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

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

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. 
cdll

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 Tore 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. 4
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 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 of 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. 5 The complaint sought to enjoin CIGLA and any
person claiming membership therein from striking or otherwise disrupting the
operations of the bank.
On June 18, 1990, respondent CIGLA filed with the trial court a motion to
dismiss the complaint. The motion alleged that:
a) The Court had no jurisdiction, this being labor dispute.
b) The guards were employees of the bank.
c) There were pending cases/labor disputes between the guards
and the bank at the different agencies of the
Department of Labor and Employment (DOLE).
d) The bank was guilty of forum shopping in filing the complaint
with the Regional Trial Court after submitting itself voluntarily
to the jurisdiction of the different agencies of the DOLE.
By order dated August 19, 1990, the trial court denied respondent CIGLA's
motion to dismiss. The relevant portion of the order reads as follows:
"Plaintiff in its Opposition alleged that jurisdiction of the court is
determined by the allegations of the complaints. In the plaintiff's
complaint there are allegations, which negate any employer-employee
relationship between it and the CIGLA members; however
 the Court could not dismiss the case and lift the restraining order without
first threshing out the same at the trial of the case.
The Court finding the grounds alleged in the defendant's motion
well taken, the motion is hereby denied.
SO ORDERED."
In due time, respondent CIGLA filed with the trial court a motion for
reconsideration of the above-mentioned order. On October 1, 1990, the
trial court denied the motion.
Subsequently, respondent CIGLA filed with the trial court its answer to the
complaint, and averred as special and affirmative defense
lack of jurisdiction of the court over the subject matter of the case. Treating the
averment as motion to dismiss, on April 27, 1991, the lower court issued an order
denying the motion. The lower court stated:
"The Court noted in defendant's Memorandum of Authorities that
they made no mention who among the parties — the plaintiff bank or the
defendants union — paid their wages or salaries and who has the power
to dismiss them.
Defendants also alleged that the complaint states no valid
cause of action as plaintiff's allegations are purely anchored on
conjectures and conclusions and not based on ultimate facts.
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."  Cdpr

On May 24, 1991 respondent CIGLA filed with the Court of Appeals a

petition for certiorari with preliminary injunction 6 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
for reconsideration are but a rehash, if not a repetition, of the arguments in its
comments, which had been considered by the Court in its decision.
Hence, the petitioner's recourse to this Court.
The Issue
The basic issue involved is whether it is the labor tribunal or the regional
trial court that has jurisdiction over the subject matter of the complaint filed
by Citibank with the trial court.
Petitioner's Submission
Petitioner Citibank contends that there is no employer-employee
relationship between Citibank and the security guards represented by respondent
CIGLA and that there is no "labor dispute" in the subject controversy. The
security guards were employees of El Toro security agency, not of Citibank. Its
service contract with Citibank had expired and not renewed.
The Court's Ruling
We sustain the petitioner's contention. This Court has held in many cases
that "in determining the existence of an employer-employee relationship, the
following elements are generally considered: 1) the selection and
engagement of the employee; 2) the payment of wages; 3) the
power of dismissal; and 4) the employer's power to control the employee with
respect to the means and methods by which the work is to be accomplished". 7 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. 8 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 1 of the
Labor Code provides the definition of a "labor dispute". It "includes any
controversy or matter concerning terms of 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 the Citibank and El Toro security agency is
one regarding the termination or non-renewal of the contract of services. This is a
civil dispute. 9 El Toro was an independent contractor. Thus, no employer-
employee relationship existed between Citibank and the security guards
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." 10 "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." 11
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.  cdasia

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

 (Citibank, N.A. v. Court of Appeals, G.R. No. 108961, [November

|||

27, 1998], 359 PHIL 719-728)

[G.R. No. 120567. March 20, 1998.]

PHILIPPINE AIRLINES, INC., petitioner, vs. NATIONAL LABOR

RELATIONS COMMISSION, FERDINAND PINEDA and
GOGFREDO CABLING, respondents.

Can the National Labor Relations Commission (NLRC), even without a

complaint for illegal dismissal filed before the labor arbiter, entertain an action for
injunction and issue such writ enjoining petitioner Philippine Airlines, Inc. from
enforcing its Orders of dismissal against private respondents, and ordering
petitioner to reinstate the private respondents to their previous positions?
This is the pivotal issue presented before us in this petition for certiorari
under Rule 65 of the Revised Rules of Court which seeks the nullification of the
injunctive writ dated April 3, 1995 issued by the NLRC and the Order denying
petitioner's motion for reconsideration on the ground that the said Orders were
issued in excess of jurisdiction. 
LLcd
 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, attorney's 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:
". . . that almost two (2) years ago, i.e. on April 15, 1993, the
petitioners were instructed to attend an investigation by respondent's
'Security and Fraud Prevention Sub-Department' regarding an April 3,
1993 incident in Hongkong at which Joseph Abaca, respondent's
Avionics Mechanic in Hongkong 'was intercepted by the Hongkong
Airport Police at Gate 05 . . . the ramp area of the Kai Tak International
Airport while . . . about to exit said gate carrying a . . . 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; . . . 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 . . . where a confrontation between Mr. Abaca and
petitioners herein was compulsorily arranged by the respondent's
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 respondent's Disciplinary Board was
anomalous 'as there was no one else in the line-up (which could not be
called one) but petitioners . . . 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 respondent's
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 plane's skybed for
Abaca to retrieve in Hongkong, which findings of how the money was
found was previously confirmed by Mr. Joseph Abaca himself when he
was first investigated by the Hongkong authorities'; that just as
petitioners 'thought that they were already fully cleared of the charges,
as they no longer received any summons/notices on the intended
'additional hearings' mandated by the Disciplinary Board,' they were
surprised to receive on February 23, 1995 . . . a Memorandum dated
February 22, 1995' terminating their services for alleged violation of
respondent's Code of Discipline 'effective, immediately'; that
sometime . . . 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
respondent's Code of Discipline; . . . "
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-Technische 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: 
LLcd

"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"(1) '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?
xxx xxx xxx
Anent respondent's second argument . . ., Article 218 (e) of
the Labor Code . . . 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-Technische 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.
xxx xxx xxx
Respondent's fourth argument that petitioner's remedy for their
dismissals is 'to file an illegal dismissal case against PAL which cases
are within the original and exclusive jurisdiction of the Labor Arbiter' is
ignorant. In requiring as a condition for the issuance of a 'temporary or
permanent injunction'- '(4) That complainant has no adequate remedy at
law;' Article 218 (e) of the Labor Code clearly envisioned adequacy, and
not plain availability of a remedy at law as an alternative bar to the
issuance of an injunction. An illegal dismissal suit (which takes, on its
expeditious side, three (3) years before it can be disposed of) while
available as a remedy under Article 217 (a) of the Labor Code, is
certainly not an 'adequate; remedy at law. Ergo, it cannot, as an
alternative remedy, bar our exercise of that injunctive power given us by
Article 218 (e) of the Code.
xxx xxx xxx
Thus, Article 218 (e), as earlier discussed [which empowers this
Commission 'to require the performance of a particular act' (such as our
requiring respondent 'to cease and desist from enforcing' its whimsical
memoranda of dismissals and 'instead to reinstate petitioners to their
respective position held prior to their subject dismissals') in 'any labor
dispute which, if not . . . 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 . . .
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'. . . ." 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; . . . (Emphasis Ours)
Complementing the above-quoted provision, Sec. 1, Rule XI of the New
Rules of Procedure of the NLRC, pertinently provides as follows:
"Section 1. Injunction in Ordinary Labor Dispute. — A preliminary
injunction or a restraining order may be granted by the Commission
through its divisions pursuant to the provisions of paragraph (e) of Article
218 of the Labor Code, as amended, when it is established on the bases
of the sworn allegations in the petition that the acts complained
of, involving or arising from any labor dispute before the Commission,
which, if not restrained or performed forthwith, may cause grave or
irreparable damage to any party or render ineffectual any decision in
favor of such party.
xxx xxx xxx
The foregoing ancillary power may be exercised by the Labor
Arbiters only as an incident to the cases pending before them in order to
preserve the rights of the parties during the pendency of the case, but
excluding labor disputes involving strikes or lockout. 7 (Emphasis Ours)
From the foregoing provisions of law, the power of the NLRC to issue an
injunctive writ originates from "any labor dispute" upon application by a party
thereof, which application if not granted "may cause grave or irreparable damage
to any party or render ineffectual any decision in favor of such party."
 The term "labor dispute" is defined as "any controversy or matter
concerning terms and conditions of employment or the association or
representation of persons in negotiating, fixing, maintaining, changing, or
arranging the terms and conditions of employment regardless of whether or not
the disputants stand in the proximate relation of employers and employees." 8
The term "controversy" is likewise defined as "a litigated
question; adversary proceeding in a court of law; a civil action or suit, either at
law or in equity; a justiciable dispute." 9
A "justiciable controversy" is "one involving an active antagonistic assertion
of a legal right on one side and a denial thereof on the other concerning a real,
and not a mere theoretical question or issue." 10
Taking into account the foregoing definitions, it is an essential requirement
that there must first be a labor dispute between the contending parties before the
labor arbiter. In the present case, there is no labor dispute between the petitioner
and private respondents as there has yet been no complaint for illegal dismissal
filed with the labor arbiter by the private respondents against the petitioner.
The petition for injunction directly filed before the NLRC is in reality an
action for illegal dismissal. This is clear from the allegations in the petition which
prays for; reinstatement of private respondents; award of full backwages, moral
and exemplary damages; and attorney's fees. As such, the petition should have
been filed with the labor arbiter who has the original and exclusive jurisdiction to
hear and decide the following cases involving all workers, whether agricultural or
non-agricultural:
(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 (P5,000.00), whether or not
accompanied with a claim for reinstatement. 11
The jurisdiction conferred by the foregoing legal provision to the labor
arbiter is both original and exclusive, meaning, no other officer or tribunal can
take cognizance of, hear and decide any of the cases therein enumerated. The
only exceptions are where the Secretary of Labor and Employment or the NLRC
exercises the power of compulsory arbitration, or the parties agree to submit the
matter to voluntary arbitration pursuant to Article 263 (g) of the Labor Code, the
pertinent portions of which reads:
"(g) When, in his opinion, there exists a labor dispute causing or
likely to cause a strike or lockout in an industry indispensable to the
national interest, the Secretary of Labor and Employment may assume
jurisdiction over the dispute and decide it or certify the same to the
Commission for compulsory arbitration. Such assumption or certification
shall have the effect of automatically enjoining the intended or impending
strike or lockout as specified in the assumption or certification order. If
one has already taken place at the time of assumption or certification, all
striking or locked out employees shall immediately resume operations
and readmit all workers under the same terms and conditions prevailing
before the strike or lockout. The Secretary of Labor and Employment or
the Commission may seek the assistance of law enforcement agencies
to ensure compliance with this provision as well as with such orders as
he may issue to enforce the same.
xxx xxx xxx"
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."  LLcd

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 petitioner. 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.
 (Philippine Airlines, Inc. v. National Labor Relations Commission, G.R. No.
|||

120567, [March 20, 1998], 351 PHIL 172-188)

G.R. No. 159577. May 3, 2006.]

CHARLITO PEÑARANDA, petitioner, vs. BAGANGA PLYWOOD

CORPORATION and HUDSON CHUA, respondents.

DECISION

PANGANIBAN, C.J  : p
 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 Review 1 under Rule 45 of the Rules of
Court, assailing the January 27, 2003 2 and July 4, 2003 3 Resolutions of the
Court of Appeals (CA) in CA-G.R. 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 con 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 [Banganga] 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 claimed for payment of damages and
attorney's fees having been forced to litigate the present complaint. 
SITCEA

"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 they instant complaint must necessarily fail for lack of
merit.'' 10
The labor arbiter ruled that there was no illegal dismissal and that
petitioner's Complaint was premature because he was still employed by
BPC. 11 The temporary closure of BPC's plant did not terminate his
employment, hence, he need not reapply when the plant reopened.
According to the labor arbiter, petitioner's money claims for illegal
dismissal was also weakened by his quitclaim and admission during the
clarificatory conference that he accepted separation benefits, sick and
vacation leave conversions and thirteenth month pay. 12
Nevertheless, the labor arbiter found petitioner entitled to overtime pay,
premium pay for working on rest days, and attorney's fees in the total amount
of P21,257.98. 13
Ruling of the NLRC
Respondents filed an appeal to the NLRC, which deleted the award of
overtime pay and premium pay for working on rest days. According to the
Commission, petitioner was not entitled to these awards because he was a
managerial employee. 14
Ruling of the Court of Appeals
In its Resolution dated January 27, 2003, the CA dismissed
Peñaranda's Petition for Certiorari. The appellate court held that he failed to:
1) attach copies of the pleading 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.
"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.  CHATcE

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. NLRC 20 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 he filed within 10 days from receipt
thereof. 27
Petitioner's claim that respondents filed their appeal beyond the
required period is not substantiated. In the pleadings before us, petitioner fails
to indicate when respondents received the Decision of the labor arbiter.
Neither did the petitioner attach a copy of the challenged appeal. Thus, this
Court has no means to determine from the records when the 10-day period
commenced and terminated. Since petitioner utterly failed to support his claim
that respondents' appeal was filed out of time, we need not belabor that point.
The parties alleging have the burden of substantiating their allegations. 28
Second Issue:
Nature of Employment
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 member 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;  TSacID

"(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
"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 white working.
"6. Recommend parts and suppliers 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
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 supervisors 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.  EHSTDA

WHEREFORE, the Petition is DENIED. Costs against petitioner.

SO ORDERED.
 (Peñaranda v. Baganga Plywood Corp., G.R. No. 159577, [May 3, 2006], 522
|||

PHIL 640-653)

G.R. No. 169717. March 16, 2011.]

SAMAHANG MANGGAGAWA SA CHARTER CHEMICAL

SOLIDARITY OF UNIONS IN THE PHILIPPINES FOR
EMPOWERMENT AND REFORMS (SMCC-SUPER),
ZACARRIAS JERRY VICTORIO-Union President, petitioner, vs.
CHARTER CHEMICAL AND COATING
CORPORATION, respondent.

DECISION
DEL CASTILLO, J  : p

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. 
EaHATD

This Petition for Review on Certiorari seeks to reverse and set aside

the Court of Appeal's March 15, 2005 Decision 1 in CA-G.R. SP No. 58203,
which annulled and set aside the January 13, 2000 Decision 2 of the
Department of Labor and Employment (DOLE) in OS-A-6-53-99 (NCR-OD-M-
9902-019) and the September 16, 2005 Resolution 3 denying petitioner
union's motion for reconsideration.
Factual Antecedents
On February 19, 1999, Samahang Manggagawa sa Charter Chemical
Solidarity of Unions in the Philippines for Empowerment and Reforms
(petitioner union) filed a petition for certification election among the regular
rank-and-file employees of Charter Chemical and Coating Corporation
(respondent company) with the Mediation Arbitration Unit of the DOLE,
National Capital Region.
On April 14, 1999, respondent company filed an Answer with Motion to
Dismiss 4 on the ground that petitioner union is not a legitimate labor
organization because of (1) failure to comply with the documentation
requirements set by law, and (2) the inclusion of supervisory employees within
petitioner union. 5
Med-Arbiter's Ruling
On April 30, 1999, Med-Arbiter Tomas F. Falconitin issued a
Decision 6 dismissing the petition for certification election. The Med-Arbiter
ruled that petitioner union is not a legitimate labor organization because the
Charter Certificate, "Sama-samang Pahayag ng Pagsapi at Authorization,"
and "Listahan ng mga Dumalo sa Pangkalahatang Pulong at mga Sumang-
ayon at Nagratipika sa Saligang Batas" were not executed under oath and
certified by the union secretary and attested to by the union president as
required by Section 235 of the Labor Code 7 in relation to Section 1, Rule VI
of Department Order (D.O.) No. 9, series of 1997. The union registration was,
thus, fatally defective.
The Med-Arbiter further held that the list of membership of petitioner
union consisted of 12 batchman, mill operator and leadman who performed
supervisory functions. Under Article 245 of the Labor Code,said supervisory
employees are prohibited from joining petitioner union which seeks to
represent the rank-and-file employees of respondent company.
As a result, not being a legitimate labor organization, petitioner union
has no right to file a petition for certification election for the purpose of
collective bargaining.
Department of Labor and Employment's Ruling
On July 16, 1999, the DOLE initially issued a Decision 8 in favor of
respondent company dismissing petitioner union's appeal on the ground that
the latter's petition for certification election was filed out of time. Although the
DOLE ruled, contrary to the findings of the Med-Arbiter, that the charter
certificate need not be verified and that there was no independent evidence
presented to establish respondent company's claim that some members of
petitioner union were holding supervisory positions, the DOLE sustained the
dismissal of the petition for certification after it took judicial notice that another
union, i.e., Pinag-isang Lakas Manggagawa sa Charter Chemical and Coating
Corporation, previously filed a petition for certification election on January 16,
1998. The Decision granting the said petition became final and executory on
September 16, 1998 and was remanded for immediate implementation. Under
Section 7, Rule XI of D.O. No. 9, series of 1997, a motion for intervention
involving a certification election in an unorganized establishment should be
filed prior to the finality of the decision calling for a certification election.
Considering that petitioner union filed its petition only on February 14, 1999,
the same was filed out of time.  DaScHC

On motion for reconsideration, however, the DOLE reversed its earlier

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

Petitioner Union's Arguments

Petitioner union claims that the litigation of the issue as to its legal
personality to file the subject petition for certification election is barred by the
July 16, 1999 Decision of the DOLE. In this decision, the DOLE ruled that
petitioner union complied with all the documentation requirements and that
there was no independent evidence presented to prove an illegal mixture of
supervisory and rank-and-file employees in petitioner union. After the
promulgation of this Decision, respondent company did not move for
reconsideration, thus, this issue must be deemed settled.
Petitioner union further argues that the lack of verification of its charter
certificate and the alleged illegal composition of its membership are not
grounds for the dismissal of a petition for certification election under Section
11, Rule XI of D.O. No. 9, series of 1997, as amended, nor are they grounds
for the cancellation of a union's registration under Section 3, Rule VIII of said
issuance. It contends that what is required to be certified under oath by the
local union's secretary or treasurer and attested to by the local union's
president are limited to the union's constitution and by-laws, statement of the
set of officers, and the books of accounts.
Finally, the legal personality of petitioner union cannot be collaterally
attacked but may be questioned only in an independent petition for
cancellation pursuant to Section 5, Rule V, Book IV of the Rules to Implement
the Labor Code and the doctrine enunciated in Tagaytay Highlands
International Golf Club Incorporated v. Tagaytay Highlands Employees Union-
PTGWO. 13
Respondent Company's Arguments
Respondent company asserts that it cannot be precluded from
challenging the July 16, 1999 Decision of the DOLE. The said decision did not
attain finality because the DOLE subsequently reversed its earlier ruling and,
from this decision, respondent company timely filed its motion for
reconsideration. 
On the issue of lack of verification of the charter certificate, respondent
company notes that Article 235 of the Labor Code and Section 1, Rule VI of
the Implementing Rules of Book V, as amended by D.O. No. 9, series of
1997, expressly requires that the charter certificate be certified under oath.
It also contends that petitioner union is not a legitimate labor
organization because its composition is a mixture of supervisory and rank-
and-file employees in violation of Article 245 of the Labor Code.Respondent
company maintains that the ruling in Toyota Motor Philippines vs. Toyota
Motor Philippines Labor Union 14 continues to be good case law. Thus, the
illegal composition of petitioner union nullifies its legal personality to file the
subject petition for certification election and its legal personality may be
collaterally attacked in the proceedings for a petition for certification election
as was done here.  CAaSHI

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. 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. IDTcHa

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 . . . certify
or attest to a document which they had no hand in the preparation
of. 23 (Emphasis supplied)
In accordance with this ruling, petitioner union's charter certificate need not be
executed under oath. Consequently, it validly acquired the status of a
legitimate labor organization upon submission of (1) its charter
certificate, 24 (2) the names of its officers, their addresses, and its principal
office, 25 and (3) its constitution and by-laws 26 — the last two requirements
having been executed under oath by the proper union officials as borne out by
the records.
The mixture of rank-and-file and
supervisory employees in petitioner
union does not nullify its legal
personality as a legitimate labor
organization.
The CA found that petitioner union has for its membership both rank-
and-file and supervisory employees. However, petitioner union sought to
represent the bargaining unit consisting of rank-and-file employees. Under
Article 245 27 of the Labor Code,supervisory employees are not eligible for
membership in a labor organization of rank-and-file employees. Thus, the
appellate court ruled that petitioner union cannot be considered a legitimate
labor organization pursuant to Toyota Motor Philippines v. Toyota Motor
Philippines Corporation Labor Union 28 (hereinafter Toyota).
Preliminarily, we note that petitioner union questions the factual findings
of the Med-Arbiter, as upheld by the appellate court, that 12 of its members,
consisting of batchman, mill operator and leadman, are supervisory
employees. However, petitioner union failed to present any rebuttal evidence
in the proceedings below after respondent company submitted in evidence the
job descriptions 29 of the aforesaid employees. The job descriptions indicate
that the aforesaid employees exercise recommendatory managerial actions
which are not merely routinary but require the use of independent judgment,
hence, falling within the definition of supervisory employees under Article 212
(m) 30 of the Labor Code.For this reason, we are constrained to agree with the
Med-Arbiter, as upheld by the appellate court, that petitioner union consisted
of both rank-and-file and supervisory employees.  TDCAHE

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. — . . . 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 . . . ." (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:
xxx xxx xxx
(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.  EaIDAT

xxx xxx xxx

In the case at bar, as respondent union's membership list
contains the names of at least twenty-seven (27) supervisory
employees in Level Five positions, the union could not, prior to
purging itself of its supervisory employee members, attain the
status of a legitimate labor organization. Not being one, it cannot
possess the requisite personality to file a petition for certification
election." (Emphasis supplied)
In Dunlop, in which the labor organization that filed a petition for
certification election was one for supervisory employees, but in which the
membership included rank-and-file employees, the Court reiterated that
such labor organization had no legal right to file a certification election to
represent a bargaining unit composed of supervisors for as long as it
counted rank-and-file employees among its members.
 It should be emphasized that the petitions for certification election
involved in Toyota and Dunlop were filed on November 26, 1992 and
September 15, 1995, respectively; hence, the 1989 Rules was applied in
both cases.
But then, on June 21, 1997, the 1989 Amended Omnibus
Rules was further amended by Department Order No. 9, series of 1997
(1997 Amended Omnibus Rules). Specifically, the requirement under
Sec. 2(c) of the 1989 Amended Omnibus Rules — that the petition for
certification election indicate that the bargaining unit of rank-and-file
employees has not been mingled with supervisory employees — was
removed. Instead, what the 1997 Amended Omnibus Rules requires is a
plain description of the bargaining unit, thus:
Rule XI
Certification Elections
xxx xxx xxx
Sec. 4. Forms and contents of petition. — The petition
shall be in writing and under oath and shall contain, among
others, the following: . . . (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 Dunlop and
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.  ATcaEH

In San Miguel Corp. (Mandaue Packaging Products Plants) v.

Mandaue Packing Products Plants-San Miguel Packaging Products-San
Miguel Corp. Monthlies Rank-and-File Union-FFW, the Court explained
that since the 1997 Amended Omnibus Rules does not require a local or
chapter to provide a list of its members, it would be improper for the
DOLE to deny recognition to said local or chapter on account of any
question pertaining to its individual members.
More to the point is Air Philippines Corporation v. Bureau of
Labor Relations, which involved a petition for cancellation of union
registration filed by the employer in 1999 against a rank-and-file labor
organization on the ground of mixed membership: the Court therein
reiterated its ruling in Tagaytay Highlands that the inclusion in a union of
disqualified employees is not among the grounds for cancellation, unless
such inclusion is due to misrepresentation, false statement or fraud
under the circumstances enumerated in Sections (a) and (c) of Article
239 of the Labor Code.
All said, while the latest issuance is R.A. No. 9481, the 1997
Amended Omnibus Rules, as interpreted by the Court in  Tagaytay
Highlands, San Miguel  and  Air Philippines, had already set the tone for
it.  Toyota and Dunlop no longer hold sway in the present altered state
of the law and the rules. 32 [Underline supplied]
The applicable law and rules in the instant case are the same as those
in Kawashima because the present petition for certification election was filed
in 1999 when D.O. No. 9, series of 1997, was still in effect.
Hence, Kawashima applies 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.  cTSDAH

No pronouncement as to costs.
SO ORDERED.
 (Samahang Manggagawa sa Charter Chemical-Super v. Charter Chemical and
|||

Coating Corp., G.R. No. 169717, [March 16, 2011], 661 PHIL 175-194)

G.R. No. 187887. September 7, 2011.]

PAMELA FLORENTINA P. JUMUAD, petitioner, vs. HI-FLYER

FOOD, INC. and/or JESUS R. MONTEMAYOR, respondents.

DECISION
MENDOZA, J  : p

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-Flyer's 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 
DAHEaT

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 management's decision
to terminate the services of the branch's pest control program and to rely
solely on the pest control program of the mall. As for the defective chiller, she
explained that it was under repair at the time of the CER. 11 Soon thereafter,
Hi-Flyer ordered the KFC-Gaisano branch closed.
Then, sometime in June of 2005, Hi-Flyer audited the accounts of KFC-
Bohol amid reports that certain employees were covering up cash shortages.
As a result, the following irregularities were discovered: 1) cash shortage
amounting to P62,290.85; 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 branch's 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.  TESDcA

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
attorney's fees. Jumuad also sought the reimbursement of the amount
equivalent to her forty percent (40%) contribution to Hi-Flyer's 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 employer's 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 complainant's 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 (P336,400.00),
Philippine currency, representing Separation Pay, within ten (10) days
from receipt hereof, through the Cashier of this Arbitration Branch.
Further, same respondents are ordered to reimburse complainant
an amount equivalent to 40% of the value of her car loaned pursuant to
the car loan entitlement memorandum.
Other claims are DISMISSED for lack of merit. 21
Both Jumuad and Hi-Flyer appealed to the NLRC. Jumuad faulted the
LA for not awarding backwages and damages despite its finding that she was
illegally dismissed. Hi-Flyer and Montemayor, on the other hand, assailed the
finding that Jumuad was illegally dismissed and that they were solidarity 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-Flyer's car entitlement program.  HDTSCc

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. 
CHaDIT

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 to August
2006 of the Honorable Labor Arbiter Julie C. Ronduque, and the 29
November 2006 Resolution of the NLRC denying petitioner's Motion for
Reconsideration dated 08 November 2007, are hereby REVERSED and
SET ASIDE.  cDAISC

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 Jumuad's termination. It was of the view
that the e-mail exchanges were mere discussions between Montemayor and
other officers of Hi-Flyer on whether grounds for disciplinary action or
termination existed. To the mind of the CA, the e-mails just showed that Hi-
Flyer extensively deliberated the nature and cause of the charges against
Jumuad. 29
On the issue of loss of trust and confidence, the CA considered the
deplorable sanitary conditions and the cash shortages uncovered at three of
the seven KFC branches supervised by Jumuad as enough bases for Hi-Flyer
to lose its trust and confidence in her. 30
With regard to the reimbursement of the 40% of the car loan as
awarded by the labor tribunal, the CA opined that the terms of the car loan
program did not provide for reimbursement in case an employee was
terminated for just cause and they, in fact, required that the employee should
stay with the company for at least three (3) years from the date of the loan to
obtain the full 40% subsidy. The CA further stated that the rights and
obligations of the parties should be litigated in a separate civil action before
the regular courts. 31
The CA also exculpated Montemayor from any liability since it
considered Jumuad's dismissal with a just cause and it found no evidence that
he acted with malice and bad faith. 32 
aDSTIC

Hence, this petition on the following

GROUNDS:
THE HONORABLE COURT OF APPEALS GRAVELY ERRED
IN UPHOLD[ING] AS VALID THE TERMINATION OF PETITIONER'S
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 JULIE RENDOQUE.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED
WHEN IT REVERSED THE DECISION OF THE NATIONAL LABOR
RELATIONS COMMISSION 4TH DIVISION 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.  IcDHaT

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. cSTHaE

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 latter's
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
jurisdiction. 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. DacTEH

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 petitioner's dismissal. Pursuant to the
Court's ruling in Lima Land, Inc. v. Cuevas, 38 as long as there is some basis
for such loss of confidence, such as when the employer has reasonable
ground to believe that the employee concerned is responsible for the
purported misconduct, and the nature of his participation therein renders him
unworthy of the trust and confidence demanded of his position, a managerial
employee may be dismissed.  
In the present case, the CER's 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. 
DTISaH

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
respondent's 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 respondent's 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 xxx 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: ". . . [i]t is Our considered view that . . . complainant cannot totally
claim that she was not remiss in her duties . . . . 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
employer's interest and not for the purpose of defeating or circumventing the
rights of the employees under special laws or under valid agreements, the
employer's exercise of its management prerogative must be upheld. 41
In this case, Hi-Flyer exercised in good faith its management
prerogative as there is no dispute that it has lost trust and confidence in her
and her managerial abilities, to its damage and prejudice. Her dismissal, was
therefore, justified. 
EICSTa

As for Jumuad's 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.
 (Jumuad v. Hi-Flyer Food, Inc., G.R. No. 187887, [September 7, 2011], 672
|||

PHIL 730-747)

G.R. No. 179652. March 6, 2012.]

PEOPLE'S BROADCASTING SERVICE (BOMBO

RADYO PHILS., INC.), petitioner, vs. THE SECRETARY OF THE
DEPARTMENT OF LABOR AND EMPLOYMENT, THE
REGIONAL DIRECTOR, DOLE REGION VII, and JANDELEON
JUEZAN, respondents.

RESOLUTION

VELASCO, JR., J  : p

In a Petition for Certiorari under Rule 65, petitioner People's Broadcasting

Service, Inc. (Bombo Radyo Phils., Inc.) questioned the Decision and Resolution
of the Court of Appeals (CA) dated October 26, 2006 and June 26, 2007,
respectively, in C.A. G.R. CEB-SP No. 00855.  cSaCDT
 Private respondent Jandeleon Juezan filed a complaint against petitioner
with the Department of Labor and Employment (DOLE) Regional Office No. VII,
Cebu City, for illegal deduction, nonpayment of service incentive leave, 13th
month pay, premium pay for holiday and rest day and illegal diminution of
benefits, delayed payment of wages and noncoverage of SSS, PAG-IBIG and
Philhealth. 1 After the conduct of summary investigations, and after the parties
submitted their position papers, the DOLE Regional Director found that private
respondent was an employee of petitioner, and was entitled to his money
claims. 2 Petitioner sought reconsideration of the Director's Order, but failed. The
Acting DOLE Secretary dismissed petitioner's appeal on the ground that
petitioner submitted a Deed of Assignment of Bank Deposit instead of posting a
cash or surety bond. When the matter was brought before the CA, where
petitioner claimed that it had been denied due process, it was held that petitioner
was accorded due process as it had been given the opportunity to be heard, and
that the DOLE Secretary had jurisdiction over the matter, as the jurisdictional
limitation imposed by Article 129 of the Labor Code on the power of the DOLE
Secretary under Art. 128 (b) of the Code had been repealed by Republic Act No.
(RA) 7730. 3
In the Decision of this Court, the CA Decision was reversed and set aside,
and the complaint against petitioner was dismissed. The dispositive portion of the
Decision reads as follows:
WHEREFORE, the petition is GRANTED. The Decision dated 26
October 2006 and the Resolution dated 26 June 2007 of the Court of
Appeals in C.A. G.R. CEB-SP No. 00855 are REVERSED and SET
ASIDE. The Order of the then Acting Secretary of the Department of
Labor and Employment dated 27 January 2005 denying petitioner's
appeal, and the Orders of the Director, DOLE Regional Office No. VII,
dated 24 May 2004 and 27 February 2004, respectively,
are ANNULLED. The complaint against petitioner is DISMISSED. 4
The Court found that there was no employer-employee relationship
between petitioner and private respondent. It was held that while the DOLE may
make a determination of the existence of an employer-employee relationship, this
function could not be co-extensive with the visitorial and enforcement power
provided in Art. 128 (b) of the Labor Code, as amended by RA 7730. The
National Labor Relations Commission (NLRC) was held to be the primary agency
in determining the existence of an employer-employee relationship. This was the
interpretation of the Court of the clause "in cases where the relationship of
employer-employee still exists" in Art. 128 (b). 5
From this Decision, the Public Attorney's Office (PAO) filed a Motion for
Clarification of Decision (with Leave of Court). The PAO sought to clarify as to
when the visitorial and enforcement power of the DOLE be not considered as co-
extensive with the power to determine the existence of an employer-employee
relationship. 6 In its Comment, 7 the DOLE sought clarification as well, as to the
extent of its visitorial and enforcement power under the Labor Code, as
amended.  SIDTCa

The Court treated the Motion for Clarification as a second motion for
reconsideration, granting said motion and reinstating the petition. 8 It is apparent
that there is a need to delineate the jurisdiction of the DOLE Secretary vis-à-vis
that of the NLRC.
Under Art. 129 of the Labor Code,the power of the DOLE and its duly
authorized hearing officers to hear and decide any matter involving the recovery
of wages and other monetary claims and benefits was qualified by the proviso
that the complaint not include a claim for reinstatement, or that the aggregate
money claims not exceed PhP5,000. RA 7730, or an Act Further Strengthening
the Visitorial and Enforcement Powers of the Secretary of Labor, did away with
the PhP5,000 limitation, allowing the DOLE Secretary to exercise its visitorial and
enforcement power for claims beyond PhP5,000. The only qualification to this
expanded power of the DOLE was only that there still be an existing employer-
employee relationship.
It is conceded that if there is no employer-employee relationship, whether it
has been terminated or it has not existed from the start, the DOLE has no
jurisdiction. Under Art. 128 (b) of the Labor Code, as amended by RA 7730, the
first sentence reads, "Notwithstanding the provisions of Articles 129 and 217 of
this Code to the contrary, and in cases where the relationship of employer-
employee still exists, the Secretary of Labor and Employment or his duly
authorized representatives shall have the power to issue compliance orders to
give effect to the labor standards provisions of this Code and other labor
legislation based on the findings of labor employment and enforcement officers
or industrial safety engineers made in the course of inspection." It is clear and
beyond debate that an employer-employee relationship must exist for the
exercise of the visitorial and enforcement power of the DOLE. The question now
arises, may the DOLE make a determination of whether or not an employer-
employee relationship exists, and if so, to what extent?
The first portion of the question must be answered in the affirmative.
The prior decision of this Court in the present case accepts such answer,
but places a limitation upon the power of the DOLE, that is, the determination of
the existence of an employer-employee relationship cannot be co-extensive with
the visitorial and enforcement power of the DOLE. But even in conceding the
power of the DOLE to determine the existence of an employer-employee
relationship, the Court held that the determination of the existence of an
employer-employee relationship is still primarily within the power of the NLRC,
that any finding by the DOLE is merely preliminary.
This conclusion must be revisited.
No limitation in the law was placed upon the power of the DOLE to
determine the existence of an employer-employee relationship. No procedure
was laid down where the DOLE would only make a preliminary finding, that the
power was primarily held by the NLRC. The law did not say that the DOLE would
first seek the NLRC's determination of the existence of an employer-employee
relationship, or that should the existence of the employer-employee relationship
be disputed, the DOLE would refer the matter to the NLRC. The DOLE must
have the power to determine whether or not an employer-employee relationship
exists, and from there to decide whether or not to issue compliance orders in
accordance with Art. 128 (b) of the Labor Code, as amended by RA 7730.  aCASEH

The DOLE, in determining the existence of an employer-employee

relationship, has a ready set of guidelines to follow, the same guide the courts
themselves use. The elements to determine the existence of an employment
relationship are: (1) the selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal; (4) the employer's power to control
the employee's conduct. 9 The use of this test is not solely limited to the NLRC.
The DOLE Secretary, or his or her representatives, can utilize the same test,
even in the course of inspection, making use of the same evidence that would
have been presented before the NLRC.
The determination of the existence of an employer-employee relationship
by the DOLE must be respected. The expanded visitorial and enforcement power
of the DOLE granted by RA 7730 would be rendered nugatory if the alleged
employer could, by the simple expedient of disputing the employer-employee
relationship, force the referral of the matter to the NLRC. The Court issued the
declaration that at least a prima facie showing of the absence of an employer-
employee relationship be made to oust the DOLE of jurisdiction. But it is
precisely the DOLE that will be faced with that evidence, and it is the DOLE that
will weigh it, to see if the same does successfully refute the existence of an
employer-employee relationship.
If the DOLE makes a finding that there is an existing employer-employee
relationship, it takes cognizance of the matter, to the exclusion of the NLRC. The
DOLE would have no jurisdiction only if the employer-employee relationship has
already been terminated, or it appears, upon review, that no employer-employee
relationship existed in the first place.
The Court, in limiting the power of the DOLE, gave the rationale that such
limitation would eliminate the prospect of competing conclusions between the
DOLE and the NLRC. The prospect of competing conclusions could just as well
have been eliminated by according respect to the DOLE findings, to the
exclusion of the NLRC, and this We believe is the more prudent course of action
to take.
This is not to say that the determination by the DOLE is beyond question
or review. Suffice it to say, there are judicial remedies such as a petition
for certiorari under Rule 65 that may be availed of, should a party wish to dispute
the findings of the DOLE.
It must also be remembered that the power of the DOLE to determine the
existence of an employer-employee relationship need not necessarily result in an
affirmative finding. The DOLE may well make the determination that no
employer-employee relationship exists, thus divesting itself of jurisdiction over
the case. It must not be precluded from being able to reach its own conclusions,
not by the parties, and certainly not by this Court.
Under Art. 128 (b) of the Labor Code, as amended by RA 7730, the DOLE
is fully empowered to make a determination as to the existence of an employer-
employee relationship in the exercise of its visitorial and enforcement power,
subject to judicial review, not review by the NLRC.
There is a view that despite Art. 128 (b) of the Labor Code, as amended
by RA 7730, there is still a threshold amount set by Arts. 129 and 217 of
the Labor Code when money claims are involved, i.e., that if it is for PhP5,000
and below, the jurisdiction is with the regional director of the DOLE, under Art.
129, and if the amount involved exceeds PhP5,000, the jurisdiction is with the
labor arbiter, under Art. 217. The view states that despite the wording of Art. 128
(b), this would only apply in the course of regular inspections undertaken by the
DOLE, as differentiated from cases under Arts. 129 and 217, which originate
from complaints. There are several cases, however, where the Court has ruled
that Art. 128 (b) has been amended to expand the powers of the DOLE Secretary
and his duly authorized representatives by RA 7730. In these cases, the Court
resolved that the DOLE had the jurisdiction, despite the amount of the money
claims involved. Furthermore, in these cases, the inspection held by the DOLE
regional director was prompted specifically by a complaint. Therefore, the
initiation of a case through a complaint does not divest the DOLE Secretary or
his duly authorized representative of jurisdiction under Art. 128 (b). 
CAcEaS

To recapitulate, if a complaint is brought before the DOLE to give effect to

the labor standards provisions of the Labor Code or other labor legislation, and
there is a finding by the DOLE that there is an existing employer-employee
relationship, the DOLE exercises jurisdiction to the exclusion of the NLRC. If the
DOLE finds that there is no employer-employee relationship, the jurisdiction is
properly with the NLRC. If a complaint is filed with the DOLE, and it is
accompanied by a claim for reinstatement, the jurisdiction is properly with the
Labor Arbiter, under Art. 217 (3) of the Labor Code,which provides that the Labor
Arbiter has original and exclusive jurisdiction over those cases involving wages,
rates of pay, hours of work, and other terms and conditions of employment, if
accompanied by a claim for reinstatement. If a complaint is filed with the NLRC,
and there is still an existing employer-employee relationship, the jurisdiction is
properly with the DOLE. The findings of the DOLE, however, may still be
questioned through a petition for certiorari under Rule 65 of the Rules of Court.
In the present case, the finding of the DOLE Regional Director that there
was an employer-employee relationship has been subjected to review by this
Court, with the finding being that there was no employer-employee relationship
between petitioner and private respondent, based on the evidence presented.
Private respondent presented self-serving allegations as well as self-defeating
evidence. 10 The findings of the Regional Director were not based on substantial
evidence, and private respondent failed to prove the existence of an employer-
employee relationship. The DOLE had no jurisdiction over the case, as there was
no employer-employee relationship present. Thus, the dismissal of the complaint
against petitioner is proper.
WHEREFORE, the Decision of this Court in G.R. No. 179652 is
hereby AFFIRMED, with the MODIFICATION that in the exercise of the DOLE's
visitorial and enforcement power, the Labor Secretary or the latter's authorized
representative shall have the power to determine the existence of an employer-
employee relationship, to the exclusion of the NLRC.
SO ORDERED.
Corona, C.J., Carpio, Leonardo-de Castro, Peralta, Bersamin, Abad,
Villarama, Jr., Perez, Mendoza, Sereno, Reyes and Perlas-Bernabe, JJ., concur.
Brion, J., see Concurring Opinion (In the Result).
Del Castillo, J., is on official leave.

Separate Opinions
BRION, J., concurring:

I concur in the result in affirming with modification the Court's Decision of

May 8, 2009. This Decision originally dismissed respondent Jandeleon Juezan's
money claims against the petitioner People's Broadcasting Service (Bombo
Radyo Phils., Inc.). The present Resolution still affirms the ruling in favor of the
petitioner, but more importantly to me, it recognizes the validity of the
Department of Labor and Employment's (DOLE's) plenary power under Article
128 (b) of the Labor Code, as amended by Republic Act No. 7730 , including its
power to determine the existence of employer-employee relationship in the
exercise of its Article 128 (b) powers. 
ACDIcS

Background
The case arose when the DOLE Regional Office No. VII conducted an
inspection of Bombo Radyo's premises in response to Juezan's money claims
against the broadcasting company, resulting in an order for Bombo Radyo to
rectify/restitute the labor standards violations discovered during the
inspection. Bombo Radyo failed to make any rectification or restitution, prompting
the DOLE to conduct a summary investigation. Bombo Radyo reiterated its
position, made during the inspection, that Juezan was not its employee. Both
parties submitted evidence to support their respective positions.
DOLE Director Rodolfo M. Sabulao found Juezan to be an employee
of Bombo Radyo. Consequently, Director Sabulao ordered Bombo Radyo to pay
Juezan P203,726.30 representing his demanded money claims. Bombo
Radyo moved for reconsideration and submitted additional evidence, but Director
Sabulao denied the motion. Bombo Radyo then appealed to the DOLE
Secretary, insisting that Juezan was not its employee as he was a drama talent
hired on a per drama basis. The Acting DOLE Secretary dismissed the appeal for
non-perfection due to Bombo Radyo's failure to put a cash or surety bond, as
required by Article 128 (b) of the Labor Code.
Bombo Radyo went to the Court of Appeals (CA) through a petition
for certiorari under Rule 65 of the Rules of Court. The CA dismissed the petition
for lack of merit. Bombo Radyo then sought relief from this Court, likewise
through a Rule 65 petition, contending that the CA committed grave abuse of
discretion in dismissing the petition. It justified its recourse to a petition
for certiorari instead of a Rule 45 appeal by claiming that there was no appeal or
any plain and adequate remedy available to it in the ordinary course of law.
On May 8, 2009, the Court's Second Division rendered a Decision
reversing the CA rulings and dismissing Juezan's complaint. It reviewed the
evidence and found that there was no employer-employee relationship between
Juezan and Bombo Radyo. The Court overruled the CA's recognition of the
DOLE's power to determine the existence of employer-employee
relationship in a labor standards case under Article 128 (b) of the Labor
Code. It stressed that the power to determine the existence of employer-
employee relationship is primarily lodged with the National Labor Relations
Commission (NLRC) based on the clause "in cases where the relationship of
employer-employee still exists" in Article 128 (b). 
cSCADE

The Dissent
 The May 8, 2009 Court Decision was not unanimous. I wrote a Dissent and
was joined by Justice Conchita Carpio Morales. I took strong exception to the
Court's Decision for:
1. taking cognizance of Bombo Radyo's Rule 65 petition
for certiorari despite the fact that a Rule 45 appeal (petition for review
on certiorari) was available to the company and would have been the proper
recourse since errors of law against the CA were raised;
2. allowing a Deed of Assignment of Bank Deposits as a substitute for a
cash or surety bond in perfecting an appeal to the Labor Secretary, in violation of
Article 128 (b) of the Labor Code which requires only a cash or surety bond;
3. re-examining the evidence and finding that there was no employer-
employee relationship between Juezan and Bombo Radyo, thereby reversing the
DOLE Regional Director's findings which had already lapsed into finality in view
of the non-perfection of the appeal;
4. holding that while the Regional Director and the DOLE Secretary may
preliminarily determine the existence of an employer-employee relationship in a
labor standards case, they can be divested of jurisdiction over the issue by a
mere prima facie showing of an absence of an employer-employee relationship.
The Public Attorney's Office (PAO) moved, with leave of court, to clarify the
Decision on the question of when the visitorial and enforcement power of the
DOLE can be considered co-extensive or not co-extensive with the power to
determine the existence of an employer-employee relationship. The DOLE, in its
Comment, also sought to clarify the extent of its visitorial and enforcement power
under the Labor Code.
The Court, treating the Motion for Clarification as a Second Motion for
Reconsideration, granted the motion and reinstated the petition. 1
The Court's Ruling
In a reversal of position, the present Resolution now recognizes that
the determination of the existence of an employer-employee relationship by
the DOLE, in the exercise of its visitorial and enforcement power under
Article 128 (b) of the Labor Code,is entitled to full respect and must be fully
supported. It categorically states: ICDSca

No limitation in the law was placed upon the power of the DOLE
to determine the existence of an employer-employee relationship. No
procedure was laid down where the DOLE would only make a
preliminary finding, that the power was primarily held by the NLRC. The
law did not say that the DOLE would first seek the NLRC's determination
of the existence of an employer-employee relationship, or that should the
existence of the employer-employee relationship be disputed, the DOLE
 would refer the matter to the NLRC. The DOLE must have the power to
determine whether or not an employer-employee relationship exists, and
from there to decide whether or not to issue compliance orders in
accordance with Art. 128(b) of the Labor Code, as amended by RA
7730. 2
The determination of the existence of an employer-employee
relationship by the DOLE must be respected. The expanded visitorial
and enforcement power of the DOLE granted by  RA 7730 would be
rendered nugatory if the alleged employer could, by the simple expedient
of disputing the employer-employee relationship, force the referral of the
matter to the NLRC. The Court issued the declaration that at least
a  prima facie  showing of the absence of an employer-employee
relationship be made to oust the DOLE of jurisdiction. But it is precisely
the DOLE that will be faced with that evidence, and it is the DOLE that
will weigh it, to see if the same does successfully refute the existence of
an employer-employee relationship. 3
This is not to say that the determination by the DOLE is beyond
question or review. Suffice it to say, there are judicial remedies such as
a petition for certiorari  under Rule 65 that may be availed of, should a
party wish to dispute the findings of the DOLE. 4 (underscoring ours)
In short, the Court now recognizes that the DOLE has the full power to
determine the existence of an employer-employee relationship in cases
brought to it under Article 128 (b) of the Labor Code.This power is parallel
and not subordinate to that of the NLRC.
Our present ruling on the authority of the DOLE with respect to Article 128
(b) of the Labor Code is, to my mind, a very positive development that cannot but
benefit our working masses, the vast majority of whom "are not organized and,
therefore, outside the protective mantle of collective bargaining." 5
It should be welcome to the DOLE, too, as it will greatly boost its visitorial
and enforcement power, and serve as an invaluable tool in its quest to ensure
that workers enjoy minimum terms and conditions of employment. The DOLE's
labor inspection program can now proceed without being sidetracked by
unscrupulous employers who could, as the Resolution acknowledges, render
nugatory the "expanded visitorial and enforcement power of the DOLE granted
by RA 7730 . . . by the simple expedient of disputing the employer-employee
relationship [and] force the referral of the matter to the NLRC." 6
But our Resolution does not fully go the DOLE's way. The Court, at the
same time, confirms its previous finding that no employer-employee relationship
exists between Juezan and Bombo Radyo based on the evidence
presented, 7 and that a Deed of Assignment of Bank Deposits can be a substitute
for a cash or surety bond in perfecting an appeal to the Labor Secretary.
 I continue to entertain strong reservations against the validity of these
rulings, particularly the ruling on the Court's acceptance of a Deed of Assignment
of Bank Deposits to perfect an appeal to the Labor Secretary; this mode directly
contravenes the express terms of Article 128 (b) of the Labor Code which
requires only a cash or surety bond. I do hope that the Court will consider
this ruling an isolated one applicable only to the strict facts obtaining in the
present case as this is a step backward in the DOLE's bid for an orderly and
efficient delivery of labor justice.  cHCaIE

In light of these reservations, I cannot fully concur with the present

Resolution and must only "concur in the result."
 (People's Broadcasting Service v. Secretary of the Department of Labor and
|||

Employment, G.R. No. 179652 (Resolution), [March 6, 2012], 683 PHIL 509-526)

G.R. No. 152396. November 20, 2007.]

EX-BATAAN VETERANS SECURITY AGENCY,

INC., petitioner, vs. THE SECRETARY OF LABOR BIENVENIDO
E. LAGUESMA, REGIONAL DIRECTOR BRENDA A.
VILLAFUERTE, ALEXANDER POCDING, FIDEL BALANGAY,
BUAGEN CLYDE, DENNIS EPI, DAVID MENDOZA, JR.,
GABRIEL TAMULONG, ANTON PEDRO, FRANCISCO PINEDA,
GASTON DUYAO, HULLARUB, NOLI DIONEDA, ATONG
CENON, JR., TOMMY BAUCAS, WILLIAM PAPSONGAY, RICKY
DORIA, GEOFREY MINO, ORLANDO RILLASE, SIMPLICIO
TELLO, M. G. NOCES, R. D. ALEJO, and P. C.
DINTAN, respondents.

DECISION

CARPIO, J  :p

The Case
This is a petition for review 1 with prayer for the issuance of a temporary
restraining order or writ of preliminary injunction of the 29 May 2001
Decision 2 and the 26 February 2002 Resolution  3 of the Court of Appeals in
CA-G.R. SP No. 57653. The 29 May 2001 Decision of the Court of Appeals
affirmed the 4 October 1999 Order of the Secretary of Labor in OS-LS-04-4-
097-280. The 26 February 2002 Resolution denied the motion for
reconsideration.
The Facts
Ex-Bataan Veterans Security Agency, Inc. (EBVSAI) is in the business
of providing security services while private respondents are EBVSAI's
employees assigned to the National Power Corporation at Ambuklao Hydro
Electric Plant, Bokod, Benguet (Ambuklao Plant).
On 20 February 1996, private respondents led by Alexander Pocding
(Pocding) instituted a complaint 4 for underpayment of wages against EBVSAI
before the Regional Office of the Department of Labor and Employment
(DOLE).
On 7 March 1996, the Regional Office conducted a complaint
inspection at the Ambuklao Plant where the following violations were noted:
(1) non-presentation of records; (2) non-payment of holiday pay; (3) non-
payment of rest day premium; (4) underpayment of night shift differential pay;
(5) non-payment of service incentive leave; (6) underpayment of 13th month
pay; (7) no registration; (8) no annual medical report; (9) no annual work
accidental report; (10) no safety committee; and (11) no trained first
aider. 5 On the same date, the Regional Office issued a notice of
hearing 6 requiring EBVSAI and private respondents to attend the hearing on
22 March 1996. Other hearings were set for 8 May 1996, 27 May 1996 and 10
June 1996.
On 19 August 1996, the Director of the Regional Office (Regional
Director) issued an Order, the dispositive portion of which reads:
WHEREFORE, premises considered, respondent EX-BATAAN
VETERANS SECURITY AGENCY is hereby ORDERED to pay the
computed deficiencies owing to the affected employees in the total
amount of SEVEN HUNDRED SIXTY THREE THOUSAND NINE
HUNDRED NINETY SEVEN PESOS and 85/PESOS within ten (10)
calendar days upon receipt hereof. Otherwise, a Writ of Execution shall
be issued to enforce compliance of this Order. 
SEACTH

  NAME DEFICIENCY
1. ALEXANDER POCDING P36,380.85
2. FIDEL BALANGAY 36,380.85
3. BUAGEN CLYDE 36,380.85
4. DENNIS EPI 36,380.85
5. DAVID MENDOZA, JR. 36,380.85
6. GABRIEL TAMULONG 36,380.85
7. ANTON PEDRO 36,380.85
 8. FRANCISCO PINEDA 36,380.85
9. GASTON DUYAO 36,380.85
10. HULLARUB 36,380.85
11. NOLI D[EO]NIDA 36,380.85
12. ATONG CENON, JR. 36,380.85
13. TOMMY BAUCAS 36,380.85
14. WILIAM PAPSONGAY 36,380.85
15. RICKY DORIA 36,380.85
16. GEOFREY MINO 36,380.85
17. ORLANDO R[IL]LASE 36,380.85
18. SIMPLICO TELLO 36,380.85
19. NOCES, M.G. 36,380.85
20. ALEJO, R.D. 36,380.85
21. D[I]NTAN, P.C. 36,380.85
    —————
  TOTAL P763,997.85
    =========

xxx xxx xxx

SO ORDERED. 7
EBVSAI filed a motion for reconsideration 8 and alleged that the
Regional Director does not have jurisdiction over the subject matter of the
case because the money claim of each private respondent exceeded P5,000.
EBVSAI pointed out that the Regional Director should have endorsed the
case to the Labor Arbiter.
In a supplemental motion for reconsideration, 9 EBVSAI questioned the
Regional Director's basis for the computation of the deficiencies due to each private
respondent.
In an Order 10 dated 16 January 1997, the Regional Director denied
EBVSAI's motion for reconsideration and supplemental motion for
reconsideration. The Regional Director stated that, pursuant to Republic Act
No. 7730 (RA 7730), 11 the limitations under Articles 129 12 and 217 (6) 13 of
the Labor Code no longer apply to the Secretary of Labor's visitorial and
enforcement powers under Article 128 (b). 14 The Secretary of Labor or his
duly authorized representatives are now empowered to hear and decide, in a
summary proceeding, any matter involving the recovery of any amount of
wages and other monetary claims arising out of employer-employee relations
at the time of the inspection.
EBVSAI appealed to the Secretary of Labor.
The Ruling of the Secretary of Labor
 In an Order 15 dated 4 October 1999, the Secretary of Labor affirmed
with modification the Regional Director's 19 August 1996 Order. The
Secretary of Labor ordered that the P1,000 received by private respondents
Romeo Alejo, Atong Cenon, Jr., Geofrey Mino, Dennis Epi, and Ricky Doria
be deducted from their respective claims. The Secretary of Labor ruled that,
pursuant to RA 7730, the Court's decision in the Servando 16 case is no longer
controlling insofar as the restrictive effect of Article 129 on the visitorial and
enforcement power of the Secretary of Labor is concerned.
The Secretary of Labor also stated that there was no denial of due
process because EBVSAI was accorded several opportunities to present its
side but EBVSAI failed to present any evidence to controvert the findings of
the Regional Director. Moreover, the Secretary of Labor doubted the veracity
and authenticity of EBVSAI's documentary evidence. The Secretary of Labor
noted that these documents were not presented at the initial stage of the
hearing and that the payroll documents did not indicate the periods covered
by EBVSAI's alleged payments.  THCSAE

EVBSAI filed a motion for reconsideration which was denied by the

Secretary of Labor in his 3 January 2000 Order. 17
EBVSAI filed a petition for certiorari before the Court of Appeals.
The Ruling of the Court of Appeals
In its 29 May 2001 Decision, the Court of Appeals dismissed the
petition and affirmed the Secretary of Labor's decision. The Court of Appeals
adopted the Secretary of Labor's ruling that RA 7730 repealed the
jurisdictional limitation imposed by Article 129 on Article 128 of the Labor
Code. The Court of Appeals also agreed with the Secretary of Labor's finding
that EBVSAI was accorded due process.
The Court of Appeals also denied EBVSAI's motion for reconsideration
in its 26 February 2002 Resolution.
Hence, this petition.
The Issues
This case raises the following issues:
1. Whether the Secretary of Labor or his duly authorized representatives
acquired jurisdiction over EBVSAI; and
2. Whether the Secretary of Labor or his duly authorized representatives
have jurisdiction over the money claims of private respondents
which exceed P5,000.  TSAHIa

The Ruling of the Court

The petition has no merit.
 On the Regional Director's Jurisdiction over EBVSAI
EBVSAI claims that the Regional Director did not acquire jurisdiction
over EBVSAI because he failed to comply with Section 11, Rule 14 of
the 1997 Rules of Civil Procedure. 18 EBVSAI points out that the notice of
hearing was served at the Ambuklao Plant, not at EBVSAI's main office in
Makati, and that it was addressed to Leonardo Castro, Jr., EBVSAI's Vice-
President.
The Rules on the Disposition of Labor Standards Cases in the Regional
Offices 19 (rules) specifically state that notices and copies of orders shall be
served on the parties or their duly authorized representatives at their last
known address or, if they are represented by counsel, through the
latter. 20 The rules shall be liberally construed  21 and only in the absence of
any applicable provision will the Rules of Court apply in a suppletory
character. 22
In this case, EBVSAI does not deny having received the notices of
hearing. In fact, on 29 March and 13 June 1996, Danilo Burgos and Edwina
Manao, detachment commander and bookkeeper of EBVSAI, respectively,
appeared before the Regional Director. They claimed that the 22 March 1996
notice of hearing was received late and manifested that the notices should be
sent to the Manila office. Thereafter, the notices of hearing were sent to the
Manila office. They were also informed of EBVSAI's violations and were asked
to present the employment records of the private respondents for verification.
They were, moreover, asked to submit, within 10 days, proof of compliance or
their position paper. The Regional Director validly acquired jurisdiction over
EBVSAI. EBVSAI can no longer question the jurisdiction of the Regional
Director after receiving the notices of hearing and after appearing before the
Regional Director.
On the Regional Director's Jurisdiction over the Money Claims
EBVSAI maintains that under Articles 129 and 217 (6) of the Labor
Code,the Labor Arbiter, not the Regional Director, has exclusive and original
jurisdiction over the case because the individual monetary claim of private
respondents exceeds P5,000. EBVSAI also argues that the case falls under
the exception clause in Article 128 (b) of the Labor Code.EBVSAI asserts that
the Regional Director should have certified the case to the Arbitration Branch
of the National Labor Relations Commission (NLRC) for a full-blown hearing
on the merits.
In Allied Investigation Bureau, Inc. v. Sec. of Labor, we ruled that:
While it is true that under Articles 129 and 217 of the Labor Code,
the Labor Arbiter has jurisdiction to hear and decide cases where the
aggregate money claims of each employee exceeds P5,000.00, said
 provisions of law do not contemplate nor cover the visitorial and
enforcement powers of the Secretary of Labor or his duly authorized
representatives.
Rather, said powers are defined and set forth in Article 128 of the
Labor Code (as amended by R.A. No. 7730) thus:
Art. 128 Visitorial and enforcement power. — . . .
(b) Notwithstanding the provisions of Article[s] 129 and
217 of this Code to the contrary, and in cases where the
relationship of employer-employee still exists, the Secretary of
Labor and Employment or his duly authorized representatives
shall have the power to issue compliance orders to give effect to
[the labor standards provisions of this Code and other] labor
legislation based on the findings of labor employment and
enforcement officers or industrial safety engineers made in the
course of inspection. The Secretary or his duly authorized
representatives shall issue writs of execution to the appropriate
authority for the enforcement of their orders, except in cases
where the employer contests the findings of the labor employment
and enforcement officer and raises issues supported by
documentary proofs which were not considered in the course of
inspection. caHIAS

xxx xxx xxx

The aforequoted provision explicitly excludes from its coverage
Articles 129 and 217 of the Labor Code by the phrase "(N)otwithstanding
the provisions of Articles 129 and 217 of this Code to the contrary . . ."
thereby retaining and further strengthening the power of the Secretary of
Labor or his duly authorized representatives to issue compliance orders
to give effect to the labor standards provisions of said Code and other
labor legislation based on the findings of labor employment and
enforcement officer or industrial safety engineer made in the course of
inspection. 23 (Italics in the original)
This was further affirmed in our ruling in Cirineo Bowling Plaza, Inc. v.
Sensing, 24 where we sustained the jurisdiction of the DOLE Regional Director
and held that "the visitorial and enforcement powers of the DOLE
Regional Director to order and enforce compliance with labor standard
laws can be exercised even where the individual claim exceeds P5,000."
However, if the labor standards case is covered by the exception clause
in Article 128 (b) of the Labor Code,then the Regional Director will have to
endorse the case to the appropriate Arbitration Branch of the NLRC. In order
to divest the Regional Director or his representatives of jurisdiction, the
following elements must be present: (a) that the employer contests the
findings of the labor regulations officer and raises issues thereon; (b) that in
 order to resolve such issues, there is a need to examine evidentiary matters;
and (c) that such matters are not verifiable in the normal course of
inspection. 25 The rules also provide that the employer shall raise such
objections during the hearing of the case or at any time after receipt of the
notice of inspection results. 26
In this case, the Regional Director validly assumed jurisdiction over the
money claims of private respondents even if the claims exceeded P5,000
because such jurisdiction was exercised in accordance with Article 128 (b) of
the Labor Code and the case does not fall under the exception clause.
The Court notes that EBVSAI did not contest the findings of the labor
regulations officer during the hearing or after receipt of the notice of inspection
results. It was only in its supplemental motion for reconsideration before the
Regional Director that EBVSAI questioned the findings of the labor regulations
officer and presented documentary evidence to controvert the claims of
private respondents. But even if this was the case, the Regional Director and
the Secretary of Labor still looked into and considered EBVSAI's documentary
evidence and found that such did not warrant the reversal of the Regional
Director's order. The Secretary of Labor also doubted the veracity and
authenticity of EBVSAI's documentary evidence. Moreover, the pieces of
evidence presented by EBVSAI were verifiable in the normal course of
inspection because all employment records of the employees should be kept
and maintained in or about the premises of the workplace, which in this case
is in Ambuklao Plant, the establishment where private respondents were
regularly assigned. 27
WHEREFORE, we DENY the petition. We AFFIRM the 29 May 2001
Decision and the 26 February 2002 Resolution of the Court of Appeals in CA-
G.R. SP No. 57653.
SO ORDERED.
 (Ex-Bataan Veterans Security Agency, Inc. v. Laguesma, G.R. No. 152396,
|||

[November 20, 2007], 563 PHIL 228-239)

G.R. No. 185567. October 20, 2010.]

ARSENIO Z. LOCSIN, petitioner, vs. NISSAN LEASE PHILS.

INC. and LUIS BANSON, respondents.
 DECISION

BRION, *** J  :
p

Through a petition for review on certiorari, 1 petitioner Arsenio Z. Locsin

(Locsin) seeks the reversal of the Decision 2 of the Court of Appeals (CA)
dated August 28, 2008, 3 in "Arsenio Z. Locsin v. Nissan Car Lease Phils.,
Inc. and Luis Banson," docketed as CA-G.R. SP No. 103720 and the
Resolution dated December 9, 2008, 4 denying Locsin's Motion for
Reconsideration. The assailed ruling of the CA reversed and set aside the
Decision 5 of the Hon. Labor Arbiter Thelma Concepcion (Labor Arbiter
Concepcion) which denied Nissan Lease Phils. Inc.'s (NCLPI) and Luis T.
Banson's (Banson) Motion to Dismiss.
THE FACTUAL ANTECEDENTS
On January 1, 1992, Locsin was elected Executive Vice President and
Treasurer (EVP/Treasurer) of NCLPI. As EVP/Treasurer, his duties and
responsibilities included: (1) the management of the finances of the company;
(2) carrying out the directions of the President and/or the Board of Directors
regarding financial management; and (3) the preparation of financial reports to
advise the officers and directors of the financial condition of NCLPI. 6 Locsin
held this position for 13 years, having been re-elected every year since 1992,
until January 21, 2005, when he was nominated and elected Chairman of
NCLPI's Board of Directors. 7
On August 5, 2005, a little over seven (7) months after his election as
Chairman of the Board, the NCLPI Board held a special meeting at the Manila
Polo Club. One of the items of the agenda was the election of a new set of
officers. Unfortunately, Locsin was neither re-elected Chairman nor reinstated
to his previous position as EVP/Treasurer. 8
Aggrieved, on June 19, 2007, Locsin filed a complaint for illegal
dismissal with prayer for reinstatement, payment of backwages, damages and
attorney's fees before the Labor Arbiter against NCLPI and Banson, who was
then President of NCLPI. 9  SACEca

The Compulsory Arbitration Proceedings before the Labor Arbiter.

On July 11, 2007, instead of filing their position paper, NCLPI and
Banson filed a Motion to Dismiss, 10 on the ground that the Labor Arbiter did
not have jurisdiction over the case since the issue of Locsin's removal as
EVP/Treasurer involves an intra-corporate dispute.
On August 16, 2007, Locsin submitted his opposition to the motion to
dismiss, maintaining his position that he is an employee of NCLPI.
 On March 10, 2008, Labor Arbiter Concepcion issued an Order denying
the Motion to Dismiss, holding that her office acquired "jurisdiction to arbitrate
and/or decide the instant complaint finding extant in the case an employer-
employee relationship." 11
NCLPI, on June 3, 2008, elevated the case to the CA through a Petition
for Certiorari under Rule 65 of the Rules of Court. 12 NCLPI raised the issue
on whether the Labor Arbiter committed grave abuse of discretion by denying
the Motion to Dismiss and holding that her office had jurisdiction over the
dispute.
The CA Decision - Locsin was a corporate officer; the issue of his
removal as EVP/Treasurer is an intra-corporate dispute under the RTC's
jurisdiction.
On August 28, 2008, 13 the CA reversed and set aside the Labor
Arbiter's Order denying the Motion to Dismiss and ruled that Locsin was a
corporate officer.
Citing PD 902-A, the CA defined "corporate officers as those officers of
a corporation who are given that character either by the Corporation Code or
by the corporations' by-laws." In this regard, the CA held:
Scrutinizing the records, We hold that petitioners successfully
discharged their onus of establishing that private respondent was a
corporate officer who held the position of Executive Vice-
President/Treasurer as provided in the by-laws of petitioner corporation
and that he held such position by virtue of election by the Board of
Directors.
That private respondent is a corporate officer cannot be disputed.
The position of Executive Vice-President/Treasurer is specifically
included in the roster of officers provided for by the (Amended) By-Laws
of petitioner corporation, his duties and responsibilities, as well as
compensation as such officer are likewise set forth therein. 14
Article 280 of the Labor Code, the receipt of salaries by Locsin, SSS
deductions on that salary, and the element of control in the performance of
work duties — indicia used by the Labor Arbiter to conclude that Locsin was a
regular employee — were held inapplicable by the CA. 15 The CA noted the
Labor Arbiter's failure to address the fact that the position of EVP/Treasurer is
specifically enumerated as an "office" in the corporation's by-laws. 16  SAHEIc

Further, the CA pointed out Locsin's failure to "state any circumstance

by which NCLPI engaged his services as a corporate officer that would make
him an employee." The CA found, in this regard, that Locsin's assumption and
retention as EVP/Treasurer was based on his election and subsequent re-
elections from 1992 until 2005. Further, he performed only those functions
that were "specifically set forth in the By-Laws or required of him by the Board
of Directors." 17
With respect to the suit Locsin filed with the Labor Arbiter, the CA held
that:
Private respondent, in belatedly filing this suit before the Labor
Arbiter, questioned the legality of his "dismissal" but in essence, he
raises the issue of whether or not the Board of Directors had the
authority to remove him from the corporate office to which he was
elected pursuant to the By-Laws of the petitioner corporation.
Indeed, had private respondent been an ordinary employee, an election
conducted by the Board of Directors would not have been necessary to
remove him as Executive Vice-President/Treasurer. However, in an
obvious attempt to preclude the application of settled jurisprudence that
corporate officers whose position is provided in the by-laws, their
election, removal or dismissal is subject to Section 5 of P.D. No. 902-
A (now R.A. No. 8799), private respondent would even claim in his
Position Paper, that since his responsibilities were akin to that of the
company's Executive Vice-President/Treasurer, he was "hired under the
pretext that he was being 'elected' into said post. 18 [Emphasis supplied.]
As a consequence, the CA concluded that Locsin does not have any
recourse with the Labor Arbiter or the NLRC since the removal of a corporate
officer, whether elected or appointed, is an intra-corporate controversy over
which the NLRC has no jurisdiction. 19 Instead, according to the CA, Locsin's
complaint for "illegal dismissal" should have been filed in the Regional Trial
Court (RTC), pursuant to Rule 6 of the Interim Rules of Procedure Governing
Intra-Corporate Controversies. 20
Finally, the CA addressed Locsin's invocation of Article 4 of the Labor
Code.Dismissing the application of the provision, the CA cited Dean Cesar
Villanueva of the Ateneo School of Law, as follows:
. . . the non-coverage of corporate officers from the security
of tenure clause under the Constitution is now well-established
principle by numerous decisions upholding such doctrine under the
aegis of the 1987 Constitution in the face of contemporary decisions of
the same Supreme Court likewise confirming that security of tenure
covers all employees or workers including managerial employees. 21
THE PETITIONER'S ARGUMENTS
Failing to obtain a reconsideration of the CA's decision, Locsin filed the
present petition on January 28, 2009, raising the following procedural and
substantive issues:  IATSHE

(1) Whether the CA has original jurisdiction to review decision of the

Labor Arbiter under Rule 65?
 (2) Whether he is a regular employee of NCLPI under the definition of
Article 280 of the Labor Code? and
(3) Whether Locsin's position as Executive Vice-President/Treasurer
makes him a corporate officer thereby excluding him from the coverage of
the Labor Code?
Procedurally, Locsin essentially submits that NCLPI wrongfully filed a
petition for certiorari before the CA, as the latter's remedy is to proceed with
the arbitration, and to appeal to the NLRC after the Labor Arbiter shall have
ruled on the merits of the case. Locsin cites, in this regard, Rule V, Section 6
of the Revised Rules of the National Labor Relations Commission (NLRC
Rules), which provides that a denial of a motion to dismiss by the Labor
Arbiter is not subject to an appeal. Locsin also argues that even if the Labor
Arbiter committed grave abuse of discretion in denying the NCLPI motion, a
special civil action for certiorari, filed with the CA was not the appropriate
remedy, since this was a breach of the doctrine of exhaustion of
administrative remedies.
Substantively, Locsin submits that he is a regular employee of NCLPI
since - as he argued before the Labor Arbiter and the CA - his relationship
with the company meets the "four-fold test."
First, Locsin contends that NCLPI had the power to engage his services
as EVP/Treasurer. Second, he received regular wages from NCLPI, from
which his SSS and Philhealth contributions, as well as his withholding taxes
were deducted. Third, NCLPI had the power to terminate his
employment. 22 Lastly, Nissan had control over the manner of the
performance of his functions as EVP/Treasurer, as shown by the 13 years of
faithful execution of his job, which he carried out in accordance with the
standards and expectations set by NCLPI. 23 Further, Locsin maintains that
even after his election as Chairman, he essentially performed the functions of
EVP/Treasurer — handling the financial and administrative operations of the
Corporation — thus making him a regular employee. 24
Under these claimed facts, Locsin concludes that the Labor Arbiter and
the NLRC — not the RTC (as NCLPI posits) — has jurisdiction to decide the
controversy. Parenthetically, Locsin clarifies that he does not dispute the
validity of his election as Chairman of the Board on January 1, 2005. Instead,
he theorizes that he never lost his position as EVP/Treasurer having
continuously performed the functions appurtenant thereto. 25 Thus, he
questions his "unceremonious removal" as EVP/Treasurer during the August
5, 2005 special Board meeting.  EDcICT 

THE RESPONDENT'S ARGUMENTS

 It its April 17, 2009 Comment, 26 Nissan prays for the denial of the
petition for lack of merit. Nissan submits that the CA correctly ruled that the
Labor Arbiter does not have jurisdiction over Locsin's complaint for illegal
dismissal. In support, Nissan maintains that Locsin is a corporate officer and
not an employee. In addressing the procedural defect Locsin raised, Nissan
brushes the issue aside, stating that (1) this issue was belatedly raised in the
Motion for Reconsideration, and that (2) in any case, Rule VI, Section 2 (1) of
the NLRC does not apply since only appealable decisions, resolutions and
orders are covered under the rule.
THE COURT'S RULING
We resolve to deny the petition for lack of merit.
At the outset, we stress that there are two (2) important considerations
in the final determination of this case. On the one hand, Locsin raises a
procedural issue that, if proven correct, will require the Court to dismiss the
instant petition for using an improper remedy. On the other hand, there is the
substantive issue that will be disregarded if a strict implementation of the rules
of procedure is upheld.
Prefatorily, we agree with Locsin's submission that the NCLPI
incorrectly elevated the Labor Arbiter's denial of the Motion to Dismiss to the
CA. Locsin is correct in positing that the denial of a motion to dismiss is
unappealable. As a general rule, an aggrieved party's proper recourse to the
denial is to file his position paper, interpose the grounds relied upon in the
motion to dismiss before the labor arbiter, and actively participate in the
proceedings. Thereafter, the labor arbiter's decision can be appealed to the
NLRC, not to the CA.
As a rule, we strictly adhere to the rules of procedure and do everything
we can, to the point of penalizing violators, to encourage respect for these
rules. We take exception to this general rule, however, when a strict
implementation of these rules would cause substantial injustice to the parties.
We see it appropriate to apply the exception to this case for the reasons
discussed below; hence, we are compelled to go beyond procedure and rule
on the merits of the case. In the context of this case, we see sufficient
justification to rule on the employer-employee relationship issue raised by
NCLPI, even though the Labor Arbiter's interlocutory order
was incorrectly brought to the CA under Rule 65.  cCEAHT

The NLRC Rules are clear: the denial by the labor arbiter of the motion
to dismiss is not appealable because the denial is merely an
interlocutory order.
 In Metro Drug v. Metro Drug Employees, 27 we definitively stated that
the denial of a motion to dismiss by a labor arbiter is not immediately
appealable. 28
We similarly ruled in Texon Manufacturing v. Millena, 29 in Sime Darby
Employees Association v. National Labor Relations Commission 30 and
in Westmont Pharmaceuticals v. Samaniego. 31 In Texon, we specifically said:
The Order of the Labor Arbiter denying petitioners' motion to
dismiss is interlocutory. It is well-settled that a denial of a motion to
dismiss a complaint is an interlocutory order and hence, cannot be
appealed, until a final judgment on the merits of the case is rendered.
[Emphasis supplied.] 32
and indicated the appropriate recourse in Metro Drug, as follows: 33
. . . The NLRC rule proscribing appeal from a denial of a motion to
dismiss is similar to the general rule observed in civil procedure that an
order denying a motion to dismiss is interlocutory and, hence, not
appealable until final judgment or order is rendered [1 Feria and Noche,
Civil Procedure Annotated 453 (2001 ed.)]. The remedy of the aggrieved
party in case of denial of the motion to dismiss is to file an answer and
interpose, as a defense or defenses, the ground or grounds relied
upon in the motion to dismiss, proceed to trial and, in case of
adverse judgment, to elevate the entire case by appeal in due
course [Mendoza v. Court of Appeals, G.R. No. 81909, September 5,
1991, 201 SCRA 343]. In order to avail of the extraordinary writ
of certiorari, it is incumbent upon petitioner to establish that the denial of
the motion to dismiss was tainted with grave abuse of discretion.
[Macawiwili Gold Mining and Development Co., Inc. v. Court of Appeals,
G.R. No. 115104, October 12, 1998, 297 SCRA 602]
In so citing Feria and Noche, the Court was referring to Sec. 1 (b), Rule
41 of the Rules of Court,which specifically enumerates interlocutory
orders as one of the court actions that cannot be appealed. In the same rule,
as amended by A.M. No. 07-7-12-SC, the aggrieved party is allowed to file an
appropriate special civil action under Rule 65. The latter rule, however, also
contains limitations for its application, clearly outlined in its Section 1 which
provides:
Section 1. Petition for certiorari. —
When any tribunal, board or officer exercising judicial or quasi-
judicial functions has acted without or in excess of its or his jurisdiction,
or with grave abuse of discretion amounting to lack or excess of
jurisdiction, and there is no appeal, or any plain, speedy, and
adequate remedy in the ordinary course of law, a person aggrieved
thereby may file a verified petition in the proper court, alleging the facts
with certainty and praying that judgment be rendered annulling or
 modifying the proceedings of such tribunal, board or officer, and granting
such incidental reliefs as law and justice may require.
In the labor law setting, a plain, speedy and adequate remedy is still
open to the aggrieved party when a labor arbiter denies a motion to dismiss.
This is Article 223 of Presidential Decree No. 442, as amended (Labor
Code), 34 which states:  cSICHD

ART. 223. APPEAL
Decisions, awards, or orders of the Labor Arbiter are final and
executory unless appealed to the Commission by any or both parties
within ten (10) calendar days from receipt of such decisions,
awards, or orders. Such appeal may be entertained only on any of the
following grounds:
(a) If there is prima facie evidence of abuse of discretion on
the part of the Labor Arbiter; . . . [Emphasis supplied.]
Pursuant to this Article, we held in Metro Drug (citing Air Services
Cooperative, et al. v. Court of Appeals) 35 that the NLRC is clothed with
sufficient authority to correct any claimed "erroneous assumption of
jurisdiction" by labor arbiters:
In Air Services Cooperative, et al. v. The Court of Appeals, et al.,
a case where the jurisdiction of the labor arbiter was put in issue and
was assailed through a petition for certiorari, prohibition and annulment
of judgment before a regional trial court, this Court had the opportunity to
expound on the nature of appeal as embodied in Article 223 of the Labor
Code,thus:
. . . Also, while the title of the Article 223 seems to provide
only for the remedy of appeal as that term is understood in
procedural law and as distinguished from the office of certiorari,
nonetheless, a closer reading thereof reveals that it is not as
limited as understood by the petitioners . . . .
Abuse of discretion is admittedly within the ambit of
certiorari and its grant of review thereof to the NLRC indicates
the lawmakers' intention to broaden the meaning of appeal as that
term is used in the Code. For this reason, petitioners cannot
argue now that the NLRC is devoid of any corrective power
to rectify a supposed erroneous assumption of jurisdiction
by the Labor Arbiter . . . . [Air Services Cooperative, et al. v. The
Court of Appeals, et al. G.R. No. 118693, 23 July 1998, 293
SCRA 101]
Since the legislature had clothed the NLRC with the appellate
authority to correct a claimed "erroneous assumption of jurisdiction" on
the part of the labor arbiter — a case of grave abuse of discretion -
 the remedy availed of by petitioner in this case is patently
erroneous as recourse in this case is lodged, under the law, with the
NLRC.  DSacAE

In Metro Drug, as in the present case, the defect imputed through the
NLCPI Motion to Dismiss is the labor arbiter's lack of jurisdiction since Locsin
is alleged to be a corporate officer, not an employee. Parallelisms between
the two cases is undeniable, as they are similar on the following points: (1)
in Metro Drug, as in this case, the Labor Arbiter issued an Order denying the
Motion to Dismiss by one of the parties; (2) the basis of the Motion to Dismiss
is also the alleged lack of jurisdiction by the Labor Arbiter to settle the dispute;
and (3) dissatisfied with the Order of the Labor Arbiter, the aggrieved party
likewise elevated the case to the CA via Rule 65.
The similarities end there, however. Unlike in the present case, the CA
denied the petition forcertiorari and the subsequent Motion for
Reconsideration in Metro Drug; the CA correctly found that the proper
appellate mechanism was an appeal to the NLRC and not a petition
for certiorari under Rule 65. In the present case, the CA took a different
position despite our clear ruling in Metro Drug, and allowed, not only the use
of Rule 65, but also ruled on the merits.
From this perspective, the CA clearly erred in the application of the
procedural rules by disregarding the relevant provisions of the NLRC Rules,
as well as the requirements for a petition for certiorari under the Rules of
Court. To reiterate, the proper action of an aggrieved party faced with the
labor arbiter's denial of his motion to dismiss is to submit his position paper
and raise therein the supposed lack of jurisdiction. The aggrieved party
cannot immediately appeal the denial since it is an interlocutory order; the
appropriate remedial recourse is the procedure outlined in Article 223 of
the Labor Code,not a petition for certiorari under Rule 65.
A strict implementation of the NLRC Rules and the Rules of
Court would cause injustice to the parties because the Labor Arbiter
clearly has no jurisdiction over the present intra-corporate dispute.
Our ruling in Mejillano v. Lucillo 36 stands for the proposition that we
should strictly apply the rules of procedure. We said: 
Time and again, we have ruled that procedural rules do not exist for the
convenience of the litigants. Rules of Procedure exist for a purpose, and
to disregard such rules in the guise of liberal construction would be to
defeat such purpose. Procedural rules were established primarily to
provide order to and enhance the efficiency of our judicial system.
[Emphasis supplied.]
 An exception to this rule is our ruling in Lazaro v. Court of
Appeals 37 where we held that the strict enforcement of the rules of procedure
may be relaxed in exceptionally meritorious cases:
. . . Procedural rules are not to be belittled or dismissed
simply because their non-observance may have resulted in
prejudice to a party's substantive rights. Like all rules, they are
required to be followed except only for the most persuasive of
reasons when they may be relaxed to relieve a litigant of an
injustice not commensurate with the degree of his thoughtlessness
in not complying with the procedure prescribed. The Court reiterates
that rules of procedure, especially those prescribing the time within
which certain acts must be done, "have oft been held as absolutely
indispensable to the prevention of needless delays and to the orderly
and speedy discharge of business. . . . The reason for rules of this
nature is because the dispatch of business by courts would be
impossible, and intolerable delays would result, without rules governing
practice . . . . Such rules are a necessary incident to the proper, efficient
and orderly discharge of judicial functions." Indeed, in no uncertain
terms, the Court held that the said rules may be relaxed only in
exceptionally meritorious cases. [Emphasis supplied.]  ESTDIA

Whether a case involves an exceptionally meritorious circumstance can

be tested under the guidelines we established in Sanchez v. Court of
Appeals, 38 as follows:
Aside from matters of life, liberty, honor or property which
would warrant the suspension of the Rules of the most mandatory
character and an examination and review by the appellate court of the
lower court's findings of fact, the other elements that should be
considered are the following: (a) the existence of special or
compelling circumstances, (b) the merits of the case, (c) a cause
not entirely attributable to the fault or negligence of the party
favored by the suspension of the rules, (d) a lack of any showing
that the review sought is merely frivolous and dilatory, and (e)
the other party will not be unjustly prejudiced thereby. [Emphasis
supplied.]
Under these standards, we hold that exceptional circumstances exist in
the present case to merit the relaxation of the applicable rules of procedure.
Due to existing exceptional circumstances, the ruling on the merits that
Locsin is an officer and not an employee of Nissan must take
precedence over procedural considerations.
We arrived at the conclusion that we should go beyond the procedural
rules and immediately take a look at the intrinsic merits of the case based on
several considerations.
 First, the parties have sufficiently ventilated their positions on the
disputed employer-employee relationship and have, in fact, submitted the
matter for the CA's consideration.
Second, the CA correctly ruled that no employer-employee relationship
exists between Locsin and Nissan.
Locsin was undeniably Chairman and President, and was elected to
these positions by the Nissan board pursuant to its By-laws. 39 As such, he
was a corporate officer, not an employee. The CA reached this conclusion by
relying on the submitted facts and on Presidential Decree 902-A, which
defines corporate officers as "those officers of a corporation who are given
that character either by the Corporation Code or by the corporation's by-laws."
Likewise, Section 25 of Batas Pambansa Blg. 69, or the Corporation Code of
the Philippines (Corporation Code) provides that corporate officers are
the president, secretary, treasurer and such other officers as may be
provided for in the by-laws.  THEDCA

Third. Even as Executive Vice-President/Treasurer, Locsin already

acted as a corporate officer because the position of Executive Vice-
President/Treasurer is provided for in Nissan's By-Laws. Article IV, Section 4
of these By-Laws specifically provides for this position, as follows:
ARTICLE IV
Officers
Section 1. Election and Appointment. — The Board of Directors at
their first meeting, annually thereafter, shall elect as officers of the
Corporation a Chairman of the Board, a President, an Executive Vice-
President/Treasurer, a Vice-President/General Manager and a
Corporate Secretary. The other Senior Operating Officers of the
Corporation shall be appointed by the Board upon the recommendation
of the President.
xxx xxx xxx
Section 4. Executive Vice-President/Treasurer. — The Executive
Vice-President/Treasurer shall have such powers and perform such
duties as are prescribed by these By-Laws, and as may be required of
him by the Board of Directors. As the concurrent Treasurer of the
Corporation, he shall have the charge of the funds, securities, receipts,
and disbursements of the Corporation. He shall deposit, or cause to be
deposited, the credit of the Corporation in such banks or trust
companies, or with such banks of other depositories, as the Board of
Directors may from time to time designate. He shall tender to the
President or to the Board of Directors whenever required an account of
the financial condition of the corporation and of all his transactions as
Treasurer. As soon as practicable after the close of each fiscal year, he
 shall make and submit to the Board of Directors a like report of such
fiscal year. He shall keep correct books of account of all the business
and transactions of the Corporation.
In Okol v. Slimmers World International, 40 citing Tabang v. National
Labor Relations Commission, 41 we held that —
x x x an "office" is created by the charter of the corporation
and the officer is elected by the directors or stockholders. On the
other hand, an "employee" usually occupies no office and generally is
employed not by action of the directors or stockholders but by the
managing officer of the corporation who also determines the
compensation to be paid to such employee. [Emphasis supplied.]
In this case, Locsin was elected by the NCLPI Board, in accordance
with the Amended By-Laws of the corporation. The following factual
determination by the CA is elucidating:
More important, private respondent failed to state any such
"circumstance" by which the petitioner corporation "engaged his
services" as corporate officer that would make him an employee. In the
first place, the Vice-President/Treasurer was elected on an annual basis
as provided in the By-Laws, and no duties and responsibilities were
stated by private respondent which he discharged while occupying said
position other than those specifically set forth in the By-Laws or required
of him by the Board of Directors. The unrebutted fact remains that
private respondent held the position of Executive Vice-
President/Treasurer of petitioner corporation, a position provided for in
the latter's by-laws, by virtue of election by the Board of Directors, and
has functioned as such Executive Vice-President/Treasurer pursuant to
the provisions of the said By-Laws. Private respondent knew very well
that he was simply not re-elected to the said position during the August
5, 2005 board meeting, but he had objected to the election of a new set
of officers held at the time upon the advice of his lawyer that he cannot
be "terminated" or replaced as Executive Vice-President/Treasurer as he
had attained tenurial security. 42 
ACTESI

We fully agree with this factual determination which we find to be

sufficiently supported by evidence. We likewise rule, based on law and
established jurisprudence, that Locsin, at the time of his severance from
NCLPI, was the latter's corporate officer.
a. The Question of Jurisdiction
Given Locsin's status as a corporate officer, the RTC, not the Labor
Arbiter or the NLRC, has jurisdiction to hear the legality of the termination of
his relationship with Nissan. As we also held in Okol, a corporate officer's
dismissal from service is an intra-corporate dispute:
 In a number of cases [Estrada v. National Labor Relations
Commission, G.R. No. 106722, 4 October 1996, 262 SCRA 709; Lozon
v. National Labor Relations Commission, 310 Phil. 1 (1995); Espino v.
National Labor Relations Commission, 310 Phil. 61 (1995); Fortune
Cement Corporation v. National Labor Relations Commission, G.R. No.
79762, 24 January 1991, 193 SCRA 258], we have held that
a corporate officer's dismissal is always a corporate act, or an intra-
corporate controversy which arises between a stockholder and a
corporation. 43 [Emphasis supplied.]
so that the RTC should exercise jurisdiction based on the following legal
reasoning:
Prior to its amendment, Section 5(c) of Presidential Decree No.
902-A (PD 902-A) provided that intra-corporate disputes fall within the
jurisdiction of the Securities and Exchange Commission (SEC):
Sec. 5. In addition to the regulatory and adjudicative
functions of the Securities and Exchange Commission over
corporations, partnerships and other forms of associations
registered with it as expressly granted under existing laws and
decrees, it shall have original and exclusive jurisdiction to hear
and decide cases involving:
xxx xxx xxx
c) Controversies in the election or appointments of
directors, trustees, officers or managers of such corporations,
partnerships or associations.
Subsection 5.2, Section 5 of Republic Act No. 8799, which took
effect on 8 August 2000, transferred to regional trial courts the SEC's
jurisdiction over all cases listed in Section 5 of PD 902-A: 
SCaEcD

5.2. The Commission's jurisdiction over all cases

enumerated under Section 5 of Presidential Decree No. 902-A is
hereby transferred to the Courts of general jurisdiction or the
appropriate Regional Trial Court. [Emphasis supplied.] 
b. Precedence of Substantive Merits;
 Primacy of Element of Jurisdiction
Based on the above jurisdictional considerations, we would be forced to
remand the case to the Labor Arbiter for further proceedings if we were to
dismiss the petition outright due to the wrongful use of Rule 65. 44 We cannot
close our eyes, however, to the factual and legal reality, established by
evidence already on record, that Locsin is a corporate officer whose
termination of relationship is outside a labor arbiter's jurisdiction to rule upon.
 Under these circumstances, we have to give precedence to the
merits of the case, and primacy to the element of jurisdiction.
Jurisdiction is the power to hear and rule on a case and is the threshold
element that must exist before any quasi-judicial officer can act. In the
context of the present case, the Labor Arbiter does not have jurisdiction
over the termination dispute Locsin brought, and should not be allowed
to continue to act on the case after the absence of jurisdiction has
become obvious, based on the records and the law. In more practical
terms, a contrary ruling will only cause substantial delay and inconvenience
as well as unnecessary expenses, to the point of injustice, to the parties. This
conclusion, of course, does not go into the merits of termination of relationship
and is without prejudice to the filing of an intra-corporate dispute on this point
before the appropriate RTC.
WHEREFORE, we DISMISS the petitioner's petition for review
on certiorari, and AFFIRM the Decision of the Court of Appeals, in CA-G.R.
SP No. 103720, promulgated on August 28, 2008, as well as its Resolution of
December 9, 2008, which reversed and set aside the March 10, 2008 Order of
Labor Arbiter Concepcion in NLRC NCR Case No. 00-06-06165-07. This
Decision is without prejudice to petitioner Locsin's available recourse for relief
through the appropriate remedy in the proper forum.
No pronouncement as to costs.
SO ORDERED.
 (Locsin v. Nissan Lease Phils., Inc., G.R. No. 185567, [October 20, 2010], 648
|||

PHIL 596-616)

G.R. No. 165744. August 11, 2008.]

OSCAR C. REYES, petitioner, vs. HON. REGIONAL TRIAL

COURT OF MAKATI, Branch 142, ZENITH INSURANCE
CORPORATION, and RODRIGO C. REYES, respondents.

DECISION

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

BACKGROUND FACTS
Oscar and private respondent Rodrigo C. Reyes (Rodrigo) are two of
the four children of the spouses Pedro and Anastacia Reyes. Pedro,
Anastacia, Oscar, and Rodrigo each owned shares of stock of Zenith
Insurance Corporation (Zenith), a domestic corporation established by their
family. Pedro died in 1964, while Anastacia died in 1993. Although Pedro's
estate was judicially partitioned among his heirs sometime in the 1970s, no
similar settlement and partition appear to have been made with Anastacia's
estate, which included her shareholdings in Zenith. As of June 30, 1990,
Anastacia owned 136,598 shares of Zenith; Oscar and Rodrigo owned
8,715,637 and 4,250 shares, respectively. 3
On May 9, 2000, Zenith and Rodrigo filed a complaint 4 with the
Securities and Exchange Commission (SEC) against Oscar, docketed as SEC
Case No. 05-00-6615. The complaint stated that it is "a derivative suit
initiated and filed by the complainant Rodrigo C. Reyes to obtain an
accounting of the funds and assets of ZENITH INSURANCE
CORPORATION which are now or formerly in the control, custody, and/or
possession of respondent [herein petitioner Oscar] and to determine the
shares of stock of deceased spouses Pedro and Anastacia Reyes that
were arbitrarily and fraudulently appropriated [by Oscar] for himself [and]
which were not collated and taken into account in the partition, distribution,
and/or settlement of the estate of the deceased spouses, for which he should
be ordered to account for all the income from the time he took these shares of
stock, and should now deliver to his brothers and sisters their just and
respective shares."  5 [Emphasis supplied.]
In his Answer with Counterclaim, 6 Oscar denied the charge that he
illegally acquired the shares of Anastacia Reyes. He asserted, as a defense,
that he purchased the subject shares with his own funds from the unissued
stocks of Zenith, and that the suit is not a bona fide derivative suit because
the requisites therefor have not been complied with. He thus questioned the
SEC's jurisdiction to entertain the complaint because it pertains to the
settlement of the estate of Anastacia Reyes.
 When Republic Act (R.A.) No. 8799 7 took effect, the SEC's exclusive
and original jurisdiction over cases enumerated in Section 5 of Presidential
Decree (P.D.) No. 902-A was transferred to the RTC designated as a special
commercial court. 8 The records of Rodrigo's SEC case were thus turned over
to the RTC, Branch 142, Makati, and docketed as Civil Case No. 00-1553.
On October 22, 2002, Oscar filed a Motion to Declare Complaint as
Nuisance or Harassment Suit. 9 He claimed that the complaint is a mere
nuisance or harassment suit and should, according to the Interim Rules of
Procedure for Intra-Corporate Controversies, be dismissed; and that it is not
a bona fide derivative suit as it partakes of the nature of a petition for the
settlement of estate of the deceased Anastacia that is outside the jurisdiction
of a special commercial court. The RTC, in its Order dated November 29,
2002 (RTC Order), denied the motion in part and declared:  cHDaEI

A close reading of the Complaint disclosed the presence of two

(2) causes of action, namely: a) a derivative suit for accounting of the
funds and assets of the corporation which are in the control, custody,
and/or possession of the respondent [herein petitioner Oscar] with
prayer to appoint a management committee; and b) an action for
determination of the shares of stock of deceased spouses Pedro and
Anastacia Reyes allegedly taken by respondent, its accounting and the
corresponding delivery of these shares to the parties' brothers and
sisters. The latter is not a derivative suit and should properly be threshed
out in a petition for settlement of estate.
Accordingly, the motion is denied. However, only the derivative
suit consisting of the first cause of action will be taken cognizance of by
this Court. 10
Oscar thereupon went to the CA on a petition for certiorari, prohibition,
and mandamus  11 and prayed that the RTC Order be annulled and set aside
and that the trial court be prohibited from continuing with the proceedings. The
appellate court affirmed the RTC Order and denied the petition in its Decision
dated May 26, 2004. It likewise denied Oscar's motion for reconsideration in a
Resolution dated October 21, 2004.
Petitioner now comes before us on appeal through a petition for review
on certiorari under Rule 45 of the Rules of Court.
ASSIGNMENT OF ERRORS
Petitioner Oscar presents the following points as conclusions the CA
should have made:
1. that the complaint is a mere nuisance or harassment suit that
should be dismissed under the Interim Rules of Procedure of
Intra-Corporate Controversies; and
 2. that the complaint is not a bona fide derivative suit but is in fact
in the nature of a petition for settlement of estate; hence, it is
outside the jurisdiction of the RTC acting as a special
commercial court.
Accordingly, he prays for the setting aside and annulment of the CA decision
and resolution, and the dismissal of Rodrigo's complaint before the RTC.  SECAHa

THE COURT'S RULING

We find the petition meritorious.
The core question for our determination is whether the trial court, sitting
as a special commercial court, has jurisdiction over the subject matter of
Rodrigo's complaint. To resolve it, we rely on the judicial principle that
"jurisdiction over the subject matter of a case is conferred by law and is
determined by the allegations of the complaint, irrespective of whether the
plaintiff is entitled to all or some of the claims asserted therein." 12
JURISDICTION OF SPECIAL COMMERCIAL COURTS
P.D. No. 902-A enumerates the cases over which the SEC (now the
RTC acting as a special commercial court) exercises exclusive jurisdiction:
SEC. 5. In addition to the regulatory and adjudicative functions of
the Securities and Exchange Commission over corporations,
partnership, and other forms of associations registered with it as
expressly granted under existing laws and decrees, it shall have original
and exclusive jurisdiction to hear and decide cases involving:
a) Devices or schemes employed by or any acts of the
board of directors, business associates, its officers or partners,
amounting to fraud and misrepresentation which may be
detrimental to the interest of the public and/or of the stockholders,
partners, members of associations or organizations registered
with the Commission.
b) Controversies arising out of intra-corporate or
partnership relations, between and among stockholders,
members, or associates; between any or all of them and the
corporation, partnership or association of which they are
stockholders, members, or associates, respectively; and between
such corporation, partnership or association and the State insofar
as it concerns their individual franchise or right to exist as such
entity; and
c) Controversies in the election or appointment of directors,
trustees, officers, or managers of such corporations, partnerships,
or associations.
 The allegations set forth in Rodrigo's complaint principally invoke
Section 5, paragraphs (a) and (b) above as basis for the exercise of the RTC's
special court jurisdiction. Our focus in examining the allegations of the
complaint shall therefore be on these two provisions.  CaATDE

Fraudulent Devices and Schemes

The rule is that a complaint must contain a plain, concise, and direct
statement of the ultimate facts constituting the plaintiff's cause of action and
must specify the relief sought. 13 Section 5, Rule 8 of the Revised Rules of
Court provides that in all averments of fraud or mistake, the
circumstances constituting fraud or mistake must be stated with
particularity. 14 These rules find specific application to Section 5 (a) of P.D.
No. 902-A which speaks of corporate devices or schemes that amount to
fraud or misrepresentation detrimental to the public and/or to the
stockholders.
In an attempt to hold Oscar responsible for corporate fraud, Rodrigo
alleged in the complaint the following:
3. This is a complaint . . . to determine the shares of stock of
the deceased spouses Pedro and Anastacia Reyes that were
arbitrarily and fraudulently appropriated for himself [herein
petitioner Oscar] which were not collated and taken into account in the
partition, distribution, and/or settlement of the estate of the deceased
Spouses Pedro and Anastacia Reyes, for which he should be ordered to
account for all the income from the time he took these shares of stock,
and should now deliver to his brothers and sisters their just and
respective shares with the corresponding equivalent amount of
P7,099,934.82 plus interest thereon from 1978 representing his
obligations to the Associated Citizens' Bank that was paid for his
account by his late mother, Anastacia C. Reyes. This amount was not
collated or taken into account in the partition or distribution of the estate
of their late mother, Anastacia C. Reyes.
3.1. Respondent Oscar C. Reyes, through other schemes of
fraud including misrepresentation, unilaterally, and for his own
benefit, capriciously transferred and took possession and control
of the management of Zenith Insurance Corporation which is
considered as a family corporation, and other properties and businesses
belonging to Spouses Pedro and Anastacia Reyes.  TDcEaH

xxx xxx xxx

4.1. During the increase of capitalization of Zenith Insurance
Corporation, sometime in 1968, the property covered by TCT No.
225324 was illegally and fraudulently used by respondent as a collateral.
xxx xxx xxx
 5. The complainant Rodrigo C. Reyes discovered that by some
manipulative scheme, the shareholdings of their deceased mother,
Doña Anastacia C. Reyes, shares of stocks and [sic] valued in the
corporate books at P7,699,934.28, more or less, excluding interest
and/or dividends, had been transferred solely in the name of
respondent. By such fraudulent manipulations and misrepresentation,
the shareholdings of said respondent Oscar C. Reyes abruptly increased
to P8,715,637.00 [sic] and becomes [sic] the majority stockholder of
Zenith Insurance Corporation, which portion of said shares must be
distributed equally amongst the brothers and sisters of the respondent
Oscar C. Reyes including the complainant herein.
xxx xxx xxx
9.1 The shareholdings of deceased Spouses Pedro Reyes
and Anastacia C. Reyes valued at P7,099,934.28 were illegally and
fraudulently transferred solely to the respondent's [herein
petitioner Oscar] name and installed himself as a majority
stockholder of Zenith Insurance Corporation [and] thereby deprived his
brothers and sisters of their respective equal shares thereof including
complainant hereto.
xxx xxx xxx
10.1 By refusal of the respondent to account of his [sic]
shareholdings in the company, he illegally and fraudulently
transferred solely in his name wherein [sic] the shares of stock of
the deceased Anastacia C. Reyes [which] must be properly collated
and/or distributed equally amongst the children, including the
complainant Rodrigo C. Reyes herein, to their damage and
prejudice.
xxx xxx xxx
11.1 By continuous refusal of the respondent to account of
his [sic] shareholding with Zenith Insurance Corporation[,] particularly
the number of shares of stocks illegally and fraudulently transferred to
him from their deceased parents Sps. Pedro and Anastacia Reyes[,]
which are all subject for collation and/or partition in equal shares among
their children. [Emphasis supplied.] 
HTcDEa

Allegations of deceit, machination, false pretenses, misrepresentation,

and threats are largely conclusions of law that, without supporting statements
of the facts to which the allegations of fraud refer, do not sufficiently state an
effective cause of action. 15 The late Justice Jose Feria, a noted authority in
Remedial Law, declared that fraud and mistake are required to be averred
with particularity in order to enable the opposing party to controvert the
particular facts allegedly constituting such fraud or mistake. 16
 Tested against these standards, we find that the charges of fraud
against Oscar were not properly supported by the required factual allegations.
While the complaint contained allegations of fraud purportedly committed by
him, these allegations are not particular enough to bring the controversy
within the special commercial court's jurisdiction; they are not statements of
ultimate facts, but are mere conclusions of law: how and why the alleged
appropriation of shares can be characterized as "illegal and fraudulent" were
not explained nor elaborated on.
Not every allegation of fraud done in a corporate setting or perpetrated
by corporate officers will bring the case within the special commercial court's
jurisdiction. To fall within this jurisdiction, there must be sufficient nexus
showing that the corporation's nature, structure, or powers were used to
facilitate the fraudulent device or scheme. Contrary to this concept, the
complaint presented a reverse situation. No corporate power or office was
alleged to have facilitated the transfer of the shares; rather, Oscar, as an
individual and without reference to his corporate personality, was alleged to
have transferred the shares of Anastacia to his name, allowing him to become
the majority and controlling stockholder of Zenith, and eventually, the
corporation's President. This is the essence of the complaint read as a whole
and is particularly demonstrated under the following allegations:
5. The complainant Rodrigo C. Reyes discovered that by some
manipulative scheme, the shareholdings of their deceased mother, Doña
Anastacia C. Reyes, shares of stocks and [sic] valued in the corporate
books at P7,699,934.28, more or less, excluding interest and/or
dividends, had been transferred solely in the name of respondent. By
such fraudulent manipulations and misrepresentation, the
shareholdings of said respondent Oscar C. Reyes abruptly
increased to P8,715,637.00 [sic] and becomes [sic] the majority
stockholder of Zenith Insurance Corporation, which portion of said
shares must be distributed equally amongst the brothers and sisters of
the respondent Oscar C. Reyes including the complainant herein. CHDAEc

xxx xxx xxx

9.1 The shareholdings of deceased Spouses Pedro Reyes
and Anastacia C. Reyes valued at P7,099,934.28 were illegally and
fraudulently transferred solely to the respondent's [herein
petitioner Oscar] name and installed himself as a majority
stockholder of Zenith Insurance Corporation [and] thereby deprived his
brothers and sisters of their respective equal shares thereof including
complainant hereto. [Emphasis supplied.]
In ordinary cases, the failure to specifically allege the fraudulent acts
does not constitute a ground for dismissal since such defect can be cured by
a bill of particulars. In cases governed by the Interim Rules of Procedure on
Intra-Corporate Controversies, however, a bill of particulars is a prohibited
pleading. 17 It is essential, therefore, for the complaint to show on its face
what are claimed to be the fraudulent corporate acts if the complainant wishes
to invoke the court's special commercial jurisdiction.
We note that twice in the course of this case, Rodrigo had been given
the opportunity to study the propriety of amending or withdrawing the
complaint, but he consistently refused. The court's function in resolving issues
of jurisdiction is limited to the review of the allegations of the complaint and,
on the basis of these allegations, to the determination of whether they are of
such nature and subject that they fall within the terms of the law defining the
court's jurisdiction. Regretfully, we cannot read into the complaint any
specifically alleged corporate fraud that will call for the exercise of the court's
special commercial jurisdiction. Thus, we cannot affirm the RTC's assumption
of jurisdiction over Rodrigo's complaint on the basis of Section 5 (a) of P.D.
No. 902-A. 18
Intra-Corporate Controversy
A review of relevant jurisprudence shows a development in the Court's
approach in classifying what constitutes an intra-corporate controversy.
Initially, the main consideration in determining whether a dispute constitutes
an intra-corporate controversy was limited to a consideration of the intra-
corporate relationship existing between or among the parties. 19 The types of
relationships embraced under Section 5 (b), as declared in the case of Union
Glass & Container Corp. v. SEC, 20 were as follows:  SAEHaC

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

b) between the corporation, partnership, or association and its
stockholders, partners, members, or officers;
c) between the corporation, partnership, or association and the State as
far as its franchise, permit or license to operate is concerned; and
d) among the stockholders, partners, or associates
themselves. [Emphasis supplied.]
The existence of any of the above intra-corporate relations was
sufficient to confer jurisdiction to the SEC, regardless of the subject matter of
the dispute. This came to be known as the relationship test.
However, in the 1984 case of DMRC Enterprises v. Esta del Sol
Mountain Reserve, Inc., 21 the Court introduced the nature of the
controversy test. We declared in this case that it is not the mere existence of
an intra-corporate relationship that gives rise to an intra-corporate
controversy; to rely on the relationship test alone will divest the regular courts
of their jurisdiction for the sole reason that the dispute involves a corporation,
its directors, officers, or stockholders. We saw that there is no legal sense in
disregarding or minimizing the value of the nature of the transactions which
gives rise to the dispute.
Under the nature of the controversy test, the incidents of that
relationship must also be considered for the purpose of ascertaining whether
the controversy itself is intra-corporate. 22 The controversy must not only be
rooted in the existence of an intra-corporate relationship, but must as well
pertain to the enforcement of the parties' correlative rights and obligations
under the Corporation Code and the internal and intra-corporate regulatory
rules of the corporation. If the relationship and its incidents are merely
incidental to the controversy or if there will still be conflict even if the
relationship does not exist, then no intra-corporate controversy exists.  HICSaD

The Court then combined the two tests and declared that jurisdiction
should be determined by considering not only the status or relationship of the
parties, but also the nature of the question under controversy. 23 This two-tier
test was adopted in the recent case of Speed Distribution, Inc. v. Court of
Appeals: 24
To determine whether a case involves an intra-corporate
controversy, and is to be heard and decided by the branches of the RTC
specifically designated by the Court to try and decide such cases, two
elements must concur: (a) the status or relationship of the parties; and
(2) the nature of the question that is the subject of their controversy.
The first element requires that the controversy must arise out of
intra-corporate or partnership relations between any or all of the parties
and the corporation, partnership, or association of which they are
stockholders, members or associates; between any or all of them and
the corporation, partnership, or association of which they are
stockholders, members, or associates, respectively; and between such
corporation, partnership, or association and the State insofar as it
concerns their individual franchises. The second element requires that
the dispute among the parties be intrinsically connected with the
regulation of the corporation. If the nature of the controversy involves
matters that are purely civil in character, necessarily, the case does not
involve an intra-corporate controversy. 
HEDaTA

Given these standards, we now tackle the question posed for our
determination under the specific circumstances of this case:
Application of the Relationship Test
Is there an intra-corporate relationship between the parties that would
characterize the case as an intra-corporate dispute?
We point out at the outset that while Rodrigo holds shares of stock in
Zenith, he holds them in two capacities: in his own right with respect to the
4,250 shares registered in his name, and as one of the heirs of Anastacia
Reyes with respect to the 136,598 shares registered in her name. What is
material in resolving the issues of this case under the allegations of the
complaint is Rodrigo's interest as an heir since the subject matter of the
present controversy centers on the shares of stocks belonging to Anastacia,
not on Rodrigo's personally-owned shares nor on his personality as
shareholder owning these shares. In this light, all reference to shares of
stocks in this case shall pertain to the shareholdings of the deceased
Anastacia and the parties' interest therein as her heirs.
Article 777 of the Civil Code declares that the successional rights are
transmitted from the moment of death of the decedent. Accordingly, upon
Anastacia's death, her children acquired legal title to her estate (which title
includes her shareholdings in Zenith), and they are, prior to the estate's
partition, deemed co-owners thereof. 25 This status as co-owners, however,
does not immediately and necessarily make them stockholders of the
corporation. Unless and until there is compliance with Section 63 of the
Corporation Code on the manner of transferring shares, the heirs do not
become registered stockholders of the corporation. Section 63 provides:
Section 63. Certificate of stock and transfer of shares. — The
capital stock of stock corporations shall be divided into shares for which
certificates signed by the president or vice-president, countersigned by
the secretary or assistant secretary, and sealed with the seal of the
corporation shall be issued in accordance with the by-laws. Shares of
stock so issued are personal property and may be transferred by
delivery of the certificate or certificates indorsed by the owner or his
attorney-in-fact or other person legally authorized to make the
transfer. No transfer, however, shall be valid, except as between the
parties, until the transfer is recorded in the books of the
corporation so as to show the names of the parties to the
transaction, the date of the transfer, the number of the certificate or
certificates, and the number of shares transferred. [Emphasis
supplied.] 
ASCTac

No shares of stock against which the corporation holds any

unpaid claim shall be transferable in the books of the corporation.
Simply stated, the transfer of title by means of succession, though
effective and valid between the parties involved (i.e., between the decedent's
estate and her heirs), does not bind the corporation and third parties. The
transfer must be registered in the books of the corporation to make the
transferee-heir a stockholder entitled to recognition as such both by the
corporation and by third parties. 26
We note, in relation with the above statement, that in Abejo v. Dela
Cruz 27 and TCL Sales Corporation v. Court of Appeals 28 we did not require
the registration of the transfer before considering the transferee a stockholder
of the corporation (in effect upholding the existence of an intra-corporate
relation between the parties and bringing the case within the jurisdiction of the
SEC as an intra-corporate controversy). A marked difference, however, exists
between these cases and the present one.
In Abejo and TCL Sales, the transferees held definite and
uncontested titles to a specific number of shares of the corporation;
after the transferee had established prima facie ownership over the shares of
stocks in question, registration became a mere formality in confirming their
status as stockholders. In the present case, each of Anastacia's heirs holds
only an undivided interest in the shares. This interest, at this point, is still
inchoate and subject to the outcome of a settlement proceeding; the right of
the heirs to specific, distributive shares of inheritance will not be determined
until all the debts of the estate of the decedent are paid. In short, the heirs are
only entitled to what remains after payment of the decedent's
debts; 29 whether there will be residue remains to be seen. Justice Jurado
aptly puts it as follows:
No succession shall be declared unless and until a liquidation of
the assets and debts left by the decedent shall have been made and all
his creditors are fully paid. Until a final liquidation is made and all the
debts are paid, the right of the heirs to inherit remains inchoate. This is
so because under our rules of procedure, liquidation is necessary in
order to determine whether or not the decedent has left any liquid
assets which may be transmitted to his heirs. 30 [Emphasis supplied.]
Rodrigo must, therefore, hurdle two obstacles before he can be
considered a stockholder of Zenith with respect to the shareholdings originally
belonging to Anastacia. First, he must prove that there are shareholdings that
will be left to him and his co-heirs, and this can be determined only in a
settlement of the decedent's estate. No such proceeding has been
commenced to date. Second, he must register the transfer of the shares
allotted to him to make it binding against the corporation. He cannot demand
that this be done unless and until he has established his specific allotment
(and prima facie ownership) of the shares. Without the settlement of
Anastacia's estate, there can be no definite partition and distribution of the
estate to the heirs. Without the partition and distribution, there can be no
registration of the transfer. And without the registration, we cannot consider
the transferee-heir a stockholder who may invoke the existence of an intra-
corporate relationship as premise for an intra-corporate controversy within the
jurisdiction of a special commercial court.
In sum, we find that — insofar as the subject shares of stock (i.e.,
Anastacia's shares) are concerned — Rodrigo cannot be considered a
stockholder of Zenith. Consequently, we cannot declare that an intra-
corporate relationship exists that would serve as basis to bring this case
within the special commercial court's jurisdiction under Section 5 (b) of P.D.
902-A, as amended. Rodrigo's complaint, therefore, fails the relationship
test. 
aESTAI

Application of the Nature of Controversy Test

The body rather than the title of the complaint determines the nature of
an action. 31 Our examination of the complaint yields the conclusion that,
more than anything else, the complaint is about the protection and
enforcement of successional rights. The controversy it presents is purely civil
rather than corporate, although it is denominated as a "complaint for
accounting of all corporate funds and assets".
Contrary to the findings of both the trial and appellate courts, we read
only one cause of action alleged in the complaint. The "derivative suit for
accounting of the funds and assets of the corporation which are in the control,
custody, and/or possession of the respondent [herein petitioner Oscar]" does
not constitute a separate cause of action but is, as correctly claimed by Oscar,
only an incident to the "action for determination of the shares of stock of
deceased spouses Pedro and Anastacia Reyes allegedly taken by
respondent, its accounting and the corresponding delivery of these shares to
the parties' brothers and sisters". There can be no mistake of the relationship
between the "accounting" mentioned in the complaint and the objective of
partition and distribution when Rodrigo claimed in paragraph 10.1 of the
complaint that:  DTcASE

10.1 By refusal of the respondent to account of [sic] his

shareholdings in the company, he illegally and fraudulently transferred
solely in his name wherein [sic] the shares of stock of the deceased
Anastacia C. Reyes [which] must be properly collated and/or distributed
equally amongst the children including the complainant Rodrigo C.
Reyes herein to their damage and prejudice.
We particularly note that the complaint contained no sufficient allegation that
justified the need for an accounting other than to determine the extent of
Anastacia's shareholdings for purposes of distribution.
Another significant indicator that points us to the real nature of the
complaint are Rodrigo's repeated claims of illegal and fraudulent transfers of
Anastacia's shares by Oscar to the prejudice of the other heirs of the
decedent; he cited these allegedly fraudulent acts as basis for his demand for
the collation and distribution of Anastacia's shares to the heirs. These claims
tell us unequivocally that the present controversy arose from the parties'
relationship as heirs of Anastacia and not as shareholders of Zenith. Rodrigo,
in filing the complaint, is enforcing his rights as a co-heir and not as a
stockholder of Zenith. The injury he seeks to remedy is one suffered by an
heir (for the impairment of his successional rights) and not by the corporation
nor by Rodrigo as a shareholder on record.
More than the matters of injury and redress, what Rodrigo clearly aims
to accomplish through his allegations of illegal acquisition by Oscar is the
distribution of Anastacia's shareholdings without a prior settlement of her
estate — an objective that, by law and established jurisprudence, cannot be
done. The RTC of Makati, acting as a special commercial court, has no
jurisdiction to settle, partition, and distribute the estate of a deceased. A
relevant provision — Section 2 of Rule 90 of the Revised Rules of Court —
that contemplates properties of the decedent held by one of the heirs
declares:
Questions as to advancement made or alleged to have been
made by the deceased to any heir may be heard and determined by
the court having jurisdiction of the estate proceedings; and the final
order of the court thereon shall be binding on the person raising the
questions and on the heir. [Emphasis supplied.]
Worth noting are this Court's statements in the case of Natcher v. Court of
Appeals: 32
Matters which involve settlement and distribution of the
estate of the decedent fall within the exclusive province of the
probate court in the exercise of its limited jurisdiction. 
CaSHAc

xxx xxx xxx

It is clear that trial courts trying an ordinary action cannot
resolve to perform acts pertaining to a special proceeding because
it is subject to specific prescribed rules. [Emphasis supplied.]
That an accounting of the funds and assets of Zenith to determine the
extent and value of Anastacia's shareholdings will be undertaken by a probate
court and not by a special commercial court is completely consistent with the
probate court's limited jurisdiction. It has the power to enforce an accounting
as a necessary means to its authority to determine the properties included in
the inventory of the estate to be administered, divided up, and distributed.
Beyond this, the determination of title or ownership over the subject shares
(whether belonging to Anastacia or Oscar) may be conclusively settled by the
probate court as a question of collation or advancement. We had occasion to
recognize the court's authority to act on questions of title or ownership in a
collation or advancement situation in Coca v. Pangilinan 33 where we ruled:
It should be clarified that whether a particular matter should be
resolved by the Court of First Instance in the exercise of its general
jurisdiction or of its limited probate jurisdiction is in reality not a
 jurisdictional question. In essence, it is a procedural question involving a
mode of practice "which may be waived".
As a general rule, the question as to title to property should not be
passed upon in the testate or intestate proceeding. That question should
be ventilated in a separate action. That general rule has qualifications or
exceptions justified by expediency and convenience.
Thus, the probate court may provisionally pass upon in an
intestate or testate proceeding the question of inclusion in, or exclusion
from, the inventory of a piece of property without prejudice to its final
determination in a separate action.
Although generally, a probate court may not decide a
question of title or ownership, yet if the interested parties are all heirs,
or the question is one of collation or advancement, or the parties
consent to the assumption of jurisdiction by the probate court and the
rights of third parties are not impaired, the probate court is competent
to decide the question of ownership. [Citations omitted. Emphasis
supplied.] 
AEIcSa

In sum, we hold that the nature of the present controversy is not one

which may be classified as an intra-corporate dispute and is beyond the
jurisdiction of the special commercial court to resolve. In short, Rodrigo's
complaint also fails the nature of the controversy test.
DERIVATIVE SUIT
Rodrigo's bare claim that the complaint is a derivative suit will not
suffice to confer jurisdiction on the RTC (as a special commercial court) if he
cannot comply with the requisites for the existence of a derivative suit. These
requisites are:
a. the party bringing suit should be a shareholder during the time of the
act or transaction complained of, the number of shares not being
material;
b. the party has tried to exhaust intra-corporate remedies, i.e., has made
a demand on the board of directors for the appropriate relief, but
the latter has failed or refused to heed his plea; and
c. the cause of action actually devolves on the corporation; the
wrongdoing or harm having been or being caused to the
corporation and not to the particular stockholder bringing the
suit. 34
Based on these standards, we hold that the allegations of the present
complaint do not amount to a derivative suit.
First, as already discussed above, Rodrigo is not a shareholder with
respect to the shareholdings originally belonging to Anastacia; he only stands
 as a transferee-heir whose rights to the share are inchoate and unrecorded.
With respect to his own individually-held shareholdings, Rodrigo has not
alleged any individual cause or basis as a shareholder on record to proceed
against Oscar.
Second, in order that a stockholder may show a right to sue on behalf
of the corporation, he must allege with some particularity in his complaint that
he has exhausted his remedies within the corporation by making a sufficient
demand upon the directors or other officers for appropriate relief with the
expressed intent to sue if relief is denied. 35 Paragraph 8 of the complaint
hardly satisfies this requirement since what the rule contemplates is the
exhaustion of remedies within the corporate setting:  AaCTID

8. As members of the same family, complainant Rodrigo C. Reyes

has resorted [to] and exhausted all legal means of resolving the dispute
with the end view of amicably settling the case, but the dispute between
them ensued.
Lastly, we find no injury, actual or threatened, alleged to have been
done to the corporation due to Oscar's acts. If indeed he illegally and
fraudulently transferred Anastacia's shares in his own name, then the damage
is not to the corporation but to his co-heirs; the wrongful transfer did not affect
the capital stock or the assets of Zenith. As already mentioned, neither has
Rodrigo alleged any particular cause or wrongdoing against the corporation
that he can champion in his capacity as a shareholder on record. 36
In summary, whether as an individual or as a derivative suit, the RTC —
sitting as special commercial court — has no jurisdiction to hear Rodrigo's
complaint since what is involved is the determination and distribution of
successional rights to the shareholdings of Anastacia Reyes. Rodrigo's proper
remedy, under the circumstances, is to institute a special proceeding for the
settlement of the estate of the deceased Anastacia Reyes, a move that is not
foreclosed by the dismissal of his present complaint.
WHEREFORE, we hereby GRANT the petition and REVERSE the
decision of the Court of Appeals dated May 26, 2004 in CA-G.R. SP No.
74970. The complaint before the Regional Trial Court, Branch 142, Makati,
docketed as Civil Case No. 00-1553, is ordered DISMISSED for lack of
jurisdiction.
SO ORDERED.
 (Reyes v. Regional Trial Court of Makati, Branch 142, G.R. No. 165744,
|||

[August 11, 2008], 583 PHIL 591-617)

 G.R. No. 160146. December 11, 2009.]

LESLIE OKOL, petitioner, vs. SLIMMERS WORLD

INTERNATIONAL, BEHAVIOR MODIFICATIONS, INC., and
RONALD JOSEPH MOY, respondents.

DECISION

CARPIO, J  :p

The Case
Before the Court is a petition for review on certiorari 1 assailing the
Decision 2 dated 18 October 2002 and Resolution dated 22 September 2003
of the Court of Appeals in CA-G.R. SP No. 69893, which set aside the
Resolutions dated 29 May 2001 and 21 December 2001 of the National Labor
Relations Commission (NLRC).
The Facts
Respondent Slimmers World International operating under the name
Behavior Modifications, Inc. (Slimmers World) employed petitioner Leslie Okol
(Okol) as a management trainee on 15 June 1992. She rose up the ranks to
become Head Office Manager and then Director and Vice President from
1996 until her dismissal on 22 September 1999.
On 28 July 1999, prior to Okol's dismissal, Slimmers World preventively
suspended Okol. The suspension arose from the seizure by the Bureau of
Customs of seven Precor elliptical machines and seven Precor treadmills
belonging to or consigned to Slimmers World. The shipment of the equipment
was placed under the names of Okol and two customs brokers for a value
less than US$500. For being undervalued, the equipment were seized.
On 2 September 1999, Okol received a memorandum that her
suspension had been extended from 2 September until 1 October 1999
pending the outcome of the investigation on the Precor equipment
importation.
On 17 September 1999, Okol received another memorandum from
Slimmers World requiring her to explain why no disciplinary action should be
taken against her in connection with the equipment seized by the Bureau of
Customs.
 On 19 September 1999, Okol filed her written explanation. However,
Slimmers World found Okol's explanation to be unsatisfactory. Through a
letter dated 22 September 1999 signed by its president Ronald Joseph Moy
(Moy), Slimmers World terminated Okol's employment.  DECSIT

Okol filed a complaint 3 with the Arbitration branch of the NLRC against

Slimmers World, Behavior Modifications, Inc. and Moy (collectively called
respondents) for illegal suspension, illegal dismissal, unpaid commissions,
damages and attorney's fees, with prayer for reinstatement and payment of
backwages.
On 22 February 2000, respondents filed a Motion to Dismiss 4 the case
with a reservation of their right to file a Position Paper at the proper time.
Respondents asserted that the NLRC had no jurisdiction over the subject
matter of the complaint.
In an Order, 5 dated 20 March 2000, the labor arbiter granted the
motion to dismiss. The labor arbiter ruled that Okol was the vice-president of
Slimmers World at the time of her dismissal. Since it involved a corporate
officer, the dispute was an intra-corporate controversy falling outside the
jurisdiction of the Arbitration branch.
Okol filed an appeal with the NLRC. In a Resolution 6 dated 29 May
2001, the NLRC reversed and set aside the labor arbiter's order. The
dispositive portion of the resolution states:
WHEREFORE, the Order appealed from is SET ASIDE and
REVERSED. A new one is hereby ENTERED ordering respondent
Behavior Modification, Inc./Slimmers World International to reinstate
complainant Leslie F. Okol to her former position with full back wages
which to date stood in the amount of P10,000,000.00 computed from
July 28, 1999 to November 28, 2000 until fully reinstated; and the further
sum of P1,250,000.00 as indemnity pay plus attorney's fee equivalent to
ten (10%) of the total monetary award. However, should reinstatement
be not feasible separation pay equivalent to one month pay per year of
service is awarded, a fraction of at least six months considered one
whole year.
All other claims are dismissed for lack of factual or legal basis.
SO ORDERED. 7
Respondents filed a Motion for Reconsideration with the NLRC.
Respondents contended that the relief prayed for was confined only to the
question of jurisdiction. However, the NLRC not only decided the case on the
merits but did so in the absence of position papers from both parties. In a
Resolution 8 dated 21 December 2001, the NLRC denied the motion for lack
of merit.
 Respondents then filed an appeal with the Court of Appeals, docketed
as CA-G.R. SP No. 69893.
The Ruling of the Court of Appeals
In a Decision 9 dated 18 October 2002, the appellate court set aside the
NLRC's Resolution dated 29 May 2001 and affirmed the labor arbiter's Order
dated 20 March 2000. The Court of Appeals ruled that the case, being an
intra-corporate dispute, falls within the jurisdiction of the regular courts
pursuant to Republic Act No. 8799. 10 The appellate court added that the
NLRC had acted without jurisdiction in giving due course to the complaint and
deprived respondents of their right to due process in deciding the case on the
merits.
Okol filed a Motion for Reconsideration which was denied in a
Resolution 11 dated 22 September 2003.  STECAc

Hence, the instant petition.

The Issue
The issue is whether or not the NLRC has jurisdiction over the illegal
dismissal case filed by petitioner.
The Court's Ruling
The petition lacks merit.
Petitioner insists that the Court of Appeals erred in ruling that she was a
corporate officer and that the case is an intra-corporate dispute falling within
the jurisdiction of the regular courts. Petitioner asserts that even as vice-
president, the work that she performed conforms to that of an employee rather
than a corporate officer. Mere title or designation in a corporation will not, by
itself, determine the existence of an employer-employee relationship. It is the
"four-fold" test, namely (1) the power to hire, (2) the payment of wages, (3) the
power to dismiss, and (4) the power to control, which must be applied.
Petitioner enumerated the instances that she was under the power and
control of Moy, Slimmers World's president: (1) petitioner received salary
evidenced by pay slips, (2) Moy deducted Medicare and SSS benefits from
petitioner's salary, and (3) petitioner was dismissed from employment not
through a board resolution but by virtue of a letter from Moy. Thus, having
shown that an employer-employee relationship exists, the jurisdiction to hear
and decide the case is vested with the labor arbiter and the NLRC.
Respondents, on the other hand, maintain that petitioner was a corporate
officer at the time of her dismissal from Slimmers World as supported by the
General Information Sheet and Director's Affidavit attesting that petitioner was
an officer. Also, the factors cited by petitioner that she was a mere employee
do not prove that she was not an officer of Slimmers World. Even the alleged
absence of any resolution of the Board of Directors approving petitioner's
termination does not constitute proof that petitioner was not an officer.
Respondents assert that petitioner was not only an officer but also a
stockholder and director; which facts provide further basis that petitioner's
separation from Slimmers World does not come under the NLRC's jurisdiction.
The issue revolves mainly on whether petitioner was an employee or a
corporate officer of Slimmers World. Section 25 of the Corporation
Code enumerates corporate officers as the president, secretary, treasurer and
such other officers as may be provided for in the by-laws. In Tabang v.
NLRC, 12 we held that an "office" is created by the charter of the corporation
and the officer is elected by the directors or stockholders. On the other hand,
an "employee" usually occupies no office and generally is employed not by
action of the directors or stockholders but by the managing officer of the
corporation who also determines the compensation to be paid to such
employee.
In the present case, the respondents, in their motion to dismiss filed before
the labor arbiter, questioned the jurisdiction of the NLRC in taking cognizance
of petitioner's complaint. In the motion, respondents attached the General
Information Sheet 13 (GIS) dated 14 April 1998, Minutes 14 of the meeting of
the Board of Directors dated 14 April 1997 and Secretary's Certificate, 15 and
the Amended By-Laws 16 dated 1 August 1994 of Slimmers World as
submitted to the SEC to show that petitioner was a corporate officer whose
rights do not fall within the NLRC's jurisdiction. The GIS and minutes of the
meeting of the board of directors indicated that petitioner was a member of
the board of directors, holding one subscribed share of the capital stock, and
an elected corporate officer. cDCIHT

The relevant portions of the Amended By-Laws of Slimmers World

which enumerate the power of the board of directors as well as the officers of
the corporation state:
Article II
The Board of Directors
1. Qualifications and Election — The general management of the
corporation shall be vested in a board of five directors who shall be
stockholders and who shall be elected annually by the stockholders and
who shall serve until the election and qualification of their successors.
xxx xxx xxx
Article III
Officers
xxx xxx xxx
 4. Vice-President — Like the Chairman of the Board and the
President, the Vice-President shall be elected by the Board of Directors
from [its] own members.
The Vice-President shall be vested with all the powers and
authority and is required to perform all the duties of the President during
the absence of the latter for any cause.
The Vice-President will perform such duties as the Board of
Directors may impose upon him from time to time.
xxx xxx xxx
Clearly, from the documents submitted by respondents, petitioner was a
director and officer of Slimmers World. The charges of illegal suspension,
illegal dismissal, unpaid commissions, reinstatement and back wages imputed
by petitioner against respondents fall squarely within the ambit of intra-
corporate disputes. In a number of cases, 17 we have held that a corporate
officer's dismissal is always a corporate act, or an intra-corporate controversy
which arises between a stockholder and a corporation. The question of
remuneration involving a stockholder and officer, not a mere employee, is not
a simple labor problem but a matter that comes within the area of corporate
affairs and management and is a corporate controversy in contemplation of
the Corporation Code. 18
Prior to its amendment, Section 5 (c) of Presidential Decree No. 902-A 19 (PD
902-A) provided that intra-corporate disputes fall within the jurisdiction of the
Securities and Exchange Commission (SEC):
Sec. 5. In addition to the regulatory and adjudicative functions of
the Securities and Exchange Commission over corporations,
partnerships and other forms of associations registered with it as
expressly granted under existing laws and decrees, it shall have original
and exclusive jurisdiction to hear and decide cases involving: DCSETa

xxx xxx xxx

c) Controversies in the election or appointments of directors,
trustees, officers or managers of such corporations, partnerships or
associations.
Subsection 5.2, Section 5 of Republic Act No. 8799, which took effect on 8
August 2000, transferred to regional trial courts the SEC's jurisdiction over all
cases listed in Section 5 of PD 902-A:
5.2. The Commission's jurisdiction over all cases enumerated
under Section 5 of Presidential Decree No. 902-A is hereby transferred
to the Courts of general jurisdiction or the appropriate Regional Trial
Court.
 xxx xxx xxx
It is a settled rule that jurisdiction over the subject matter is conferred by
law. 20 The determination of the rights of a director and corporate officer
dismissed from his employment as well as the corresponding liability of a
corporation, if any, is an intra-corporate dispute subject to the jurisdiction of
the regular courts. Thus, the appellate court correctly ruled that it is not the
NLRC but the regular courts which have jurisdiction over the present case.
WHEREFORE, we DENY the petition. We AFFIRM the 18 October
2002 Decision and 22 September 2003 Resolution of the Court of Appeals in
CA-G.R. SP No. 69893. This Decision is without prejudice to petitioner Leslie
Okol's taking recourse to and seeking relief through the appropriate remedy in
the proper forum.
SO ORDERED.
 (Okol v. Slimmers World International, G.R. No. 160146, [December 11, 2009],
|||

623 PHIL 13-22)

[G.R. No. 164888. December 6, 2006.]

RURAL BANK OF CORON (PALAWAN), INC., EMPIRE COLD

STORAGE AND DEVELOPMENT CORPORATION, CITIZENS
DEVELOPMENT INCORPORATED, CARIDAD B. GARCIA,
SANDRA G. ESCAT, LORNA GARCIA, and OLGA G.
ESCAT, petitioners, vs. ANNALISA CORTES, respondent.

DECISION

CARPIO MORALES, J  : p

In 1987, Virgilio Garcia, "founder" of petitioner corporations (the

corporations), hired the then still single Annalisa Cortes (respondent) as clerk
of the Rural Bank of Coron (Manila Office).
After Virgilio died, his son Victor took over the management of the
corporations.
 Anita Cortes (Anita), the wife of Victor Garcia, was also involved in the
management of the corporations. Respondent later married Anita's brother
Eduardo Cortes.
Anita soon assumed the position of Vice President of petitioner Citizens
Development Incorporated (CDI) and practically controlled the financial
operations of almost all of the other corporations in the course of which she
allowed some of her relatives and in-laws, including respondent, to hold
several key sensitive positions thereat.
Respondent later became the Financial Assistant, Personnel Officer
and Corporate Secretary of The Rural Bank of Coron, Personnel Officer of
CDI, and also Personnel Officer and Disbursing Officer of The Empire Cold
Storage Development Corporation (ECSDC). She simultaneously received
salaries from these corporations.
On examination of the financial books of the corporations by petitioner
Sandra Garcia Escat, a daughter of Virgilio Garcia who was previously
residing in Spain, she found out that respondent was involved in several
anomalies, 1 drawing petitioners to terminate respondent's services on
November 23, 1998 in petitioner corporations. 2
By letter of November 25, 1998 3 addressed to individual petitioners
Caridad B. Garcia (widow of Virgilio Garcia), Sandra G. Escat, and Olga G.
Escat (another daughter of Virgilio Garcia), respondent's counsel conveyed
respondent's willingness to abide by the decision to terminate her but
reminded them that she was entitled to separation pay equivalent to 11
months salary as well as to the other benefits provided by law in her favor.  EcHIAC

Respondent's counsel thus demanded the payment of respondent's

unpaid salary for the months of October and November 1998, separation pay
equivalent to 12 months salary, 4 13th month pay and other benefits.
As the demand remained unheeded, respondent filed a complaint 5 for
illegal dismissal and non-payment of salaries and other benefits, docketed as
NLRC-NCR Case No. 00-05-05738-99.
Petitioners moved for the dismissal of the complaint on the ground of
lack of jurisdiction, contending that the case was an intra-corporate
controversy involving the removal of a corporate officer, respondent being the
Corporate Secretary of the Rural Bank of Coron, Inc., hence, cognizable by
the Securities and Exchange Commission (SEC) pursuant to Section 5 of PD
902-A. 6
In resolving the issue of jurisdiction, the Labor Arbiter noted as follows:
It is to be noted that complainant, aside from her being Corporate
Secretary of Rural Bank of Coron, complainant was likewise
 appointed as Financial Assistant & Personnel Officer of all
respondents herein, whose services w[ere] terminated on 23
November 1998, hence, the instant complaint.
Verily, a Financial Assistant & Personnel Officer is not a
Corporate Officer of the [petitioners'] corporation, thus, pursuant to
Article 217 of the Labor Code, as amended, the instant case falls within
the ambit of original and exclusive jurisdiction of this Office. 7 (Emphasis
and underscoring supplied).
Eventually, the Labor Arbiter found for respondent, computing the
monetary award due her as follows:
Backwages P658,000.00
13th Month Pay for 1998, 1999 & 2000 63,000.00
  P721,000.00
Separation Pay 315,000.00
Unpaid Salary 25,900.00
Attorney's fees 106,190.00
  P1,168,090.00
Thus, the Labor Arbiter, by Decision of July 18, 2001, disposed:
WHEREFORE, in view of all the foregoing, respondents are
hereby ordered to jointly and severally pay complainant the total amount
of ONE MILLION ONE HUNDRED SIXTY-EIGHT THOUSAND NINETY
(P1,168,090.00) PESOS as discussed above. 8
On August 13, 2001, the tenth or last day of the period of
appeal, 9 petitioners filed a Notice of Appeal and Motion for Reduction of
Bond 10 to which they attached a Memorandum on Appeal. 11 In their Motion
for Reduction of Bond, petitioners alleged that the corporations were under
financial distress and the Rural Bank of Coron was under receivership. They
thus prayed that the amount of bond be substantially reduced, preferably to
one half thereof or even lower. 12
By Resolution of October 16, 2001 13 , the National Labor Relations
Commission (NLRC), while noting that petitioners timely filed the appeal, held
that the same was not accompanied by an appeal bond, a mandatory
requirement under Article 223 14 of the Labor Code and Section 6, Rule VI of
the NLRC New Rules of Procedure. It also noted that the Motion for
Reduction of Bond was "premised on self-serving allegations." It accordingly
dismissed the appeal.
Petitioners' Motion for Reconsideration 15 was denied by the NLRC by
November 26, 2001 Resolution, 16 hence, they filed a Petition for
Certiorari 17 before the Court of Appeals.  aSIATD
 By Decision dated May 26, 2004 18 , the appellate court dismissed the
petition for lack of merit. Petitioners' motion for reconsideration was also
denied by Resolution of August 13, 2004. 19
Hence, this petition, 20 petitioners faulting the appellate court for:
I
. . . FAIL[URE] TO RULE THAT THE NLRC'S RULE OF PROCEDURE
WHICH PROVIDES FOR THE POSTING OF A BOND AS A
CONDITION PRECEDENT FOR PERFECTING AN APPEAL AS A
CONDITION PRECEDENT FOR PERFECTING AN APPEAL IS
CONTRARY TO LAW AND ESTABLISHED JURISPRUDENCE.
II
. . . DISMISS[ING] PETITIONERS['] PETITION FOR [CERTIORARI]
BASED ON TECHNICALITY AND FAIL[URE] TO DECIDE THE SAME
BASED ON ITS MERIT.
III
. . . DISMISSING PETITIONERS' PETITION FOR CERTIORARI FROM
THE DECISION OF THE NLRC FOR NON-PERFECTION THEREOF.
IV
. . . DISMISSING PETITIONERS' PETITION FOR [CERTIORARI] FROM
THE DECISION OF THE NLRC WITHOUT RESOLVING THE CASE
BASED ON ITS MERITS.
V
. . . FAIL[URE] TO DECLARE THAT INDIVIDUAL PETITIONERS ARE
NOT SOLIDARY LIABLE TO PAY THE RESPONDENT FOR HER
MONETARY CLAIM IN VIEW OF THE ABSENCE OF ANY EVIDENCE
SHOWING THAT THEY WERE MOTIVATED BY ILL-WILL OR MALICE
IN SEVERING HER EMPLOYMENT.
VI
. . . FAIL[URE] TO RESOLVE THE ISSUE OF JURISDICTION. 21
While, indeed, respondent was the Corporate Secretary of the Rural
Bank of Coron, she was also its Financial Assistant and the Personnel Officer
of the two other petitioner corporations. 22
Mainland Construction Co., Inc. v. Movilla 23 instructs that a corporation
can engage its corporate officers to perform services under a circumstance
which would make them employees. 24
The Labor Arbiter has thus jurisdiction over respondent's complaint.
 On the first three assigned errors which bear on whether petitioners'
appeal before the NLRC was perfected:
As before the Court of Appeals, petitioners cite Cosico, Jr. v.
NLRC 25 and Taberrah v. NLRC 26 in support of their contention that their
appeal before the NLRC was perfected. As correctly ruled by the Court of
Appeals, however, the cited cases are not in point.
. . . The appellant in Taberrah filed a motion to fix appeal bond
instead of posting an appeal bond; and the Supreme Court relaxed the
requirement considering that the labor arbiter's decision did not contain a
computation of the monetary award. In Cosico, the appeal bond posted
was of insufficient amount but the Supreme Court ruled that provisions of
the Labor Code on requiring a bond on appeal involving monetary
awards must be given liberal interpretation in line with the desired
objective of resolving controversies on their merits. Herein, no appeal
bond, whether sufficient or not, was ever filed by the
petitioners. 27 (Italics in the original; emphasis and underscoring
supplied) CEHcSI

Petitioners additionally cite Star Angel Handicraft v. NLRC 28 to support

their position that there is a distinction between the filing of an appeal within
the reglementary period and its perfection. In the parallel case of Computer
Innovations Center v. National Labor Relations Commission, 29 this Court
hesitated to reiterate the doctrine in Star Angel in this wise:
Petitioners invoke the aforementioned holding in Star Angel that
there is a distinction between the filing of an appeal within the
reglementary period and its perfection, and that the appeal may be
perfected after the said reglementary period. Indeed, Star Angel held
that the filing of a motion for reduction of appeal bond necessarily stays
the reglementary period for appeal. However, in this case, the motion for
reduction of appeal bond, which was incorporated in the appeal
memorandum, was filed only on the tenth or final day of the
reglementary period. Under such circumstance, the motion for
reduction of appeal bond can no longer be deemed to have stayed
the appeal, and the petitioner faces the risk, as had happened in
this case, of summary dismissal of the appeal for non-perfection.
Moreover, the reference in Star Angel to the distinction between
the period to file the appeal and to perfect the appeal has been pointedly
made only once by this Court in Gensoli v. NLRC thus, it has not
acquired the sheen of venerability reserved for repeatedly-cited cases.
The distinction, if any, is not particularly evident or material in the Labor
Code; hence, the reluctance of the Court to adopt such doctrine.
Moreover, the present provision in the NLRC Rules of Procedure,
that "the filing of a motion to reduce bond shall not stop the running of
the period to perfect appeal" flatly contradicts the notion expressed
 in Star Angel that there is a distinction between the filing an appeal
and perfecting an appeal. 
Ultimately, the disposition of Star Angel was premised on the
ruling that a motion for reduction of the appeal bond necessarily stays
the period for perfecting the appeal, and that the employer cannot be
expected to perfect the appeal by posting the proper bond until such
time the said motion for reduction is resolved. The unduly stretched-
out distinction between the period to file an appeal and to perfect
an appeal was not material to the resolution of Star Angel, and this
could be properly considered as obiter dictum. 30 (Italics in the
original; emphasis and underscoring supplied)
The appellate court did not thus err in dismissing the petition before it.
And contrary to petitioners' assertion, the appellate court dismissed its petition
not "on a mere technicality." For the non-posting of an appeal bond within the
reglementary period divests the NLRC of its jurisdiction to entertain the
appeal. Thus, in the same case of Computer Innovations Center, this Court
held:
Petitioners also characterize the appeal bond requirement as a
technical rule, and that the dismissal of an appeal on purely technical
grounds is frowned upon. However, Article 223, which prescribes the
appeal bond requirement, is a rule of jurisdiction and not of
procedure. There is a little leeway for condoning a liberal interpretation
thereof, and certainly none premised on the ground that its requirements
are mere technicalities. It must be emphasized that there is no inherent
right to an appeal in a labor case, as it arises solely from grant of statute,
namely the Labor Code.  IDTSEH

We have indeed held that the requirement for posting the

surety bond is not merely procedural but jurisdictional and cannot be
trifled with. Non-compliance with such legal requirements is fatal and has
the effect of rendering the judgment final and executory. The petitioners
cannot be allowed to seek refuge in a liberal application of rules for their
act of negligence. 31 (Emphasis and underscoring supplied)
It bears emphasis that all that is required to perfect the appeal is the
posting of a bond to ensure that the award is eventually paid should the
appeal be dismissed. Petitioners should thus have posted a bond, even if it
were only partial, but they did not. No relaxation of the Rule may thus be
considered. 32
In the case at bar, petitioner did not post a full or partial
appeal bond within the prescribed period, thus, no appeal was
perfected from the decision of the Labor Arbiter. For this reason, the
decision sought to be appealed to the NLRC had become final and
executory and therefore immutable. Clearly then, the NLRC has no
 authority to entertain the appeal, much less to reverse the decision of the
Labor Arbiter. Any amendment or alteration made which substantially
affects the final and executory judgment is null and void for lack of
jurisdiction, including the entire proceeding held for that
purpose. 33 (Emphasis and underscoring supplied)
As the decision of the Labor Arbiter had become final and executory, a
discussion of the fourth and fifth assigned errors is no longer necessary.
WHEREFORE, the petition is DENIED.
SO ORDERED.
 (Rural Bank of Coron (Palawan), Inc. v. Cortes, G.R. No. 164888, [December 6,
|||

2006], 539 PHIL 498-509)

G.R. No. 172013. October 2, 2009.]

PATRICIA HALAGUEÑA, MA. ANGELITA L. PULIDO, MA.

TERESITA P. SANTIAGO, MARIANNE V. KATINDIG,
BERNADETTE A. CABALQUINTO, LORNA B. TUGAS, MARY
CHRISTINE A. VILLARETE, CYNTHIA A. STEHMEIER, ROSE
ANNA G. VICTA, NOEMI R. CRESENCIO, and other flight
attendants of PHILIPPINE AIRLINES, petitioners, vs.
PHILIPPINE AIRLINES INCORPORATED, respondent.

DECISION

PERALTA, J.  : p

Before this Court is a petition for review on certiorari under Rule 45 of

the Rules of Court seeking to annul and set aside the Decision 1 and the
Resolution 2 of the Court of Appeals (CA) in CA-G.R. SP. No. 86813.
Petitioners were employed as female flight attendants of respondent
Philippine Airlines (PAL) on different dates prior to November 22, 1996. They are
members of the Flight Attendants and Stewards Association of the Philippines
(FASAP), a labor organization certified as the sole and exclusive certified as the
sole and exclusive bargaining representative of the flight attendants, flight
stewards and pursers of respondent.
On July 11, 2001, respondent and FASAP entered into a Collective
Bargaining Agreement 3 incorporating the terms and conditions of their
agreement for the years 2000 to 2005, hereinafter referred to as PAL-FASAP
CBA.
Section 144, Part A of the PAL-FASAP CBA, provides that:
A. For the Cabin Attendants hired before 22 November 1996:
xxx xxx xxx
3. Compulsory Retirement
Subject to the grooming standards provisions of this Agreement,
compulsory retirement shall be fifty-five (55) for females and sixty (60)
for males. . . . . 
cDHAaT

In a letter dated July 22, 2003, 4 petitioners and several female cabin

crews manifested that the aforementioned CBA provision on compulsory
retirement is discriminatory, and demanded for an equal treatment with their male
counterparts. This demand was reiterated in a letter 5 by petitioners' counsel
addressed to respondent demanding the removal of gender discrimination
provisions in the coming re-negotiations of the PAL-FASAP CBA.
On July 12, 2004, Robert D. Anduiza, President of FASAP submitted their
2004-2005 CBA proposals 6 and manifested their willingness to commence the
collective bargaining negotiations between the management and the association,
at the soonest possible time.
On July 29, 2004, petitioners filed a Special Civil Action for Declaratory
Relief with Prayer for the Issuance of Temporary Restraining Order and Writ of
Preliminary Injunction 7 with the Regional Trial Court (RTC) of Makati City,
Branch 147, docketed as Civil Case No. 04-886, against respondent for the
invalidity of Section 144, Part A of the PAL-FASAP CBA. The RTC set a hearing
on petitioners' application for a TRO and, thereafter, required the parties to
submit their respective memoranda.
On August 9, 2004, the RTC issued an Order 8 upholding its jurisdiction
over the present case. The RTC reasoned that:
In the instant case, the thrust of the Petition is Sec. 144 of the
subject CBA which is allegedly discriminatory as it discriminates against
female flight attendants, in violation of the Constitution, the Labor Code,
and the CEDAW. The allegations in the Petition do not make out a labor
dispute arising from employer-employee relationship as none is shown
to exist. This case is not directed specifically against respondent arising
 from any act of the latter, nor does it involve a claim against the
respondent. Rather, this case seeks a declaration of the nullity of the
questioned provision of the CBA, which is within the Court's
competence, with the allegations in the Petition constituting the bases for
such relief sought.
The RTC issued a TRO on August 10, 2004, 9 enjoining the respondent for
implementing Section 144, Part A of the PAL-FASAP CBA.
The respondent filed an omnibus motion 10 seeking reconsideration of the
order overruling its objection to the jurisdiction of the RTC the lifting of the TRO.
It further prayed that the (1) petitioners' application for the issuance of a writ of
preliminary injunction be denied; and (2) the petition be dismissed or the
proceedings in this case be suspended.
On September 27, 2004, the RTC issued an Order 11 directing the
issuance of a writ of preliminary injunction enjoining the respondent or any of its
agents and representatives from further implementing Sec. 144, Part A of the
PAL-FASAP CBA pending the resolution of the case.  HSDCTA

Aggrieved, respondent, on October 8, 2004, filed a Petition for Certiorari

and Prohibition with Prayer for a Temporary Restraining Order and Writ of
Preliminary Injunction 12 with the Court of Appeals (CA) praying that the order of
the RTC, which denied its objection to its jurisdiction, be annuled and set aside
for having been issued without and/or with grave abuse of discretion amounting
to lack of jurisdiction.
The CA rendered a Decision, dated August 31, 2005, granting the
respondent's petition, and ruled that:
WHEREFORE, the respondent court is by us declared to have
NO JURISDICTION OVER THE CASE BELOW and, consequently, all
the proceedings, orders and processes it has so far issued therein are
ANNULED and SET ASIDE. Respondent court is ordered to DISMISS its
Civil Case No. 04-886.
SO ORDERED.
Petitioner filed a motion for reconsideration, 13 which was denied by the CA
in its Resolution dated March 7, 2006.
Hence, the instant petition assigning the following error:
THE COURT OF APPEALS' CONCLUSION THAT THE SUBJECT
MATTER IS A LABOR DISPUTE OR GRIEVANCE IS CONTRARY TO
LAW AND JURISPRUDENCE.
The main issue in this case is whether the RTC has jurisdiction over the
petitioners' action challenging the legality or constitutionality of the provisions on
the compulsory retirement age contained in the CBA between respondent PAL
and FASAP.
Petitioners submit that the RTC has jurisdiction in all civil actions in which
the subject of the litigation is incapable of pecuniary estimation and in all cases
not within the exclusive jurisdiction of any court, tribunal, person or body
exercising judicial or quasi-judicial functions. The RTC has the power to
adjudicate all controversies except those expressly witheld n from the plenary
powers of the court. Accordingly, it has the power to decide issues of
constitutionality or legality of the provisions of Section 144, Part A of the PAL-
FASAP CBA. As the issue involved is constitutional in character, the labor arbiter
or the National Labor Relations Commission (NLRC) has no jurisdiction over the
case and, thus, the petitioners pray that judgment be rendered on the merits
declaring Section 144, Part A of the PAL-FASAP CBA null and void.
Respondent, on the other hand, alleges that the labor tribunals have
jurisdiction over the present case, as the controversy partakes of a labor dispute.
The dispute concerns the terms and conditions of petitioners' employment in
PAL, specifically their retirement age. The RTC has no jurisdiction over the
subject matter of petitioners' petition for declaratory relief because the Voluntary
Arbitrator or panel of Voluntary Arbitrators have original and exclusive jurisdiction
to hear and decide all unresolved grievances arising from the interpretation or
implementation of the CBA. Regular courts have no power to set and fix the
terms and conditions of employment. Finally, respondent alleged that petitioners'
prayer before this Court to resolve their petition for declaratory relief on the
merits is procedurally improper and baseless.
The petition is meritorious.
Jurisdiction of the court is determined on the basis of the material
allegations of the complaint and the character of the relief prayed for irrespective
of whether plaintiff is entitled to such relief. 14
In the case at bar, the allegations in the petition for declaratory relief plainly
show that petitioners' cause of action is the annulment of Section 144, Part A of
the PAL-FASAP CBA. The pertinent portion of the petition recites:
CAUSE OF ACTION
24. Petitioners have the constitutional right to fundamental
equality with men under Section 14, Article II, 1987 of the Constitution
and, within the specific context of this case, with the male cabin
attendants of Philippine Airlines.
26. Petitioners have the statutory right to equal work and
employment opportunities with men under Article 3, Presidential Decree
No. 442, The Labor Code and, within the specific context of this case,
with the male cabin attendants of Philippine Airlines.
27. It is unlawful, even criminal, for an employer to discriminate
against women employees with respect to terms and conditions of
employment solely on account of their sex under Article 135 of the Labor
Code as amended by Republic Act No. 6725 or the Act Strengthening
Prohibition on Discrimination Against Women.  EScAID

28. This discrimination against Petitioners is likewise against the

Convention on the Elimination of All Forms of Discrimination Against
Women (hereafter, "CEDAW"), a multilateral convention that the
Philippines ratified in 1981. The Government and its agents, including
our courts, not only must condemn all forms of discrimination against
women, but must also implement measures towards its elimination.
29. This case is a matter of public interest not only because of
Philippine Airlines' violation of the Constitution and existing laws, but
also because it highlights the fact that twenty-three years after the
Philippine Senate ratified the CEDAW, discrimination against women
continues.
31. Section 114, Part A of the PAL-FASAP 2000-20005 CBA on
compulsory retirement from service is invidiously discriminatory against
and manifestly prejudicial to Petitioners because, they are compelled to
retire at a lower age (fifty-five (55) relative to their male counterparts
(sixty (60)).
33. There is no reasonable, much less lawful, basis for Philippine
Airlines to distinguish, differentiate or classify cabin attendants on the
basis of sex and thereby arbitrarily set a lower compulsory retirement
age of 55 for Petitioners for the sole reason that they are women.
 
37. For being patently unconstitutional and unlawful, Section 114,
Part A of the PAL-FASAP 2000-2005 CBA must be declared invalid and
stricken down to the extent that it discriminates against petitioner.
38. Accordingly, consistent with the constitutional and statutory
guarantee of equality between men and women, Petitioners should be
adjudged and declared entitled, like their male counterparts, to work until
they are sixty (60) years old.
PRAYER
WHEREFORE, it is most respectfully prayed that the Honorable
Court:
c. after trial on the merits:
 (I) declare Section 114, Part A of the PAL-FASAP 2000-2005
CBA INVALID, NULL and VOID to the extent that it discriminates against
Petitioners; . . . .
From the petitioners' allegations and relief prayed for in its petition, it is
clear that the issue raised is whether Section 144, Part A of the PAL-FASAP
CBA is unlawful and unconstitutional. Here, the petitioners' primary relief in Civil
Case No. 04-886 is the annulment of Section 144, Part A of the PAL-FASAP
CBA, which allegedly discriminates against them for being female flight
attendants. The subject of litigation is incapable of pecuniary estimation,
exclusively cognizable by the RTC, pursuant to Section 19 (1) of Batas
Pambansa Blg. 129, as amended. 15 Being an ordinary civil action, the same is
beyond the jurisdiction of labor tribunals. 
TIEHDC

The said issue cannot be resolved solely by applying the Labor Code.

Rather, it requires the application of the Constitution, labor statutes, law on
contracts and the Convention on the Elimination of All Forms of Discrimination
Against Women, 16 and the power to apply and interpret
the Constitution and CEDAW is within the jurisdiction of trial courts, a court of
general jurisdiction. In Georg Grotjahn GMBH & Co. v. Isnani, 17 this Court held
that not every dispute between an employer and employee involves matters that
only labor arbiters and the NLRC can resolve in the exercise of their adjudicatory
or quasi-judicial powers. The jurisdiction of labor arbiters and the NLRC under
Article 217 of the Labor Code is limited to disputes arising from an employer-
employee relationship which can only be resolved by reference to the Labor
Code, other labor statutes, or their collective bargaining agreement.
Not every controversy or money claim by an employee against the
employer or vice-versa is within the exclusive jurisdiction of the labor arbiter.
Actions between employees and employer where the employer-employee
relationship is merely incidental and the cause of action precedes from a different
source of obligation is within the exclusive jurisdiction of the regular
court. 18 Here, the employer-employee relationship between the parties is merely
incidental and the cause of action ultimately arose from different sources of
obligation, i.e., the Constitution and CEDAW.
Thus, where the principal relief sought is to be resolved not by reference to
the Labor Code or other labor relations statute or a collective bargaining
agreement but by the general civil law, the jurisdiction over the dispute belongs
to the regular courts of justice and not to the labor arbiter and the NLRC. In such
situations, resolution of the dispute requires expertise, not in labor management
relations nor in wage structures and other terms and conditions of employment,
but rather in the application of the general civil law. Clearly, such claims fall
outside the area of competence or expertise ordinarily ascribed to labor arbiters
and the NLRC and the rationale for granting jurisdiction over such claims to these
agencies disappears. 19
If We divest the regular courts of jurisdiction over the case, then which
tribunal or forum shall determine the constitutionality or legality of the assailed
CBA provision?
This Court holds that the grievance machinery and voluntary arbitrators do
not have the power to determine and settle the issues at hand. They have no
jurisdiction and competence to decide constitutional issues relative to the
questioned compulsory retirement age. Their exercise of jurisdiction is futile, as it
is like vesting power to someone who cannot wield it.
In Gonzales v. Climax Mining Ltd., 20 this Court affirmed the jurisdiction of
courts over questions on constitutionality of contracts, as the same involves the
exercise of judicial power. The Court said:
Whether the case involves void or voidable contracts is still a
judicial question. It may, in some instances, involve questions of fact
especially with regard to the determination of the circumstances of the
execution of the contracts. But the resolution of the validity or voidness
of the contracts remains a legal or judicial question as it requires the
exercise of judicial function. It requires the ascertainment of what laws
are applicable to the dispute, the interpretation and application of those
laws, and the rendering of a judgment based thereon. Clearly, the
dispute is not a mining conflict. It is essentially judicial. The complaint
was not merely for the determination of rights under the mining contracts
since the very validity of those contracts is put in issue. 
DTIaCS

In Saura v. Saura, Jr., 21 this Court emphasized the primacy of the regular

court's judicial power enshrined in the Constitution that is true that the trend is
towards vesting administrative bodies like the SEC with the power to adjudicate
matters coming under their particular specialization, to insure a more
knowledgeable solution of the problems submitted to them. This would also
relieve the regular courts of a substantial number of cases that would otherwise
swell their already clogged dockets. But as expedient as this policy may be, it
should not deprive the courts of justice of their power to decide ordinary
cases in accordance with the general laws that do not require any
particular expertise or training to interpret and apply. Otherwise, the
creeping take-over by the administrative agencies of the judicial power
vested in the courts would render the judiciary virtually impotent in the
discharge of the duties assigned to it by the  Constitution.
To be sure, in Rivera v. Espiritu, 22 after Philippine Airlines (PAL) and PAL
Employees Association (PALEA) entered into an agreement, which includes the
provision to suspend the PAL-PALEA CBA for 10 years, several employees
questioned its validity via a petition for certiorari directly to the Supreme Court.
They said that the suspension was unconstitutional and contrary to public policy.
Petitioners submit that the suspension was inordinately long, way beyond the
maximum statutory life of 5 years for a CBA provided for in Article 253-A of
the Labor Code. By agreeing to a 10-year suspension, PALEA, in effect,
abdicated the workers' constitutional right to bargain for another CBA at the
mandated time.
In that case, this Court denied the petition for certiorari, ruling that there is
available to petitioners a plain, speedy, and adequate remedy in the ordinary
course of law. The Court said that while the petition was denominated as one for
certiorari and prohibition, its object was actually the nullification of the PAL-
PALEA agreement. As such, petitioners' proper remedy is an ordinary civil action
for annulment of contract, an action which properly falls under the jurisdiction of
the regional trial courts.
The change in the terms and conditions of employment, should Section
144 of the CBA be held invalid, is but a necessary and unavoidable consequence
of the principal relief sought, i.e., nullification of the alleged discriminatory
provision in the CBA. Thus, it does not necessarily follow that a resolution of
controversy that would bring about a change in the terms and conditions of
employment is a labor dispute, cognizable by labor tribunals. It is unfair to
preclude petitioners from invoking the trial court's jurisdiction merely because it
may eventually result into a change of the terms and conditions of employment.
Along that line, the trial court is not asked to set and fix the terms and conditions
of employment, but is called upon to determine whether CBA is consistent with
the laws.
Although the CBA provides for a procedure for the adjustment of
grievances, such referral to the grievance machinery and thereafter to voluntary
arbitration would be inappropriate to the petitioners, because the union and the
management have unanimously agreed to the terms of the CBA and their interest
is unified. 
HaIATC

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

. . . Hence, only disputes involving the union and the company
shall be referred to the grievance machinery or voluntary arbitrators.
In the instant case, both the union and the company are united or
have come to an agreement regarding the dismissal of private
respondents. No grievance between them exists which could be brought
to a grievance machinery. The problem or dispute in the present case is
between the union and the company on the one hand and some union
and non-union members who were dismissed, on the other hand. The
dispute has to be settled before an impartial body. The grievance
machinery with members designated by the union and the company
cannot be expected to be impartial against the dismissed employees.
 Due process demands that the dismissed workers' grievances be
ventilated before an impartial body. . . . .
Applying the same rationale to the case at bar, it cannot be said
that the "dispute" is between the union and petitioner company because
both have previously agreed upon the provision on "compulsory
retirement" as embodied in the CBA. Also, it was only private respondent
on his own who questioned the compulsory retirement. . . . .
In the same vein, the dispute in the case at bar is not between FASAP and
respondent PAL, who have both previously agreed upon the provision on the
compulsory retirement of female flight attendants as embodied in the CBA. The
dispute is between respondent PAL and several female flight attendants who
questioned the provision on compulsory retirement of female flight attendants.
Thus, applying the principle in the aforementioned case cited, referral to the
grievance machinery and voluntary arbitration would not serve the interest of the
petitioners.
 

Besides, a referral of the case to the grievance machinery and to the

voluntary arbitrator under the CBA would be futile because respondent already
implemented Section 114, Part A of PAL-FASAP CBA when several of its female
flight attendants reached the compulsory retirement age of 55.
Further, FASAP, in a letter dated July 12, 2004, addressed to PAL,
submitted its association's bargaining proposal for the remaining period of 2004-
2005 of the PAL-FASAP CBA, which includes the renegotiation of the subject
Section 144. However, FASAP's attempt to change the questioned provision was
shallow and superficial, to say the least, because it exerted no further efforts to
pursue its proposal. When petitioners in their individual capacities questioned the
legality of the compulsory retirement in the CBA before the trial court, there was
no showing that FASAP, as their representative, endeavored to adjust, settle or
negotiate with PAL for the removal of the difference in compulsory age retirement
between its female and male flight attendants, particularly those employed before
November 22, 1996. Without FASAP's active participation on behalf of its female
flight attendants, the utilization of the grievance machinery or voluntary arbitration
would be pointless.
The trial court in this case is not asked to interpret Section 144, Part A of
the PAL-FASAP CBA. Interpretation, as defined in Black's Law Dictionary, is the
art of or process of discovering and ascertaining the meaning of a statute, will,
contract, or other written document. 24 The provision regarding the compulsory
retirement of flight attendants is not ambiguous and does not require
interpretation. Neither is there any question regarding the implementation of the
subject CBA provision, because the manner of implementing the same is clear in
itself. The only controversy lies in its intrinsic validity. 
AaDSTH
 Although it is a rule that a contract freely entered between the parties
should be respected, since a contract is the law between the parties, said rule is
not absolute.
In Pakistan International Airlines Corporation v. Ople, 25 this Court held
that:
The principle of party autonomy in contracts is not, however, an
absolute principle. The rule in Article 1306, of our Civil Code is that the
contracting parties may establish such stipulations as they may deem
convenient, "provided they are not contrary to law, morals, good
customs, public order or public policy". Thus, counter-balancing the
principle of autonomy of contracting parties is the equally general rule
that provisions of applicable law, especially provisions relating to matters
affected with public policy, are deemed written into the contract. Put a
little differently, the governing principle is that parties may not contract
away applicable provisions of law especially peremptory provisions
dealing with matters heavily impressed with public interest. The law
relating to labor and employment is clearly such an area and parties are
not at liberty to insulate themselves and their relationships from the
impact of labor laws and regulations by simply contracting with each
other.
Moreover, the relations between capital and labor are not merely
contractual. They are so impressed with public interest that labor contracts must
yield to the common good. . . . 26 The supremacy of the law over contracts is
explained by the fact that labor contracts are not ordinary contracts; these are
imbued with public interest and therefore are subject to the police power of the
state. 27 It should not be taken to mean that retirement provisions agreed upon in
the CBA are absolutely beyond the ambit of judicial review and nullification. A
CBA, as a labor contract, is not merely contractual in nature but impressed with
public interest. If the retirement provisions in the CBA run contrary to law, public
morals, or public policy, such provisions may very well be voided. 28
Finally, the issue in the petition for certiorari brought before the CA by the
respondent was the alleged exercise of grave abuse of discretion of the RTC in
taking cognizance of the case for declaratory relief. When the CA annuled and
set aside the RTC's order, petitioners sought relief before this Court through the
instant petition for review under Rule 45. A perusal of the petition before Us,
petitioners pray for the declaration of the alleged discriminatory provision in the
CBA against its female flight attendants.
This Court is not persuaded. The rule is settled that pure questions of fact
may not be the proper subject of an appeal by certiorari under Rule 45 of
the Revised Rules of Court. This mode of appeal is generally limited only to
questions of law which must be distinctly set forth in the petition. The Supreme
Court is not a trier of facts. 29
The question as to whether said Section 114, Part A of the PAL-FASAP
CBA is discriminatory or not is a question of fact. This would require the
presentation and reception of evidence by the parties in order for the trial court to
ascertain the facts of the case and whether said provision violates
the Constitution, statutes and treaties. A full-blown trial is necessary, which
jurisdiction to hear the same is properly lodged with the the n RTC. Therefore, a
remand of this case to the RTC for the proper determination of the merits of the
petition for declaratory relief is just and proper.
WHEREFORE, the petition is PARTLY GRANTED. The Decision and
Resolution of the Court of Appeals, dated August 31, 2005 and March 7, 2006,
respectively, in CA-G.R. SP. No. 86813 are REVERSED and SET ASIDE. The
Regional Trial Court of Makati City, Branch 147 is DIRECTED to continue the
proceedings in Civil Case No. 04-886 with deliberate dispatch.  DCScaT

SO ORDERED.
 (Halagueña v. Philippine Airlines, Inc., G.R. No. 172013, [October 2, 2009], 617
|||

PHIL 502-521)

G.R. No. 162419. July 10, 2007.]

PAUL V. SANTIAGO, petitioner, vs. CF SHARP CREW

MANAGEMENT, INC., respondent.

DECISION

TINGA, J  :
p

At the heart of this case involving a contract between a seafarer, on one

hand, and the manning agent and the foreign principal, on the other, is this
erstwhile unsettled legal quandary: whether the seafarer, who was prevented
from leaving the port of Manila and refused deployment without valid reason but
whose POEA-approved employment contract provides that the employer-
employee relationship shall commence only upon the seafarer's actual departure
from the port in the point of hire, is entitled to relief?
This treats of the petition for review filed by Paul V. Santiago (petitioner)
assailing the Decision and Resolution of the Court of Appeals dated 16 October
2003 and 19 February 2004, respectively, in CA-G.R. SP No. 68404. 1
Petitioner had been working as a seafarer for Smith Bell Management, Inc.
(respondent) for about five (5) years. 2 On 3 February 1998, petitioner signed a
new contract of employment with respondent, with the duration of nine (9)
months. He was assured of a monthly salary of US$515.00, overtime pay and
other benefits. The following day or on 4 February 1998, the contract was
approved by the Philippine Overseas Employment Administration (POEA).
Petitioner was to be deployed on board the "MSV Seaspread" which was
scheduled to leave the port of Manila for Canada on 13 February 1998.
A week before the scheduled date of departure, Capt. Pacifico Fernandez,
respondent's Vice President, sent a facsimile message to the captain of "MSV
Seaspread," which reads:
I received a phone call today from the wife of Paul Santiago in
Masbate asking me not to send her husband to MSV Seaspread
anymore. Other callers who did not reveal their identity gave me some
feedbacks that Paul Santiago this time if allowed to depart will jump ship
in Canada like his brother Christopher Santiago, O/S who jumped ship
from the C.S. Nexus in Kita-kyushu, Japan last December, 1997.  CScTED

We do not want this to happen again and have the vessel

penalized like the C.S. Nexus in Japan.
Forewarned is forearmed like his brother when his brother when
he was applying he behaved like a Saint but in his heart he was a
serpent. If you agree with me then we will send his replacement.
Kindly advise. 3
To this message the captain of "MSV Seaspread" replied:
Many thanks for your advice concerning P. Santiago, A/B. Please
cancel plans for him to return to Seaspread. 4
On 9 February 1998, petitioner was thus told that he would not be leaving
for Canada anymore, but he was reassured that he might be considered for
deployment at some future date.
Petitioner filed a complaint for illegal dismissal, damages, and attorney's
fees against respondent and its foreign principal, Cable and Wireless (Marine)
Ltd. 5 The case was raffled to Labor Arbiter Teresita Castillon-Lora, who ruled
that the employment contract remained valid but had not commenced since
petitioner was not deployed. According to her, respondent violated the rules and
regulations governing overseas employment when it did not deploy petitioner,
causing petitioner to suffer actual damages representing lost salary income for
nine (9) months and fixed overtime fee, all amounting to US$7,209.00.
The labor arbiter held respondent liable. The dispositive portion of her
Decision dated 29 January 1999 reads:
WHEREFORE, premises considered, respondent is hereby
Ordered to pay complainant actual damages in the amount of
US$7,209.00 plus 10% attorney's fees, payable in Philippine peso at the
rate of exchange prevailing at the time of payment. 
TacSAE

All the other claims are hereby DISMISSED for lack of merit.
SO ORDERED. 6
On appeal by respondent, the National Labor Relations Commission
(NLRC) ruled that there is no employer-employee relationship between petitioner
and respondent because under the Standard Terms and Conditions Governing
the Employment of Filipino Seafarers on Board Ocean Going Vessels (POEA
Standard Contract), the employment contract shall commence upon actual
departure of the seafarer from the airport or seaport at the point of hire and with a
POEA-approved contract. In the absence of an employer-employee relationship
between the parties, the claims for illegal dismissal, actual damages, and
attorney's fees should be dismissed. 7 On the other hand, the NLRC found
respondent's decision not to deploy petitioner to be a valid exercise of its
management prerogative. 8 The NLRC disposed of the appeal in this wise:
WHEREFORE, in the light of the foregoing, the assailed Decision
dated January 29, 1999 is hereby AFFIRMED in so far as other claims
are concerned and with MODIFICATION by VACATING the award of
actual damages and attorney's fees as well as excluding Pacifico
Fernandez as party respondent.
SO ORDERED. 9
Petitioner moved for the reconsideration of the NLRC's Decision but his
motion was denied for lack of merit. 10 He elevated the case to the Court of
Appeals through a petition for certiorari.
In its Decision 11 dated 16 October 2003, the Court of Appeals noted that
there is an ambiguity in the NLRC's Decision when it affirmed with modification
the labor arbiter's Decision, because by the very modification introduced by the
Commission (vacating the award of actual damages and attorney's fees), there is
nothing more left in the labor arbiter's Decision to affirm. 12
According to the appellate court, petitioner is not entitled to actual
damages because damages are not recoverable by a worker who was not
deployed by his agency within the period prescribed in the POEA Rules. 13 It
agreed with the NLRC's finding that petitioner's non-deployment was a valid
exercise of respondent's management prerogative. 14 It added that since
petitioner had not departed from the Port of Manila, no employer-employee
relationship between the parties arose and any claim for damages against the
so-called employer could have no leg to stand on. 15  HaECDI

Petitioner's subsequent motion for reconsideration was denied on 19

February 2004. 16
The present petition is anchored on two grounds, to wit:
A. The Honorable Court of Appeals committed a serious error of
law when it ignored [S]ection 10 of Republic Act [R.A.] No. 8042
otherwise known as the Migrant Worker's Act of 1995 as well as Section
29 of the Standard Terms and Conditions Governing the Employment of
Filipino Seafarers On-Board Ocean-Going Vessels (which is deemed
incorporated under the petitioner's POEA approved Employment
Contract) that the claims or disputes of the Overseas Filipino Worker by
virtue of a contract fall within the jurisdiction of the Labor Arbiter of the
NLRC.
B. The Honorable Court of Appeals committed a serious error
when it disregarded the required quantum of proof in labor cases, which
is substantial evidence, thus a total departure from established
jurisprudence on the matter. 17
Petitioner maintains that respondent violated the Migrant Workers Act and
the POEA Rules when it failed to deploy him within thirty (30) calendar days
without a valid reason. In doing so, it had unilaterally and arbitrarily prevented the
consummation of the POEA-approved contract. Since it prevented his
deployment without valid basis, said deployment being a condition to the
consummation of the POEA contract, the contract is deemed consummated, and
therefore he should be awarded actual damages, consisting of the stipulated
salary and fixed overtime pay. 18 Petitioner adds that since the contract is
deemed consummated, he should be considered an employee for all intents and
purposes, and thus the labor arbiter and/or the NLRC has jurisdiction to take
cognizance of his claims. 19
Petitioner additionally claims that he should be considered a regular
employee, having worked for five (5) years on board the same vessel owned by
the same principal and manned by the same local agent. He argues that
respondent's act of not deploying him was a scheme designed to prevent him
from attaining the status of a regular employee. 20
Petitioner submits that respondent had no valid and sufficient cause to
abandon the employment contract, as it merely relied upon alleged phone calls
from his wife and other unnamed callers in arriving at the conclusion that he
would jump ship like his brother. He points out that his wife had executed an
affidavit 21 strongly denying having called respondent, and that the other alleged
callers did not even disclose their identities to respondent. 22 Thus, it was error
for the Court of Appeals to adopt the unfounded conclusion of the NLRC, as the
same was not based on substantial evidence. 23  aHATDI

On the other hand, respondent argues that the Labor Arbiter has no
jurisdiction to award petitioner's monetary claims. His employment with
respondent did not commence because his deployment was withheld for a valid
reason. Consequently, the labor arbiter and/or the NLRC cannot entertain
adjudication of petitioner's case much less award damages to him. The
controversy involves a breach of contractual obligations and as such is
cognizable by civil courts. 24 On another matter, respondent claims that the
second issue posed by petitioner involves a recalibration of facts which is outside
the jurisdiction of this Court. 25
There is some merit in the petition.
There is no question that the parties entered into an employment contract
on 3 February 1998, whereby petitioner was contracted by respondent to render
services on board "MSV Seaspread" for the consideration of US$515.00 per
month for nine (9) months, plus overtime pay. However, respondent failed to
deploy petitioner from the port of Manila to Canada. Considering that petitioner
was not able to depart from the airport or seaport in the point of hire, the
employment contract did not commence, and no employer-employee relationship
was created between the parties. 26
However, a distinction must be made between the perfection of the
employment contract and the commencement of the employer-employee
relationship. The perfection of the contract, which in this case coincided with the
date of execution thereof, occurred when petitioner and respondent agreed on
the object and the cause, as well as the rest of the terms and conditions therein.
The commencement of the employer-employee relationship, as earlier
discussed, would have taken place had petitioner been actually deployed from
the point of hire. Thus, even before the start of any employer-employee
relationship, contemporaneous with the perfection of the employment contract
was the birth of certain rights and obligations, the breach of which may give rise
to a cause of action against the erring party. Thus, if the reverse had happened,
that is the seafarer failed or refused to be deployed as agreed upon, he would be
liable for damages.
Moreover, while the POEA Standard Contract must be recognized and
respected, neither the manning agent nor the employer can simply prevent a
seafarer from being deployed without a valid reason.
 Respondent's act of preventing petitioner from departing the port of Manila
and boarding "MSV Seaspread" constitutes a breach of contract, giving rise to
petitioner's cause of action. Respondent unilaterally and unreasonably reneged
on its obligation to deploy petitioner and must therefore answer for the actual
damages he suffered.
We take exception to the Court of Appeals' conclusion that damages are
not recoverable by a worker who was not deployed by his agency. The fact that
the POEA Rules 27 are silent as to the payment of damages to the affected
seafarer does not mean that the seafarer is precluded from claiming the same.
The sanctions provided for non-deployment do not end with the suspension or
cancellation of license or fine and the return of all documents at no cost to the
worker. They do not forfend a seafarer from instituting an action for damages
against the employer or agency which has failed to deploy him.  HaIESC

The POEA Rules only provide sanctions which the POEA can impose on

erring agencies. It does not provide for damages and money claims recoverable
by aggrieved employees because it is not the POEA, but the NLRC, which has
jurisdiction over such matters.
Despite the absence of an employer-employee relationship between
petitioner and respondent, the Court rules that the NLRC has jurisdiction over
petitioner's complaint. The jurisdiction of labor arbiters is not limited to claims
arising from employer-employee relationships. Section 10 of R.A. No.
8042 (Migrant Workers Act), provides that:
Sec. 10. Money Claims. — Notwithstanding any provision of law
to the contrary, the Labor Arbiters of the National Labor Relations
Commission (NLRC) shall have the original and exclusive jurisdiction to
hear and decide, within ninety (90) calendar days after the filing of the
complaint, the claims arising out of an employer-employee
relationship or by virtue of any law or contract involving Filipino
workers for overseas deployment including claims for actual,
moral, exemplary and other forms of damages. . . . [Emphasis
supplied]
Since the present petition involves the employment contract entered into
by petitioner for overseas employment, his claims are cognizable by the labor
arbiters of the NLRC.
Article 2199 of the Civil Code provides that one is entitled to an adequate
compensation only for such pecuniary loss suffered by him as he has duly
proved. Respondent is thus liable to pay petitioner actual damages in the form of
the loss of nine (9) months' worth of salary as provided in the contract. He is not,
however, entitled to overtime pay. While the contract indicated a fixed overtime
pay, it is not a guarantee that he would receive said amount regardless of
whether or not he rendered overtime work. Even though petitioner was
"prevented without valid reason from rendering regular much less overtime
service," 28 the fact remains that there is no certainty that petitioner will perform
overtime work had he been allowed to board the vessel. The amount of
US$286.00 stipulated in the contract will be paid only if and when the employee
rendered overtime work. This has been the tenor of our rulings in the case
of Stolt-Nielsen Marine Services (Phils.), Inc. v. National Labor Relations
Commission 29 where we discussed the matter in this light:  AaCTcI

The contract provision means that the fixed overtime pay of 30%
would be the basis for computing the overtime pay if and when overtime
work would be rendered. Simply stated, the rendition of overtime work
and the submission of sufficient proof that said work was actually
performed are conditions to be satisfied before a seaman could be
entitled to overtime pay which should be computed on the basis of 30%
of the basic monthly salary. In short, the contract provision guarantees
the right to overtime pay but the entitlement to such benefit must first be
established. Realistically speaking, a seaman, by the very nature of his
job, stays on board a ship or vessel beyond the regular eight-hour work
schedule. For the employer to give him overtime pay for the extra hours
when he might be sleeping or attending to his personal chores or even
just lulling away his time would be extremely unfair and unreasonable. 30
The Court also holds that petitioner is entitled to attorney's fees in the
concept of damages and expenses of litigation. Attorney's fees are recoverable
when the defendant's act or omission has compelled the plaintiff to incur
expenses to protect his interest. 31 We note that respondent's basis for not
deploying petitioner is the belief that he will jump ship just like his brother, a mere
suspicion that is based on alleged phone calls of several persons whose
identities were not even confirmed. Time and again, this Court has upheld
management prerogatives so long as they are exercised in good faith for the
advancement of the employer's interest and not for the purpose of defeating or
circumventing the rights of the employees under special laws or under valid
agreements. 32 Respondent's failure to deploy petitioner is unfounded and
unreasonable, forcing petitioner to institute the suit below. The award of
attorney's fees is thus warranted.
However, moral damages cannot be awarded in this case. While
respondent's failure to deploy petitioner seems baseless and unreasonable, we
cannot qualify such action as being tainted with bad faith, or done deliberately to
defeat petitioner's rights, as to justify the award of moral damages. At most,
respondent was being overzealous in protecting its interest when it became too
hasty in making its conclusion that petitioner will jump ship like his brother.
We likewise do not see respondent's failure to deploy petitioner as an act
designed to prevent the latter from attaining the status of a regular employee.
Even if petitioner was able to depart the port of Manila, he still cannot be
considered a regular employee, regardless of his previous contracts of
employment with respondent. In Millares v. National Labor Relations
Commission, 33 the Court ruled that seafarers are considered contractual
employees and cannot be considered as regular employees under the Labor
Code. Their employment is governed by the contracts they sign every time they
are rehired and their employment is terminated when the contract expires. The
exigencies of their work necessitates that they be employed on a contractual
basis. 34 
CDTHSI

WHEREFORE, petition is GRANTED IN PART. The Decision dated 16

October 2003 and the Resolution dated 19 February 2004 of the Court of
Appeals are REVERSED and SET ASIDE. The Decision of Labor Arbiter
Teresita D. Castillon-Lora dated 29 January 1999 is REINSTATED with the
MODIFICATION that respondent CF Sharp Crew Management, Inc. is ordered to
pay actual or compensatory damages in the amount of US$4,635.00
representing salary for nine (9) months as stated in the contract, and attorney's
fees at the reasonable rate of 10% of the recoverable amount.
SO ORDERED.
 (Santiago v. CF Sharp Crew Management, Inc., G.R. No. 162419, [July 10,
|||

2007], 554 PHIL 63-77)

G.R. No. 142244. November 18, 2002.]

ATLAS FARMS, INC., petitioner, vs. NATIONAL LABOR

RELATIONS COMMISSION, JAIME O. DELA PEÑA and
MARCIAL I. ABION, respondents.

 (Atlas Farms, Inc. v. National Labor Relations Commission, G.R. No. 142244,
|||

[November 18, 2002], 440 PHIL 620-636)

Petitioner seeks the reversal of the decision 1 dated January 10, 2000 of

the Court of Appeals in CA-G.R. SP No. 52780, dismissing its petition
for certiorari against the NLRC, as well as the resolution 2 dated February 24,
2000, denying its motion for reconsideration.
The antecedent facts of the case, as found by the Court of Appeals, 3 are
as follows:
 Private respondent Jaime O. dela Peña was employed as a veterinary aide
by petitioner in December 1975. He was among several employees terminated in
July 1989. On July 8, 1989, he was re-hired by petitioner and given the additional
job of feedmill operator. He was instructed to train selected workers to operate
the feedmill.
On March 13, 1993, 4 Peña was allegedly caught urinating and defecating
on company premises not intended for the purpose. The farm manager of
petitioner issued a formal notice directing him to explain within 24 hours why
disciplinary action should not be taken against him for violating company rules
and regulations. Peña refused, however, to receive the formal notice. He never
bothered to explain, either verbally or in writing, according to petitioner. Thus, on
March 20, 1993, a notice of termination with payment of his monetary benefits
was sent to him. He duly acknowledged receipt of his separation pay of
P13,918.67.
From the start of his employment on July 8, 1989, until his termination on
March 20, 1993, Peña had worked for seven days a week, including holidays,
without overtime, holiday, rest day pay and service incentive leave. At the time of
his dismissal from employment, he was receiving P180 pesos daily wage, or an
average monthly salary of P5,402.
Co-respondent Marcial I. Abion 5 was a carpenter/mason and a
maintenance man whose employment by petitioner commenced on October 8,
1990. Allegedly, he caused the clogging of the fishpond drainage resulting in
damages worth several hundred thousand pesos when he improperly disposed
of the cut grass and other waste materials into the pond's drainage system.
Petitioner sent a written notice to Abion, requiring him to explain what happened,
otherwise, disciplinary action would be taken against him. He refused to receive
the notice and give an explanation, according to petitioner. Consequently, the
company terminated his services on October 27, 1992. He acknowledged receipt
of a written notice of dismissal, with his separation pay.
Like Peña, Abion worked seven days a week, including holidays, without
holiday pay, rest day pay, service incentive leave pay and night shift differential
pay. When terminated on October 27, 1992, Abion was receiving a monthly
salary of P4,500.
Peña and Abion filed separate complaints for illegal dismissal that were
later consolidated. Both claimed that their termination from service was due to
petitioner's suspicion that they were the leaders in a plan to form a union to
compete and replace the existing management-dominated union.
On November 9, 1993, the labor arbiter dismissed their complaints on the
ground that the grievance machinery in the collective bargaining agreement
(CBA) had not yet been exhausted. Private respondents availed of the grievance
process, but later on refiled the case before the NLRC in Region IV. They alleged
"lack of sympathy" on petitioner's part to engage in conciliation proceedings.
Their cases were consolidated in the NLRC. At the initial mandatory
conference, petitioner filed a motion to dismiss, on the ground of lack of
jurisdiction, alleging private respondents themselves admitted that they were
members of the employees' union with which petitioner had an existing CBA.
This being the case, according to petitioner, jurisdiction over the case belonged
to the grievance machinery and thereafter the voluntary arbitrator, as provided in
the CBA.
In a decision dated January 30, 1996, the labor arbiter dismissed the
complaint for lack of merit, finding that the case was one of illegal dismissal and
did not involve the interpretation or implementation of any CBA provision. He
stated that Article 217 (c) of the Labor Code 6 was inapplicable to the case.
Further, the labor arbiter found that although both complainants did not
substantiate their claims of illegal dismissal, there was proof that private
respondents voluntarily accepted their separation pay and petitioner's financial
assistance.
Thus, private respondents brought the case to the NLRC, which reversed
the labor arbiter's decision. Dissatisfied with the NLRC ruling, petitioner went to
the Court of Appeals by way of a petition for review on certiorari under Rule 65,
seeking reinstatement of the labor arbiter's decision. The appellate court denied
the petition and affirmed the NLRC resolution with some modifications, thus:
WHEREFORE, the petition is DENIED. The resolution in NLRC
CA No. 010520-96 is AFFIRMED with the following modifications:
1) The private respondents can not be reinstated, due to their
acceptance of the separation pay offered by the petitioner;
2) The private respondents are entitled to their full back wages;
and,
3) The amount of the separation pay received by private
respondents from petitioner shall not be deducted from their full back
wages.
Costs against petitioner.
SO ORDERED. 7
Petitioner forthwith filed its motion for reconsideration, which was denied in
a resolution dated February 24, 2000, which reads:
Acting on the Motion for Reconsideration filed by petitioner[s]
which drew an opposition from private respondents, the Court resolved
to DENY the aforesaid motion for reconsideration, as the issues raised
 therein have been passed upon by the Court in its questioned decision
and no substantial arguments were presented to warrant its reversal, let
alone modification.
SO ORDERED. 8
In this petition now before us, petitioner alleges that the appellate court
erred in:
I.  . . . DENYING THE PETITION FOR CERTIORARI AND IN EFFECT
AFFIRMING THE RULINGS OF THE PUBLIC RESPONDENT
NLRC THAT THE PRIVATE RESPONDENTS WERE ILLEGALLY
DISMISSED;
II.  . . . RULING THAT THE PRIVATE RESPONDENTS ARE ENTITLED
TO SEPARATION PAY AND FULL BACKWAGES;
III.  . . . RULING THAT PETITIONER IS LIABLE FOR COSTS OF
SUIT. 9
Petitioner contends that the dismissal of private respondents was for a just
and valid cause, pursuant to the provisions of the company's rules and
regulations. It also alleges lack of jurisdiction on the part of the labor arbiter,
claiming that the cases should have been resolved through the grievance
machinery, and eventually referred to voluntary arbitration, as prescribed in the
CBA.
For their part, private respondents contend that they were illegally
dismissed from employment because management discovered that they intended
to form another union, and because they were vocal in asserting, their rights. In
any case, according to private respondents, the petition involves factual issues
that cannot be properly raised in a petition for review on certiorari under Rule 45
of the Revised Rules of Court. 10
In fine, there are three issues to be resolved: 1) whether private
respondents were legally and validly dismissed; 2) whether the labor arbiter and
the NLRC had jurisdiction to decide complaints for illegal dismissal; and 3)
whether petitioner is liable for costs of the suit.
The first issue primarily involves questions of fact, which can serve as
basis for the conclusion that private respondents were legally and validly
dismissed. The burden of proving that the dismissal of private respondents was
legal and valid falls upon petitioner. The NLRC found that petitioner failed to
substantiate its claim that both private respondents committed certain acts that
violated company rules and regulations, 11 hence we find no factual basis to say
that private respondents' dismissal was in order. We see no compelling reason to
deviate from the NLRC ruling that their dismissal was illegal, absent a showing
that it reached its conclusion arbitrarily. 12 Moreover, factual findings of agencies
exercising quasi-judicial functions are accorded not only respect but even finality,
aside from the consideration here that this Court is not a trier of facts. 13
Anent the second issue, Article 217 of the Labor Code provides that labor
arbiters have original and exclusive jurisdiction over termination disputes. A
possible exception is provided in Article 261 of the Labor Code, which provides
that —
The Voluntary Arbitrator or panel of voluntary arbitrators shall
have original and exclusive jurisdiction to hear and decide all unresolved
grievances arising from the interpretation or implementation of the
Collective Bargaining Agreement and those arising from the
interpretation or enforcement of company personnel policies referred to
in the immediately preceding article. Accordingly, violations of a
Collective Bargaining Agreement, except those which are gross in
character, shall no longer be treated as unfair labor practice and shall be
resolved as grievances under the Collective Bargaining Agreement. For
purposes of this article, gross violations of Collective Bargaining
Agreement shall mean flagrant and or malicious refusal to comply with
the economic provisions of such agreement.
The Commission, its Regional Offices and the Regional Directors
of the Department of Labor and Employment shall not entertain disputes,
grievances or matters under the exclusive and original jurisdiction of the
Voluntary Arbitrator or panel of Voluntary Arbitrators and shall
immediately dispose and refer the same to the grievance Machinery or
Arbitration provided in the Collective Bargaining Agreement.
But as held in Vivero vs. CA,  14 "petitioner cannot arrogate into the powers
of Voluntary Arbitrators the original and exclusive jurisdiction of Labor Arbiters
over unfair labor practices, termination disputes, and claims for damages, in the
absence of an express agreement between the parties in order for Article 262 of
the Labor Code [Jurisdiction over other labor disputes] to apply in the case at
bar."
Moreover, per Justice Bellosillo:
It may be observed that under Policy Instruction No. 56 of the
Secretary of Labor, dated 6 April 1993, "Clarifying the Jurisdiction
Between Voluntary Arbitrators and Labor Arbiters Over Termination
Cases and Providing Guidelines for the Referral of Said Cases Originally
Filed with the NLRC to the NCMB," termination cases arising in or
resulting from the interpretation and implementation of collective
bargaining agreements and interpretation and enforcement of company
personnel policies which were initially processed at the various steps of
the plant-level Grievance Procedures under the parties' collective
bargaining agreements fall within the original and exclusive jurisdiction of
the voluntary arbitrator pursuant to Art. 217 (c) and Art. 261 of the Labor
 Code; and, if filed before the Labor Arbiter, these cases shall be
dismissed by the Labor Arbiter for lack of jurisdiction and referred to the
concerned NCMB Regional Branch for appropriate action towards an
expeditious selection by the parties of a Voluntary Arbitrator or Panel of
Arbitrators based on the procedures agreed upon in the CBA.
As earlier stated, the instant case is a termination dispute falling
under the original and exclusive jurisdiction of the Labor Arbiter, and
does not specifically involve the application, implementation or
enforcement of company personnel policies contemplated in Policy
Instruction No. 56. Consequently, Policy Instruction No. 56 does not
apply in the case at bar. 15 . . .
Records show, however, that private respondents sought without success
to avail of the grievance procedure in their CBA. 16 On this point, petitioner
maintains that by so doing, private respondents recognized that their cases still
fell under the grievance machinery. According to petitioner, without having
exhausted said machinery, the private respondents filed their action before the
NLRC, in a clear act of forum-shopping. 17 However, it is worth pointing out that
private respondents went to the NLRC only after the labor arbiter dismissed their
original complaint for illegal dismissal. Under these circumstances private
respondents had to find another avenue for redress. We agree with the NLRC
that it was petitioner who failed to show proof that it took steps to convene the
grievance machinery after the labor arbiter first dismissed the complaints for
illegal dismissal and directed the parties to avail of the grievance procedure
under Article VII of the existing CBA. They could not now be faulted for
attempting to find an impartial forum, after petitioner failed to listen to them and
after the intercession of the labor arbiter proved futile. The NLRC had aptly
concluded in part that private respondents had already exhausted the remedies
under the grievance procedure. 18 It erred only in finding that their cause of action
was ripe for arbitration.
In the case of Maneja vs. NLRC,  19 we held that the dismissal case does
not fall within the phrase "grievances arising from the interpretation or
implementation of the collective bargaining agreement and those arising from the
interpretation or enforcement of company personnel policies." In Maneja, the
hotel employee was dismissed without hearing. We ruled that her dismissal was
unjustified, and her right to due process was violated, absent the twin
requirements of notice and hearing. We also held that the labor arbiter had
original and exclusive jurisdiction over the termination case, and that it was error
to give the voluntary arbitrator jurisdiction over the illegal dismissal case.
In Vivero vs. CA, 20 private respondents attempted to justify the jurisdiction
of the voluntary arbitrator over a termination dispute alleging that the issue
involved the interpretation and implementation of the grievance procedure in the
CBA. There, we held that since what was challenged was the legality of the
employee's dismissal for lack of cause and lack of due process, the case was
primarily a termination dispute. The issue of whether there was proper
interpretation and implementation of the CBA provisions came into play only
because the grievance procedure in the CBA was not observed, after he sought
his union's assistance. Since the real issue then was whether there was a valid
termination, there was no reason to invoke the need to interpret nor question an
implementation of any CBA provision.
One significant fact in the present petition also needs stressing. Pursuant
to Article 260 21 of the Labor Code, the parties to a CBA shall name or designate
their respective representatives to the grievance machinery and if the grievance
is unsettled in that level, it shall automatically be referred to the voluntary
arbitrators designated in advance by the parties to a CBA. Consequently only
disputes involving the union and the company shall be referred to the grievance
machinery or voluntary arbitrators. In these termination cases of private
respondents, the union had no participation, it having failed to object to the
dismissal of the employees concerned by the petitioner. It is obvious that
arbitration without the union's active participation on behalf of the dismissed
employees would be pointless, or even prejudicial to their cause.
Coming to the merits of the petition, the NLRC found that petitioner did not
comply with the requirements of a valid dismissal. For a dismissal to be valid, the
employer must show that: (1) the employee was accorded due process, and (2)
the dismissal must be for any of the valid causes provided for by law. 22 No
evidence was shown that private respondents refused, as alleged, to receive the
notices requiring them to show cause why no disciplinary action should be taken
against them. Without proof of notice, private respondents who were
subsequently dismissed without hearing were also deprived of a chance to air
their side at the level of the grievance machinery. Given the fact of dismissal, it
can be said that the cases were effectively removed from the jurisdiction of the
voluntary arbitrator, thus placing them within the jurisdiction of the labor arbiter.
Where the dispute is just in the interpretation, implementation or enforcement
stage, it may be referred to the grievance machinery set up in the CBA, or
brought to voluntary arbitration. But, where there was already actual termination,
with alleged violation of the employee's rights, it is already cognizable by the
labor arbiter. 23
In sum, we conclude that the labor arbiter and then the NLRC had
jurisdiction over the cases involving private respondents' dismissal, and no error
was committed by the appellate court in upholding their assumption of
jurisdiction.
However, we find that a modification of the monetary awards is in order. As
a consequence of their illegal dismissal, private respondents are entitled to
reinstatement to their former positions. But since reinstatement is no longer
feasible because petitioner had already closed its shop, separation pay in lieu of
reinstatement shall be awarded. 24 A terminated employee's receipt of his
separation pay and other monetary benefits does not preclude reinstatement or
full benefits under the law, should reinstatement be no longer possible. 25 As held
in Cariño vs. ACCFA:  26
Acceptance of those benefits would not amount to estoppel. The
reason is plain. Employer and employee, obviously, do not stand on the
same footing. The employer drove the employee to the wall. The latter
must have to get hold of the money. Because out of job, he had to face
the harsh necessities of life. He thus found himself in no position to resist
money proffered. His, then, is a case of adherence, not of choice. One
thing sure, however, is that petitioners did not relent their claim. They
pressed it. They are deemed not to have waived their rights. Renuntiato
non praesumitur.
Conformably, private respondents are entitled to separation pay equivalent
to one month's salary for every year of service, in lieu of reinstatement. 27 As
regards the award of damages, in order not to further delay the disposition of this
case, we find it necessary to expressly set forth the extent of the backwages as
awarded by the appellate court. Pursuant to R.A. 6715, as amended, private
respondents shall be entitled to full backwages computed from the time of their
illegal dismissal up to the date of promulgation of this decision without
qualification, considering that reinstatement is no longer practicable under the
circumstances. 28
Having found private respondents' dismissal to be illegal, and the labor
arbiter and the NLRC duly vested with jurisdiction to hear and decide their cases,
we agree with the appellate court that petitioner should pay the costs of suit.
WHEREFORE, the petition is DENIED for lack of merit. The decision of the
Court of Appeals in CA-G.R. SP No. 52780 is AFFIRMED with the
MODIFICATION that petitioner is ordered to pay private respondents (a)
separation pay, in lieu of their reinstatement, equivalent to one month's salary for
every year of service, (b) full backwages from the date of their dismissal up to the
date of the promulgation of this decision, together with (c) the costs of suit.
SO ORDERED.
 (Atlas Farms, Inc. v. National Labor Relations Commission, G.R. No. 142244,
|||

[November 18, 2002], 440 PHIL 620-636)

G.R. No. 121948. October 8, 2001.]

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

 On January 3, 1990, Benedicto Faburada, Sisinita Vilar, Imelda Tamayo

|||

and Harold Catipay, private respondents, filed a complaint against the Perpetual
Help Credit Cooperative, Inc. (PHCCI), petitioner, with the Arbitration Branch,
Department of Labor and Employment (DOLE), Dumaguete City, for illegal
dismissal, premium pay on holidays and rest days, separation pay, wage
differential, moral damages, and attorney's fees.
Forthwith, petitioner PHCCI filed a motion to dismiss the complaint on the
ground that there is no employer-employee relationship between them as private
respondents are all members and co-owners of the cooperative. Furthermore,
private respondents have not exhausted the remedies provided in the
cooperative by-laws.
On September 3, 1990, petitioner filed a supplemental motion to dismiss
alleging that Article 121 of R.A. No. 6939, otherwise known as the Cooperative
Development Authority Law which took effect on March 26, 1990, requires
conciliation or mediation within the cooperative before a resort to judicial
proceeding.
On the same date, the Labor Arbiter denied petitioner's motion to dismiss,
holding that the case is impressed with employer-employee relationship and that
the law on cooperatives is subservient to the Labor Code.
On November 23, 1993, the Labor Arbiter rendered a decision, the
dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby
rendered declaring complainants illegally dismissed, thus respondent is
directed to pay Complainants backwages computed from the time they
were illegally dismissed up to the actual reinstatement but subject to the
three year backwages rule, separation pay for one month for every year
of service since reinstatement is evidently not feasible anymore, to pay
complainants 13th month pay, wage differentials and Ten Percent (10%)
attorney's fees from the aggregate monetary award. However,
complainant Benedicto Faburada shall only be awarded what are due
him in proportion to the nine and a half months that he had served the
respondent, he being a part-time employee.
All other claims are hereby dismissed for lack of merit.
 The computation of the foregoing awards is hereto attached and
forms an integral part of this decision."
On appeal, 1 the NLRC affirmed the Labor Arbiter's decision.
Hence, this petition by the PHCCI.
The issue for our resolution is whether or not respondent judge committed
grave abuse of discretion in ruling that there is an employer-employee
relationship between the parties and that private respondents were illegally
dismissed.
Petitioner PHCCI contends that private respondents are its members and
are working for it as volunteers. Not being regular employees, they cannot sue
petitioner. 
TICaEc

In determining the existence of an employer-employee relationship, the

following elements are considered: (1) the selection and engagement of the
worker or the power to hire; (2) the power to dismiss; (3) the payment of wages
by whatever means; and (4) the power to control the worker's conduct, with the
latter assuming primacy in the overall consideration. No particular form of proof is
required to prove the existence of an employer-employee relationship. Any
competent and relevant evidence may show the relationship. 2
The above elements are present here. Petitioner PHCCI, through Mr.
Edilberto Lantaca, Jr., its Manager, hired private respondents to work for it. They
worked regularly on regular working hours, were assigned specific duties, were
paid regular wages and made to accomplish daily time records just like any other
regular employee. They worked under the supervision of the cooperative
manager. But unfortunately, they were dismissed.
That an employer-employee exists between the parties is shown by the
averments of private respondents in their respective affidavits, carefully
considered by respondent NLRC in affirming the Labor Arbiter's decision, thus:
Benedicto Faburada —Regular part-time Computer
programmer/operator. Worked with the Cooperative since June 1, 1988
up to December 29, 1989. Work schedule: Tuesdays and Thursdays,
from 1:00 p.m. to 5:30 p.m. and every Saturday from 8:00 to 11:30 a.m.
and 1:00 to 4:00 p.m. and for at least three (3) hours during
Sundays. Monthly salary: P1,000.00 — from June to December 1988;
P1,350.00 — from January to June 1989; and P1,500.00 from July to
December 1989. Duties: Among others, — Enter data into the computer;
compute interests on savings deposits, effect mortuary deductions and
dividends on fixed deposits; maintain the masterlist of the cooperative
members; perform various forms for mimeographing; and perform such
other duties as may be assigned from time to time.
 Sisinita Vilar — Clerk. Worked with the Cooperative since
December 1, 1987 up to December 29, 1989. Work schedule: Regular
working hours. Monthly salary: P500.00 — from December 1, 1987 to
December 31, 1988; P1,000.00 — from January 1, 1989 to June 30,
1989; and P1,150.00 — from July 1, 1989 to December 31,
1989. Duties: Among others, Prepare summary of salary advances,
journal vouchers, daily summary of disbursements to respective
classifications; schedule loans; prepare checks and cash vouchers for
regular and emergency loans; reconcile bank statements to the daily
summary of disbursements; post the monthly balance of fixed and
savings deposits in preparation for the computation of interests,
dividends, mortuary and patronage funds; disburse checks during
regular and emergency loans; and perform such other bookkeeping and
accounting duties as may be assigned to her from time to time.
Imelda C. Tamayo — Clerk. Worked with the Cooperative since
October 19, 1987 up to December 29, 1989. Work schedule: Monday to
Friday - 8:00 to 11:30 a.m and 2:00 to 5:30 p.m.; every Saturday — 8:00
to 11:30 a.m and 1:00 to 4:00 p.m; and for one Sunday each month —
for at least three (3) hours. Monthly salary: P60.00 — from October to
November 1987; P250.00 for December 1987; P500.00 — from January
to December 1988; P950 — from January to June 1989; and P1,000.00
from July to December 1989. Duties: Among others, pick up balances for
the computation of interests on savings deposit, mortuary, dividends and
patronage funds; prepare cash vouchers; check petty cash vouchers;
take charge of the preparation of new passbooks and ledgers for new
applicants; fill up members logbook of regular depositors, junior
depositors and special accounts; take charge of loan releases every
Monday morning; assist in the posting and preparation of deposit slips;
receive deposits from members; and perform such other bookkeeping
and accounting duties as may be assigned her from time to time.
Harold D. Catipay — Clerk. Worked with the Cooperative since
March 3 to December 29, 1989. Work schedule: — Monday to Friday —
8:00 to 11:30 a.m. and 2:00 to 5:30 p.m.; Saturday — 8:00 to 11:30 a.m.
and 1:00 to 4:00 p.m.; and one Sunday each month — for at least three
(3) hours. Monthly salary: P900.00 — from March to June 1989;
P1,050.00 — from July to December 1989. Duties: Among others,
Bookkeeping, accounting and collecting duties, such as, post daily
collections from the two (2) collectors in the market; reconcile passbooks
and ledgers of members in the market; and assist the other clerks in
their duties.
All of them were given a memorandum of termination on January
2, 1990, effective December 29, 1989.
 We are not prepared to disregard the findings of both the Labor Arbiter and
respondent NLRC, the same being supported by substantial evidence, that
quantum of evidence required in quasi-judicial proceedings, like this one.
Necessarily, this leads us to the issue of whether or not private
respondents are regular employees. Article 280 of the Labor Code provides for
three kinds of employees: (1) regular employees or those who have been
engaged to perform activities which are usually necessary or desirable in the
usual business or trade of the employer; (2) project employees or those whose
employment has been fixed for a specific project or undertaking, the completion
or termination of which has been determined at the time of the engagement of
the employee or where the work or service to be performed is seasonal in nature
and the employment is for the duration of the season; and (3) casual employees
or those who are neither regular nor project employees. 3 The employees who
are deemed regular are: (a) those who have been engaged to perform activities
which are usually necessary or desirable in the usual trade or business of the
employer; and (b) those casual employees who have rendered at least one (1)
year of service, whether such service is continuous or broken, with respect to the
activity in which they are employed. 4 Undeniably, private respondents were
rendering services necessary to the day-to-day operations of petitioner PHCCI.
This fact alone qualified them as regular employees.
All of them, except Harold D. Catipay, worked with petitioner for more than
one (1) year: Benedicto Faburada, for one and a half (1 1/2) years; Sisinita Vilar,
for two (2) years; and Imelda C. Tamayo, for two (2) years and two (2) months.
That Benedicto Faburada worked only on a part-time basis, does not mean that
he is not a regular employee. One's regularity of employment is not determined
by the number of hours one works but by the nature and by the length of time
one has been in that particular job. 5 Petitioner's contention that private
respondents are mere volunteer workers, not regular employees, must
necessarily fail. Its invocation of San Jose City Electric Cooperative vs. Ministry
of Labor and Employment (173 SCRA 697, 703 (1989) is misplaced. The issue in
this case is whether or not the employees-members of a cooperative can
organize themselves for purposes of collective bargaining, not whether or not the
members can be employees. Petitioner missed the point
As regular employees or workers, private respondents are entitled to
security of tenure. Thus, their services may be terminated only for a valid cause,
with observance of due process.
The valid causes are categorized into two groups: the just causes under
Articles 282 of the Labor Code and the authorized causes under Articles 283 and
284 of the same Code. The just causes are: (1) serious misconduct or willful
disobedience of lawful orders in connection with the employee's work; (2) gross
or habitual neglect of duties; (3) fraud or willful breach of trust; (4) commission of
a crime or an offense against the person of the employer or his immediate family
member or representative; and, analogous cases. The authorized causes are: (1)
the installation of labor-saving devices; (2) redundancy; (3) retrenchment to
prevent losses; and (4) closing or cessation of operations of the establishment or
undertaking, unless the closing is for the purpose of circumventing the provisions
of law. Article 284 provides that an employer would be authorized to terminate
the services of an employee found to be suffering from any disease if the
employee's continued employment is prohibited by law or is prejudicial to his
health or to the health of his fellow employees. 6
Private respondents were dismissed not for any of the above causes. They
were dismissed because petitioner considered them to be mere voluntary
workers, being its members, and as such work at its pleasure. Petitioner thus
vehemently insists that their dismissal is not against the law.
Procedural due process requires that the employer serve the employees to
be dismissed two (2) written notices before the termination of their employment is
effected: (a) the first, to apprise them of the particular acts or omissions for which
their dismissal is sought and (b) the second, to inform them of the decision of the
employer that they are being dismissed. 7 In this case, only one notice was
served upon private respondents by petitioner. It was in the form of a
Memorandum signed by the Manager of the Cooperative dated January 2, 1990
terminating their services effective December 29, 1989. Clearly, petitioner failed
to comply with the twin requisites of a valid notice.
We hold that private respondents have been illegally dismissed.
Petitioner contends that the labor arbiter has no jurisdiction to take
cognizance of the complaint of private respondents considering that they failed to
submit their dispute to the grievance machinery as required by P.D.
175 (strengthening the Cooperative Movement) 8 and its implementing rules and
regulations under LOI 23. Likewise, the Cooperative Development Authority did
not issue a Certificate of Non-Resolution pursuant to Section 8 of R.A. 6939 or
the Cooperative Development Authority Law.
As aptly stated by the Solicitor General in his comment, P.D. 175 does not
provide for a grievance machinery where a dispute or claim may first be
submitted. LOI 23 refers to instructions to the Secretary of Public Works and
Communications to implement immediately the recommendation of the
Postmaster General for the dismissal of some employees of the Bureau of Post.
Obviously, this LOI has no relevance to the instant case.
Article 121 of Republic Act No. 6938 (Cooperative Code of the Philippines)
provides the procedure how cooperative disputes are to be resolved, thus:
 "ART. 121. Settlement of Disputes. — Disputes among members,
officers, directors, and committee members, and intra-cooperative
disputes shall, as far as practicable, be settled amicably in accordance
with the conciliation or mediation mechanisms embodied in the bylaws of
the cooperative, and in applicable laws.
Should such a conciliation/mediation proceeding fail, the matter
shall be settled in a court of competent jurisdiction."
Complementing this Article is Section 8 of R.A. No. 6939 (Cooperative
Development Authority Law) which reads:
SEC. 8 Mediation and Conciliation. — Upon request of either or
both parties, the Authority shall mediate and conciliate disputes within a
cooperative or between cooperatives: Provided, That if no mediation or
conciliation succeeds within three (3) months from request thereof, a
certificate of non-resolution shall be issued by the Commission prior to
the filing of appropriate action before the proper courts.
The above provisions apply to members, officers and directors of the
cooperative involved in disputes within a cooperative or between cooperatives.
There is no evidence that private respondents are members of petitioner
PHCCI and even if they are, the dispute is about payment of wages, overtime
pay, rest day and termination of employment. Under Art. 217 of the Labor
Code,these disputes are within the original and exclusive jurisdiction of the Labor
Arbiter.
As illegally dismissed employees, private respondents are therefore
entitled to reinstatement without loss of seniority rights and other privileges and
to full backwages, inclusive of allowances, plus other benefits or their monetary
equivalent computed from the time their compensation was withheld from them
up to the time of their actual reinstatement. 9 Since they were dismissed after
March 21, 1989, the effectivity date of R.A. 6715 10 they are granted full
backwages, meaning, without deducting from their backwages the earnings
derived by them elsewhere during the period of their illegal dismissal. 11 If
reinstatement is no longer feasible, as when the relationship between petitioner
and private respondents has become strained, payment of their separation pay in
lieu of reinstatement is in order. 12 
AIaSTE

WHEREFORE, the petition is hereby DENIED. The decision of respondent

NLRC is AFFIRMED, with modification in the sense that the backwages due
private respondents shall be paid in full, computed from the time they were
illegally dismissed up to the time of the finality of this Decision. 13
SO ORDERED.
  (Perpetual Help Credit Cooperative, Inc. v. Faburada, G.R. No. 121948,
|||

[October 8, 2001], 419 PHIL 147-159)

G.R. No. 124382. August 16, 1999.]

PASTOR DIONISIO V. AUSTRIA, petitioner, vs. HON.

NATIONAL LABOR RELATIONS COMMISSION (Fourth
Division), CEBU CITY, CENTRAL PHILIPPINE UNION MISSION
CORPORATION OF THE SEVENTH-DAY ADVENTISTS, ELDER
HECTOR V. GAYARES, PASTORS REUBEN MORALDE,
OSCAR L. ALOLOR, WILLIAM U. DONATO, JOEL WALES, ELY
SACAY, GIDEON BUHAT, ISACHAR GARSULA, ELISEO
DOBLE, PORFIRIO BALACY, DAVID RODRIGO, LORETO
MAYPA, MR. RUFO GASAPO, MR. EUFRONIO IBESATE, MRS.
TESSIE BALACY, MR. ZOSIMO KARA-AN, and MR.
ELEUTERIO LOBITANA, respondents.

 (Austria v. National Labor Relations Commission, G.R. No. 124382, [August 16,
|||

1999], 371 PHIL 340-362)

KAPUNAN, J  : p

Subject to the instant petition for certiorari under Rule 65 of the Rules of

Court is the Resolution 1 of public respondent National Labor Relations
Commission (the "NLRC"), rendered on 23 January 1996, in NLRC Case No. V-
0120-93, entitled "Pastor Dionisio V. Austria vs. Central Philippine Union Mission
Corporation of Seventh Day Adventists, et. al.," which dismissed the case for
illegal dismissal filed by the petitioner against private respondents for lack of
jurisdiction.
Private Respondent Central Philippine Union Mission Corporation of the
Seventh-Day Adventists (hereinafter referred to as the "SDA") is a religious
corporation duly organized and existing under Philippine law and is represented
in this case by the other private respondents, officers of the SDA. Petitioner, on
the other hand, was a Pastor of the SDA until 31 October 1991, when his
services were terminated.
The records show that petitioner Pastor Dionisio V. Austria worked with the
SDA for twenty eight (28) years from 1963 to 1991. 2 He began his work with the
SDA on 15 July 1963 as a literature evangelist, selling literature of the SDA over
the island of Negros. From then on, petitioner worked his way up the ladder and
got promoted several times. In January, 1968, petitioner became the Assistant
Publishing Director in the West Visayan Mission of the SDA. In July, 1972, he
was elevated to the position of Pastor in the West Visayan Mission covering the
island of Panay, and the provinces of Romblon and Guimaras. Petitioner held the
same position up to 1988. Finally, in 1989, petitioner was promoted as District
Pastor of the Negros Mission of the SDA and was assigned at Sagay, Balintawak
and Toboso, Negros Occidental, with twelve (12) churches under his jurisdiction.
In January, 1991, petitioner was transferred to Bacolod City. He held the position
of district pastor until his services were terminated on 31 October 1991.
On various occasions from August up to October, 1991, petitioner received
several communications 3 from Mr. Eufronio Ibesate, the treasurer of the Negros
Mission asking him to admit accountability and responsibility for the church tithes
and offerings collected by his wife, Mrs. Thelma Austria, in his district which
amounted to P15,078.10, and to remit the same to the Negros Mission.
In his written explanation dated 11 October 1991, 4 petitioner reasoned out
that he should not be made accountable for the unremitted collections since it
was private respondents Pastor Gideon Buhat and Mr. Eufronio Ibesate who
authorized his wife to collect the tithes and offerings since he was very sick to do
the collecting at that time.
Thereafter, on 16 October 1991, at around 7:30 a.m., petitioner went to the
office of Pastor Buhat, the president of the Negros Mission. During said call,
petitioner tried to persuade Pastor Buhat to convene the Executive Committee for
the purpose of settling the dispute between him and the private respondent,
Pastor David Rodrigo. The dispute between David Rodrigo and petitioner arose
from an incident in which petitioner assisted his friend, Danny Diamada, to collect
from Pastor Rodrigo the unpaid balance for the repair of the latter's motor vehicle
which he failed to pay to Diamada. 5 Due to the assistance of petitioner in
collecting Pastor Rodrigo's debt, the latter harbored ill-feelings against petitioner.
When news reached petitioner that Pastor Rodrigo was about to file a complaint
against him with the Negros Mission, he immediately proceeded to the office of
Pastor Buhat on the date abovementioned and asked the latter to convene the
Executive Committee. Pastor Buhat denied the request of petitioner since some
committee members were out of town and there was no quorum. Thereafter, the
two exchanged heated arguments. Petitioner then left the office of Pastor Buhat.
While on his way out, petitioner overheard Pastor Buhat saying "Pastor daw
inisog na ina iya (Pastor you are talking tough)." 6 Irked by such remark,
petitioner returned to the office of Pastor Buhat, and tried to overturn the latter's
table, though unsuccessfully, since it was heavy. Thereafter, petitioner banged
the attaché case of Pastor Buhat on the table, scattered the books in his office,
and threw the phone. 7 Fortunately, private respondents Pastors Yonilo Leopoldo
and Claudio Montaño were around and they pacified both Pastor Buhat and
petitioner.
On 17 October 1991, petitioner received a letter 8 inviting him and his wife
to attend the Executive Committee meeting at the Negros Mission Conference
Room on 21 October 1991, at nine in the morning. To be discussed in the
meeting were the non-remittance of church collection and the events that
transpired on 16 October 1991. A fact-finding committee was created to
investigate petitioner. For two (2) days, from October 21 amd 22, the fact-finding
committee conducted an investigation of petitioner. Sensing that the result of the
investigation might be one-sided, petitioner immediately wrote Pastor Rueben
Moralde, president of the SDA and chairman of the fact-finding committee,
requesting that certain members of the fact-finding committee be excluded in the
investigation and resolution of the case. 9 Out of the six (6) members requested
to inhibit themselves from the investigation and decision-making, only two (2)
were actually excluded, namely: Pastor Buhat and Pastor Rodrigo.
Subsequently, on 29 October 1991, petitioner received a letter of
dismissal 10 citing misappropriation of denominational funds, willful breach of
trust, serious misconduct, gross and habitual neglect of duties, and commission
of an offense against the person of employer's duly authorized representative, as
grounds for the termination of his services.
Reacting against the adverse decision of the SDA, petitioner filed a
complaint 11 on 14 November 1991, before the Labor Arbiter for illegal dismissal
against the SDA and its officers and prayed for reinstatement with backwages
and benefits, moral and exemplary damages and other labor law benefits.
On 15 February 1993, Labor Arbiter Cesar D. Sideño rendered a decision
in favor of petitioner, the dispositive portion of which reads thus:
WHEREFORE, PREMISES CONSIDERED, respondents
CENTRAL PHILIPPINE UNION MISSION CORPORATION OF THE
SEVENTH-DAY ADVENTISTS (CPUMCSDA) and its officers,
respondents herein, are hereby ordered to immediately reinstate
complainant Pastor Dionisio Austria to his former position as Pastor of
Brgy. Taculing, Progreso and Banago, Bacolod City, without loss of
seniority and other rights and backwages in the amount of ONE
HUNDRED FIFTEEN THOUSAND EIGHT HUNDRED THIRTY PESOS
(P115,830.00) without deductions and qualifications.
Respondent CPUMCSDA is further ordered to pay complainant the
following:
A. 13th month pay P21,060.00
B. Allowance P4,770.83
C. Service Incentive Leave Pay P3,461.85
 D. Moral Damages P50,000.00
E. Exemplary Damages P25,000.00
F. Attorney's Fee P22,012.27
SO ORDERED. 12
The SDA, through its officers, appealed the decision of the Labor Arbiter to
the National Labor Relations Commission, Fourth Division, Cebu City. In a
decision, dated 26 August 1994, the NLRC vacated the findings of the Labor
Arbiter. The decretal portion of the NLRC decision states:
WHEREFORE, the Decision appealed from is hereby VACATED
and a new one ENTERED dismissing this case for want of merit.
SO ORDERED. 13
Petitioner filed a motion for reconsideration of the above-named decision.
On 18 July 1995, the NLRC issued a Resolution reversing its original decision.
The dispositive portion of the resolution reads:
WHEREFORE, premises considered, Our decision dated August
26, 1994 is VACATED and the decision of the Labor Arbiter dated
February 15, 1993 is REINSTATED.
SO ORDERED. 14
In view of the reversal of the original decision of the NLRC, the SDA filed a
motion for reconsideration of the above resolution. Notable in the motion for
reconsideration filed by private respondents is their invocation, for the first time
on appeal, that the Labor Arbiter has no jurisdiction over the complaint filed by
petitioner due to the constitutional provision on the separation of church and
state since the case allegedly involved an ecclesiastical affair to which the State
cannot interfere.
The NLRC, without ruling on the merits of the case, reversed itself once
again, sustained the argument posed by private respondents and, accordingly,
dismissed the complaint of petitioner. The dispositive portion of the NLRC
resolution dated 23 January 1996, subject of the present petition, is as follows:
WHEREFORE, in view of all the foregoing, the instant motion for
reconsideration is hereby granted. Accordingly, this case is hereby
DISMISSED for lack of jurisdiction.
SO ORDERED. 15
Hence, the recourse to this Court by petitioner.
After the filing of the petition, the Court ordered the Office of the Solicitor
General (the "OSG") to file its comment on behalf of public respondent NLRC.
Interestingly, the OSG filed a manifestation and motion in lieu of
comment 16 setting forth its stand that it cannot sustain the resolution of the
NLRC. In its manifestation, the OSG submits that the termination of petitioner
from his employment may be questioned before the NLRC as the same is
secular in nature, not ecclesiastical. After the submission of memoranda of all the
parties, the case was submitted for decision.
The issues to be resolved in this petition are:
1) Whether or not the Labor Arbiter/NLRC has jurisdiction to try
and decide the complaint filed by petitioner against the SDA.
2) Whether or not the termination of the services of petitioner is
an ecclesiastical affair, and, as such, involves the separation of church
and state; and
3) Whether or not such termination is valid.
The first two issues shall be resolved jointly, since they are related.
Private respondents contend that by virtue of the doctrine of separation of
church and state, the Labor Arbiter and the NLRC have no jurisdiction to
entertain the complaint filed by petitioner. Since the matter at bar allegedly
involves the discipline of a religious minister, it is to be considered a purely
ecclesiastical affair to which the State has no right to interfere.
The contention of private respondents deserves scant consideration. The
principle of separation of church and state finds no application in this case.
The rationale of the principle of the separation of church and state is
summed up in the familiar saying, "Strong fences make good neighbors." 17 The
idea advocated by this principle is to delineate the boundaries between the two
institutions and thus avoid encroachments by one against the other because of a
misunderstanding of the limits of their respective exclusive jurisdictions. 18 The
demarcation line calls on the entities to "render therefore unto Ceasar the things
that are Ceasar's and unto God the things that are God's." 19 While the State is
prohibited from interfering in purely ecclesiastical affairs, the Church is likewise
barred from meddling in purely secular matters. 20
The case at bar does not concern an ecclesiastical or purely religious affair
as to bar the State from taking cognizance of the same. An ecclesiastical affair is
"one that concerns doctrine, creed or form or worship of the church, or the
adoption and enforcement within a religious association of needful laws and
regulations for the government of the membership, and the power of excluding
from such associations those deemed unworthy of membership. 21 Based on this
definition, an ecclesiastical affair involves the relationship between the church
and its members and relate to matters of faith, religious doctrines, worship and
governance of the congregation. To be concrete, examples of this so-called
ecclesiastical affairs to which the State cannot meddle are proceedings for
excommunication, ordinations of religious ministers, administration of sacraments
and other activities which attached religious significance. The case at bar does
not even remotely concern any of the abovecited examples. While the matter at
hand relates to the church and its religious minister it does not ipso facto give the
case a religious significance. Simply stated, what is involved here is the
relationship of the church as an employer and the minister as an employee. It is
purely secular and has no relation whatsoever with the practice of faith, worship
or doctrines of the church. In this case, petitioner was not excommunicated or
expelled from the membership of the SDA but was terminated from employment.
Indeed, the matter of terminating an employee, which is purely secular in nature,
is different from the ecclesiastical act of expelling a member from the religious
congregation.
As pointed out by the OSG in its memorandum, the grounds invoked for
petitioner's dismissal, namely: misappropriation of denominational funds, willful
breach of trust, serious misconduct, gross and habitual neglect of duties and
commission of an offense against the person of his employer's duly authorized
representative, are all based on Article 282 of the Labor Code which enumerates
the just causes for termination of employment. 22 By this alone, it is palpable that
the reason for petitioner's dismissal from the service is not religious in nature.
Coupled with this is the act of the SDA in furnishing NLRC with a copy of
petitioner's letter of termination. As aptly stated by the OSG, this again is an
eloquent admission by private respondents that NLRC has jurisdiction over the
case. Aside from these, SDA admitted in a certification 23 issued by its officer, Mr.
Ibesate, that petitioner has been its employee for twenty-eight (28) years. SDA
even registered petitioner with the Social Security System (SSS) as its employee.
As a matter of fact, the worker's records of petitioner have been submitted by
private respondents as part of their exhibits. From all of these it is clear that when
the SDA terminated the services of petitioner, it was merely exercising its
management prerogative to fire an employee which it believes to be unfit for the
job. As such, the State, through the Labor Arbiter and the NLRC, has the right to
take cognizance of the case and to determine whether the SDA, as employer,
rightfully exercised its management prerogative to dismiss an employee. This is
in consonance with the mandate of the Constitution to afford full protection to
labor.
Under the Labor Code, the provision which governs the dismissal of
employees, is comprehensive enough to include religious corporations, such as
the SDA, in its coverage. Article 278 of the Labor Code on post-employment
states that "the provisions of this Title shall apply to all establishments or
undertakings, whether for profit or not." Obviously, the cited article does not
make any exception in favor of a religious corporation. This is made more evident
by the fact that the Rules Implementing the Labor Code, particularly, Section 1,
Rule 1, Book VI on the Termination of Employment and Retirement, categorically
includes religious institutions in the coverage of the law, to wit:
 SECTION 1.  Coverage. — This Rule shall apply to all
establishments and undertakings, whether operated for profit or not,
including educational, medical, charitable and religious institutions and
organizations, in cases of regular employment with the exception of
Government and its political subdivisions including government-owned
or controlled corporations. 24
With this clear mandate, the SDA cannot hide behind the mantle of
protection of the doctrine of separation of church and state to avoid its
responsibilities as an employer under the Labor Code.
Finally, as correctly pointed out by petitioner, private respondents are
estopped from raising the issue of lack of jurisdiction for the first time on appeal.
It is already too late in the day for private respondents to question the jurisdiction
of the NLRC and the Labor Arbiter since the SDA had fully participated in the
trials and hearings of the case from start to finish. The Court has already ruled
that the active participation of a party against whom the action was brought,
coupled with his failure to object to the jurisdiction of the court or quasi-judicial
body where the action is pending, is tantamount to an invocation of that
jurisdiction and a willingness to abide by the resolution of the case and will bar
said party from later on impugning the court or body's jurisdiction. 25 Thus, the
active participation of private respondents in the proceedings before the Labor
Arbiter and the NLRC mooted the question of jurisdiction.
The jurisdictional question now settled, we shall now proceed to determine
whether the dismissal of petitioner was valid.
At the outset, we note that as a general rule, findings of fact of
administrative bodies like the NLRC are binding upon this Court. A review of
such findings is justified, however, in instances when the findings of the NLRC
differ from those of the labor arbiter, as in this case. 26 When the findings of
NLRC do not agree with those of the Labor Arbiter, this Court must of necessity
review the records to determine which findings should be preferred as more
conformable to the evidentiary facts. 27
We turn now to the crux of the matter. In termination cases, the settled rule
is that the burden of proving that the termination was for a valid or authorized
cause rests on the employer. 28 Thus, private respondents must not merely rely
on the weaknesses of petitioner's evidence but must stand on the merits of their
own defense.
The issue being the legality of petitioner's dismissal, the same must be
measured against the requisites for a valid dismissal, namely: (a) the employee
must be afforded due process, i.e., he must be given an opportunity to be heard
and to defend himself, and; (b) the dismissal must be for a valid cause as
provided in Article 282 of the Labor Code. 29 Without the concurrence of this twin
requirements, the termination would, in the eyes of the law, be illegal. 30
Before the services of an employee can be validly terminated, Article 277
(b) of the Labor Code and Section 2, Rule XXIII, Book V of the Rules
Implementing the Labor Code further require the employer to furnish the
employee with two (2) written notices, to wit: (a) a written notice served on the
employee specifying the ground or grounds for termination, and giving to said
employee reasonable opportunity within which to explain his side; and, (b) a
written notice of termination served on the employee indicating that upon due
consideration of all the circumstances, grounds have been established to justify
his termination.
The first notice, which may be considered as the proper charge, serves to
apprise the employee of the particular acts or omissions for which his dismissal is
sought. 31 The second notice on the other hand seeks to inform the employee of
the employer's decision to dismiss him. 32 This decision, however, must come
only after the employee is given a reasonable period from receipt of the first
notice within which to answer the charge and ample opportunity to be heard and
defend himself with the assistance of a representative, if he so desires. 33 This is
in consonance with the express provision of the law on the protection to labor
and the broader dictates of procedural due process. 34 Non-compliance therewith
is fatal because these requirements are conditions sine qua non before dismissal
may be validly effected. 35
Private respondent failed to substantially comply with the above
requirements. With regard to the first notice, the letter, 36 dated 17 October 1991,
which notified petitioner and his wife to attend the meeting on 21 October 1991,
cannot be construed as the written charge required by law. A perusal of the said
letter reveals that it never categorically stated the particular acts or omissions on
which petitioner's impending termination was grounded. In fact, the letter never
even mentioned that petitioner would be subject to investigation. The letter
merely mentioned that petitioner and his wife were invited to a meeting wherein
what would be discussed were the alleged unremitted church tithes and the
events that transpired on 16 October 1991. Thus, petitioner was surprised to find
out that the alleged meeting turned out to be an investigation. From the tenor of
the letter, it cannot be presumed that petitioner was actually on the verge of
dismissal. The alleged grounds for the dismissal of petitioner from the service
were only revealed to him when the actual letter of dismissal was finally issued.
For this reason, it cannot be said that petitioner was given enough opportunity to
properly prepare for his defense. While admittedly, private respondents complied
with the second requirement, the notice of termination, this does not cure the
initial defect of lack of the proper written charge required by law.
 In the letter of termination, 37 dated 29 October 1991, private respondents
enumerated the following as grounds for the dismissal of petitioner, namely:
misappropriation of denominational funds, willful breach of trust, serious
misconduct, gross and habitual neglect of duties, and commission of an offense
against the person of employer's duly authorized representative. Breach of trust
and misappropriation of denominational funds refer to the alleged failure of
petitioner to remit to the treasurer of the Negros Mission tithes, collections and
offerings amounting to P15,078.10 which were collected by his wife, Mrs. Thelma
Austria, in the churches under his jurisdiction. On the other hand, serious
misconduct and commission of an offense against the person of the employer's
duly authorized representative pertain to the 16 October 1991 incident wherein
petitioner allegedly committed an act of violence in the office of Pastor Gideon
Buhat. The final ground invoked by private respondents is gross and habitual
neglect of duties allegedly committed by petitioner.
We cannot sustain the validity of dismissal based on the ground of breach
of trust. Private respondents allege that they have lost their confidence in
petitioner for his failure, despite demands, to remit the tithes and offerings
amounting to P15,078.10, which were collected in his district. A careful study of
the voluminous records of the case reveals that there is simply no basis for the
alleged loss of confidence and breach of trust. Settled is the rule that under
Article 282 (c) of the Labor Code, the breach of trust must be willful. A breach is
willful if it is done intentionally, knowingly and purposely, without justifiable
excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly
or inadvertently. 38 It must rest on substantial grounds and not on the employer's
arbitrariness, whims, caprices or suspicion; otherwise, the employee would
eternally remain at the mercy of the employer. 39 It should be genuine and not
simulated. 40 This ground has never been intended to afford an occasion for
abuse, because of its subjective nature. The records show that there were only
six (6) instances when petitioner personally collected and received from the
church treasurers the tithes, collections, and donations for the church. 41 The
stenographic notes on the testimony of Naomi Geniebla, the Negros Mission
Church Auditor and a witness for private respondents, show that Pastor Austria
was able to remit all his collections to the treasurer of the Negros Mission. 42
Though private respondents were able to establish that petitioner collected
and received tithes and donations several times, they were not able to establish
that petitioner failed to remit the same to the Negros Mission, and that he
pocketed the amount and used it for his personal purpose. In fact, as admitted by
their own witness, Naomi Geniebla, petitioner remitted the amounts which he
collected to the Negros Mission for which corresponding receipts were issued to
him. Thus, the allegations of private respondents that petitioner breached their
trust have no leg to stand on. 
cdasia
 In a vain attempt to support their claim of breach of trust, private
respondents try to pin on petitioner the alleged non-remittance of the tithes
collected by his wife. This argument deserves little consideration. First of all, as
proven by convincing and substantial evidence consisting of the testimonies of
the witnesses for private respondents who are church treasurers, it was Mrs.
Thelma Austria who actually collected the tithes and donations from them, and,
who failed to remit the same to the treasurer of the Negros Mission. The
testimony of these church treasurers were corroborated and confirmed by Ms.
Geniebla and Mrs. Ibesate, officers of the SDA. Hence, in the absence of
conspiracy and collusion, which private respondents failed to demonstrate,
between petitioner and his wife, petitioner cannot be made accountable for the
alleged infraction committed by his wife. After all, they still have separate and
distinct personalities. For this reason, the Labor Arbiter found it difficult to see the
basis for the alleged loss of confidence and breach of trust. The Court does not
find any cogent reason, therefore, to digress from the findings of the Labor
Arbiter which is fully supported by the evidence on record.
With respect to the grounds of serious misconduct and commission of an
offense against the person of the employer's duly authorized representative, we
find the same unmeritorious and, as such, do not warrant petitioner's dismissal
from the service.
Misconduct has been defined as improper or wrong conduct. It is the
transgression of some established and definite rule of action, a forbidden act, a
dereliction of duty, willful in character, and implies wrongful intent and not mere
error in judgment. 43 For misconduct to be considered serious it must be of such
grave and aggravated character and not merely trivial or unimportant. 44 Based
on this standard, we believe that the act of petitioner in banging the attaché case
on the table, throwing the telephone and scattering the books in the office of
Pastor Buhat, although improper, cannot be considered as grave enough to be
considered as serious misconduct. After all, as correctly observed by the Labor
Arbiter, though petitioner committed damage to property, he did not physically
assault Pastor Buhat or any other pastor present during the incident of 16
October 1991. In fact, the alleged offense committed upon the person of the
employer's representatives was never really established or proven by private
respondents. Hence, there is no basis for the allegation that petitioner's act
constituted serious misconduct or that the same was an offense against the
person of the employer's duly authorized representative. As such, the cited
actuation of petitioner does not justify the ultimate penalty of dismissal from
employment. While the Constitution does not condone wrongdoing by the
employee, it nevertheless urges a moderation of the sanctions that may be
applied to him in light of the many disadvantages that weigh heavily on him like
an albatross on his neck. 45 Where a penalty less punitive would suffice,
whatever missteps may have been committed by the worker ought not be visited
with a consequence so severe such as dismissal from employment. 46 For the
foregoing reasons, we believe that the minor infraction committed by petitioner
does not merit the ultimate penalty of dismissal.
The final ground alleged by private respondents in terminating petitioner,
gross and habitual neglect of duties, does not require an exhaustive discussion.
Suffice it to say that all private respondents had were allegations but not proof.
Aside from merely citing the said ground, private respondents failed to prove
culpability on the part of petitioner. In fact, the evidence on record shows
otherwise. Petitioner's rise from the ranks disclose that he was actually a hard-
worker. Private respondents' evidence, 47 which consisted of petitioner's Worker's
Reports, revealed how petitioner travelled to different churches to attend to the
faithful under his care. Indeed, he labored hard for the SDA, but, in return, he
was rewarded with a dismissal from the service for a non-existent cause.
In view of the foregoing, we sustain the finding of the Labor Arbiter that
petitioner was terminated from service without just or lawful cause. Having been
illegally dismissed, petitioner is entitled to reinstatement to his former position
without loss of seniority right 48 and the payment of full backwages without any
deduction corresponding to the period from his illegal dismissal up to the actual
reinstatement. 49
WHEREFORE, the petition for certiorari is GRANTED. The challenged
Resolution of public respondent National Labor Relations Commission, rendered
on 23 January 1996, is NULLIFIED and SET ASIDE. The Decision of the Labor
Arbiter, dated 15 February 1993, is REINSTATED and hereby AFFIRMED.
SO ORDERED.
 (Austria v. National Labor Relations Commission, G.R. No. 124382, [August 16,
|||

1999], 371 PHIL 340-362)

G.R. No. 113191. September 18, 1996.]

DEPARTMENT OF FOREIGN AFFAIRS, petitioner, vs.

NATIONAL LABOR RELATIONS COMMISSION, HON. LABOR
ARBITER NIEVES V. DE CASTRO and JOSE C.
MAGNAYI, respondents.

 (Department of Foreign Affairs v. National Labor Relations Commission, G.R.

|||

No. 113191, [September 18, 1996], 330 PHIL 573-590)

 The questions raised in the petition for certiorari are a few coincidental
matters relative to the diplomatic immunity extended to the Asian Development
Bank ("ADB").
On 27 January 1993, private respondent initiated NLRC-NCR Case No.
00-01-0690-93 for his alleged illegal dismissal by ADB and the latter's violation of
the "labor-only" contracting law. Two summonses were served, one sent directly
to the ADB and the other through the Department of Foreign Affairs ("DFA"), both
with a copy of the complainant. Forthwith, the ADB and the DFA notified
respondent Labor Arbiter that the ADB, as well as its President and Officers,
were covered by an immunity from legal process except for borrowings,
guaranties or the sale of securities pursuant to Article 50(1) and Article 55 of
the Agreement Establishing the Asian Development Bank (the "Charter") in
relation to Section 5 and Section 44 of the Agreement Between The Bank And
The Government Of The Philippines Regarding The Bank's Headquarters (the
"Headquarters Agreement").
The Labor Arbiter took cognizance of the complaint on the impression that
the ADB had waived its diplomatic immunity from suit. In time, the Labor Arbiter
rendered his decision, dated 31 August 1993, that concluded:
"WHEREFORE, above premises considered, judgment is hereby
rendered declaring the complainant as a regular employee of respondent
ADB, and the termination of his services as illegal. Accordingly,
respondent Bank is hereby ordered:
"1. To immediately reinstate the complainant to his former
position effective September 16, 1993;
"2. To pay complainant full backwages from December 1, 1992 to
September 15, 1993 in the amount of P42,750.00 (P4,500.00 x 9
months);
"3. And to pay complainants other benefits and without loss of
seniority rights and other privileges and benefits due a regular employee
of Asian Development Bank from the time he was terminated on
December 31, 1992;
"4. To pay 10% attorney's fees of the total entitlements." 1
The ADB did not appeal the decision. Instead, on 03 November 1993, the
DFA referred the matter to the National Labor Relations Commission ("NLRC");
in its referral, the DFA sought a "formal vacation of the void judgment." Replying
to the letter, the NLRC Chairman, wrote:
"The undersigned submits that the request for the 'investigation'
of Labor Arbiter Nieves de Castro, by the National Labor Relations
 Commission, has been erroneously premised on Art. 218(c) of the Labor
Code, as cited in the letter of Secretary Padilla, considering that the
provision deals with 'a question, matter or controversy within its (the
Commission) jurisdiction' obviously referring to a labor dispute within the
ambit of Art. 217 (on jurisdiction of Labor Arbiters and the Commission
over labor cases).
"The procedure, in the adjudication of labor cases, including
raising of defenses, is prescribed by law. The defense of immunity could
have been raised before the Labor Arbiter by a special
appearance which, naturally, may not be considered as a waiver of the
very defense being raised. Any decision thereafter is subject to legal
remedies, including appeals to the appropriate division of the
Commission and/or a petition for certiorari with the Supreme Court,
under Rule 65 of the Rules of Court. Except where an appeal is
seasonably and properly made, neither the Commission nor the
undersigned may review, or even question, the propriety of any decision
by a Labor Arbiter. Incidentally, the Commission sits en banc (all fifteen
Commissioners) only to promulgate rules of procedure or to formulate
policies (Art. 213, Labor Code).
"On the other hand, while the undersigned exercises
'administrative supervision over the Commission and its regional
branches and all its personnel, including the Executive Labor Arbiters
and Labor Arbiters' (penultimate paragraph, Art. 213, Labor Code), he
does not have the competence to investigate or review any decision of a
Labor Arbiter. However, on the purely administrative aspect of the
decision-making process, he may cause that an investigation be made of
any misconduct, malfeasance or misfeasance, upon complaint properly
made.
"If the Department of Foreign Affairs feels that the action of Labor
Arbiter Nieves de Castro constitutes misconduct, malfeasance or
misfeasance, it is suggested that an appropriate complaint be lodged
with the Office of the Ombudsman.
"Thank you for your kind attention." 2
Dissatisfied, the DFA lodged the instant petition for certiorari. In this
Court's resolution of 31 January 1994, respondents were required to comment.
Petitioner was later constrained to make an application for a restraining order
and/or writ of preliminary injunction following the issuance, on 16 March 1994, by
the Labor Arbiter of a writ of execution. In a resolution, dated 07 April 1994, the
Court issued the temporary restraining order prayed for.
The Office of the Solicitor General ("OSG"), in its comment of 26 May
1994, initially assailed the claim of immunity by the ADB. Subsequently, however,
it submitted a Manifestation (dated 20 June 1994) stating, among other things,
that "after a thorough review of the case and the records," it became convinced
that ADB, indeed, was correct in invoking its immunity from suit under the
Charter and the Headquarters Agreement.
The Court is of the same view.
Article 50(1) of the Charter provides:
"The Bank shall enjoy immunity from every form of legal
process, except in cases arising out of or in connection with the exercise
of its powers to borrow money, to guarantee obligations, or to buy and
sell or underwrite the sale of securities." 3
Under Article 55 thereof —
"All Governors, Directors, alternates, officers and employees of
the Bank, including experts performing missions for the Bank:
"(1) shall be immune from legal process with respect of acts
performed by them in their official capacity, except when the Bank
waives the immunity." 4
Like provisions are found in the Headquarters Agreement. Thus,
its Section 5 reads:
"The Bank shall enjoy immunity from every form of legal process,
except in cases arising out of, or in connection with, the exercise of its
powers to borrow money, to guarantee obligations, or to buy and sell or
underwrite the sale of securities." 5
And, with respect to certain officials of the bank, Section 44 of the
agreement states:
"Governors, other representatives of Members, Directors, the
President, Vice-President and executive officers as may be agreed upon
between the Government and the Bank shall enjoy, during their stay in
the Republic of the Philippines in connection with their official duties with
the Bank:
"xxx xxx xxx
"(b) Immunity from legal process of every kind in respect of words
spoken or written and all acts done by them in their official capacity." 6
The above stipulations of both the Charter and Headquarters Agreement
should be able, nay well enough, to establish that, except in the specified
cases of borrowing and guarantee operations, as well as the purchase, sale
and underwriting of securities, the ADB enjoys immunity from legal process of
every form. The Bank's officers, on their part, enjoy immunity in respect of all
acts performed by them in their official capacity. The Charter and the
Headquarters Agreement granting these immunities and privileges are treaty
 covenants and commitments voluntarily assumed by the Philippine
government which must be respected.
In World Health Organization vs. Aquino, 7 we have declared:
"It is a recognized principle of international law and under our
system of separation of powers that diplomatic immunity is essentially a
political question and courts should refuse to look beyond a
determination by the executive branch of the government, and where the
plea of diplomatic immunity is recognized and affirmed by the executive
branch of the government. . . it is then the duty of the courts to accept
the claim of immunity upon appropriate suggestion by the principal law
officer of the government, . . . or other officer acting under his direction.
Hence, in adherence to the settled principle that courts may not so
exercise their jurisdiction . . . as to embarrass the executive arm of the
government in conducting foreign relations, it is accepted doctrine that
'in such cases the judicial department of government follows the action
of the political branch and will not embarrass the latter by assuming an
antagonistic jurisdiction." 8
To the same effect is the decision in International Catholic Migration
Commission vs. Calleja, 9 which has similarly deemed the Memoranda of the
Legal Adviser of the Department of Foreign Affairs to be "a categorical
recognition by the Executive Branch of Government that ICMC . . . enjoy(s)
immunities accorded to international organizations" and which determination
must be held "conclusive upon the Courts in order not to embarrass a political
department of Government." In the instant case, the filing of the petition by the
DFA, in behalf of ADB, is itself an affirmance of the government's own
recognition of ADB's immunity.
Being an international organization that has been extended a diplomatic
status, the ADB is independent of the municipal law. 10 In Southeast Asian
Fisheries Development Center vs. Acosta, 11 the Court has cited with approval
the opinion 12 of the then Minister of Justice; thus —
"One of the basic immunities of an international organization is
immunity from local jurisdiction, i.e., that it is immune from the legal writs
and processes issued by the tribunals of the country where it is found.
(See Jenks, Id., pp. 37–44). The obvious reason for this is that the
subjection of such an organization to the authority of the local courts
would afford a convenient medium thru which the host government may
interfere in their operations or even influence or control its policies and
decisions of the organization; besides, such subjection to local
jurisdiction would impair the capacity of such body to discharge its
responsibilities impartially on behalf of its member-states." 13
Contrary to private respondent's assertion, the claim of immunity is not
here being raised for the first time; it has been invoked before the forum of origin
through communications sent by petitioner and the ADB to the Labor Arbiter, as
well as before the NLRC following the rendition of the questioned judgment by
the Labor Arbiter, but evidently to no avail.
In its communication of 27 May 1993, the DFA, through the Office of Legal
Affairs, has advised the NLRC:
"Respectfully returned to the Honorable Domingo B. Mabazza,
Labor Arbitration Associate, National Labor Relations Commission,
National Capital Judicial Region, Arbitration Branch, Associated bank
Bldg., T.M. Kalaw St., Ermita, Manila, the attached Notice of Hearing
addressed to the Asian Development Bank, in connection with the
aforestated case, for the reason stated in the Department's 1st
Indorsement dated 23 March 1993, copy attached, which is self-
explanatory.
"In view of the fact that the Asian Development Bank (ADB)
invokes its immunity which is sustained by the Department of Foreign
Affairs, a continuous hearing of this case erodes the credibility of the
Philippine government before the international community, let alone the
negative implication of such a suit on the official relationship of the
Philippine government with the ADB.
"For the Secretary of Foreign Affairs.
(Sgd.)
"SIME D. HIDALGO
Assistant Secretary" 14
The Office of the President, likewise, has issued on 18 May 1993 a letter to
the Secretary of Labor, viz:
"Dear Secretary Confesor,
"I am writing to draw your attention to a case filed by a certain
Jose C. Magnayi against the Asian Development Bank and its President,
Kimimasa Tarumizu, before the National Labor Relations Commission,
National Capital Region Arbitration Board (NLRC NCR Case No. 00-
01690-93).
"Last March 8, the Labor Arbiter charged with the case, Ms.
Nieves V. de Castro, addressed a Notice of Resolution/Order to the
Bank which brought it to the attention of the Department of Foreign
Affairs on the ground that the service of such notice was in violation of
the RP-ADB Headquarters Agreement which provided, inter-alia, for the
immunity of the Bank, its President and officers from every form of legal
process, except only, in cases of borrowings, guarantees or the sale of
securities.
 "The Department of Foreign Affairs, in turn, informed Labor
Arbiter Nieves V. de Castro of this fact by letter dated March 22, copied
to you.
"Despite this, the labor arbiter in question persisted to send
summons, the latest dated May 4, herewith attached, regarding the
Magnayi case.
"The Supreme Court has long settled the matter of diplomatic
immunities. In WHO vs. Aquino, SCRA 48, it ruled that courts should
respect diplomatic immunities of foreign officials recognized by the
Philippine government. Such decision by the Supreme Court forms part
of the law of the land.
"Perhaps you should point out to Labor Arbiter Nieves V. de
Castro that ignorance of the law is a ground for dismissal.
"Very truly yours,
 (Sgd.)
JOSE B. ALEJANDRINO
Chairman, PCC-ADB" 15
Private respondent argues that, by entering into service contracts with
different private companies, ADB has descended to the level of an ordinary party
to a commercial transaction giving rise to a waiver of its immunity from suit. In the
case of Holy See vs. Hon. Rosario, Jr., 16 the Court has held:
"There are two conflicting concepts of sovereign immunity, each
widely held and firmly established. According to the classical or absolute
theory, a sovereign cannot, without its consent, be made a respondent in
the Courts of another sovereign. According to the newer or restrictive
theory, the immunity of the sovereign is recognized only with regard to
public acts or acts jure imperii of a state, but not with regard to private
act or acts jure gestionis.
"xxx xxx xxx
"Certainly, the mere entering into a contract by a foreign state
with a private party cannot be the ultimate test. Such an act can only be
the start of the inquiry. The logical question is whether the foreign state
is engaged in the activity in the regular course of business. If the foreign
state is not engaged regularly in a business or trade, the particular act or
transaction must then be tested by its nature. If the act is in pursuit of a
sovereign activity, or an incident thereof, then it is an act jure imperii,
especially when it is not undertaken for gain or profit." 17
 The service contracts referred to by private respondent have not been
intended by the ADB for profit or gain but are official acts over which a waiver of
immunity would not attach.
With regard to the issue of whether or not the DFA has the legal
standing to file the present petition, and whether or not petitioner has
regarded the basic rule that certiorari can be availed of only when there is no
appeal nor plain, speedy and adequate remedy in the ordinary course of law,
we hold both in the affirmative.
The DFA's function includes, among its other mandates, the determination
of persons and institutions covered by diplomatic immunities, a determination
which, when challenged, entitles it to seek relief from the court so as not to
seriously impair the conduct of the country's foreign relations. The DFA must be
allowed to plead its case whenever necessary or advisable to enable it to help
keep the credibility of the Philippine government before the international
community. When international agreements are concluded, the parties thereto
are deemed to have likewise accepted the responsibility of seeing to it that their
agreements are duly regarded. In our country, this task falls principally on the
DFA as being the highest executive department with the competence and
authority to so act in this aspect of the international arena. 18 In Holy See
vs. Hon. Rosario, Jr., 19 this Court has explained the matter in good detail; viz:
"In Public International Law, when a state or international agency
wishes to plead sovereign or diplomatic immunity in a foreign court, it
requests the Foreign Office of the state where it is sued to convey to the
court that said defendant is entitled to immunity.
"In the United States, the procedure followed is the process of
'suggestion,' where the foreign state or the international organization
sued in an American court requests the Secretary of State to make a
determination as to whether it is entitled to immunity. If the Secretary of
State finds that the defendant is immune from suit, he, in turn, asks the
Attorney General to submit to the court a 'suggestion' that the defendant
is entitled to immunity. In England, a similar procedure is followed, only
the Foreign Office issues a certification to that effect instead of
submitting a 'suggestion' (O'Connell, I International Law 130 [1965];
Note: Immunity from Suit of Foreign Sovereign Instrumentalities and
Obligations, 50 Yale Law Journal 1088 [1941]).
"In the Philippines, the practice is for the foreign government or
the international organization to first secure an executive endorsement of
its claim of sovereign or diplomatic immunity. But how the Philippine
Foreign Office conveys its endorsement to the courts varies.
In International Catholic Migration Commission vs. Calleja, 190 SCRA
130 (1990), the Secretary of Foreign Affairs just sent a letter directly to
the Secretary of Labor and Employment, informing the latter that the
 respondent-employer could not be sued because it enjoyed diplomatic
immunity. In World Health Organization vs. Aquino, 48 SCRA 242
(1972), the Secretary of Foreign Affairs sent the trial court a telegram to
that effect. In Baer vs. Tizon, 57 SCRA 1 (1974), the U.S. Embassy
asked the Secretary of Foreign Affairs to request the Solicitor General to
make, in behalf of the Commander of the United States Naval Base at
Olongapo City, Zambales, a 'suggestion' to respondent Judge. The
Solicitor General embodied the 'suggestion' in a manifestation and
memorandum as amicus curiae.
"In the case at bench, the Department of Foreign Affairs, through
the Office of Legal Affairs moved with this Court to be allowed to
intervene on the side of petitioner. The Court allowed the said
Department to file its memorandum in support of petitioner's claim of
sovereign immunity.
"In some cases, the defense of sovereign immunity was
submitted directly to the local courts by the respondents through their
private counsels (Raquiza vs. Bradford, 75 Phil. 50 [1945]; Miquiabas
vs. Philippine-Ryukyus Command, 80 Phil. 262 [1948]; United States of
America vs. Guinto, 182 SCRA 644 [1990] and companion cases). In
cases where the foreign states bypass the Foreign Office, the courts can
inquire into the facts and make their own determination as to the nature
of the acts and transactions involved." 20
Relative to the propriety of the extraordinary remedy of certiorari, the Court
has, under special circumstances, so allowed and entertained such a petition
when (a) the questioned order or decision is issued in excess of or without
jurisdiction, 21 or (b) where the order or decision is a patent nullity, 22 which,
verily, are the circumstances that can be said to obtain in the present case.
When an adjudicator is devoid of jurisdiction on a matter before him, his action
that assumes otherwise would be a clear nullity.
WHEREFORE, the petition for certiorari is GRANTED, and the decision of
the Labor Arbiter, dated 31 August 1993 is VACATED for being NULL AND
VOID. The temporary restraining order issued by this Court on 07 April 1994 is
hereby made permanent. No costs.
SO ORDERED.
 (Department of Foreign Affairs v. National Labor Relations Commission, G.R.
|||

No. 113191, [September 18, 1996], 330 PHIL 573-590)

G.R. No. 157010. June 21, 2005.]

 PHILIPPINE NATIONAL BANK, petitioner, vs. FLORENCE O.
CABANSAG, respondent.

DECISION

PANGANIBAN, J  : p

The Court reiterates the basic policy that all Filipino workers, whether
employed locally or overseas, enjoy the protective mantle of Philippine labor
and social legislations. Our labor statutes may not be rendered ineffective by
laws or judgments promulgated, or stipulations agreed upon, in a foreign
country.
The Case
Before us is a Petition for Review on Certiorari  1  under Rule 45 of the
Rules of Court, seeking to reverse and set aside the July 16, 2002
Decision 2 and the January 29, 2003 Resolution 3 of the Court of Appeals (CA)
in CA-GR SP No. 68403. The assailed Decision dismissed the CA Petition
(filed by herein petitioner), which had sought to reverse the National Labor
Relations Commission (NLRC)'s June 29, 2001 Resolution, 4 affirming Labor
Arbiter Joel S. Lustria's January 18, 2000 Decision. 5
The assailed CA Resolution denied herein petitioner's Motion for
Reconsideration.
The Facts
The facts are narrated by the Court of Appeals as follows:
"In late 1998, [herein Respondent Florence Cabansag] arrived in
Singapore as a tourist. She applied for employment, with the Singapore
Branch of the Philippine National Bank, a private banking corporation
organized and existing under the laws of the Philippines, with principal
offices at the PNB Financial Center, Roxas Boulevard, Manila. At the
time, the Singapore PNB Branch was under the helm of Ruben C.
Tobias, a lawyer, as General Manager, with the rank of Vice-President of
the Bank. At the time, too, the Branch Office had two (2) types of
employees: (a) expatriates or the regular employees, hired in Manila and
assigned abroad including Singapore, and (b) locally (direct) hired. She
applied for employment as Branch Credit Officer, at a total monthly
package of $SG4,500.00, effective upon assumption of duties after
approval. Ruben C. Tobias found her eminently qualified and wrote on
October 26, 1998, a letter to the President of the Bank in Manila,
recommending the appointment of Florence O. Cabansag, for the
position.
 xxx xxx xxx
"The President of the Bank was impressed with the credentials of
Florence O. Cabansag that he approved the recommendation of Ruben
C. Tobias. She then filed an 'Application,' with the Ministry of Manpower
of the Government of Singapore, for the issuance of an 'Employment
Pass' as an employee of the Singapore PNB Branch. Her application
was approved for a period of two (2) years.
"On December 7, 1998, Ruben C. Tobias wrote a letter to
Florence O. Cabansag offering her a temporary appointment, as Credit
Officer, at a basic salary of Singapore Dollars 4,500.00, a month and,
upon her successful completion of her probation to be determined solely,
by the Bank, she may be extended at the discretion of the Bank, a
permanent appointment and that her temporary appointment was subject
to the following terms and conditions:
'1. You will be on probation for a period of three (3)
consecutive months from the date of your assumption of duty.
'2. You will observe the Bank's rules and regulations and
those that may be adopted from time to time.
'3. You will keep in strictest confidence all matters related
to transactions between the Bank and its clients.
'4. You will devote your full time during business hours in
promoting the business and interest of the Bank.  HICSTa

'5. You will not, without prior written consent of the Bank,

be employed in anyway for any purpose whatsoever outside
business hours by any person, firm or company.
'6. Termination of your employment with the Bank may be
made by either party after notice of one (1) day in writing during
probation, one month notice upon confirmation or the equivalent
of one (1) day's or month's salary in lieu of notice.'
"Florence O. Cabansag accepted the position and assumed
office. In the meantime, the Philippine Embassy in Singapore processed
the employment contract of Florence O. Cabansag and, on March 8,
1999, she was issued by the Philippine Overseas Employment
Administration, an 'Overseas Employment Certificate,' certifying that she
was a bona fide contract worker for Singapore.
xxx xxx xxx
"Barely three (3) months in office, Florence O. Cabansag
submitted to Ruben C. Tobias, on March 9, 1999, her initial
'Performance Report.' Ruben C. Tobias was so impressed with the
'Report' that he made a notation and, on said 'Report': 'GOOD WORK.'
However, in the evening of April 14, 1999, while Florence O. Cabansag
was in the flat, which she and Cecilia Aquino, the Assistant Vice-
President and Deputy General Manager of the Branch and Rosanna
Sarmiento, the Chief Dealer of the said Branch, rented, she was told by
the two (2) that Ruben C. Tobias has asked them to tell Florence O.
Cabansag to resign from her job. Florence O. Cabansag was perplexed
at the sudden turn of events and the runabout way Ruben C. Tobias
procured her resignation from the Bank. The next day, Florence O.
Cabansag talked to Ruben C. Tobias and inquired if what Cecilia Aquino
and Rosanna Sarmiento had told her was true. Ruben C. Tobias
confirmed the veracity of the information, with the explanation that her
resignation was imperative as a 'cost-cutting measure' of the Bank.
Ruben C. Tobias, likewise, told Florence O. Cabansag that the PNB
Singapore Branch will be sold or transformed into a remittance office and
that, in either way, Florence O. Cabansag had to resign from her
employment. The more Florence O. Cabansag was perplexed. She then
asked Ruben C. Tobias that she be furnished with a 'Formal Advice'
from the PNB Head Office in Manila. However, Ruben C. Tobias flatly
refused. Florence O. Cabansag did not submit any letter of resignation.
"On April 16, 1999, Ruben C. Tobias again summoned Florence
O. Cabansag to his office and demanded that she submit her letter of
resignation, with the pretext that he needed a Chinese-speaking Credit
Officer to penetrate the local market, with the information that a Chinese-
speaking Credit Officer had already been hired and will be reporting for
work soon. She was warned that, unless she submitted her letter of
resignation, her employment record will be blemished with the notation
'DISMISSED' spread thereon. Without giving any definitive answer,
Florence O. Cabansag asked Ruben C. Tobias that she be given
sufficient time to look for another job. Ruben C. Tobias told her that she
should be 'out' of her employment by May 15, 1999.
"However, on April 19, 1999, Ruben C. Tobias again summoned
Florence O. Cabansag and adamantly ordered her to submit her letter of
resignation. She refused. On April 20, 1999, she received a letter from
Ruben C. Tobias terminating her employment with the Bank.
xxx xxx xxx
"On January 18, 2000, the Labor Arbiter rendered judgment in
favor of the Complainant and against the Respondents, the decretal
portion of which reads as follows:
'WHEREFORE, considering the foregoing premises,
judgment is hereby rendered finding respondents guilty of Illegal
dismissal and devoid of due process, and are hereby ordered:
1. To reinstate complainant to her former or substantially
equivalent position without loss of seniority rights,
benefits and privileges;
2. Solidarily liable to pay complainant as follows:
a) To pay complainant her backwages from 16 April
1999 up to her actual reinstatement. Her
backwages as of the date of the promulgation
of this decision amounted to SGD 40,500.00
or its equivalent in Philippine Currency at the
time of payment;
b) Mid-year bonus in the amount of SGD 2,250.00
or its equivalent in Philippine Currency at the
time of payment;
c) Allowance for Sunday banking in the amount of
SGD 120.00 or its equivalent in Philippine
Currency at the time of payment;
d) Monetary equivalent of leave credits earned on
Sunday banking in the amount of SGD
1,557.67 or its equivalent in Philippine
Currency at the time of payment;
e.) Monetary equivalent of unused sick leave
benefits in the amount of SGD 1,150.60 or its
equivalent in Philippine Currency at the time
of payment.
f.) Monetary equivalent of unused vacation leave
benefits in the amount of SGD 319.85 or its
equivalent in Philippine Currency at the time
of payment.
g.) 13th month pay in the amount of SGD 4,500.00
or its equivalent in Philippine Currency at the
time of payment;
3. Solidarily to pay complainant actual damages in the
amount of SGD 1,978.00 or its equivalent in
Philippine Currency at the time of payment, and
moral damages in the amount of PhP 200,000.00,
exemplary damages in the amount of PhP
100,000.00;
4. To pay complainant the amount of SGD 5,039.81 or its
equivalent in Philippine Currency at the time of
payment, representing attorney's fees.  TAIDHa
 SO ORDERED." 6 [Emphasis in the original.]
PNB appealed the labor arbiter's Decision to the NLRC. In a Resolution
dated June 29, 2001, the Commission affirmed that Decision, but reduced the
moral damages to P100,000 and the exemplary damages to P50,000. In a
subsequent Resolution, the NLRC denied PNB's Motion for Reconsideration.
Ruling of the Court of Appeals
In disposing of the Petition for Certiorari, the CA noted that petitioner
bank had failed to adduce in evidence the Singaporean law supposedly
governing the latter's employment Contract with respondent. The appellate
court found that the Contract had actually been processed by the Philippine
Embassy in Singapore and approved by the Philippine Overseas Employment
Administration (POEA), which then used that Contract as a basis for issuing
an Overseas Employment Certificate in favor of respondent.
According to the CA, even though respondent secured an employment
pass from the Singapore Ministry of Employment, she did not thereby waive
Philippine labor laws, or the jurisdiction of the labor arbiter or the NLRC over
her Complaint for illegal dismissal. In so doing, neither did she submit herself
solely to the Ministry of Manpower of Singapore's jurisdiction over disputes
arising from her employment. The appellate court further noted that a cursory
reading of the Ministry's letter will readily show that no such waiver or
submission is stated or implied.
 
Finally, the CA held that petitioner had failed to establish a just cause
for the dismissal of respondent. The bank had also failed to give her sufficient
notice and an opportunity to be heard and to defend herself. The CA ruled
that she was consequently entitled to reinstatement and back wages,
computed from the time of her dismissal up to the time of her reinstatement.
Hence, this Petition. 7
Issues
Petitioner submits the following issues for our consideration:
"1. Whether or not the arbitration branch of the NLRC in the National
Capital Region has jurisdiction over the instant controversy;
"2. Whether or not the arbitration of the NLRC in the National Capital
Region is the most convenient venue or forum to hear and decide
the instant controversy; and
"3. Whether or not the respondent was illegally dismissed, and therefore,
entitled to recover moral and exemplary damages and attorney's
fees." 8
 In addition, respondent assails, in her Comment, 9 the propriety of Rule
45 as the procedural mode for seeking a review of the CA Decision affirming
the NLRC Resolution. Such issue deserves scant consideration. Respondent
miscomprehends the Court's discourse in St. Martin Funeral Home v.
NLRC, 10 which has indeed affirmed that the proper mode of review of NLRC
decisions, resolutions or orders is by a special civil action for certiorari under
Rule 65 of the Rules of Court. The Supreme Court and the Court of Appeals
have concurrent original jurisdiction over such petitions for certiorari. Thus, in
observance of the doctrine on the hierarchy of courts, these petitions should
be initially filed with the CA. 11
Rightly, the bank elevated the NLRC Resolution to the CA by way of a
Petition for Certiorari. In seeking a review by this Court of the CA Decision —
on questions of jurisdiction, venue and validity of employment termination —
petitioner is likewise correct in invoking Rule 45. 12
It is true, however, that in a petition for review on certiorari, the scope of
the Supreme Court's judicial review of decisions of the Court of Appeals is
generally confined only to errors of law. It does not extend to questions of fact.
This doctrine applies with greater force in labor cases. Factual questions are
for the labor tribunals to resolve. 13 In the present case, the labor arbiter and
the NLRC have already determined the factual issues. Their findings, which
are supported by substantial evidence, were affirmed by the CA. Thus, they
are entitled to great respect and are rendered conclusive upon this Court,
absent a clear showing of palpable error or arbitrary disregard of evidence. 14
The Court's Ruling
The Petition has no merit.
First Issue:
Jurisdiction
The jurisdiction of labor arbiters and the NLRC is specified in Article
217 of the Labor Code as follows:
"ART. 217. Jurisdiction of Labor Arbiters and the Commission. —
(a) Except as otherwise provided under this Code the Labor Arbiters
shall have original and exclusive jurisdiction to hear and decide, within
thirty (30) calendar days after the submission of the case by the parties
for decision without extension, even in the absence of stenographic
notes, the following cases involving all workers, whether agricultural or
non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
 3. If accompanied with a claim for reinstatement, those cases that
workers may file involving wage, rates of pay, hours of
work and other terms and conditions of employment
4. Claims for actual, moral, exemplary and other forms of
damages arising from the employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code,
including questions involving the legality of strikes and
lockouts; and
6. Except claims for Employees Compensation, Social Security,
Medicare and maternity benefits, all other claims, arising
from employer-employee relations, including those of
persons in domestic or household service, involving an
amount of exceeding five thousand pesos (P5,000.00)
regardless of whether accompanied with a claim for
reinstatement.  SaCIAE

(b) The commission shall have exclusive appellate jurisdiction

over all cases decided by Labor Arbiters.
xxx xxx xxx."
More specifically, Section 10 of RA 8042 reads in part:
"SECTION 10. Money Claims. — Notwithstanding any provision
of law to the contrary, the Labor Arbiters of the National Labor Relations
Commission (NLRC) shall have the original and exclusive jurisdiction to
hear and decide, within ninety (90) calendar days after the filing of the
complaint, the claims arising out of an employer-employee relationship
or by virtue of any law or contract involving Filipino workers for overseas
deployment including claims for actual, moral, exemplary and other
forms of damages.
xxx xxx xxx"
Based on the foregoing provisions, labor arbiters clearly have original
and exclusive jurisdiction over claims arising from employer-employee
relations, including termination disputes involving all workers, among whom
are overseas Filipino workers (OFW). 15
We are not unmindful of the fact that respondent was directly hired,
while on a tourist status in Singapore, by the PNB branch in that city state.
Prior to employing respondent, petitioner had to obtain an employment pass
for her from the Singapore Ministry of Manpower. Securing the pass was a
regulatory requirement pursuant to the immigration regulations of that
country. 16
Similarly, the Philippine government requires non-Filipinos working in
the country to first obtain a local work permit in order to be legally employed
here. That permit, however, does not automatically mean that the non-citizen
is thereby bound by local laws only, as averred by petitioner. It does not at all
imply a waiver of one's national laws on labor. Absent any clear and
convincing evidence to the contrary, such permit simply means that its holder
has a legal status as a worker in the issuing country.
Noteworthy is the fact that respondent likewise applied for and secured
an Overseas Employment Certificate from the POEA through the Philippine
Embassy in Singapore. The Certificate, issued on March 8, 1999, declared
her a bona fide contract worker for Singapore. Under Philippine law, this
document authorized her working status in a foreign country and entitled her
to all benefits and processes under our statutes. Thus, even
assuming arguendo that she was considered at the start of her employment
as a "direct hire" governed by and subject to the laws, common practices and
customs prevailing in Singapore 17 she subsequently became a contract
worker or an OFW who was covered by Philippine labor laws and policies
upon certification by the POEA. At the time her employment was illegally
terminated, she already possessed the POEA employment Certificate.
Moreover, petitioner admits that it is a Philippine corporation doing
business through a branch office in Singapore. 18 Significantly, respondent's
employment by the Singapore branch office had to be approved by Benjamin
P. Palma Gil, 19 the president of the bank whose principal offices were in
Manila. This circumstance militates against petitioner's contention that
respondent was "locally hired"; and totally "governed by and subject to the
laws, common practices and customs" of Singapore, not of the Philippines.
Instead, with more reason does this fact reinforce the presumption that
respondent falls under the legal definition of migrant worker, in this case one
deployed in Singapore. Hence, petitioner cannot escape the application of
Philippine laws or the jurisdiction of the NLRC and the labor arbiter.
In any event, we recall the following policy pronouncement of the Court
in Royal Crown Internationale v. NLRC: 20
". . . Whether employed locally or overseas, all Filipino workers
enjoy the protective mantle of Philippine labor and social legislation,
contract stipulations to the contrary notwithstanding. This
pronouncement is in keeping with the basic public policy of the State to
afford protection to labor, promote full employment, ensure equal work
opportunities regardless of sex, race or creed, and regulate the relations
between workers and employers. For the State assures the basic rights
of all workers to self-organization, collective bargaining, security of
tenure, and just and humane conditions of work [Article 3 of the Labor
Code of the Philippines; See also Section 18, Article II and Section 3,
Article XIII, 1987 Constitution]. This ruling is likewise rendered
imperative by Article 17 of the Civil Code which states that laws 'which
 have for their object public order, public policy and good customs shall
not be rendered ineffective by laws or judgments promulgated, or by
determination or conventions agreed upon in a foreign country."
Second Issue:
Proper Venue
Section 1(a) of Rule IV of the NLRC Rules of Procedure reads:
"Section 1. Venue. — (a) All cases which Labor Arbiters have
authority to hear and decide may be filed in the Regional Arbitration
Branch having jurisdiction over the workplace of the
complainant/petitioner; Provided, however that cases of Overseas
Filipino Worker (OFW) shall be filed before the Regional Arbitration
Branch where the complainant resides or where the principal office of
the respondent/employer is situated, at the option of the complainant.
"For purposes of venue, workplace shall be understood as the
place or locality where the employee is regularly assigned when the
cause of action arose. It shall include the place where the employee is
supposed to report back after a temporary detail, assignment or travel. In
the case of field employees, as well as ambulant or itinerant workers,
their workplace is where they are regularly assigned, or where they are
supposed to regularly receive their salaries/wages or work instructions
from, and report the results of their assignment to their employers."
Under the "Migrant Workers and Overseas Filipinos Act of 1995" (RA
8042), a migrant worker "refers to a person who is to be engaged, is engaged
or has been engaged in a remunerated activity in a state of which he or she is
not a legal resident; to be used interchangeably with overseas Filipino
worker." 21 Undeniably, respondent was employed by petitioner in its branch
office in Singapore. Admittedly, she is a Filipino and not a legal resident of
that state. She thus falls within the category of "migrant worker" or "overseas
Filipino worker."
As such, it is her option to choose the venue of her Complaint against
petitioner for illegal dismissal. The law gives her two choices: (1) at the
Regional Arbitration Branch (RAB) where she resides or (2) at the RAB where
the principal office of her employer is situated. Since her dismissal by
petitioner, respondent has returned to the Philippines — specifically to her
residence at Filinvest II, Quezon City. Thus, in filing her Complaint before the
RAB office in Quezon City, she has made a valid choice of proper venue.  cCSDTI

Third Issue:
Illegal Dismissal
The appellate court was correct in holding that respondent was already
a regular employee at the time of her dismissal, because her three-month
probationary period of employment had already ended. This ruling is in
accordance with Article 281 of the Labor Code: "An employee who is allowed
to work after a probationary period shall be considered a regular employee."
Indeed, petitioner recognized respondent as such at the time it dismissed her,
by giving her one month's salary in lieu of a one-month notice, consistent with
provision No. 6 of her employment Contract.
Notice and Hearing
Not Complied With
As a regular employee, respondent was entitled to all rights, benefits
and privileges provided under our labor laws. One of her fundamental rights is
that she may not be dismissed without due process of law. The twin
requirements of notice and hearing constitute the essential elements of
procedural due process, and neither of these elements can be eliminated
without running afoul of the constitutional guarantee. 22
In dismissing employees, the employer must furnish them two written
notices: 1) one to apprise them of the particular acts or omissions for which
their dismissal is sought; and 2) the other to inform them of the decision to
dismiss them. As to the requirement of a hearing, its essence lies simply in
the opportunity to be heard. 23
The evidence in this case is crystal-clear. Respondent was not notified
of the specific act or omission for which her dismissal was being sought.
Neither was she given any chance to be heard, as required by law. At any
rate, even if she were given the opportunity to be heard, she could not have
defended herself effectively, for she knew no cause to answer to.
All that petitioner tendered to respondent was a notice of her
employment termination effective the very same day, together with the
equivalent of a one-month pay. This Court has already held that nothing in the
law gives an employer the option to substitute the required prior notice and
opportunity to be heard with the mere payment of 30 days' salary. 24
Well-settled is the rule that the employer shall be sanctioned for
noncompliance with the requirements of, or for failure to observe, due process
that must be observed in dismissing an employee. 25
No Valid Cause
for Dismissal
Moreover, Articles 282, 26 283 27 and 284 28 of the Labor Code provide
the valid grounds or causes for an employee's dismissal. The employer has
the burden of proving that it was done for any of those just or authorized
causes. The failure to discharge this burden means that the dismissal was not
justified, and that the employee is entitled to reinstatement and back
wages. 29
 Notably, petitioner has not asserted any of the grounds provided by law
as a valid reason for terminating the employment of respondent. It merely
insists that her dismissal was validly effected pursuant to the provisions of her
employment Contract, which she had voluntarily agreed to be bound to.  cDIHES

Truly, the contracting parties may establish such stipulations, clauses,

terms and conditions as they want, and their agreement would have the force
of law between them. However, petitioner overlooks the qualification that
those terms and conditions agreed upon must not be contrary to law, morals,
customs, public policy or public order. 30 As explained earlier, the employment
Contract between petitioner and respondent is governed by Philippine labor
laws. Hence, the stipulations, clauses, and terms and conditions of the
Contract must not contravene our labor law provisions.
Moreover, a contract of employment is imbued with public interest. The
Court has time and time again reminded parties that they "are not at liberty to
insulate themselves and their relationships from the impact of labor laws and
regulations by simply contracting with each other." 31 Also, while a contract is
the law between the parties, the provisions of positive law that regulate such
contracts are deemed included and shall limit and govern the relations
between the parties. 32
Basic in our jurisprudence is the principle that when there is no showing
of any clear, valid, and legal cause for the termination of employment, the law
considers the matter a case of illegal dismissal. 33
Awards for Damages
Justified
Finally, moral damages are recoverable when the dismissal of an
employee is attended by bad faith or constitutes an act oppressive to labor or
is done in a manner contrary to morals, good customs or public
policy. 34 Awards for moral and exemplary damages would be proper if the
employee was harassed and arbitrarily dismissed by the employer. 35
In affirming the awards of moral and exemplary damages, we quote
with approval the following ratiocination of the labor arbiter:
"The records also show that [respondent's] dismissal was effected
by [petitioners'] capricious and high-handed manner, anti-social and
oppressive, fraudulent and in bad faith, and contrary to morals, good
customs and public policy. Bad faith and fraud are shown in the acts
committed by [petitioners] before, during and after [respondent's]
dismissal in addition to the manner by which she was dismissed. First,
[respondent] was pressured to resign for two different and contradictory
reasons, namely, cost-cutting and the need for a Chinese[-]speaking
credit officer, for which no written advice was given despite
complainant's request. Such wavering stance or vacillating position
 indicates bad faith and a dishonest purpose. Second, she was employed
on account of her qualifications, experience and readiness for the
position of credit officer and pressured to resign a month after she was
commended for her good work. Third, the demand for [respondent's]
instant resignation on 19 April 1999 to give way to her replacement who
was allegedly reporting soonest, is whimsical, fraudulent and in bad
faith, because on 16 April 1999 she was given a period of [sic] until 15
May 1999 within which to leave. Fourth, the pressures made on her to
resign were highly oppressive, anti-social and caused her absolute
torture, as [petitioners] disregarded her situation as an overseas worker
away from home and family, with no prospect for another job. She was
not even provided with a return trip fare. Fifth, the notice of termination is
an utter manifestation of bad faith and whim as it totally disregards
[respondent's] right to security of tenure and due process. Such notice
together with the demands for [respondent's] resignation contravenes
the fundamental guarantee and public policy of the Philippine
government on security of tenure.
"[Respondent] likewise established that as a proximate result of
her dismissal and prior demands for resignation, she suffered and
continues to suffer mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock and social humiliation. Her
standing in the social and business community as well as prospects for
employment with other entities have been adversely affected by her
dismissal. [Petitioners] are thus liable for moral damages under Article
2217 of the Civil Code.
xxx xxx xxx
"[Petitioners] likewise acted in a wanton, oppressive or malevolent
manner in terminating [respondent's] employment and are therefore
liable for exemplary damages. This should served [sic] as protection to
other employees of [petitioner] company, and by way of example or
correction for the public good so that persons similarly minded as
[petitioners] would be deterred from committing the same acts." 36
The Court also affirms the award of attorney's fees. It is settled that
when an action is instituted for the recovery of wages, or when employees are
forced to litigate and consequently incur expenses to protect their rights and
interests, the grant of attorney's fees is legally justifiable. 37
WHEREFORE, the Petition is DENIED and the assailed Decision and
Resolution AFFIRMED. Costs against petitioner.
SO ORDERED.
 (Philippine National Bank v. Cabansag, G.R. No. 157010, [June 21, 2005], 499
|||

PHIL 512-536)
 G.R. No. 120077. October 13, 2000.]

THE MANILA HOTEL CORP. and MANILA HOTEL INTL.

LTD., petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION, ARBITER CEFERINA J. DIOSANA and
MARCELO G. SANTOS, respondents.

 (Manila Hotel Corp. v. National Labor Relations Commission, G.R. No. 120077,
|||

[October 13, 2000], 397 PHIL 1-23)

The case before the Court is a petition for certiorari 1 to annul the following
orders of the National Labor Relations Commission (hereinafter referred to as
"NLRC") for having been issued without or with excess jurisdiction and with grave
abuse of discretion: 2
(1) Order of May 31, 1993. 3 Reversing and setting aside its earlier
resolution of August 28, 1992. 4 The questioned order declared that the NLRC,
not the Philippine Overseas Employment Administration (hereinafter referred to
as "POEA"), had jurisdiction over private respondent's complaint;
(2) Decision of December 15, 1994. 5 Directing petitioners to jointly and
severally pay private respondent twelve thousand and six hundred dollars
(US$12,600.00) representing salaries for the unexpired portion of his contract;
three thousand six hundred dollars (US$3,600.00) as extra four months salary for
the two (2) year period of his contract, three thousand six hundred dollars
(US$3,600.00) as "14th month pay" or a total of nineteen thousand and eight
hundred dollars (US$19,800.00) or its peso equivalent and attorney's fees
amounting to ten percent (10%) of the total award; and
(3) Order of March 30, 1995. 6 Denying the motion for reconsideration of
the petitioners. 
EHSITc

In May, 1988, private respondent Marcelo Santos (hereinafter referred to

as "Santos") was an overseas worker employed as a printer at the Mazoon
Printing Press, Sultanate of Oman. Subsequently, in June 1988, he was directly
hired by the Palace Hotel, Beijing, People's Republic of China and later
terminated due to retrenchment.
 Petitioners are the Manila Hotel Corporation (hereinafter referred to as
"MHC") and the Manila Hotel International Company, Limited (hereinafter
referred to as "MHICL").
When the case was filed in 1990, MHC was still a government-owned and
controlled corporation duly organized and existing under the laws of the
Philippines.
MHICL is a corporation duly organized and existing under the laws of Hong
Kong. 7 MHC is an "incorporator" of MHICL, owning 50% of its capital stock. 8
By virtue of a "management agreement" 9 with the Palace Hotel (Wang Fu
Company Limited), MHICL 10 trained the personnel and staff of the Palace Hotel
at Beijing, China.
Now the facts.
During his employment with the Mazoon Printing Press in the Sultanate of
Oman, respondent Santos received a letter dated May 2, 1988 from Mr. Gerhard
R. Shmidt, General Manager, Palace Hotel, Beijing, China. Mr. Schmidt informed
respondent Santos that he was recommended by one Nestor Buenio, a friend of
his.
Mr. Shmidt offered respondent Santos the same position as printer, but
with a higher monthly salary and increased benefits. The position was slated to
open on October 1, 1988. 11
On May 8, 1988, respondent Santos wrote to Mr. Shmidt and signified his
acceptance of the offer.
On May 19, 1988, the Palace Hotel Manager, Mr. Hans J. Henk mailed a
ready to sign employment contract to respondent Santos. Mr. Henk advised
respondent Santos that if the contract was acceptable, to return the same to Mr.
Henk in Manila, together with his passport and two additional pictures for his visa
to China. 
TAIEcS

On May 30, 1988, respondent Santos resigned from the Mazoon Printing
Press, effective June 30, 1988, under the pretext that he was needed at home to
help with the family's piggery and poultry business.
On June 4, 1988, respondent Santos wrote the Palace Hotel and
acknowledged Mr. Henk's letter. Respondent Santos enclosed four (4) signed
copies of the employment contract (dated June 4, 1988) and notified them that
he was going to arrive in Manila during the first week of July 1988.
The employment contract of June 4, 1988 stated that his employment
would commence September 1, 1988 for a period of two years. 12 It provided for
a monthly salary of nine hundred dollars (US$900.00) net of taxes, payable
fourteen (14) times a year. 13
On June 30, 1988, respondent Santos was deemed resigned from the
Mazoon Printing Press.
On July 1, 1988, respondent Santos arrived in Manila.
On November 5, 1988, respondent Santos left for Beijing, China. He
started to work at the Palace Hotel. 14
Subsequently, respondent Santos signed an amended "employment
agreement" with the Palace Hotel, effective November 5, 1988. In the contract,
Mr. Shmidt represented the Palace Hotel. The Vice President (Operations and
Development) of petitioner MHICL Miguel D. Cergueda signed the employment
agreement under the word "noted."
From June 8 to 29, 1989, respondent Santos was in the Philippines on
vacation leave. He returned to China and reassumed his post on July 17,
1989. AaEcDS

On July 22, 1989, Mr. Shmidt's Executive Secretary, a certain Joanna

suggested in a handwritten note that respondent Santos be given one (1) month
notice of his release from employment.
On August 10, 1989, the Palace Hotel informed respondent Santos by
letter signed by Mr. Shmidt that his employment at the Palace Hotel print shop
would be terminated due to business reverses brought about by the political
upheaval in China. 15 We quote the letter: 16
"After the unfortunate happenings in China and especially Beijing
(referring to Tiannamen Square incidents), our business has been
severely affected. To reduce expenses, we will not open/operate
printshop for the time being.
"We sincerely regret that a decision like this has to be made, but
rest assured this does in no way reflect your past performance which we
found up to our expectations."
"Should a turnaround in the business happen, we will contact you
directly and give you priority on future assignment."
On September 5, 1989, the Palace Hotel terminated the employment of
respondent Santos and paid all benefits due him, including his plane fare back to
the Philippines.
On October 3, 1989, respondent Santos was repatriated to the Philippines.
 On October 24, 1989, respondent Santos, through his lawyer, Atty. Ednave
wrote Mr. Shmidt, demanding full compensation pursuant to the employment
agreement.
On November 11, 1989, Mr. Shmidt replied, to wit: 17
"His service with the Palace Hotel, Beijing was not abruptly
terminated but we followed the one-month notice clause and Mr. Santos
received all benefits due him.
"For your information the Print Shop at the Palace Hotel is still not
operational and with a low business outlook, retrenchment in various
departments of the hotel is going on which is a normal management
practice to control costs.
"When going through the latest performance ratings, please also
be advised that his performance was below average and a Chinese
National who is doing his job now shows a better approach.
"In closing, when Mr. Santos received the letter of notice, he
hardly showed up for work but still enjoyed free
accommodation/laundry/meals up to the day of his departure."
On February 20, 1990, respondent Santos filed a complaint for illegal
dismissal with the Arbitration Branch, National Capital Region, National Labor
Relations Commission (NLRC). He prayed for an award of nineteen thousand
nine hundred and twenty-three dollars (US$19,923.00) as actual damages, forty
thousand pesos (P40,000.00) as exemplary damages and attorney's fees
equivalent to 20% of the damages prayed for. The complaint named MHC,
MHICL, the Palace Hotel and Mr. Shmidt as respondents.  DCSETa

The Palace Hotel and Mr. Shmidt were not served with summons and
neither participated in the proceedings before the Labor Arbiter. 18
On June 27, 1991, Labor Arbiter Ceferina J. Diosana, decided the case
against petitioners, thus: 19
"WHEREFORE, judgment is hereby rendered:
"1. directing all the respondents to pay complainant jointly and
severally;
"a) $20,820 US dollars or its equivalent in Philippine currency as
unearned salaries;
"b) P50,000.00 as moral damages;
"c) P40,000.00 as exemplary damages; and
"d) Ten (10) percent of the total award as attorney's fees.
"SO ORDERED."
 On July 23, 1991, petitioners appealed to the NLRC, arguing that the
POEA, not the NLRC had jurisdiction over the case.
On August 28, 1992, the NLRC promulgated a resolution, stating: 20
"WHEREFORE, let the appealed Decision be, as it is hereby,
declared null and void for want of jurisdiction. Complainant is hereby
enjoined to file his complaint with the POEA.
"SO ORDERED."
On September 18, 1992, respondent Santos moved for reconsideration of
the afore-quoted resolution. He argued that the case was not cognizable by the
POEA as he was not an "overseas contract worker." 21
On May 31, 1993, the NLRC granted the motion and reversed itself. The
NLRC directed Labor Arbiter Emerson Tumanon to hear the case on the question
of whether private respondent was retrenched or dismissed. 22
On January 13, 1994, Labor Arbiter Tumanon completed the proceedings
based on the testimonial and documentary evidence presented to and heard by
him. 23
Subsequently, Labor Arbiter Tumanon was re-assigned as trial Arbiter of
the National Capital Region, Arbitration Branch, and the case was transferred to
Labor Arbiter Jose G. de Vera. 24
On November 25, 1994, Labor Arbiter de Vera submitted his report. 25 He
found that respondent Santos was illegally dismissed from employment and
recommended that he be paid actual damages equivalent to his salaries for the
unexpired portion of his contract. 26
On December 15, 1994, the NLRC ruled in favor of private respondent, to
wit: 27
"WHEREFORE, finding that the report and recommendations of
Arbiter de Vera are supported by substantial evidence, judgment is
hereby rendered, directing the respondents to jointly and severally pay
complainant the following computed contractual benefits: (1)
US$12,600.00 as salaries for the unexpired portion of the parties'
contract; (2) US$3,600.00 as extra four (4) months salary for the two (2)
years period (sic) of the parties' contract; (3) US$3,600.00 as "14th
month pay" for the aforesaid two (2) years contract stipulated by the
parties or a total of US$19,800.00 or its peso equivalent, plus (4)
attorney's fees of 10% of complainant's total award.
"SO ORDERED."
On February 2, 1995, petitioners filed a motion for reconsideration arguing
that Labor Arbiter de Vera's recommendation had no basis in law and in fact. 28
 On March 30, 1995, the NLRC denied the motion for reconsideration. 29
Hence, this petition. 30
On October 9, 1995, petitioners filed with this Court an urgent motion for
the issuance of a temporary restraining order and/or writ of preliminary injunction
and a motion for the annulment of the entry of judgment of the NLRC dated July
31, 1995. 31
On November 20, 1995, the Court denied petitioner's urgent motion. The
Court required respondents to file their respective comments, without giving due
course to the petition. 32
On March 8, 1996, the Solicitor General filed a manifestation stating that
after going over the petition and its annexes, they can not defend and sustain the
position taken by the NLRC in its assailed decision and orders. The Solicitor
General prayed that he be excused from filing a comment on behalf of the
NLRC. 33
On April 30,1996, private respondent Santos filed his comment. 34
On June 26, 1996, the Court granted the manifestation of the Solicitor
General and required the NLRC to file its own comment to the petition. 35
On January 7, 1997, the NLRC filed its comment.
The petition is meritorious.
I. Forum Non-Conveniens
The NLRC was a seriously inconvenient forum.
We note that the main aspects of the case transpired in two foreign
jurisdictions and the case involves purely foreign elements. The only link that the
Philippines has with the case is that respondent Santos is a Filipino citizen. The
Palace Hotel and MHICL are foreign corporations. Not all cases involving our
citizens can be tried here. 
ICTaEH

The employment contract. — Respondent Santos was hired directly by the

Palace Hotel, a foreign employer, through correspondence sent to the Sultanate
of Oman, where respondent Santos was then employed. He was hired without
the intervention of the POEA or any authorized recruitment agency of the
government. 36
Under the rule of forum non conveniens, a Philippine court or
agency may assume jurisdiction over the case if it chooses to do so provided: (1)
that the Philippine court is one to which the parties may conveniently resort to;
(2) that the Philippine court is in a position to make an intelligent decision as to
the law and the facts; and (3) that the Philippine court has or is likely to have
power to enforce its decision. 37 The conditions are unavailing in the case at bar.
Not Convenient. — We fail to see how the NLRC is a convenient forum
given that all the incidents of the case — from the time of recruitment, to
employment to dismissal occurred outside the Philippines. The inconvenience is
compounded by the fact that the proper defendants, the Palace Hotel and MHICL
are not nationals of the Philippines. Neither are they "doing business in the
Philippines." Likewise, the main witnesses, Mr. Shmidt and Mr. Henk are non-
residents of the Philippines.
No power to determine applicable law. — Neither can an intelligent
decision be made as to the law governing the employment contract as such was
perfected in foreign soil. This calls to fore the application of the principle of lex
loci contractus (the law of the place where the contract was made). 38
The employment contract was not perfected in the Philippines.
Respondent Santos signified his acceptance by writing a letter while he was in
the Republic of Oman. This letter was sent to the Palace Hotel in the People's
Republic of China.
No power to determine the facts. — Neither can the NLRC determine the
facts surrounding the alleged illegal dismissal as all acts complained of took
place in Beijing, People's Republic of China. The NLRC was not in a position to
determine whether the Tiannamen Square incident truly adversely affected
operations of the Palace Hotel as to justify respondent Santos' retrenchment.
Principle of effectiveness, no power to execute decision. — Even
assuming that a proper decision could be reached by the NLRC, such would not
have any binding effect against the employer, the Palace Hotel. The Palace Hotel
is a corporation incorporated under the laws of China and was not even served
with summons. Jurisdiction over its person was not acquired.
This is not to say that Philippine courts and agencies have no power to
solve controversies involving foreign employers. Neither are we saying that we
do not have power over an employment contract executed in a foreign country. If
Santos were an "overseas contract worker," a Philippine forum, specifically the
POEA, not the NLRC, would protect him.  39 He is not an "overseas contract
worker" a fact which he admits with conviction. 40
Even assuming that the NLRC was the proper forum, even on the
merits, the NLRC's decision cannot be sustained.
II. MHC Not Liable
Even if we assume two things: (1) that the NLRC had jurisdiction over the
case, and (2) that MHICL was liable for Santos' retrenchment, still MHC, as a
separate and distinct juridical entity cannot be held liable.
 True, MHC is an incorporator of MHICL and owns fifty percent (50%) of its
capital stock. However, this is not enough to pierce the veil of corporate fiction
between MHICL and MHC.
Piercing the veil of corporate entity is an equitable remedy. It is resorted to
when the corporate fiction is used to defeat public convenience, justify wrong,
protect fraud or defend a crime. 41 It is done only when a corporation is a mere
alter ego or business conduit of a person or another corporation.
In Traders Royal Bank v. Court of Appeals, 42 we held that "the mere
ownership by a single stockholder or by another corporation of all or nearly all of
the capital stock of a corporation is not of itself a sufficient reason for
disregarding the fiction of separate corporate personalities."
The tests in determining whether the corporate veil may be pierced
are: First, the defendant must have control or complete domination of the other
corporation's finances, policy and business practices with regard to the
transaction attacked. There must be proof that the other corporation had no
separate mind, will or existence with respect the act complained
of. Second, control must be used by the defendant to commit fraud or
wrong. Third, the aforesaid control or breach of duty must be the proximate
cause of the injury or loss complained of. The absence of any of the elements
prevents the piercing of the corporate veil. 43
It is basic that a corporation has a personality separate and distinct from
those composing it as well as from that of any other legal entity to which it may
be related. 44 Clear and convincing evidence is needed to pierce the veil of
corporate fiction. 45 In this case, we find no evidence to show that MHICL and
MHC are one and the same entity.  DSHTaC

III. MHICL not Liable

Respondent Santos predicates MHICL's liability on the fact that MHICL
"signed" his employment contract with the Palace Hotel. This fact fails to
persuade us.
First, we note that the Vice President (Operations and Development) of
MHICL, Miguel D. Cergueda signed the employment contract as a mere witness.
He merely signed under the word "noted."
When one "notes" a contract, one is not expressing his agreement or
approval, as a party would. 46 In Sichangco v. Board of Commissioners of
Immigration, 47 the Court recognized that the term "noted" means that the person
so noting has merely taken cognizance of the existence of an act or declaration,
without exercising a judicious deliberation or rendering a decision on the matter.
 Mr. Cergueda merely signed the "witnessing part" of the document. The
"witnessing part" of the document is that which, "in a deed or other formal
instrument is that part which comes after the recitals, or where there are no
recitals, after the parties (italics ours)." 48 As opposed to a party to a contract, a
witness is simply one who, "being present, personally sees or perceives a thing;
a beholder, a spectator, or eyewitness." 49 One who "notes" something just
makes a "brief written statement" 50 a memorandum or observation.
Second, and more importantly, there was no existing employer-employee
relationship between Santos and MHICL. In determining the existence of an
employer-employee relationship, the following elements are considered: 51
"(1) the selection and engagement of the employee;
"(2) the payment of wages;
"(3) the power to dismiss; and
"(4) the power to control employee's conduct."
MHICL did not have and did not exercise any of the aforementioned
powers. It did not select respondent Santos as an employee for the Palace Hotel.
He was referred to the Palace Hotel by his friend, Nestor Buenio. MHICL
did not engage respondent Santos to work. The terms of employment were
negotiated and finalized through correspondence between respondent Santos,
Mr. Schmidt and Mr. Henk, who were officers and representatives of the Palace
Hotel and not MHICL. Neither did respondent Santos adduce any proof that
MHICL had the power to control his conduct. Finally, it was the Palace Hotel,
through Mr. Schmidt and not MHICL that terminated respondent Santos'
services.
Neither is there evidence to suggest that MHICL was a "labor-only
contractor." 52 There is no proof that MHICL "supplied" respondent Santos or
even referred him for employment to the Palace Hotel.
Likewise, there is no evidence to show that the Palace Hotel and MHICL
are one and the same entity. The fact that the Palace Hotel is a member of the
"Manila Hotel Group" is not enough to pierce the corporate veil between MHICL
and the Palace Hotel.
IV. Grave Abuse of Discretion
Considering that the NLRC was forum non-conveniens and considering
further that no employer-employee relationship existed between MHICL, MHC
and respondent Santos, Labor Arbiter Ceferina J. Diosana clearly had no
jurisdiction over respondent's claim in NLRC NCR Case No. 00-02-01058-90.  AaCcST

Labor Arbiters have exclusive and original jurisdiction only over the
following: 53
 "1. Unfair labor practice cases;
"2. Termination disputes;
"3. If accompanied with a claim for reinstatement, those cases
that workers may file involving wages, rates of pay, hours of work and
other terms and conditions of employment;
"4. Claims for actual, moral, exemplary and other forms of
damages arising from employer-employee relations;
"5. Cases arising from any violation of Article 264 of this Code,
including questions involving legality of strikes and lockouts; and
"6. Except claims for Employees Compensation, Social Security,
Medicare and maternity benefits, all other claims, arising from employer-
employee relations, including those of persons in domestic or household
service, involving an amount exceeding five thousand pesos (P5,000.00)
regardless of whether accompanied with a claim for reinstatement."
In all these cases, an employer-employee relationship is an indispensable
jurisdictional requirement.
The jurisdiction of labor arbiters and the NLRC under Article 217 of the
Labor Code is limited to disputes arising from an employer-employee relationship
which can be resolved by reference to the Labor Code, or other labor statutes, or
their collective bargaining agreements. 54
"To determine which body has jurisdiction over the present controversy, we
rely on the sound judicial principle that jurisdiction over the subject matter is
conferred by law and is determined by the allegations of the complaint
irrespective of whether the plaintiff is entitled to all or some of the claims asserted
therein." 55
The lack of jurisdiction of the Labor Arbiter was obvious from the
allegations of the complaint. His failure to dismiss the case amounts to grave
abuse of discretion. 56
V. The Fallo
WHEREFORE, the Court hereby GRANTS the petition for certiorari and
ANNULS the orders and resolutions of the National Labor Relations Commission
dated May 31, 1993, December 15, 1994 and March 30, 1995 in NLRC NCR CA
No. 002101-91 (NLRC NCR Case No. 00-02-01058-90).
No costs.
SO ORDERED.
 (Manila Hotel Corp. v. National Labor Relations Commission, G.R. No. 120077,
|||

[October 13, 2000], 397 PHIL 1-23)

 G.R. No. 128024. May 9, 2000.]

BEBIANO M. BAÑEZ, petitioner, vs. HON. DOWNEY C.

VALDEVILLA and ORO MARKETING, INC., respondents.

|||  (Bañez v. Valdevilla, G.R. No. 128024, [May 9, 2000], 387 PHIL 601-612)

The orders of respondent judge 1 dated June 20, 1996 and October 16,
1996, taking jurisdiction over an action for damages filed by an employer against
its dismissed employee, are assailed in this petition for certiorari under Rule 65 of
the Rules of Court for having been issued in grave abuse of discretion.
Petitioner was the sales operations manager of private respondent in its
branch in Iligan City. In 1993, private respondent "indefinitely suspended"
petitioner and the latter filed a complaint for illegal dismissal with the National
Labor Relations Commission ("NLRC") in Iligan City. In a decision dated July 7,
1994, Labor Arbiter Nicodemus G. Palangan found petitioner to have been
illegally dismissed and ordered the payment of separation pay in lieu of
reinstatement, and of backwages and attorney's fees. The decision was
appealed to the NLRC, which dismissed the same for having been filed out of
time. 2 Elevated by petition for certiorari before this Court, the case was
dismissed on technical grounds; 3 however, the Court also pointed out that even
if all the procedural requirements for the filing of the petition were met, it would
still be dismissed for failure to show grave abuse of discretion on the part of the
NLRC.  Cdpr

On November 13, 1995, private respondent filed a complaint for damages

before the Regional Trial Court ("RTC") of Misamis Oriental, docketed as Civil
Case No. 95-554, which prayed for the payment of the following:
a. P709,217.97 plus 12% interest as loss of profit and/or unearned
income of three years;
b. P119,700.00 plus 12% interest as estimated cost of supplies, facilities,
properties, space, etc. for three years;
c. P5,000.00 as initial expenses of litigation; and
d. P25,000.00 as attorney's fees. 4
 On January 30, 1996, petitioner filed a motion to dismiss the above
complaint. He interposed in the court below that the action for damages, having
arisen from an employer-employee relationship, was squarely under the
exclusive original jurisdiction of the NLRC under Article 217(a), paragraph 4 of
the Labor Code and is barred by reason of the final judgment in the labor case.
He accused private respondent of splitting causes of action, stating that the latter
could very well have included the instant claim for damages in its counterclaim
before the Labor Arbiter. He also pointed out that the civil action of private
respondent is an act of forum-shopping and was merely resorted to after a failure
to obtain a favorable decision with the NLRC.
Ruling upon the motion to dismiss, respondent judge issued the herein
questioned Order, which summarized the basis for private respondent's action for
damages in this manner:
Paragraph 5 of the complaint alleged that the defendant violated
the plaintiff’s policy re: His business in his branch at Iligan City wherein
defendant was the Sales Operations Manager, and paragraph 7 of the
same complaint briefly narrated the modus operandi of defendant,
quoted herein: Defendant canvassed customers personally or through
salesmen of plaintiff which were hired or recruited by him. If said
customer decided to buy items from plaintiff on installment basis,
defendant, without the knowledge of said customer and plaintiff, would
buy the items on cash basis at ex-factory price, a privilege not given to
customers, and thereafter required the customer to sign promissory
notes and other documents using the name and property of plaintiff,
purporting that said customer purchased the items from plaintiff on
installment basis. Thereafter, defendant collected the installment
payments either personally or through Venus Lozano, a Group Sales
Manager of plaintiff but also utilized by him as secretary in his own
business for collecting and receiving of installments, purportedly for the
plaintiff but in reality on his own account or business. The collection and
receipt of payments were made inside the Iligan City branch using
plaintiff’s facilities, property and manpower. That accordingly plaintiff’s
sales decreased and reduced to a considerable extent the profits which
it would have earned. 5
In declaring itself as having jurisdiction over the subject matter of the
instant controversy, respondent court stated:
A perusal of the complaint which is for damages does not ask for
any relief under the Labor Code of the Philippines. It seeks to recover
damages as redress for defendant's breach of his contractual obligation
to plaintiff who was damaged and prejudiced. The Court believes such
cause of action is within the realm of civil law, and jurisdiction over the
controversy belongs to the regular courts.
 While seemingly the cause of action arose from employer-
employee relations, the employer's claim for damages is grounded on
the nefarious activities of defendant causing damage and prejudice to
plaintiff as alleged in paragraph 7 of the complaint. The Court believes
that there was a breach of a contractual obligation, which is intrinsically a
civil dispute. The averments in the complaint removed the controversy
from the coverage of the Labor Code of the Philippines and brought it
within the purview of civil law. (Singapore Airlines, Ltd. Vs. Paño, 122
SCRA 671.) . . . 6
Petitioner's motion for reconsideration of the above Order was denied for
lack of merit on October 16, 1996. Hence, this petition.
Acting on petitioner's prayer, the Second Division of this Court issued a
Temporary Restraining Order ("TRO") on March 5, 1997, enjoining respondents
from further proceeding with Civil Case No. 95-554 until further orders from the
Court.
By way of assignment of errors, the petition reiterates the grounds raised
in the Motion to Dismiss dated January 30, 1996, namely, lack of jurisdiction over
the subject matter of the action, res judicata, splitting of causes of action, and
forum-shopping. The determining issue, however, is the issue of jurisdiction.
Article 217(a), paragraph 4 of the Labor Code, which was already in effect
at the time of the filing of this case, reads: cda

ARTICLE 217. Jurisdiction of Labor Arbiters and the

Commission. — (a) Except as otherwise provided under this Code, the
Labor Arbiters shall have original and exclusive jurisdiction to hear and
decide, within thirty (30) calendar days after the submission of the case
by the parties for decision without extension, even in the absence of
stenographic notes, the following cases involving all workers, whether
agricultural or non-agricultural:
xxx xxx xxx
4. Claims for actual, moral, exemplary and other forms of
damages arising from the employer-employee relations;
xxx xxx xxx
The above provisions are a result of the amendment by Section 9 of
Republic Act ("R.A.") No. 6715, which took effect on March 21, 1989, and which
put to rest the earlier confusion as to who between Labor Arbiters and regular
courts had jurisdiction over claims for damages as between employers and
employees.
It will be recalled that years prior to R.A. 6715, jurisdiction over all money
claims of workers, including claims for damages, was originally lodged with the
Labor Arbiters and the NLRC by Article 217 of the Labor Code. 7 On May 1,
1979, however, Presidential Decree ("P.D.") No. 1367 amended said Article 217
to the effect that "Regional Directors shall not indorse and Labor Arbiters shall
not entertain claims for moral or other forms of damages." 8 This limitation in
jurisdiction, however, lasted only briefly since on May 1, 1980, P.D. No.
1691 nullified P.D. No. 1367 and restored Article 217 of the Labor Code almost to
its original form. Presently, and as amended by R.A. 6715, the jurisdiction of
Labor Arbiters and the NLRC in Article 217 is comprehensive enough to include
claims for all forms of damages "arising from the employer-employee relations".
Whereas this Court in a number of occasions had applied the jurisdictional
provisions of Article 217 to claims for damages filed by employees, 9 we hold that
by the designating clause "arising from the employer-employee relations" Article
217 should apply with equal force to the claim of an employer for actual
damages against its dismissed employee, where the basis for the claim arises
from or is necessarily connected with the fact of termination, and should be
entered as a counterclaim in the illegal dismissal case.
Even under Republic Act No. 875 (the "Industrial Peace Act", now
completely superseded by the Labor Code), jurisprudence was settled that where
the plaintiff's cause of action for damages arose out of, or was necessarily
intertwined with, an alleged unfair labor practice committed by the union, the
jurisdiction is exclusively with the (now defunct) Court of Industrial Relations, and
the assumption of jurisdiction of regular courts over the same is a nullity. 10 To
allow otherwise would be "to sanction split jurisdiction, which is prejudicial to the
orderly administration of justice." 11 Thus, even after the enactment of the Labor
Code, where the damages separately claimed by the employer were allegedly
incurred as a consequence of strike or picketing of the union, such complaint for
damages is deeply rooted from the labor dispute between the parties, and should
be dismissed by ordinary courts for lack of jurisdiction. As held by this Court
in National Federation of Labor vs. Eisma, 127 SCRA 419:
Certainly, the present Labor Code is even more committed to the
view that on policy grounds, and equally so in the interest of greater
promptness in the disposition of labor matters, a court is spared the
often onerous task of determining what essentially is a factual matter,
namely, the damages that may be incurred by either labor or
management as a result of disputes or controversies arising from
employer-employee relations.
There is no mistaking the fact that in the case before us, private
respondent's claim against petitioner for actual damages arose from a prior
employer-employee relationship. In the first place, private respondent would not
have taken issue with petitioner's "doing business of his own" had the latter not
been concurrently its employee. Thus, the damages alleged in the complaint
below are: first, those amounting to lost profits and earnings due to petitioner's
abandonment or neglect of his duties as sales manager, having been otherwise
preoccupied by his unauthorized installment sale scheme; and second, those
equivalent to the value of private respondent's property and supplies which
petitioner used in conducting his "business".
Second, and more importantly, to allow respondent court to proceed with
the instant action for damages would be to open anew the factual issue of
whether petitioner's installment sale scheme resulted in business losses and the
dissipation of private respondent's property. This issue has been duly raised and
ruled upon in the illegal dismissal case, where private respondent brought up as
a defense the same allegations now embodied in his complaint, and presented
evidence in support thereof. The Labor Arbiter, however, found to the contrary —
that no business losses may be attributed to petitioner as in fact, it was by reason
of petitioner's installment plan that the sales of the Iligan branch of private
respondent (where petitioner was employed) reached its highest record level to
the extent that petitioner was awarded the 1989 Field Sales Achievement Award
in recognition of his exceptional sales performance, and that the installment
scheme was in fact with the knowledge of the management of the Iligan branch
of private respondent. 12 In other words, the issue of actual damages has been
settled in the labor case, which is now final and executory.
Still on the prospect of re-opening factual issues already resolved by the
labor court, it may help to refer to that period from 1979 to 1980 when jurisdiction
over employment-predicated actions for damages vacillated from labor tribunals
to regular courts, and back to labor tribunals. In Ebon vs. de Guzman, 113 SCRA
52, 13 this Court discussed:
The lawmakers in divesting the Labor Arbiters and the NLRC of
jurisdiction to award moral and other forms of damages in labor cases
could have assumed that the Labor Arbiters' position-paper procedure of
ascertaining the facts in dispute might not be an adequate tool for
arriving at a just and accurate assessment of damages, as distinguished
from backwages and separation pay, and that the trial procedure in the
Court of First Instance would be a more effective means of determining
such damages. . .
Evidently, the lawmaking authority had second thoughts about
depriving the Labor Arbiters and the NLRC of the jurisdiction to award
damages in labor cases because that setup would mean duplicity of
suits, splitting the cause of action and possible conflicting findings and
conclusions by two tribunals on one and the same claim.  LexLib

So, on May 1, 1980, Presidential Decree No. 1691 (which

substantially reenacted Article 217 in its original form)
nullified Presidential Decree No. 1367 and restored to the Labor Arbiter
 and the NLRC their jurisdiction to award all kinds of damages in cases
arising from employer-employee relations. . . . (Italics supplied)
Clearly, respondent court's taking jurisdiction over the instant case would
bring about precisely the harm that the lawmakers sought to avoid in amending
the Labor Code to restore jurisdiction over claims for damages of this nature to
the NLRC.
This is, of course, to distinguish from cases of actions for damages where
the employer-employee relationship is merely incidental and the cause of action
proceeds from a different source of obligation. Thus, the jurisdiction of regular
courts was upheld where the damages, claimed for were based on
tort, 14 malicious prosecution, 15 or breach of contract, as when the claimant
seeks to recover a debt from a former employee 16 or seeks liquidated damages
in enforcement of a prior employment contract. 17
Neither can we uphold the reasoning of respondent court that because the
resolution of the issues presented by the complaint does not entail application of
the Labor Code or other labor laws, the dispute is intrinsically civil. Article 217(a)
of the Labor Code, as amended, clearly bestows upon the Labor Arbiter original
and exclusive jurisdiction over claims for damages arising from employer-
employee relations — in other words, the Labor Arbiter has jurisdiction to award
not only the reliefs provided by labor laws, but also damages governed by the
Civil Code. 18
Thus, it is obvious that private respondent's remedy is not in the filing of
this separate action for damages, but in properly perfecting an appeal from the
Labor Arbiter's decision. Having lost the right to appeal on grounds of
untimeliness, the decision in the labor case stands as a final judgment on the
merits, and the instant action for damages cannot take the place of such lost
appeal.
Respondent court clearly having no jurisdiction over private respondent's
complaint for damages, we will no longer pass upon petitioner's other
assignments of error.
WHEREFORE, the Petition is GRANTED, and the complaint in Civil Case
No. 95-554 before Branch 39 of the Regional Trial Court of Misamis Oriental is
hereby DISMISSED. No pronouncement as to costs.  cdphil

SO ORDERED.
|||  (Bañez v. Valdevilla, G.R. No. 128024, [May 9, 2000], 387 PHIL 601-612)
 G.R. No. 166377. November 28, 2008.]

MA. ISABEL T. SANTOS, represented by ANTONIO P.

SANTOS, petitioner, vs. SERVIER PHILIPPINES, INC. and
NATIONAL LABOR RELATIONS COMMISSION, respondents.

DECISION

NACHURA, J  : p

Before this Court is a Petition for Review on Certiorari under Rule 45 of

the Rules of Court, seeking to set aside the Court of Appeals (CA)
Decision, 1 dated August 12, 2004 and its Resolution 2 dated December 17,
2004, in CA-G.R. SP No. 75706.  IHSTDE

The facts, as culled from the records, are as follows:

Petitioner Ma. Isabel T. Santos was the Human Resource Manager of
respondent Servier Philippines, Inc. since 1991 until her termination from
service in 1999. On March 26 and 27, 1998, petitioner attended a meeting 3 of
all human resource managers of respondent, held in Paris, France. Since the
last day of the meeting coincided with the graduation of petitioner's only child,
she arranged for a European vacation with her family right after the meeting.
She, thus, filed a vacation leave effective March 30, 1998. 4
On March 29, 1998, petitioner, together with her husband Antonio P.
Santos, her son, and some friends, had dinner at Leon des Bruxelles, a Paris
restaurant known for mussels 5 as their specialty. While having dinner,
petitioner complained of stomach pain, then vomited. Eventually, she was
brought to the hospital known as Centre Chirurgical de L'Quest where she fell
into coma for 21 days; and later stayed at the Intensive Care Unit (ICU) for 52
days. The hospital found that the probable cause of her sudden attack was
"alimentary allergy", as she had recently ingested a meal of mussels which
resulted in a concomitant uticarial eruption. 6
During the time that petitioner was confined at the hospital, her
husband and son stayed with her in Paris. Petitioner's hospitalization
expenses, as well as those of her husband and son, were paid by
respondent. 7
In June 1998, petitioner's attending physicians gave a prognosis of the
former's condition; and, with the consent of her family, allowed her to go back
to the Philippines for the continuation of her medical treatment. She was then
confined at the St. Luke's Medical Center for rehabilitation. 8 During the period
of petitioner's rehabilitation, respondent continued to pay the former's salaries;
and to assist her in paying her hospital bills.
In a letter dated May 14, 1999, respondent informed the petitioner that
the former had requested the latter's physician to conduct a thorough physical
and psychological evaluation of her condition, to determine her fitness to
resume her work at the company. Petitioner's physician concluded that the
former had not fully recovered mentally and physically. Hence, respondent
was constrained to terminate petitioner's services effective August 31, 1999. 9
As a consequence of petitioner's termination from employment,
respondent offered a retirement package which consists of:  TEHIaD

Retirement Plan Benefits: P1,063,841.76

Insurance Pension at P20,000.00/month  
for 60 months from company-sponsored  
group life policy: P1,200,000.00
Educational assistance: P465,000.00
Medical and Health Care: P200,000.00 10

Of the promised retirement benefits amounting to P1,063,841.76, only

P701,454.89 was released to petitioner's husband, the balance 11 thereof was
withheld allegedly for taxation purposes. Respondent also failed to give the
other benefits listed above. 12
Petitioner, represented by her husband, instituted the instant case for
unpaid salaries; unpaid separation pay; unpaid balance of retirement package
plus interest; insurance pension for permanent disability; educational
assistance for her son; medical assistance; reimbursement of medical and
rehabilitation expenses; moral, exemplary, and actual damages, plus
attorney's fees. The case was docketed as NLRC-NCR (SOUTH) Case No.
30-06-02520-01.
On September 28, 2001, Labor Arbiter Aliman D. Mangandog rendered
a Decision 13 dismissing petitioner's complaint. The Labor Arbiter stressed
that respondent had been generous in giving financial assistance to the
petitioner. 14 He likewise noted that there was a retirement plan for the benefit
of the employees. In denying petitioner's claim for separation pay, the Labor
Arbiter ratiocinated that the same had already been integrated in the
retirement plan established by respondent. Thus, petitioner could no longer
collect separation pay over and above her retirement benefits. 15 The arbiter
refused to rule on the legality of the deductions made by respondent from
petitioner's total retirement benefits for taxation purposes, as the issue was
beyond the jurisdiction of the NLRC. 16 On the matter of educational
assistance, the Labor Arbiter found that the same may be granted only upon
the submission of a certificate of enrollment. 17 Lastly, as to petitioner's claim
for damages and attorney's fees, the Labor Arbiter denied the same as the
former's dismissal was not tainted with bad faith. 18
On appeal to the National Labor Relations Commission (NLRC), the
tribunal set aside the Labor Arbiter's decision, ruling that:
WHEREFORE, premises considered, Complainant's appeal is
partly GRANTED. The Labor Arbiter's decision in the above-entitled
case is hereby SET ASIDE. Respondent is ordered to pay
Complainant's portion of her separation pay covering the following: 1)
P200,000.00 for medical and health care from September 1999 to April
2001; and 2) P35,000.00 per year for her son's high school (second
year to fourth year) education and P45,000.00 per semester for the
latter's four-year college education, upon presentation of any
applicable certificate of enrollment.
SO ORDERED. 19
The NLRC emphasized that petitioner was not retired from the service
pursuant to law, collective bargaining agreement (CBA) or other employment
contract; rather, she was dismissed from employment due to a
disease/disability under Article 284 20 of the Labor Code. 21 In view of her non-
entitlement to retirement benefits, the amounts received by petitioner should
then be treated as her separation pay. 22 Though not legally obliged to give
the other benefits, i.e., educational assistance, respondent volunteered to
grant them, for humanitarian consideration. The NLRC therefore ordered the
payment of the other benefits promised by the respondent. 23 Lastly, it
sustained the denial of petitioner's claim for damages for the latter's failure to
substantiate the same. 24  SaIACT

Unsatisfied, petitioner elevated the matter to the Court of Appeals which

affirmed the NLRC decision. 25
Hence, the instant petition.
At the outset, the Court notes that initially, petitioner raised the issue of
whether she was entitled to separation pay, retirement benefits, and
damages. In support of her claim for separation pay, she cited Article 284 of
the Labor Code, as amended. However, in coming to this Court via a petition
for review on certiorari, she abandoned her original position and alleged that
she was, in fact, not dismissed from employment based on the above
provision. She argued that her situation could not be characterized as a
disease; rather, she became disabled. In short, in her petition before us, she
now changes her theory by saying that she is not entitled to separation pay
but to retirement pay pursuant to Section 4, 26 Article V of the Retirement
Plan, on disability retirement. She, thus, prayed for the full payment of her
retirement benefits by giving back to her the amount deducted for taxation
purposes.
 In our Resolution 27 dated November 23, 2005 requiring the parties to
submit their respective memoranda, we specifically stated:
No new issues may be raised by a party in the Memorandum
and the issues raised in the pleadings but not included in the
Memorandum shall be deemed waived or abandoned.
Being summations of the parties' previous pleadings, the Court
may consider the Memoranda alone in deciding or resolving this
petition.
Pursuant to the above resolution, any argument raised in her petition,
but not raised in her Memorandum, 28 is deemed abandoned. 29 Hence, the
only issue proper for determination is the propriety of deducting P362,386.87
from her total benefits, for taxation purposes. Nevertheless, in order to resolve
the legality of the deduction, it is imperative that we settle, once and for all,
the ground relied upon by respondent in terminating the services of the
petitioner, as well as the nature of the benefits given to her after such
termination. Only then can we decide whether the amount deducted by the
respondent should be paid to the petitioner.
Respondent dismissed the petitioner from her employment based on
Article 284 of the Labor Code, as amended, which reads:
Art. 284. Disease as Ground for Termination. —
An employer may terminate the services of an employee who
has been found to be suffering from any disease and whose continued
employment is prohibited by law or is prejudicial to his health as well
as to the health of his co-employees: Provided, That he is paid
separation pay equivalent to at least one (1) month salary or to one-
half (1/2) month salary for every year of service, whichever is greater,
a fraction of at least six (6) months being considered as one (1) whole
year.
As she was dismissed on the abovementioned ground, the law gives the
petitioner the right to demand separation pay. However, respondent
established a retirement plan in favor of all its employees which specifically
provides for "disability retirement", to wit:
Sec. 4. Disability Retirement. —
In the event that a Member is retired by the Company due to
permanent total incapacity or disability, as determined by a competent
physician appointed by the Company, his disability retirement benefit
shall be the Full Member's Account Balance determined as of the last
valuation date. . . . . 30 
cSATEH

On the basis of the above-mentioned retirement plan, respondent

offered the petitioner a retirement package which consists of retirement plan
benefits, insurance pension, and educational assistance. 31 The amount of
P1,063,841.76 represented the disability retirement benefit provided for in the
plan; while the insurance pension was to be paid by their insurer; and the
educational assistance was voluntarily undertaken by the respondent as a
gesture of compassion to the petitioner. 32
We have declared in Aquino v. National Labor Relations
Commission 33 that the receipt of retirement benefits does not bar the retiree
from receiving separation pay. Separation pay is a statutory right designed to
provide the employee with the wherewithal during the period that he/she is
looking for another employment. On the other hand, retirement benefits are
intended to help the employee enjoy the remaining years of his life, lessening
the burden of worrying about his financial support, and are a form of reward
for his loyalty and service to the employer. 34 Hence, they are not mutually
exclusive. However, this is only true if there is no specific prohibition against
the payment of both benefits in the retirement plan and/or in the Collective
Bargaining Agreement (CBA). 35
In the instant case, the Retirement Plan bars the petitioner from
claiming additional benefits on top of that provided for in the Plan. Section 2,
Article XII of the Retirement Plan provides:
Section 2. No Duplication of Benefits. —
No other benefits other than those provided under this Plan
shall be payable from the Fund. Further, in the event the Member
receives benefits under the Plan, he shall be precluded from receiving
any other benefits under the Labor Code or under any present or future
legislation under any other contract or Collective Bargaining
Agreement with the Company. 36
There being such a provision, as held in Cruz v. Philippine Global
Communications, Inc., 37 petitioner is entitled only to either the separation pay
under the law or retirement benefits under the Plan, and not both.
Clearly, the benefits received by petitioner from the respondent
represent her retirement benefits under the Plan. The question that now
confronts us is whether these benefits are taxable. If so, respondent correctly
made the deduction for tax purposes. Otherwise, the deduction was illegal
and respondent is still liable for the completion of petitioner's retirement
benefits. 
ASHICc

Respondent argues that the legality of the deduction from petitioner's

total benefits cannot be taken cognizance of by this Court since the issue was
not raised during the early stage of the proceedings. 38
We do not agree.
 Records reveal that as early as in petitioner's position paper filed with
the Labor Arbiter, she already raised the legality of said
deduction, albeit designated as "unpaid balance of the retirement package".
Petitioner specifically averred that P362,386.87 was not given to her by
respondent as it was allegedly a part of the former's taxable income. 39 This is
likewise evident in the Labor Arbiter and the NLRC's decisions although they
ruled that the issue was beyond the tribunal's jurisdiction. They even
suggested that petitioner's claim for illegal deduction could be addressed by
filing a tax refund with the Bureau of Internal Revenue. 40
Contrary to the Labor Arbiter and NLRC's conclusions, petitioner's claim
for illegal deduction falls within the tribunal's jurisdiction. It is noteworthy that
petitioner demanded the completion of her retirement benefits, including the
amount withheld by respondent for taxation purposes. The issue of deduction
for tax purposes is intertwined with the main issue of whether or not
petitioner's benefits have been fully given her. It is, therefore, a money claim
arising from the employer-employee relationship, which clearly falls within the
jurisdiction 41 of the Labor Arbiter and the NLRC.
This is not the first time that the labor tribunal is faced with the issue of
illegal deduction. In Intercontinental Broadcasting Corporation (IBC) v.
Amarilla, 42 IBC withheld the salary differentials due its retired employees to
offset the tax due on their retirement benefits. The retirees thus lodged a
complaint with the NLRC questioning said withholding. They averred that their
retirement benefits were exempt from income tax; and IBC had no authority to
withhold their salary differentials. The Labor Arbiter took cognizance of the
case, and this Court made a definitive ruling that retirement benefits are
exempt from income tax, provided that certain requirements are met.  ScCEIA

Nothing, therefore, prevents us from deciding this main issue of

whether the retirement benefits are taxable.
We answer in the affirmative.
Section 32 (B) (6) (a) of the New National Internal Revenue
Code (NIRC) provides for the exclusion of retirement benefits from gross
income, thus:
(6) Retirement Benefits, Pensions, Gratuities, etc. —
a) Retirement benefits received under Republic Act 7641 and
those received by officials and employees of private firms, whether
individual or corporate, in accordance with a reasonable private benefit
plan maintained by the employer: Provided, That the retiring official or
employee has been in the service of the same employer for at least ten
(10) years and is not less than fifty (50) years of age at the time of his
retirement: Provided further, That the benefits granted under this
 subparagraph shall be availed of by an official or employee only once. .
...
Thus, for the retirement benefits to be exempt from the withholding tax,
the taxpayer is burdened to prove the concurrence of the following elements:
(1) a reasonable private benefit plan is maintained by the employer; (2) the
retiring official or employee has been in the service of the same employer for
at least ten (10) years; (3) the retiring official or employee is not less than fifty
(50) years of age at the time of his retirement; and (4) the benefit had been
availed of only once. 43
As discussed above, petitioner was qualified for disability retirement. At
the time of such retirement, petitioner was only 41 years of age; and had been
in the service for more or less eight (8) years. As such, the above provision is
not applicable for failure to comply with the age and length of service
requirements. Therefore, respondent cannot be faulted for deducting from
petitioner's total retirement benefits the amount of P362,386.87, for taxation
purposes.
WHEREFORE, the petition is DENIED for lack of merit. The Court of
Appeals Decision dated August 12, 2004 and its Resolution dated December
17, 2004, in CA-G.R. SP No. 75706 are AFFIRMED.
SO ORDERED.
 (Santos v. Servier Philippines, Inc., G.R. No. 166377, [November 28, 2008],
|||

593 PHIL 133-145)

G.R. No. 89621. September 24, 1991.]

PEPSI COLA DISTRIBUTORS OF THE PHILIPPINES, INC.,

represented by its Plant General Manager ANTHONY B. SIAN,
ELEAZAR LIMBAB, IRENEO BALTAZAR & JORGE
HERAYA, petitioners, vs. HON. LOLITA O. GAL-LANG,
SALVADOR NOVILLA, ALEJANDRO OLIVA, WILFREDO
CABAÑAS & FULGENCIO LEGO, respondents.

 (Pepsi Cola Distributors of the Philippines, Inc. v. Gal-lang, G.R. No. 89621,
|||

[September 24, 1991], 278 PHIL 708-715)

 The question now before us has been categorically resolved in earlier
decisions of the Court that a little more diligent research would have disclosed
to the petitioners. On the basis of those cases and the facts now before us,
the petition must be denied. prLL

The private respondents were employees of the petitioner who were

suspected of complicity in the irregular disposition of empty Pepsi Cola
bottles. On July 16, 1987, the petitioners filed a criminal complaint for theft
against them but this was later withdrawn and substituted with a criminal
complaint for falsification of private documents. On November 26, 1987, after
a preliminary investigation conducted by the Municipal Trial Court of Tanauan,
Leyte, the complaint was dismissed. The dismissal was affirmed on April 8,
1988, by the Office of the Provincial Prosecutor.
Meantime, allegedly after an administrative investigation, the private
respondents were dismissed by the petitioner company on November 23,
1987. As a result, they lodged a complaint for illegal dismissal with the
Regional Arbitration Branch of the NLRC in Tacloban City on December 1,
1987, and demanded reinstatement with damages. In addition, they instituted
in the Regional Trial Court of Leyte, on April 1988, a separate civil complaint
against the petitioners for damages arising from what they claimed to be their
malicious prosecution.
The petitioners moved to dismiss the civil complaint on the ground that
the trial court had no jurisdiction over the case because it involved employee-
employer relations that were exclusively cognizable by the labor arbiter. The
motion was granted on February 6, 1989. On July 6, 1989, however, the
respondent judge, acting on the motion for reconsideration, reinstated the
complaint, saying it was "distinct from the labor case for damages now
pending before the labor courts." The petitioners then came to this Court for
relief.
The petitioners invoke Article 217 of the Labor Code and a number of
decisions of this Court to support their position that the private respondents'
civil complaint for damages falls under the jurisdiction of the labor arbiter.
They particularly cite the case of Getz Corporation v. Court of
Appeals, 1 where it was held that a court of first instance had no jurisdiction
over the complaint filed by a dismissed employee "for unpaid salary and other
employment benefits, termination pay and moral and exemplary damages."
We hold at the outset that the case is not in point because what was
involved there was a claim arising from the alleged illegal dismissal of an
employee, who chose to complain to the regular court and not to the labor
arbiter. Obviously, the claim arose from employee-employer relations and so
came under Article 217 of the Labor Code which then provided as follows:
 ART. 217. Jurisdiction of Labor Arbiters and the Commission. — (a) The
Labor Arbiters shall have the original and exclusive jurisdiction to hear
and decide within thirty (30) working days after submission of the case
by the parties for decision, the following cases involving all workers,
whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Those that workers may file involving wages, hours of work and other
terms and conditions of employment;
3. All money claims of workers, including those based on non-payment
or underpayment of wages, overtime compensation, separation pay and
other benefits provided by law or appropriate agreement, except claims
for employees' compensation, social security, medicare and maternity
benefits;
4. Cases involving household services; and
5. Cases arising from any violation of Article 265 of this Code, including
questions involving the legality of strikes and lockouts.
(b) The Commission shall have exclusive appellate jurisdiction over all
cases decided by Labor Arbiters. 2
It must be stressed that not every controversy involving workers and
their employers can be resolved only by the labor arbiters. This will be so only
if there is a "reasonable causal connection" between the claim asserted and
employee-employer relations to put the case under the provisions of Article
217. Absent such a link, the complaint will be cognizable by the regular courts
of justice in the exercise of their civil and criminal jurisdiction.
In Medina v. Castro-Bartolome, 3 two employees filed in the Court of
First Instance of Rizal a civil complaint for damages against their employer for
slanderous remarks made against them by the company president. On the
order dismissing the case because it came under the jurisdiction of the labor
arbiters, Justice Vicente Abad Santos said for the Court:
It is obvious from the complaint that the plaintiffs have not alleged any
unfair labor practice. Theirs is a simple action for damages for tortuous
acts allegedly committed by the defendants. Such being the case, the
governing statute is the Civil Code and not the Labor Code. It results that
the orders under review are based on a wrong premise.  prLL

In Singapore Airlines Ltd. v. Paño, 4 where the plaintiff was suing for

damages for alleged violation by the defendant of an "Agreement for a Course
of Conversion Training at the Expense of Singapore Airlines Limited," the
jurisdiction of the Court of First Instance of Rizal over the case was
questioned. The Court, citing the earlier case of Quisaba v. Sta. Ines Melale
Veneer and Plywood, Inc., 5 declared through Justice Herrera:
 Stated differently, petitioner seeks protection under the civil laws and
claims no benefits under the Labor Code. The primary relief sought is for
liquidated damages for breach of a contractual obligation. The other
items demanded are not labor benefits demanded by workers generally
taken cognizance of in labor disputes, such as payment of wages,
overtime compensation or separation pay. The items claimed are the
natural consequences flowing from breach of an obligation, intrinsically a
civil dispute.
In Molave Sales, Inc. v. Laron, 6 the same Justice held for the Court that
the claim of the plaintiff against its sales manager for payment of certain
accounts pertaining to his purchase of vehicles and automotive parts, repairs
of such vehicles, and cash advances from the corporation was properly
cognizable by the Regional Trial Court of Dagupan City and not the labor
arbiter, because "although a controversy is between an employer and an
employee, the Labor Arbiters have no jurisdiction if the Labor Code is not
involved."
The latest ruling on this issue is found in San Miguel Corporation v.
NLRC, 7 where the above cases are cited and the changes in Article 217 are
recounted. That case involved a claim of an employee for a P60,000.00 prize
for a proposal made by him which he alleged had been accepted and
implemented by the defendant corporation in the processing of one of its beer
products. The claim was filed with the labor arbiter, who dismissed it for lack
of jurisdiction but was reversed by the NLRC on appeal. In setting aside the
appealed decision and dismissing the complaint, the Court observed through
Justice Feliciano:
It is the character of the principal relief sought that appears essential, in
this connection. Where such principal relief is to be granted under labor
legislation or a collective bargaining agreement, the case should fall
within the jurisdiction of the Labor Arbiter and the NLRC, even though a
claim for damages might be asserted as an incident to such claim.
xxx xxx xxx
Where the claim to the principal relief sought is to be resolved not by
reference to the Labor Code or other labor relations statute or a
collective bargaining agreement but by the general civil law, the
jurisdiction over the dispute belongs to the regular courts of justice and
not to the Labor Arbiter and the NLRC. In such situations, resolution of
the dispute requires expertise, not in labor management relations nor in
wage structures and other terms and conditions of employment, but
rather in the application of the general civil law. Clearly, such claims fall
outside the area of competence or expertise ordinarily ascribed to Labor
Arbiters and the NLRC and the rationale for granting jurisdiction over
such claims to these agencies disappears.
  
xxx xxx xxx
While paragraph 3 above refers to "all money claims of workers," it is not
necessary to suppose that the entire universe of money claims that
might be asserted by workers against their employers has been
absorbed into the original and exclusive jurisdiction of Labor Arbiters.
xxx xxx xxx
For it cannot be presumed that money claims of workers which do not
arise out of or in connection with their employer-employee relationship,
and which would therefore fall within the general jurisdiction of the
regular courts of justice, were intended by the legislative authority to be
taken away from the jurisdiction of the courts and lodged with Labor
Arbiters on an exclusive basis. The Court, therefore, believes and so
holds that the "money claims of workers" referred to in paragraph 3 of
Article 217 embraces money claims which arise out of or in connection
with the employer-employee relationship, or some aspect or incident of
such relationship. Put a little differently, that money claims of workers
which now fall within the original and exclusive jurisdiction of Labor
Arbiters are those money claims which have some reasonable causal
connection with the employer-employee relationship (Ibid.).
The case now before the Court involves a complaint for damages for
malicious prosecution which was filed with the Regional Trial Court of Leyte
by the employees of the defendant company. It does not appear that there is
a "reasonable causal connection" between the complaint and the relations of
the parties as employer and employees. The complaint did not arise from
such relations and in fact could have arisen independently of an employment
relationship between the parties. No such relationship or any unfair labor
practice is asserted. What the employees are alleging is that the petitioners
acted with bad faith when they filed the criminal complaint which the Municipal
Trial Court said was intended "to harass the poor employees" and the
dismissal of which was affirmed by the Provincial Prosecutor "for lack of
evidence to establish even a slightest probability that all the respondents
herein have committed the crime imputed against them." This is a matter
which the labor arbiter has no competence to resolve as the applicable law is
not the Labor Code but the Revised Penal Code.  llcd

"Talents differ, all is well and wisely put," so observed the philosopher-
poet. 8 So it must be in the case we here decide.
WHEREFORE, the order dated July 6, 1989, is AFFIRMED and the
petition DENIED, with costs against the petitioner.
SO ORDERED.
  (Pepsi Cola Distributors of the Philippines, Inc. v. Gal-lang, G.R. No. 89621,
|||

[September 24, 1991], 278 PHIL 708-715)

G.R. No. 182295. June 26, 2013.]

7K CORPORATION, petitioner, vs. EDDIE
ALBARICO, respondent.

DECISION

SERENO, C.J  : p

This is a Petition for Review on Certiorari filed under Rule 45 of

the Revised Rules of Court, asking the Court to determine whether a voluntary
arbitrator in a labor dispute exceeded his jurisdiction in deciding issues not
specified in the submission agreement of the parties. It assails the
Decision 1 dated 18 September 2007 and the Resolution 2 dated 17 March 2008
of the Court of Appeals (CA). 3

FACTS

When he was dismissed on 5 April 1993, respondent Eddie Albarico

(Albarico) was a regular employee of petitioner 7K Corporation, a company
selling water purifiers. He started working for the company in 1990 as a
salesman. 4 Because of his good performance, his employment was regularized.
He was also promoted several times: from salesman, he was promoted to senior
sales representative and then to acting team field supervisor. In 1992, he was
awarded the President's Trophy for being one of the company's top water purifier
specialist distributors.
In April of 1993, the chief operating officer of petitioner 7K Corporation
terminated Albarico's employment allegedly for his poor sales
performance. 5 Respondent had to stop reporting for work, and he subsequently
submitted his money claims against petitioner for arbitration before the National
Conciliation and Mediation Board (NCMB). The issue for voluntary arbitration
before the NCMB, according to the parties' Submission Agreement dated 19 April
1993, was whether respondent Albarico was entitled to the payment of
separation pay and the sales commission reserved for him by the corporation. 6
While the NCMB arbitration case was pending, respondent Albarico filed a
Complaint against petitioner corporation with the Arbitration Branch of the
National Labor Relations Commission (NLRC) for illegal dismissal with money
claims for overtime pay, holiday compensation, commission, and food and
travelling allowances. 7 The Complaint was decided by the labor arbiter in favor
of respondent Albarico, who was awarded separation pay in lieu of
reinstatement, backwages and attorney's fees. 8
On appeal by petitioner, the labor arbiter's Decision was vacated by the
NLRC for forum shopping on the part of respondent Albarico, because the NCMB
arbitration case was still pending. 9 The NLRC Decision, which explicitly stated
that the dismissal was without prejudice to the pending NCMB arbitration
case, 10 became final after no appeal was taken.  HSTCcD

On 17 September 1997, petitioner corporation filed its Position Paper in

the NCMB arbitration case. 11 It denied that respondent was terminated from
work, much less illegally dismissed. The corporation claimed that he had
voluntarily stopped reporting for work after receiving a verbal reprimand for his
sales performance; hence, it was he who was guilty of abandonment of
employment. Respondent made an oral manifestation that he was adopting the
position paper he submitted to the labor arbiter, a position paper in which the
former claimed that he had been illegally dismissed. 12
On 12 January 2005, almost 12 years after the filing of the NCMB case,
both parties appeared in a hearing before the NCMB. 13 Respondent manifested
that he was willing to settle the case amicably with petitioner based on the
decision of the labor arbiter ordering the payment of separation pay in lieu of
reinstatement, backwages and attorney's fees. On its part, petitioner made a
counter-manifestation that it was likewise amenable to settling the dispute.
However, it was willing to pay only the separation pay and the sales commission
according to the Submission Agreement dated 19 April 1993. 14
The factual findings of the voluntary arbitrator, as well as of the CA, are not
clear on what happened afterwards. Even the records are bereft of sufficient
information.
On 18 November 2005, the NCMB voluntary arbitrator rendered a Decision
finding petitioner corporation liable for illegal dismissal. 15 The termination of
respondent Albarico, by reason of alleged poor performance, was found
invalid. 16 The arbitrator explained that the promotions, increases in salary, and
awards received by respondent belied the claim that the latter was performing
poorly. 17 It was also found that Albarico could not have abandoned his job, as
the abandonment should have been clearly shown. Mere absence was not
sufficient, according to the arbitrator, but must have been accompanied by overt
acts pointing to the fact that the employee did not want to work anymore. It was
noted that, in the present case, the immediate filing of a complaint for illegal
dismissal against the employer, with a prayer for reinstatement, showed that the
employee was not abandoning his work. The voluntary arbitrator also found that
Albarico was dismissed from his work without due process.
However, it was found that reinstatement was no longer possible because
of the strained relationship of the parties. 18 Thus, in lieu of reinstatement, the
voluntary arbitrator ordered the corporation to pay separation pay for two years at
P4,456 for each year, or a total amount of P8,912.
Additionally, in view of the finding that Albarico had been illegally
dismissed, the voluntary arbitrator also ruled that the former was entitled to
backwages in the amount of P90,804. 19 Finally, the arbitrator awarded attorney's
fees in respondent's favor, because he had been compelled to file an action for
illegal dismissal. 20
Petitioner corporation subsequently appealed to the CA, imputing to the
voluntary arbitrator grave abuse of discretion amounting to lack or excess of
jurisdiction for awarding backwages and attorney's fees to respondent Albarico
based on the former's finding of illegal dismissal. 21 The arbitrator contended that
the issue of the legality of dismissal was not explicitly included in the Submission
Agreement dated 19 April 1993 filed for voluntary arbitration and resolution. It
prayed that the said awards be set aside, and that only separation pay of
P8,912.00 and sales commission of P4,787.60 be awarded.
The CA affirmed the Decision of the voluntary arbitrator, but eliminated the
award of attorney's fees for having been made without factual, legal or equitable
justification. 22 Petitioner's Motion for Partial Reconsideration was denied as
well. 23
Hence, this Petition.

ISSUE

The issue before the Court is whether the CA committed reversible error in
finding that the voluntary arbitrator properly assumed jurisdiction to decide the
issue of the legality of the dismissal of respondent as well as the latter's
entitlement to backwages, even if neither the legality nor the entitlement was
expressedly claimed in the Submission Agreement of the parties.
The Petition is denied for being devoid of merit.

DISCUSSION
 Preliminarily, we address petitioner's claim that under Article 217 of
the Labor Code, original and exclusive jurisdiction over termination disputes,
such as the present case, is lodged only with the labor arbiter of the NLRC. 24
Petitioner overlooks the proviso in the said article, thus:
Art. 217. Jurisdiction of the Labor Arbiters and the Commission.
—
a. Except as otherwise provided under this Code, the Labor Arbiters
shall have original and exclusive jurisdiction to hear and decide, within
thirty (30) calendar days after the submission of the case by the parties
for decision without extension, even in the absence of stenographic
notes, the following cases involving all workers, whether agricultural or
non-agricultural:
xxx xxx xxx
2. Termination disputes;
xxx xxx xxx
6. Except claims for Employees Compensation, Social Security,
Medicare and maternity benefits, all other claims arising from
employer-employee relations, including those of persons in domestic
or household service, involving an amount exceeding five thousand
pesos (P5,000.00) regardless of whether accompanied with a claim
for reinstatement. (Emphases supplied)
Thus, although the general rule under the Labor Code gives the labor
arbiter exclusive and original jurisdiction over termination disputes, it also
recognizes exceptions. One of the exceptions is provided in Article 262 of
the Labor Code. In San Jose v. NLRC, 25 we said:
The phrase "Except as otherwise provided under this Code" refers to
the following exceptions:
A. Art. 217.  Jurisdiction of Labor Arbiters. — . . .
xxx xxx xxx
(c) Cases arising from the interpretation or implementation of collective
bargaining agreement and those arising from the interpretation or
enforcement of company procedure/policies shall be disposed of by
the Labor Arbiter by referring the same to the grievance machinery and
voluntary arbitrator as may be provided in said agreement.
B. Art. 262.  Jurisdiction over other labor disputes. — The
Voluntary Arbitrator or panel of Voluntary Arbitrators, upon
agreement of the parties, shall also hear and decide all other
 labor disputes including unfair labor practices and bargaining
deadlocks. (Emphasis supplied)
We also said in the same case that "[t]he labor disputes referred to in the
same Article 262 [of the Labor Code] can include all those disputes mentioned in
Article 217 over which the Labor Arbiter has original and exclusive jurisdiction." 26
From the above discussion, it is clear that voluntary arbitrators may, by
agreement of the parties, assume jurisdiction over a termination dispute such as
the present case, contrary to the assertion of petitioner that they may not.
We now resolve the main issue. Petitioner argues that, assuming that the
voluntary arbitrator has jurisdiction over the present termination dispute, the latter
should have limited his decision to the issue contained in the Submission
Agreement of the parties — the issue of whether respondent Albarico was
entitled to separation pay and to the sales commission the latter earned before
being terminated. 27 Petitioner asserts that under Article 262 of the Labor Code,
the jurisdiction of a voluntary arbitrator is strictly limited to the issues that the
parties agree to submit. Thus, it contends that the voluntary arbitrator exceeded
his jurisdiction when he resolved the issues of the legality of the dismissal of
respondent and the latter's entitlement to backwages on the basis of a finding of
illegal dismissal.
According to petitioner, the CA wrongly concluded that the issue of
respondent's entitlement to separation pay was necessarily based on his
allegation of illegal dismissal, thereby making the issue of the legality of his
dismissal implicitly submitted to the voluntary arbitrator for
resolution. 28 Petitioner argues that this was an erroneous conclusion, because
separation pay may in fact be awarded even in circumstances in which there is
no illegal dismissal.
We rule that although petitioner correctly contends that separation pay
may in fact be awarded for reasons other than illegal dismissal, the
circumstances of the instant case lead to no other conclusion than that the claim
of respondent Albarico for separation pay was premised on his allegation of
illegal dismissal. Thus, the voluntary arbitrator properly assumed jurisdiction over
the issue of the legality of his dismissal.
True, under the Labor Code, separation pay may be given not only when
there is illegal dismissal. In fact, it is also given to employees who are terminated
for authorized causes, such as redundancy, retrenchment or installation of labor-
saving devices under Article 283 29 of the Labor Code. Additionally, jurisprudence
holds that separation pay may also be awarded for considerations of social
justice, even if an employee has been terminated for a just cause other than
serious misconduct or an act reflecting on moral character. 30 The Court has also
ruled that separation pay may be awarded if it has become an established
practice of the company to pay the said benefit to voluntarily resigning
employees 31 or to those validly dismissed for non-membership in a union as
required in a closed-shop agreement. 32
The above circumstances, however, do not obtain in the present case.
There is no claim that the issue of entitlement to separation pay is being resolved
in the context of any authorized cause of termination undertaken by petitioner
corporation. Neither is there any allegation that a consideration of social justice is
being resolved here. In fact, even in instances in which separation pay is
awarded in consideration of social justice, the issue of the validity of the
dismissal still needs to be resolved first. Only when there is already a finding of a
valid dismissal for a just cause does the court then award separation pay for
reason of social justice. The other circumstances when separation pay may be
awarded are not present in this case.
The foregoing findings indisputably prove that the issue of separation pay
emanates solely from respondent's allegation of illegal dismissal. In fact,
petitioner itself acknowledged the issue of illegal dismissal in its position paper
submitted to the NCMB.
Moreover, we note that even the NLRC was of the understanding that the
NCMB arbitration case sought to resolve the issue of the legality of the dismissal
of the respondent. In fact, the identity of the issue of the legality of his dismissal,
which was previously submitted to the NCMB, and later submitted to the NLRC,
was the basis of the latter's finding of forum shopping and the consequent
dismissal of the case before it. In fact, petitioner also implicitly acknowledged this
when it filed before the NLRC its Motion to Dismiss respondent's Complaint on
the ground of forum shopping. Thus, it is now estopped from claiming that the
issue before the NCMB does not include the issue of the legality of the dismissal
of respondent. Besides, there has to be a reason for deciding the issue of
respondent's entitlement to separation pay. To think otherwise would lead to
absurdity, because the voluntary arbitrator would then be deciding that issue in a
vacuum. The arbitrator would have no basis whatsoever for saying that Albarico
was entitled to separation pay or not if the issue of the legality of respondent's
dismissal was not resolve first.
Hence, the voluntary arbitrator correctly assumed that the core issue
behind the issue of separation pay is the legality of the dismissal of respondent.
Moreover, we have ruled in Sime Darby Pilipinas, Inc. v. Deputy Administrator
Magsalin 33 that a voluntary arbitrator has plenary jurisdiction and authority to
interpret an agreement to arbitrate and to determine the scope of his own
authority when the said agreement is vague — subject only, in a proper case, to
the certiorari jurisdiction of this Court.
 Having established that the issue of the legality of dismissal of Albarico
was in fact necessarily — albeit not explicitly — included in the Submission
Agreement signed by the parties, this Court rules that the voluntary arbitrator
rightly assumed jurisdiction to decide the said issue.
Consequently, we also rule that the voluntary arbitrator may award
backwages upon a finding of illegal dismissal, even though the issue of
entitlement thereto is not explicitly claimed in the Submission Agreement.
Backwages, in general, are awarded on the ground of equity as a form of relief
that restores the income lost by the terminated employee by reason of his illegal
dismissal. 34
In Sime Darby we ruled that although the specific issue presented by the
parties to the voluntary arbitrator was only "the issue of performance bonus," the
latter had the authority to determine not only the issue of whether or not a
performance bonus was to be granted, but also the related question of the
amount of the bonus, were it to be granted. We explained that there was no
indication at all that the parties to the arbitration agreement had regarded "the
issue of performance bonus" as a two-tiered issue, of which only one aspect was
being submitted to arbitration. Thus, we held that the failure of the parties to limit
the issues specifically to that which was stated allowed the arbitrator to assume
jurisdiction over the related issue.
Similarly, in the present case, there is no indication that the issue of illegal
dismissal should be treated as a two-tiered issue whereupon entitlement to
backwages must be determined separately. Besides, "since arbitration is a final
resort for the adjudication of disputes," the voluntary arbitrator in the present
case can assume that he has the necessary power to make a final
settlement. 35 Thus, we rule that the voluntary arbitrator correctly assumed
jurisdiction over the issue of entitlement of respondent Albarico to backwages on
the basis of the former's finding of illegal dismissal.
WHEREFORE, premises considered, the instant Petition is DENIED. The
18 September 2007 Decision and 17 March 2008 Resolution of the Court of
Appeals in CA-G.R. SP No. 92526, are hereby AFFIRMED.
SO ORDERED.
|||  (7K Corp. v. Albarico, G.R. No. 182295, [June 26, 2013], 712 PHIL 372-386)

G.R. No. 163768. March 27, 2007.]

 JULIUS KAWACHI and GAYLE KAWACHI, petitioners, vs.
DOMINIE DEL QUERO and HON. JUDGE MANUEL R. TARO,
Metropolitan Trial Court, Branch 43, Quezon City, respondents.

DECISION

TINGA, J  :
p

This is a petition for review on certiorari under Rule 45 of the Rules of Civil

Procedure, assailing two resolutions of the Regional Trial Court (RTC), Branch
226, Quezon City which affirmed the jurisdiction of the Metropolitan Trial Court
(MeTC), Branch 42, Quezon City over private respondent's action for damages
against petitioner.
The following factual antecedents are matters of record.
In an Affidavit-Complaint dated 14 August 2002, private respondent
Dominie Del Quero charged A/J Raymundo Pawnshop, Inc., Virgilio Kawachi and
petitioner Julius Kawachi with illegal dismissal, non-execution of a contract of
employment, violation of the minimum wage law, and non-payment of overtime
pay. The complaint was filed before the National Labor Relations Commission
(NLRC). 1
The complaint essentially alleged that Virgilio Kawachi hired private
respondent as a clerk of the pawnshop and that on certain occasions, she
worked beyond the regular working hours but was not paid the corresponding
overtime pay.
The complaint also narrated an incident on 10 August 2002, wherein
petitioner Julius Kawachi scolded private respondent in front of many people
about the way she treated the customers of the pawnshop and afterwards
terminated private respondent's employment without affording her due process.
On 7 November 2002, private respondent Dominie Del Quero filed an
action for damages against petitioners Julius Kawachi and Gayle Kawachi before
the MeTC of Quezon City. 2 The complaint, which was docketed as Civil Case
No. 29522, alleged the following:
2. That the Plaintiff was employed as a clerk in the pawnshop
business office of the Defendants otherwise known as the A/J
RAYMUNDO PAWNSHOP, INC. located (sic) and with principal office
address at Unit A Virka Bldg. Edsa Corner Roosevelt[,] Quezon City,
from May 27, 2002 to August 10, 2002;
 3. That on August 10, 2002 at or about 11:30 AM, the Plaintiff was
admonished by the Defendants Julius Kawachi and Gayle Kawachi who
are acting as manager and assistant manager respectively of the
pawnshop business and alternately accused her of having committed an
act which she had not done and was scolded in a loud voice in front of
many employees and customers in their offices;
4. That further for no apparent reason the Plaintiff was ordered to
get out and leave the pawnshop office and was told to wait for her salary
outside the office when she tried to explain that she had no fault in the
complaint of the customer, (sic) [H]owever[,] her explanation fell on deaf
ears;
5. That she was instantly dismissed from her job without due
process;
6. That the incident happened in front of many people which
caused the Plaintiff to suffer serious embarrassment and shame so that
she could not do anything but cry because of the shameless way by
which she was terminated from the service; . . . 3
The complaint for damages specifically sought the recovery of moral
damages, exemplary damages and attorney's fees.  DSETcC

Petitioners moved for the dismissal of the complaint on the grounds of lack
of jurisdiction and forum-shopping or splitting causes of action. At first, the MeTC
granted petitioners' motion and ordered the dismissal of the complaint for lack of
jurisdiction in an Order dated 2 January 2003. 4 Upon private respondent's
motion, the MeTC reconsidered and set aside the order of dismissal in an Order
dated 3 March 2003. 5 It ruled that no causal connection appeared between
private respondent's cause of action and the employer-employee relations
between the parties. The MeTC also rejected petitioners' motion for
reconsideration in an Order dated 22 April 2003. 6
Thus, petitioners elevated the MeTC's aforesaid two orders to the RTC,
Branch 226 of Quezon City, via a Petition for Certiorari (With Prayer for
Temporary Restraining Order and/or Preliminary Injunction). After due hearing,
the RTC declined petitioners' prayer for a temporary restraining order. For her
part, private respondent filed a Motion to Dismiss Petition.
On 20 October 2003, the RTC issued the assailed Resolution, upholding
the jurisdiction of the MeTC over private respondent's complaint for damages. 7
The RTC held that private respondent's action for damages was based on
the alleged tortious acts committed by her employers and did not seek any relief
under the Labor Code. The RTC cited the pronouncement in Medina, et al. v.
Hon. Castro-Bartolome, etc., et al. 8 where the Court held that the employee's
action for damages based on the slanderous remarks uttered by the employer
was within the regular courts' jurisdiction since the complaint did not allege any
unfair labor practice on the part of the employer.
On 29 March 2004, the RTC denied petitioners' motion for
reconsideration. 9 Hence, the instant petition for review on certiorari, raising the
sole issue of jurisdiction over private respondent's complaint for damages.  aHcDEC

Petitioners argue that the NLRC has jurisdiction over the action for
damages because the alleged injury is work-related. They also contend that
private respondent should not be allowed to split her causes of action by filing the
action for damages separately from the labor case.
Private respondent maintains that there is no causal connection between
her cause of action and the employer-employee relations of the parties.
The petition is meritorious.
The jurisdictional controversy of the sort presented in this case has long
been settled by this Court.
Article 217(a) of the Labor Code, as amended, clearly bestows upon the
Labor Arbiter original and exclusive jurisdiction over claims for damages arising
from employer-employee relations — in other words, the Labor Arbiter has
jurisdiction to award not only the reliefs provided by labor laws, but also damages
governed by the Civil Code. 10
In the 1999 case of San Miguel Corporation v. Etcuban, 11 the Court noted
what was then the current trend, and still is, to refer worker-employer
controversies to labor courts, unless unmistakably provided by the law to be
otherwise. Because of the trend, the Court noted further, jurisprudence has
developed the "reasonable causal connection rule." Under this rule, if there is a
reasonable causal connection between the claim asserted and the employer-
employee relations, then the case is within the jurisdiction of our labor courts. In
the absence of such nexus, it is the regular courts that have jurisdiction. 12
In San Miguel Corporation, 13 the Court upheld the labor arbiter's
jurisdiction over the employees' separate action for damages, which also sought
the nullification of the so-called "contract of termination" and noted that the
allegations in the complaint were so carefully formulated as to avoid a semblance
of employer-employee relations.  ECaSIT

In said case, the employees of San Miguel Corporation (SMC) availed of

the "Retrenchment to Prevent Loss Program." After their inclusion in the
retrenchment program, the employees were given their termination letters and
separation pay. In return, the employees executed "receipt and release"
documents in favor of the company. Subsequently, the employees learned that
the company was never in financial distress and was engaged in hiring new
employees. Thus, they filed a complaint before the NLRC for the declaration of
nullity of the retrenchment program and prayed for reinstatement, backwages
and damages. After the labor arbiter dismissed the complaint, the employees
filed an action for damages before the RTC, alleging the deception employed
upon them by SMC which led to their separation from the company. They sought
the declaration of nullity of their so-called collective "contract of termination" and
the recovery of actual and compensatory damages, moral damages, exemplary
damages, and attorney's fees.
The Court held that the employees' claim for damages was intertwined with
their having been separated from their employment without just cause and,
consequently, had a reasonable causal connection with their employer-employee
relations with petitioner. The Court explained in this manner:
. . . First, their claim for damages is grounded on their having
been deceived into serving their employment due to SMC's concocted
financial distress and fraudulent retrenchment program — a clear case
of illegal dismissal. Second, a comparison of respondents' complaint for
the declaration of nullity of the retrenchment program before the labor
arbiter and the complaint for the declaration of nullity of their "contract of
termination" before the RTC reveals that the allegations and prayer of
the former are almost identical with those of the latter except that the
prayer for reinstatement was no longer included and the claim for
backwages and other benefits was replaced with a claim for actual
damages. These are telltale signs that respondents' claim for damages
is intertwined with their having been separated from their employment
without just cause and, consequently, has a reasonable causal
connection with their employer-employee relations with SMC.
Accordingly, it cannot be denied that respondents' claim falls under the
jurisdiction of the labor arbiter as provided in paragraph 4 of Article
217. 14
The "reasonable causal connection rule" emerged in the 1987 case
of Primero v. Intermediate Appellate Court, 15 where the Court recognized the
jurisdiction of the labor arbiters over claims for damages in connection with
termination of employment, thus:
It is clear that the question of the legality of the act of dismissal is
intimately related to the issue of the legality of the manner by which that
act of dismissal was performed. But while the Labor Code treats of the
nature of, and the remedy available as regards the first — the
employee's separation from employment — it does not at all deal with
the second — the manner of that separation — which is governed
exclusively by the Civil Code. In addressing the first issue, the Labor
Arbiter applies the Labor Code; in addressing the second, the Civil
Code. And this appears to be the plain and patent intendment of the law.
For apart from the reliefs expressly set out in the Labor Code flowing
 from illegal dismissal from employment, no other damages may be
awarded to an illegally dismissed employee other than those specified
by the Civil Code. Hence, the fact that the issue — of whether or not
moral or other damages were suffered by an employee and in the
affirmative, the amount that should properly be awarded to him in the
circumstances — is determined under the provisions of the Civil Code
and not the Labor Code, obviously was not meant to create a cause of
action independent of that for illegal dismissal and thus place the matter
beyond the Labor Arbiter's jurisdiction. 16
In the instant case, the allegations in private respondent's complaint for
damages show that her injury was the offshoot of petitioners' immediate harsh
reaction as her administrative superiors to the supposedly sloppy manner by
which she had discharged her duties. Petitioners' reaction culminated in private
respondent's dismissal from work in the very same incident. The incident on 10
August 2002 alleged in the complaint for damages was similarly narrated in
private respondent's Affidavit-Complaint supporting her action for illegal dismissal
before the NLRC. Clearly, the alleged injury is directly related to the employer-
employee relations of the parties.
Where the employer-employee relationship is merely incidental and the
cause of action proceeds from a different source of obligation, the Court has not
hesitated to uphold the jurisdiction of the regular courts. Where the damages
claimed for were based on tort, malicious prosecution, or breach of contract, as
when the claimant seeks to recover a debt from a former employee or seeks
liquidated damages in the enforcement of a prior employment contract, 17 the
jurisdiction of regular courts was upheld. The scenario that obtains in this case is
obviously different. The allegations in private respondent's complaint
unmistakably relate to the manner of her alleged illegal dismissal.
For a single cause of action, the dismissed employee cannot be allowed to
sue in two forums: one, before the labor arbiter for reinstatement and recovery of
back wages or for separation pay, upon the theory that the dismissal was illegal;
and two, before a court of justice for recovery of moral and other damages, upon
the theory that the manner of dismissal was unduly injurious or tortious. Suing in
the manner described is known as "splitting a cause of action," a practice
engendering multiplicity of actions. It is considered procedurally unsound and
obnoxious to the orderly administration of justice. 18
In the instant case, the NLRC has jurisdiction over private respondent's
complaint for illegal dismissal and damages arising therefrom. She cannot be
allowed to file a separate or independent civil action for damages where the
alleged injury has a reasonable connection to her termination from employment.
Consequently, the action for damages filed before the MeTC must be dismissed.
 WHEREFORE, the petition for review on certiorari is GRANTED. The two
Resolutions dated 20 October 2003 and 29 March 2004 of the Regional Trial
Court, Branch 226, Quezon City are REVERSED and SET ASIDE. Costs against
private respondent.
SO ORDERED.

G.R. No. 200476 : April 18, 2012]

GILDA G. LUNZAGA v. ALBAR SHIPPING AND TRADING CORP. AND/OR AKIRA

KATO, AND DARWIN, VENUS, ROMEO ULYSSES, MARIKIT ODESSA, ALL
SURNAMED LUNZAGA

Sirs/Mesdames:

Please take notice that the Court, Third Division, issued a Resolution dated  18 April
2012, which reads as follows:

G.R. No. 200476 (Gilda G. Lunzaga v. Albar Shipping and Trading Corp. and/or Akira
Kato, and Darwin, Venus, Romeo Ulysses, Marikit Odessa, all surnamed Lunzaga)

RESOLUTION 

Before the Court is a Petition for Review on Certiorari under Rule 45, assailing the July
21, 2011 Decision[1] and February 2, 2012 Resolution[2] of the Court of Appeals (CA) in
CA-G.R. SP No. 116476. The CA Decision upheld the Decision dated April 30, 2010 [3] of
the National Labor Relations Commission (NLRC), which dismissed the appeal of
petitioner for having been filed out of time. The CA Decision, in effect, affirmed the
Order dated August 28, 2009[4]  of the Labor Arbiter, which ruled that jurisdiction over
the instant controversy is with the regular courts and not with the NLRC, the dispositive
portion of which reads: 

WHEREFORE PREMISES CONSIDERED the parties are directed to ventilate their conflict
before the regular court to determine who the rightful heirs to receive the disability
benefits. 

For the meantime instant case is temporarily dismissed. 

SO ORDERED.

The facts of the case are as follows:

Romeo Lunzaga (Romeo) was a seaman working for respondent Albar Shipping and
Trading Corp. (Albar). On June 11, 2008, Romeo was assigned as Chief Engineer on
board Albar's Philippine vessel MV Lake Aru by virtue of a Philippine Overseas
Employment Administration-approved employment contract. One month later, Romeo
suffered a heart attack and was repatriated to the Philippines only to die on September
5, 2008.

Sometime in early 2009, Gilda G. Lunzaga (Gilda), claiming to be the surviving spouse
of Romeo, filed with the NLRC a complaint against Albar for payment of death benefits,
damages and attorney's fees. It should be noted that Gilda was the designated heir in
Romeo's Overseas Filipino Worker Verification Sheet and PhilHealth Information Sheet.
Darwin Lunzaga, Venus Lunzaga, Romeo Ulysses Lunzaga, and Marikit Odessa Lunzaga
(Lunzaga siblings), the children of Romeo from his first marriage that was judicially
declared null and void, opposed the complaint through a complaint-in-intervention. The
Lunzaga siblings claimed that Gilda is not entitled to the death benefits of Romeo, as
she had a subsisting marriage when she married him. They claim that her marriage
with Romeo was, therefore, bigamous. During the mandatory conferences of the parties
before the Labor Arbiter, Albar signified its willingness to pay Romeo's death benefits in
the amount of USD 55,547.44. However, Gilda and the Lunzaga siblings could not agree
as to the sharing of the benefits.

Thus, on August 28, 2009, the Labor Arbiter issued an Order temporarily dismissing the
complaint and directing the parties to file their case with the regular courts. Gilda
received a copy of the August 28, 2009 Order of the Labor Arbiter on September 28,
2009. Gilda's appeal to the NLRC was, however, filed only on October 9, 2009, one day
past the 10-day period for filing an appeal from the decision of the Labor Arbiter. Thus,
the NLRC rendered a Decision dated April 30, 2010, dismissing the appeal for having
been filed beyond the reglementary period.

On appeal, the CA rendered the July 21, 2011 Decision, ruling that the petition is
devoid of merit. The CA ruled that despite the fact that the appeal to the NLRC was filed
only one day beyond the reglementary period, Gilda failed to present any reason for the
liberal application of the rule on filing of appeals. The CA wrote, "Indeed, the matter of
the parties' entitlement is inherently intertwined with their status as legal heirs of
Romeo Lunzaga. Clearly, this is a matter not within the competence of the Labor Arbiter
to decide."[5] 

Gilda's motion for reconsideration of the Decision of the CA was denied in its February
2, 2012 Resolution. Hence, We have this petition.

We agree with the pronouncement of the Labor Arbiter and the CA that the issue of who
is the proper beneficiary of Romeo is properly within the jurisdiction of the regular
courts. However, this is not the only issue in the instant petition.

A review of the records of the case reveals that the main issue in the complaint before
the Labor Arbiter was whether the heirs of Romeo are entitled to receive his death
benefits from Albar. Clearly, the Labor Arbiter has jurisdiction over this issue and the
case itself, involving as it does a claim arising from an employer-employee relationship.
And while the Labor Arbiter has no jurisdiction to determine who among the alleged
heirs is entitled to receive Romeo's death benefits, it should have made a ruling holding
Albar liable for the claim.
In this light, substantial justice and fair play dictate that the Court reconsider the
August 28, 2009 Order of the Labor Arbiter, the April 30, 2010 Decision of the NLRC,
and the July 21, 2011 Decision and February 2, 2012 Resolution of the CA.

With regard to the dismissal of the appeal by the NLRC on the ground that it was filed
one (1) day past the reglementary period, We rule that the ends of justice would be
best served with the admission of the appeal for the complete ventilation of the issues
in the case. Considering that Albar admitted its liability to the heirs of Romeo for his
death benefits, the NLRC should have given due course to the meritorious appeal. Thus,
this Court ruled in Chronicle Securities Corporation v. National Labor Relations
Commission:[6]  

In not a few instances, we relaxed the rigid application of the rules of procedure to
afford the parties the opportunity to fully ventilate their cases on the merits. This is in
line with the time honored principle that cases should be decided only after giving all
parties the chance to argue their causes and defenses. Technicality and procedural
imperfections should thus not serve as bases of decisions. In that way, the ends of
justice would be better served. For indeed, the general objective of procedure is to
facilitate the application of justice to the rival claims of contending parties, bearing
always in mind that procedure is not to hinder but to promote the administration of
justice. 

In Philippine National Bank, et al. v. Court of Appeals, we allowed, in the higher interest
of justice, an appeal filed three days late. 

In Republic v. Court of Appeals, we ordered the Court of Appeals to entertain an appeal

filed six days after the expiration of the [reglementary] period; while in Siguenza v.
Court of Appeals, we accepted an appeal filed thirteen days late. Likewise, in Olacao v.
NLRC, we affirmed the respondent Commission's order giving due course to a tardy
appeal "to forestall the grant of separation pay twice" since the issue of separation pay
had been judicially settled with finality in another case. All of the aforequoted rulings
were reiterated in our 2001 decision in the case of Equitable PCI Bank v. Ku.

Notably, in Philippine National Bank v. Court of Appeals,[7] the Court cited the following
cases, applicable to the instant controversy: 

It has been said this time and again that the perfection of an appeal within the period
fixed by the rules is mandatory and jurisdictional. But, it is always in the power of this
Court to suspend its own rules, or to except a particular case from its operation,
whenever the purposes of justice require it. Strong compelling reasons such as serving
the ends of justice and preventing a grave miscarriage thereof warrant the suspension
of the rules. 

x x x x 

In Siguenza vs. Court of Appeals, the appeal which was perfected thirteen days
late was permitted, "since on its face the appeal appeared to be impressed
with merit." x x x 
x x x x 

In Cortes vs. Court of Appeals, the counsel of record of a party failed to withdraw his
appearance as such when he was appointed as Judge of the RTC of Dumaguete City.
Thus, the copy of the adverse decision was still served at his address of record in Cebu
City on 28 February 1983. He was at the time in Dumaguete City and learned of the
decision only on 8 March 1983 when he came home to Cebu City. He right away
informed his client through a telegram, which reached the latter's office in Zamboanga
City at a time when he was out on official business and which came to his knowledge
only a few days later. It was only on 22 March 1983 that a notice of appeal was filed by
his new lawyer. This Court held that the seven-day delay is excusable, and that
the appeal, being ostensibly meritorious, deserves to be given due
course. (Emphasis supplied.)

Evidently, the NLRC and the CA erred in not giving due course to the appeal due to a
one (l)-day delay of its filing, considering the apparent merit of the appeal as shown by
the admission of Albar.

Verily, Albar is liable to the heirs of Romeo for the amount of USD 55,547.44. Albar
hereby is ordered to deposit this amount in an escrow account under the control of the
NLRC in order to protect the interests of Romeo's heirs. The parties claiming to be the
beneficiaries of Romeo are directed to file the appropriate action with a trial court to
determine the true and legal heirs of Romeo entitled to receive the disability benefits.
The amount in the escrow account will only be released to the legal heirs per the
decision of a trial court.

WHEREFORE, the instant petition is GRANTED. The July 21, 2011 Decision and
February 2, 2012 Resolution of the CA in CA-G.R. SP No. 116476, the Decision dated
April 30, 2010 of the NLRC, and the Order dated August 28, 2009 of the Labor Arbiter
dismissing the complaint of petitioner Gilda G. Lunzaga are hereby REVERSED and SET
ASIDE. 

Further, respondent Albar Shipping and Trading Corp. is hereby ORDERED to pay the
heirs of Romeo Lunzaga the amount of USD 55,547.44 and to deposit in escrow the
said amount with the NLRC in a bank account in trust for the heirs of Romeo Lunzaga.
The said amount shall only be released to the legal beneficiaries of Romeo adjudged as
such by a trial court in the appropriate action to determine his legal heirs.

SO ORDERED.

G.R. Nos. 178382-83. September 23, 2015.]

CONTINENTAL MICRONESIA, INC., petitioner, vs. JOSEPH

BASSO, respondent.
 DECISION

JARDELEZA, J  : p

This is a Petition for Review on Certiorari 1 under Rule 45 of

the Revised Rules of Court assailing the Decision 2 dated May 23, 2006 and
Resolution 3 dated June 19, 2007 of the Court of Appeals in the consolidated
cases CA-G.R. SP No. 83938 and CA-G.R. SP No. 84281. These assailed
Decision and Resolution set aside the Decision 4 dated November 28, 2003 of
the National Labor Relations Commission (NLRC) declaring Joseph Basso's
(Basso) dismissal illegal, and ordering the payment of separation pay as
alternative to reinstatement and full backwages until the date of the
Decision. 
HTcADC

The Facts
Petitioner Continental Micronesia, Inc. (CMI) is a foreign corporation
organized and existing under the laws of and domiciled in the United States of
America (US). It is licensed to do business in the Philippines. 5 Basso, a US
citizen, resided in the Philippines prior to his death. 6
During his visit to Manila in 1990, Mr. Keith R. Braden (Mr. Braden),
Managing Director-Asia of Continental Airlines, Inc. (Continental), offered
Basso the position of General Manager of the Philippine Branch of
Continental. Basso accepted the offer. 7
It was not until much later that Mr. Braden, who had since returned to
the US, sent Basso the employment contract 8 dated February 1, 1991, which
Mr. Braden had already signed. Basso then signed the employment contract
and returned it to Mr. Braden as instructed.
On November 7, 1992, CMI took over the Philippine operations of
Continental, with Basso retaining his position as General Manager. 9
On December 20, 1995, Basso received a letter from Mr. Ralph Schulz
(Mr. Schulz), who was then CMI's Vice President of Marketing and Sales,
informing Basso that he has agreed to work in CMI as a consultant on an "as
needed basis" effective February 1, 1996 to July 31, 1996. The letter also
informed Basso that: (1) he will not receive any monetary compensation but
will continue being covered by the insurance provided by CMI; (2) he will
enjoy travel privileges; and (3) CMI will advance Php1,140,000.00 for the
payment of housing lease for 12 months. 10
On January 11, 1996, Basso wrote a counter-proposal 11 to Mr. Schulz
regarding his employment status in CMI. On March 14, 1996, Basso wrote
another letter addressed to Ms. Marty Woodward (Ms. Woodward) of CMI's
Human Resources Department inquiring about the status of his
employment. 12 On the same day, Ms. Woodward responded that pursuant to
the employment contract dated February 1, 1991, Basso could be terminated
at will upon a thirty-day notice. This notice was allegedly the letter Basso
received from Mr. Schulz on December 20, 1995. Ms. Woodward also
reminded Basso of the telephone conversation between him, Mr. Schulz and
Ms. Woodward on December 19, 1995, where they informed him of the
company's decision to relieve him as General Manager. Basso, instead, was
offered the position of consultant to CMI. Ms. Woodward also informed Basso
that CMI rejected his counter-proposal and, thus, terminated his employment
effective January 31, 1996. CMI offered Basso a severance pay, in
consideration of the Php1,140,000.00 housing advance that CMI promised
him. 13
Basso filed a Complaint for Illegal Dismissal with Moral and Exemplary
Damages against CMI on December 19, 1996. 14 Alleging the presence of
foreign elements, CMI filed a Motion to Dismiss 15 dated February 10, 1997 on
the ground of lack of jurisdiction over the person of CMI and the subject
matter of the controversy. In an Order 16 dated August 27, 1997, the Labor
Arbiter granted the Motion to Dismiss. Applying the doctrine of lex loci
contractus, the Labor Arbiter held that the terms and provisions of the
employment contract show that the parties did not intend to apply our Labor
Code (Presidential Decree No. 442). The Labor Arbiter also held that no
employer-employee relationship existed between Basso and the branch office
of CMI in the Philippines, but between Basso and the foreign corporation
itself.
On appeal, the NLRC remanded the case to the Labor Arbiter for the
determination of certain facts to settle the issue on jurisdiction. NLRC ruled
that the issue on whether the principle of lex loci contractus or lex loci
celebrationis should apply has to be further threshed out. 17
Labor Arbiter's Ruling
Labor Arbiter Madjayran H. Ajan in his Decision 18 dated September 24,
1999 dismissed the case for lack of merit and jurisdiction.
The Labor Arbiter agreed with CMI that , thus:
Although the contract does not state what law shall apply, it is
obvious that Philippine laws were not written into it. More specifically,
the Philippine law on taxes and the Labor Code were not intended by
the parties to apply, otherwise Par. 7 on the payment by Complainant
U.S. Federal and Home State income taxes, and Pars. 22/23 on
termination by 30-day prior notice, will not be there. The contract was
prepared in contemplation of Texas or U.S. laws where Par. 7 is
required and Pars. 22/23 is allowed. 20
 The Labor Arbiter also ruled that Basso was terminated for a valid
cause based on the allegations of CMI that Basso committed a series of acts
that constitute breach of trust and loss of confidence. 21
The Labor Arbiter, however, found CMI to have voluntarily submitted to
his office's jurisdiction. CMI participated in the proceedings, submitted
evidence on the merits of the case, and sought affirmative relief through a
motion to dismiss. 22
NLRC's Ruling
On appeal, the NLRC Third Division promulgated its Decision 23 dated
November 28, 2003, the decretal portion of which reads:
WHEREFORE, the decision dated 24 September 1999 is
VACATED and SET ASIDE. Respondent CMI is ordered to pay
complainant the amount of US$5,416.00 for failure to comply with the
due notice requirement. The other claims are dismissed.
SO ORDERED. 24
The NLRC did not agree with the pronouncement of the Labor Arbiter
that his office has no jurisdiction over the controversy. It ruled that the Labor
Arbiter acquired jurisdiction over the case when CMI voluntarily submitted to
his office's jurisdiction by presenting evidence, advancing arguments in
support of the legality of its acts, and praying for reliefs on the merits of the
case. 25
On the merits, the NLRC agreed with the Labor Arbiter that Basso was
dismissed for just and valid causes on the ground of breach of trust and loss
of confidence. The NLRC ruled that under the applicable rules on loss of trust
and confidence of a managerial employee, such as Basso, mere existence of
a basis for believing that such employee has breached the trust of his
employer suffices. However, the NLRC found that CMI denied Basso the
required due process notice in his dismissal. 26
Both CMI and Basso filed their respective Motions for Reconsideration
dated January 15, 2004 27 and January 8, 2004. 28 Both motions were
dismissed in separate Resolutions dated March 15, 2004 29 and February 27,
2004, 30 respectively.
Basso filed a Petition for Certiorari dated April 16, 2004 with the Court
of Appeals docketed as CA-G.R. SP No. 83938. 31 Basso imputed grave
abuse of discretion on the part of the NLRC in ruling that he was validly
dismissed. CMI filed its own Petition for Certiorari dated May 13, 2004
docketed as CA-G.R. SP No. 84281, 32 alleging that the NLRC gravely
abused its discretion when it assumed jurisdiction over the person of CMI and
the subject matter of the case.
 In its Resolution dated October 7, 2004, the Court of Appeals
consolidated the two cases 33 and ordered the parties to file their respective
Memoranda.
The Court of Appeal's Decision
The Court of Appeals promulgated the now assailed Decision 34 dated
May 23, 2006, the relevant dispositive portion of which reads:
WHEREFORE, the petition of Continental docketed as CA-G.R.
SP No. 84281 is DENIED DUE COURSE and DISMISSED.
On the other hand the petition of Basso docketed as CA-G.R.
SP No. 83938 is GIVEN DUE COURSE and GRANTED, and
accordingly, the assailed Decision dated November 28, 2003 and
Resolution dated February 27, 2004 of the NLRC are SET
ASIDE and VACATED. Instead judgment is rendered hereby declaring
the dismissal of Basso illegal and ordering Continental to pay him
separation pay equivalent to one (1) month pay for every year of
service as an alternative to reinstatement. Further, ordering
Continental to pay Basso his full backwages from the date of his said
illegal dismissal until date of this decision. The claim for moral and
exemplary damages as well as attorney's fees are dismissed. 35
The Court of Appeals ruled that the Labor Arbiter and the NLRC had
jurisdiction over the subject matter of the case and over the parties. The Court
of Appeals explained that jurisdiction over the subject matter of the action is
determined by the allegations of the complaint and the law. Since the case
filed by Basso is a termination dispute that is "undoubtedly cognizable by the
labor tribunals", the Labor Arbiter and the NLRC had jurisdiction to rule on the
merits of the case. On the issue of jurisdiction over the person of the parties,
who are foreigners, the Court of Appeals ruled that jurisdiction over the
person of Basso was acquired when he filed the complaint for illegal
dismissal, while jurisdiction over the person of CMI was acquired through
coercive process of service of summons to its agent in the Philippines. The
Court of Appeals also agreed that the active participation of CMI in the case
rendered moot the issue on jurisdiction.  aScITE

On the merits of the case, the Court of Appeals declared that CMI
illegally dismissed Basso. The Court of Appeals found that CMI's allegations
of loss of trust and confidence were not established. CMI "failed to prove its
claim of the incidents which were its alleged bases for loss of trust or
confidence." 36 While managerial employees can be dismissed for loss of trust
and confidence, there must be a basis for such loss, beyond mere whim or
caprice.
 After the parties filed their Motions for Reconsideration, 37 the Court of
Appeals promulgated Resolution 38 dated June 19, 2007 denying CMI's
motion, while partially granting Basso's as to the computation of backwages.
Hence, this petition, which raises the following issues:
I.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN
REVIEWING THE FACTUAL FINDINGS OF THE NLRC INSTEAD OF
LIMITING ITS INQUIRY INTO WHETHER OR NOT THE NLRC
COMMITTED GRAVE ABUSE OF DISCRETION.
II.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING
THAT THE LABOR ARBITER AND THE NLRC HAD JURISDICTION
TO HEAR AND TRY THE ILLEGAL DISMISSAL CASE.
III.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN FINDING
THAT BASSO WAS NOT VALIDLY DISMISSED ON THE GROUND
OF LOSS OF TRUST OR CONFIDENCE.
We begin with the second issue on the jurisdiction of the Labor Arbiter
and the NLRC in the illegal dismissal case. The first and third issues will be
discussed jointly.
The labor tribunals had jurisdiction
over the parties and the subject
matter of the case.
CMI maintains that there is a conflict-of-laws issue that must be settled
to determine proper jurisdiction over the parties and the subject matter of the
case. It also alleges that the existence of foreign elements calls for the
application of US laws and the doctrines of lex loci celebrationis (the law of
the place of the ceremony), lex loci contractus (law of the place where a
contract is executed), and lex loci intentionis (the intention of the parties as to
the law that should govern their agreement). CMI also invokes the application
of the rule of forum non conveniens to determine the propriety of the
assumption of jurisdiction by the labor tribunals.
We agree with CMI that there is a conflict-of-laws issue that needs to be
resolved first. Where the facts establish the existence of foreign elements, the
case presents a conflict-of-laws issue. 39 The foreign element in a case may
appear in different forms, such as in this case, where one of the parties is an
alien and the other is domiciled in another state.
In Hasegawa v. Kitamura, 40 we stated that in the judicial resolution of
conflict-of-laws problems, three consecutive phases are involved: jurisdiction,
choice of law, and recognition and enforcement of judgments. In resolving the
conflicts problem, courts should ask the following questions:
1. "Under the law, do I have jurisdiction over the subject matter and the
parties to this case?
2. "If the answer is yes, is this a convenient forum to the parties, in light
of the facts?
3. "If the answer is yes, what is the conflicts rule for this particular
problem?
4. "If the conflicts rule points to a foreign law, has said law been
properly pleaded and proved by the one invoking it?
5. "If so, is the application or enforcement of the foreign law in the
forum one of the basic exceptions to the application of foreign law? In
short, is there any strong policy or vital interest of the forum that is at
stake in this case and which should preclude the application of foreign
law? 41
Jurisdiction is defined as the power and authority of the courts to hear,
try and decide cases. Jurisdiction over the subject matter is conferred by
the Constitution or by law and by the material allegations in the complaint,
regardless of whether or not the plaintiff is entitled to recover all or some of
the claims or reliefs sought therein. 42 It cannot be acquired through a waiver
or enlarged by the omission of the parties or conferred by the acquiescence of
the court. 43 That the employment contract of Basso was replete with
references to US laws, and that it originated from and was returned to the US,
do not automatically preclude our labor tribunals from exercising jurisdiction to
hear and try this case.
This case stemmed from an illegal dismissal complaint. The Labor
Code, under Article 217, clearly vests original and exclusive jurisdiction to
hear and decide cases involving termination disputes to the Labor Arbiter.
Hence, the Labor Arbiter and the NLRC have jurisdiction over the subject
matter of the case.
As regards jurisdiction over the parties, we agree with the Court of
Appeals that the Labor Arbiter acquired jurisdiction over the person of Basso,
notwithstanding his citizenship, when he filed his complaint against CMI. On
the other hand, jurisdiction over the person of CMI was acquired through the
coercive process of service of summons. We note that CMI never denied that
it was served with summons. CMI has, in fact, voluntarily appeared and
participated in the proceedings before the courts. Though a foreign
corporation, CMI is licensed to do business in the Philippines and has a local
business address here. The purpose of the law in requiring that foreign
corporations doing business in the country be licensed to do so, is to subject
the foreign corporations to the jurisdiction of our courts. 44
 Considering that the Labor Arbiter and the NLRC have jurisdiction over
the parties and the subject matter of this case, these tribunals may proceed to
try the case even if the rules of conflict-of-laws or the convenience of the
parties point to a foreign forum, this being an exercise of sovereign
prerogative of the country where the case is filed. 45
The next question is whether the local forum is the convenient forum in
light of the facts of the case. CMI contends that a Philippine court is an
inconvenient forum.
We disagree.
Under the doctrine of forum non conveniens, a Philippine court in a
conflict-of-laws case may assume jurisdiction if it chooses to do so, provided,
that the following requisites are met: (1) that the Philippine Court is one to
which the parties may conveniently resort to; (2) that the Philippine Court is in
a position to make an intelligent decision as to the law and the facts; and (3)
that the Philippine Court has or is likely to have power to enforce its
decision. 46 All these requisites are present here.
Basso may conveniently resort to our labor tribunals as he and CMI had
physical presence in the Philippines during the duration of the trial. CMI has a
Philippine branch, while Basso, before his death, was residing here. Thus, it
could be reasonably expected that no extraordinary measures were needed
for the parties to make arrangements in advocating their respective cases.
The labor tribunals can make an intelligent decision as to the law and
facts. The incident subject of this case (i.e., dismissal of Basso) happened in
the Philippines, the surrounding circumstances of which can be ascertained
without having to leave the Philippines. The acts that allegedly led to loss of
trust and confidence and Basso's eventual dismissal were committed in the
Philippines. As to the law, we hold that Philippine law is the proper law of the
forum, as we shall discuss shortly. Also, the labor tribunals have the power to
enforce their judgments because they acquired jurisdiction over the persons
of both parties. 
HEITAD

Our labor tribunals being the convenient fora, the next question is what
law should apply in resolving this case.
The choice-of-law issue in a conflict-of-laws case seeks to answer the
following important questions: (1) What legal system should control a given
situation where some of the significant facts occurred in two or more states;
and (2) to what extent should the chosen legal system regulate the
situation. 47 These questions are entirely different from the question of
jurisdiction that only seeks to answer whether the courts of a state where the
case is initiated have jurisdiction to enter a judgment. 48 As such, the power to
exercise jurisdiction does not automatically give a state constitutional authority
to apply forum law. 49
CMI insists that US law is the applicable choice-of-law under the
principles of lex loci celebrationis and lex loci contractus. It argues that the
contract of employment originated from and was returned to the US after
Basso signed it, and hence, was perfected there. CMI further claims that the
references to US law in the employment contract show the parties' intention to
apply US law and not ours. These references are:
a. Foreign station allowance of forty percent (40%) using the "U.S.
State Department Index, the base being Washington, D.C."
b. Tax equalization that made Basso responsible for "federal and any
home state income taxes."
c. Hardship allowance of fifteen percent (15%) of base pay based upon
the "U.S. Department of State Indexes of living costs abroad."
d. The employment arrangement is "one at will, terminable by either
party without any further liability on thirty days prior written
notice." 50
CMI asserts that the US law on labor relations particularly, the US
Railway Labor Act sanctions termination-at-will provisions in an employment
contract. Thus, CMI concludes that if such laws were applied, there would
have been no illegal dismissal to speak of because the termination-at-will
provision in Basso's employment contract would have been perfectly valid.
We disagree.
In Saudi Arabian Airlines v. Court of Appeals, 51 we emphasized that an
essential element of conflict rules is the indication of a "test" or "connecting
factor" or "point of contact". Choice-of-law rules invariably consist of a factual
relationship (such as property right, contract claim) and a connecting fact or
point of contact, such as the situs of the res, the place of celebration, the
place of performance, or the place of wrongdoing. Pursuant to Saudi Arabian
Airlines, we hold that the "test factors," "points of contact" or "connecting
factors" in this case are the following:
(1) The nationality, domicile or residence of Basso;
(2) The seat of CMI;
(3) The place where the employment contract has been made,
the locus actus;
(4) The place where the act is intended to come into effect, e.g., the
place of performance of contractual duties;
 (5) The intention of the contracting parties as to the law that should
govern their agreement, the lex loci intentionis; and
(6) The place where judicial or administrative proceedings are instituted
or done. 52
Applying the foregoing in this case, we conclude that Philippine law is
the applicable law. Basso, though a US citizen, was a resident here from the
time he was hired by CMI until his death during the pendency of the case.
CMI, while a foreign corporation, has a license to do business in the
Philippines and maintains a branch here, where Basso was hired to work. The
contract of employment was negotiated in the Philippines. A purely
consensual contract, it was also perfected in the Philippines when Basso
accepted the terms and conditions of his employment as offered by CMI. The
place of performance relative to Basso's contractual duties was in the
Philippines. The alleged prohibited acts of Basso that warranted his dismissal
were committed in the Philippines.
Clearly, the Philippines is the state with the most significant relationship
to the problem. Thus, we hold that CMI and Basso intended Philippine law to
govern, notwithstanding some references made to US laws and the fact that
this intention was not expressly stated in the contract. We explained
in Philippine Export and Foreign Loan Guarantee Corporation v. V. P.
Eusebio Construction, Inc. 53 that the law selected may be implied from such
factors as substantial connection with the transaction, or the nationality or
domicile of the parties. 54 We cautioned, however, that while Philippine courts
would do well to adopt the first and most basic rule in most legal systems,
namely, to allow the parties to select the law applicable to their contract, the
selection is subject to the limitation that it is not against the law, morals, or
public policy of the forum. 55
Similarly, in Bank of America, NT & SA v. American Realty
Corporation, 56 we ruled that a foreign law, judgment or contract contrary to a
sound and established public policy of the forum shall not be applied. Thus:
Moreover, foreign law should not be applied when its application
would work undeniable injustice to the citizens or residents of the
forum. To give justice is the most important function of law; hence, a
law, or judgment or contract that is obviously unjust negates the
fundamental principles of Conflict of Laws. 57
Termination-at-will is anathema to the public policies on labor protection
espoused by our laws and Constitution,which dictates that no worker shall be
dismissed except for just and authorized causes provided by law and after
due process having been complied with. 58 Hence, the US Railway Labor Act,
which sanctions termination-at-will, should not be applied in this case.
 Additionally, the rule is that there is no judicial notice of any foreign law.
As any other fact, it must be alleged and proved. 59 If the foreign law is not
properly pleaded or proved, the presumption of identity or similarity of the
foreign law to our own laws, otherwise known as processual
presumption, applies. Here, US law may have been properly pleaded but it
was not proved in the labor tribunals.
Having disposed of the issue on jurisdiction, we now rule on the first
and third issues.
The Court of Appeals may review the
factual findings of the NLRC in a
Rule 65 petition.
CMI submits that the Court of Appeals overstepped the boundaries of
the limited scope of its certiorari jurisdiction when instead of ruling on the
existence of grave abuse of discretion, it proceeded to pass upon the legality
and propriety of Basso's dismissal. Moreover, CMI asserts that it was error on
the part of the Court of Appeals to re-evaluate the evidence and
circumstances surrounding the dismissal of Basso.
We disagree.
The power of the Court of Appeals to review NLRC decisions via a
Petition for Certiorari under Rule 65 of the Revised Rules of Court was settled
in our decision in St. Martin Funeral Home v. NLRC. 60 The general rule is
that certiorari does not lie to review errors of judgment of the trial court, as
well as that of a quasi-judicial tribunal. In certiorari proceedings, judicial
review does not go as far as to examine and assess the evidence of the
parties and to weigh their probative value. 61 However, this rule admits of
exceptions. In Globe Telecom, Inc. v. Florendo-Flores,  62 we stated:
In the review of an NLRC decision through a special civil action
for certiorari, resolution is confined only to issues of jurisdiction and
grave abuse of discretion on the part of the labor tribunal. Hence, the
Court refrains from reviewing factual assessments of lower courts and
agencies exercising adjudicative functions, such as the NLRC.
Occasionally, however, the Court is constrained to delve into factual
matters where, as in the instant case, the findings of the NLRC
contradict those of the Labor Arbiter.
In this instance, the Court in the exercise of its equity jurisdiction
may look into the records of the case and re-examine the questioned
findings. As a corollary, this Court is clothed with ample authority to
review matters, even if they are not assigned as errors in their appeal,
if it finds that their consideration is necessary to arrive at a just
decision of the case. The same principles are now necessarily adhered
to and are applied by the Court of Appeals in its expanded jurisdiction
 over labor cases elevated through a petition for certiorari; thus, we see
no error on its part when it made anew a factual determination of the
matters and on that basis reversed the ruling of the NLRC. 63 (Citations
omitted.)
Thus, the Court of Appeals may grant the petition when the factual
findings complained of are not supported by the evidence on record; when it is
necessary to prevent a substantial wrong or to do substantial justice; when
the findings of the NLRC contradict those of the Labor Arbiter; and when
necessary to arrive at a just decision of the case. 64 To make these findings,
the Court of Appeals necessarily has to look at the evidence and make its
own factual determination. 65
Since the findings of the Labor Arbiter differ with that of the NLRC, we
find that the Court of Appeals correctly exercised its power to review the
evidence and the records of the illegal dismissal case.
Basso was illegally dismissed.
It is of no moment that Basso was a managerial employee of CMI.
Managerial employees enjoy security of tenure and the right of the
management to dismiss must be balanced against the managerial employee's
right to security of tenure, which is not one of the guaranties he gives up. 66
In Apo Cement Corporation v. Baptisma, 67 we ruled that for an
employer to validly dismiss an employee on the ground of loss of trust and
confidence under Article 282 (c) of the Labor Code,the employer must
observe the following guidelines: 1) loss of confidence should not be
simulated; 2) it should not be used as subterfuge for causes which are
improper, illegal or unjustified; 3) it may not be arbitrarily asserted in the face
of overwhelming evidence to the contrary; and 4) it must be genuine, not a
mere afterthought to justify earlier action taken in bad faith. More importantly,
it must be based on a willful breach of trust and founded on clearly
established facts.
We agree with the Court of Appeals that the dismissal of Basso was not
founded on clearly established facts and evidence sufficient to warrant
dismissal from employment. While proof beyond reasonable doubt is not
required to establish loss of trust and confidence, substantial evidence is
required and on the employer rests the burden to establish it. 68 There must
be some basis for the loss of trust, or that the employer has reasonable
ground to believe that the employee is responsible for misconduct, which
renders him unworthy of the trust and confidence demanded by his
position. 69
CMI alleges that Basso committed the following:
 (1) Basso delegated too much responsibility to the General Sales Agent
and relied heavily on its judgments. 70
(2) Basso excessively issued promotional tickets to his friends who had
no direct business with CMI. 71
(3) The advertising agency that CMI contracted had to deal directly with
Guam because Basso was hardly available. 72 Mr. Schulz
discovered that Basso exceeded the advertising budget by
$76,000.00 in 1994 and by $20,000.00 in 1995. 73
(4) Basso spent more time and attention to his personal businesses and
was reputed to own nightclubs in the Philippines. 74
(5) Basso used free tickets and advertising money to promote his
personal business, 75 such as a brochure that jointly advertised
one of Basso's nightclubs with CMI.
We find that CMI failed to discharge its burden to prove the above acts.
CMI merely submitted affidavits of its officers, without any other corroborating
evidence. Basso, on the other hand, had adequately explained his side. On
the advertising agency and budget issues raised by CMI, he explained that
these were blatant lies as the advertising needs of CMI were centralized in its
Guam office and the Philippine office was not authorized to deal with CMI's
advertising agency, except on minor issues. 76 Basso further stated that under
CMI's existing policy, ninety percent (90%) of the advertising decisions were
delegated to the advertising firm of McCann-Ericsson in Japan and only ten
percent (10%) were left to the Philippine office. 77 Basso also denied the
allegations of owning nightclubs and promoting his personal businesses and
explained that it was illegal for foreigners in the Philippines to engage in retail
trade in the first place. 
TIADCc

Apart from these accusations, CMI likewise presented the findings of

the audit team headed by Mr. Stephen D. Goepfert, showing that "for the
period of 1995 and 1996, personal passes for Continental and other airline
employees were noted (sic) to be issued for which no service charge was
collected." 78 The audit cited the trip pass log of a total of 10 months. The trip
log does not show, however, that Basso caused all the ticket issuances. More,
half of the trips in the log occurred from March to July of 1996, 79 a period
beyond the tenure of Basso. Basso was terminated effectively on January 31,
1996 as indicated in the letter of Ms. Woodward. 80
CMI also accused Basso of making "questionable overseas phone
calls". Basso, however, adequately explained in his Reply 81 that the phone
calls to Italy and Portland, USA were made for the purpose of looking for a
technical maintenance personnel with US Federal Aviation Authority
qualifications, which CMI needed at that time. The calls to the US were also
made in connection with his functions as General Manager, such as inquiries
on his tax returns filed in Nevada. Basso also explained that the phone
lines 82 were open direct lines that all personnel were free to use to make
direct long distance calls. 83
Finally, CMI alleged that Basso approved the disbursement of
Php80,000.00 to cover the transfer fee of the Manila Polo Club share from Mr.
Kenneth Glover, the previous General Manager, to him. CMI claimed that
"nowhere in the said contract was it likewise indicated that the Manila Polo
Club share was part of the compensation package given by CMI to
Basso." 84 CMI's claims are not credible. Basso explained that the Manila
Polo Club share was offered to him as a bonus to entice him to leave his then
employer, United Airlines. A letter from Mr. Paul J. Casey, former president of
Continental, supports Basso. 85 In the letter, Mr. Casey explained:
As a signing bonus, and a perk to attract Mr. Basso to join
Continental Airlines, he was given the Manila Polo Club share and
authorized to have the share re-issued in his name. In addition to
giving Mr. Basso the Manila Polo Club share, Continental agreed to
pay the dues for a period of three years and this was embodied in his
contract with Continental. This was all done with my knowledge and
approval. 86
Clause 14 of the employment contract also states:
Club Memberships: The Company will locally pay annual dues for
membership in a club in Manila that your immediate supervisor and I
agree is of at least that value to Continental through you in your role as
our General Manager for the Philippines. 87
Taken together, the above pieces of evidence suggest that the Manila
Polo Club share was part of Basso's compensation package and thus he
validly used company funds to pay for the transfer fees. If doubts exist
between the evidence presented by the employer and the employee, the
scales of justice must be tilted in favor of the latter. 88
Finally, CMI violated procedural due process in terminating Basso.
In King of Kings Transport, Inc. v. Mamac 89 we detailed the procedural due
process steps in termination of employment:
To clarify, the following should be considered in terminating the
services of employees:
(1) The first written notice to be served on the employees
should contain the specific causes or grounds for termination against
them, and a directive that the employees are given the opportunity to
submit their written explanation within a reasonable period.
"Reasonable opportunity" under the Omnibus Rules means every kind
of assistance that management must accord to the employees to
 enable them to prepare adequately for their defense. This should be
construed as a period of at least five (5) calendar days from receipt of
the notice to give the employees an opportunity to study the accusation
against them, consult a union official or lawyer, gather data and
evidence, and decide on the defenses they will raise against the
complaint. Moreover, in order to enable the employees to intelligently
prepare their explanation and defenses, the notice should contain a
detailed narration of the facts and circumstances that will serve as
basis for the charge against the employees. A general description of
the charge will not suffice. Lastly, the notice should specifically mention
which company rules, if any, are violated and/or which among the
grounds under Art. 282 is being charged against the employees.
(2) After serving the first notice, the employers should schedule
and conduct a hearing or conference wherein the employees will be
given the opportunity to: (1) explain and clarify their defenses to the
charge against them; (2) present evidence in support of their defenses;
and (3) rebut the evidence presented against them by the
management. During the hearing or conference, the employees are
given the chance to defend themselves personally, with the assistance
of a representative or counsel of their choice. Moreover, this
conference or hearing could be used by the parties as an opportunity
to come to an amicable settlement.
(3) After determining that termination of employment is justified,
the employers shall serve the employees a written notice of
termination indicating that: (1) all circumstances involving the charge
against the employees have been considered; and (2) grounds have
been established to justify the severance of their employment.
(Emphasis in original.)
Here, Mr. Schulz's and Ms. Woodward's letters dated December 19,
1995 and March 14, 1996, respectively, are not one of the valid twin notices.
Neither identified the alleged acts that CMI now claims as bases for Basso's
termination. Ms. Woodward's letter even stressed that the original plan was to
remove Basso as General Manager but with an offer to make him consultant.
It was inconsistent of CMI to declare Basso as unworthy of its trust and
confidence and, in the same breath, offer him the position of consultant. As
the Court of Appeals pointed out:  AIDSTE

But mark well that Basso was clearly notified that the sole
ground for his dismissal was the exercise of the termination at will
clause in the employment contract. The alleged loss of trust and
confidence claimed by Continental appears to be a mere afterthought
belatedly trotted out to save the day. 90
Basso is entitled to separation pay and full backwages.
 Under Article 279 of the Labor Code,an employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of
seniority rights and other privileges, and to his full backwages, inclusive
of allowances and to his other benefits or their monetary equivalent computed
from the time his compensation was withheld up to the time of actual
reinstatement.
Where reinstatement is no longer viable as an option, separation pay
equivalent to one (1) month salary for every year of service should be
awarded as an alternative. The payment of separation pay is in addition to
payment of backwages. 91 In the case of Basso, reinstatement is no longer
possible since he has already passed away. Thus, Basso's separation pay
with full backwages shall be paid to his heirs.
As to the computation of backwages, we agree with CMI that Basso
was entitled to backwages only up to the time he reached 65 years old, the
compulsory retirement age under the law. 92 This is our consistent
ruling. 93 When Basso was illegally dismissed on January 31, 1996, he was
already 58 years old. 94 He turned 65 years old on October 2, 2002. Since
backwages are granted on grounds of equity for earnings lost by an employee
due to his illegal dismissal, 95 Basso was entitled to backwages only for the
period he could have worked had he not been illegally dismissed, i.e., from
January 31, 1996 to October 2, 2002.
WHEREFORE, premises considered, the Decision of the Court of
Appeals dated May 23, 2006 and Resolution dated June 19, 2007 in the
consolidated cases CA-G.R. SP No. 83938 and CA-G.R. SP No. 84281
are AFFIRMED, with MODIFICATION as to the award of backwages.
Petitioner Continental Micronesia, Inc. is hereby ordered to pay Respondent
Joseph Basso's heirs: 1) separation pay equivalent to one (1) month pay for
every year of service, and 2) full backwages from January 31, 1996, the date
of his illegal dismissal, to October 2, 2002, the date of his compulsory
retirement age.
SO ORDERED.
 (Continental Micronesia, Inc. v. Basso, G.R. Nos. 178382-83, [September 23,
|||

2015], 770 PHIL 201-231)

G.R. No. 211588. September 9, 2015.]

 WORLD'S BEST GAS, INC., petitioner, vs. HENRY VITAL,
joined by his wife FLOSERFINA VITAL, respondents.

DECISION

PERLAS-BERNABE, J  : p

Before the Court is a petition for review on certiorari 1 filed by petitioner

World's Best Gas, Inc. (WBGI) assailing the Decision 2 dated September 30,
2013 and the Resolution 3 dated March 4, 2014 of the Court of Appeals (CA)
in CA-G.R. SP No. 123497, which affirmed the Decision 4 dated December
12, 2011 of the Regional Trial Court of Bataan, Branch 2 (RTC) in Civil Case
No. 8694 finding WBGI liable to respondent Henry Vital (Vital) for his unpaid
salaries and separation pay.
The Facts
Vital was one of the incorporators of WBGI, holding P500,000.00 worth
of shares of stocks therein. 5 As a separate business venture, Vital and his
wife, respondent Floserfina Vital (respondents), sourced Liquefied Petroleum
Gas (LPG) from WBGI and distributed the same through ERJ Enterprises
owned by them. 6 As of respondents' last statement of account, their
outstanding balance with WBGI for unpaid LPG amounted to
P923,843.59. 7
On January 6, 1999, Vital was appointed as Internal Auditor and
Personnel Manager by WBGI's President/CEO and continued to serve as
such until his mandatory retirement on September 25, 2003. 8 Upon his
retirement, WBGI's Board of Directors computed Vital's retirement benefits at
P82,500.00 by multiplying his P15,000.00 monthly pay by 5.5 years, which
was the number of years he served as Internal Auditor and Personnel
Manager. WBGI also agreed to acquire Vital's P500,000.00 shares of
stocks at par value. 9
After offsetting the P500,000.00 due from WBGI's acquisition of his
shares of stocks against ERJ Enterprises' P923,843.59 outstanding balance
to WBGI, Vital claimed that the unpaid salaries and separation pay due
him amounted to P845,000.00 and P250,000.00, respectively, leaving a net
amount of P671,156.41 payable to him. WBGI rejected Vital's claim and
contended that after offsetting, Vital actually owed it P369,156.19. 10
On January 4, 2006, Vital filed a complaint before the National Labor
Relations Commission (NLRC) — Regional Arbitration Branch III (RAB),
docketed as NLRC Case No. RAB-III-01-9671-06, for non-payment of
separation and retirement benefits, underpayment of salaries/wages and
13th month pay, illegal reduction of salary and benefits, and damages. 11
For its part, WBGI averred that the Labor Arbiter (LA) had no
jurisdiction over the complaint because Vital is not an employee, but a mere
incorporator and stockholder of WBGI, hence, no employer-employee
relationship exists between them. 12  AIDSTE

The LA Ruling
In a Decision 13 dated May 3, 2006, the LA found that the issues
between Vital and WBGI are intra-corporate in nature as they arose between
the relations of a stockholder and the corporation, and not from an employee
and employer relationship. 14 Thus, the LA dismissed the case for lack of
jurisdiction, 15 prompting Vital to file his complaint 16 for payment of unpaid
salaries, separation and retirement benefits, and damages on July 19, 2007
before the RTC, docketed as Civil Case No. 8694. 17
The RTC Ruling
In a Decision 18 dated December 12, 2011, the RTC, acting as a special
commercial court, oppositely found that Vital was an employee of WBGI and
thereby, upheld his claim of P845,000.00 and P250,000.00 in unpaid salaries
and separation pay. However, the RTC offset these amounts, including the
P500,000.00 due from WBGI's acquisition of Vital's shares of stocks, against
the P923,843.59 payable to WBGI from ERJ Enterprises, thus, awarding Vital
the net amount of P671,156.41, with legal interest from date of demand until
full payment, P50,000.00 as attorney's fees and costs of suit plus litigation
expenses. 19
The RTC ratiocinated that since the positions of Internal Auditor and
Personnel Manager were not provided for in WBGI's By-Laws, Vital was not a
corporate officer but an employee entitled to employment benefits. It also
maintained that it had jurisdiction to rule on the main intra-corporate
controversy, together with the question of damages and employment
benefits. 20
Aggrieved, WBGI elevated the case to the CA on appeal. 21
The CA Ruling
In a Decision 22 dated September 30, 2013, the CA dismissed the
appeal, agreeing with the RTC's finding that Vital was an employee of WGBI.
While the CA observed that the RTC's award of employment benefits to Vital
was improper, as the same was under the exclusive jurisdiction of the labor
arbiters, it still ruled on said claim, reasoning that it has the eventual authority
to review the labor courts' decision on the matter. 23
 WBGI filed a motion for reconsideration 24 which was, however, denied
in a Resolution 25 dated March 4, 2014; hence, the present petition.
The Issue before the Court
The main issue to be resolved is whether or not the CA erred in ruling
upon Vital's claim of P845,000.00 and P250,000.00 in unpaid salaries and
separation pay.
The Court's Ruling
The petition is partly meritorious.
At the outset, it should be pointed out that the instant case actually
involves three (3) distinct causes of action, namely, (1) Vital's claim for
P845,000.00 and P250,000.00 in unpaid salaries and separation pay; (2) the
P923,843.59 in arrearages payable to WBGI from ERJ Enterprises, which
was admitted by Vital but not claimed by WBGI; and (3) Vital's claim of
P500,000.00 due from WBGI's acquisition of Vital's shares of stocks. All of the
foregoing were threshed out by the RTC in its December 12, 2011 Decision,
and effectively upheld by the CA on appeal.  AaCTcI

However, the RTC's adjudication of the first cause of action was

improper since the same is one which arose from Vital and WBGI's employer-
employee relations, involving an amount exceeding P5,000.00, hence,
belonging to the jurisdiction of the labor arbiters pursuant to Article 217 of
the Labor Code:
Art. 217. Jurisdiction of the Labor Arbiters and the Commission. —
(a) Except as otherwise provided under this Code, the Labor
Arbiters shall have original and exclusive jurisdiction to hear and
decide, within thirty (30) calendar days after the submission of the case
by the parties for decision without extension, even in the absence of
stenographic notes, the following cases involving all workers, whether
agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those
cases that workers may file involving wages, rates of pay,
hours of work and other terms and conditions of
employment;
4. Claims for actual, moral, exemplary and other forms of
damages arising from the employer-employee relations;
5. Cases arising from any violation of Article 264 of this
Code, including questions involving the legality of strikes
and lockouts; and  acEHCD
 6. Except claims for Employees' Compensation, Social
Security, Medicare and maternity benefits, all other
claims arising from employer-employee relations,
including those of persons in domestic or household
service, involving an amount exceeding five
thousand pesos (P5,000.00) regardless of whether
accompanied with a claim for reinstatement.
xxx xxx xxx
Having no subject matter jurisdiction to resolve claims arising from
employer-employee relations, the RTC's ruling on Vital's claim of P845,000.00
and P250,000.00 in unpaid salaries and separation pay is, thus, null and void,
and therefore, cannot perpetuate even if affirmed on appeal, 26 rendering the
CA's ratiocination that it "has the eventual authority to review the labor courts'
decision on the matter" 27 direly infirm. As a result, WBGI's petition is
meritorious on this score. However, since the dismissal is grounded on lack of
jurisdiction, then the same should be considered as a dismissal without
prejudice. 28 As such, Vital may re-file 29 the same claim, including those
related thereto (e.g., moral and exemplary damages, and, attorney's
fees) before the proper labor tribunal.
Contrary to its lack of jurisdiction over claims arising from employer-
employee relations, the RTC has: (a) general jurisdiction to adjudicate on
the P923,843.59 in arrearages payable to WBGI from ERJ Enterprises,
which was admitted by Vital but not claimed by WBGI; 30 and (b) special
jurisdiction, as a special commercial court, to adjudicate on Vital's claim of
P500,000.00 from WBGI's acquisition of his shares of stocks. 31 Indeed,
even acting as a special commercial court, the RTC's general jurisdiction to
adjudicate on the first-mentioned claim is retained.
With the RTC's jurisdiction established over the above-mentioned
causes of action, Vital's claim of P500,000.00 due from WBGI's acquisition of
his shares of stocks should therefore be offset against the P923,843.59 in
arrearages payable to WBGI by ERJ Enterprises owned by respondents, as
prayed for by him. Hence, no amount can be adjudicated in Vital's favor, since
it is the respondents who, after due computation, would be left liable to WBGI
in the net amount of P423,843.59. This notwithstanding, WBGI cannot recover
this latter amount in this case since it never interposed a permissive
counterclaim therefor in its answer. 32 It is well-settled that courts cannot grant
a relief not prayed for in the pleadings or in excess of what is being sought by
the party. 33 WBGI may, however, opt to file a separate collection suit,
including those related thereto (e.g., moral and exemplary damages, and
attorney's fees), to recover such sum.
 WHEREFORE, the petition is PARTLY GRANTED. The Decision dated
September 30, 2013 and the Resolution dated March 4, 2014 of the Court of
Appeals in CA-G.R. SP No. 123497 are hereby SET ASIDE. A new one is
entered:
(a) DISMISSING respondent Henry Vital's (Vital) labor claims of
P845,000.00 and P250,000.00 in unpaid salaries and separation pay against
petitioner World's Best Gas, Inc.'s (WBGI), WITHOUT PREJUDICE as stated
in this Decision; and 
HSAcaE

(b) RECOGNIZING WBGI's liability to Vital in the amount of

P500,000.00 due from the acquisition of his shares of stocks. This amount is,
however, OFFSET against the P923,843.59 in arrearages payable to WBGI
by ERJ Enterprises owned by Vital and his wife, respondent Floserfina Vital,
leaving a net amount of P423,843.59, which WBGI may claim in a separate
case as stated in this Decision.
SO ORDERED.
 (World's Best Gas, Inc. v. Vital, G.R. No. 211588, [September 9, 2015], 769
|||

PHIL 558-566)

G.R. No. 201595. January 25, 2016.]

ALLAN M. MENDOZA, petitioner, vs. OFFICERS OF MANILA

WATER EMPLOYEES UNION (MWEU), namely, EDUARDO B.
BORELA, BUENAVENTURA QUEBRAL, ELIZABETH COMETA,
ALEJANDRO TORRES, AMORSOLO TIERRA, SOLEDAD
YEBAN, LUIS RENDON, VIRGINIA APILADO, TERESITA BOLO,
ROGELIO BARBERO, JOSE CASAÑAS, ALFREDO MAGA,
EMILIO FERNANDEZ, ROSITA BUENAVENTURA, ALMENIO
CANCINO, ADELA IMANA, MARIO MANCENIDO, WILFREDO
MANDILAG, ROLANDO MANLAPAZ, EFREN MONTEMAYOR,
NELSON PAGULAYAN, CARLOS VILLA, RIC BRIONES, and
CHITO BERNARDO, respondents.

DECISION
DEL CASTILLO, J  : p

This Petition for Review on Certiorari 1 assails the April 24, 2012

Decision 2 of the Court of Appeals (CA) which dismissed the Petition
for Certiorari 3 in CA-G.R. SP No. 115639.
Factual Antecedents
Petitioner was a member of the Manila Water Employees Union
(MWEU), a Department of Labor and Employment (DOLE)-registered labor
organization consisting of rank-and-file employees within Manila Water
Company (MWC). The respondents herein named — Eduardo B. Borela
(Borela), Buenaventura Quebral (Quebral), Elizabeth Cometa (Cometa),
Alejandro Torres (Torres), Amorsolo Tierra (Tierra), Soledad Yeban (Yeban),
Luis Rendon (Rendon), Virginia Apilado (Apilado), Teresita Bolo (Bolo),
Rogelio Barbero (Barbero), Jose Casañas (Casañas), Alfredo Maga (Maga),
Emilio Fernandez (Fernandez), Rosita Buenaventura (Buenaventura),
Almenio Cancino (Cancino), Adela Imana, Mario Mancenido (Mancenido),
Wilfredo Mandilag (Mandilag), Rolando Manlapaz (Manlapaz), Efren
Montemayor (Montemayor), Nelson Pagulayan, Carlos Villa, Ric Briones, and
Chito Bernardo — were MWEU officers during the period material to this
Petition, with Borela as President and Chairman of the MWEU Executive
Board, Quebral as First Vice-President and Treasurer, and Cometa as
Secretary. 4
In an April 11, 2007 letter, 5 MWEU through Cometa informed petitioner
that the union was unable to fully deduct the increased P200.00 union dues
from his salary due to lack of the required December 2006 check-off
authorization from him. Petitioner was warned that his failure to pay the union
dues would result in sanctions upon him. Quebral informed Borela, through a
May 2, 2007 letter, 6 that for such failure to pay the union dues, petitioner and
several others violated Section 1 (g), Article IX of the MWEU's Constitution
and By-Laws. 7 In turn, Borela referred the charge to the MWEU grievance
committee for investigation. HESIcT

On May 21, 2007, a notice of hearing was sent to petitioner, who

attended the scheduled hearing. On June 6, 2007, the MWEU grievance
committee recommended that petitioner be suspended for 30 days.
In a June 20, 2007 letter, 8 Borela informed petitioner and his co-
respondents of the MWEU Executive Board's "unanimous approval" 9 of the
grievance committee's recommendation and imposition upon them of a
penalty of 30 days suspension, effective June 25, 2007.
In a June 26, 2007 letter 10 to Borela, petitioner and his co-respondents
took exception to the imposition and indicated their intention to appeal the
same to the General Membership Assembly in accordance with Section 2 (g),
Article V of the union's Constitution and By-Laws, 11 which grants them the
right to appeal any arbitrary resolution, policy and rule promulgated by the
Executive Board to the General Membership Assembly. In a June 28, 2007
reply, 12 Borela denied petitioner's appeal, stating that the prescribed period
for appeal had expired.
Petitioner and his co-respondents sent another letter 13 on July 4, 2007,
reiterating their arguments and demanding that the General Membership
Assembly be convened in order that their appeal could be taken up. The letter
was not acted upon.
Petitioner was once more charged with non-payment of union dues,
and was required to attend an August 3, 2007 hearing. 14 Thereafter,
petitioner was again penalized with a 30-day suspension through an August
21, 2007 letter 15 by Borela informing petitioner of the Executive Board's
"unanimous approval" 16 of the grievance committee recommendation to
suspend him effective August 24, 2007, to which he submitted a written
reply, 17 invoking his right to appeal through the convening of the General
Membership Assembly. However, the respondents did not act on petitioner's
plea.
Meanwhile, MWEU scheduled an election of officers on September 14,
2007. Petitioner filed his certificate of candidacy for Vice-President, but he
was disqualified for not being a member in good standing on account of his
suspension.
On October 2, 2007, petitioner was charged with non-payment of union
dues for the third time. He did not attend the scheduled hearing. This time, he
was meted the penalty of expulsion from the union, per "unanimous
approval" 18 of the members of the Executive Board. His pleas for an appeal
to the General Membership Assembly were once more unheeded. 19
In 2008, during the freedom period and negotiations for a new collective
bargaining agreement (CBA) with MWC, petitioner joined another union, the
Workers Association for Transparency, Empowerment and Reform, All-
Filipino Workers Confederation (WATER-AFWC). He was elected union
President. Other MWEU members were inclined to join WATER-AFWC, but
MWEU director Torres threatened that they would not get benefits from the
new CBA. 20
The MWEU leadership submitted a proposed CBA which contained
provisions to the effect that in the event of retrenchment, non-MWEU
members shall be removed first, and that upon the signing of the CBA, only
MWEU members shall receive a signing bonus. 21
Ruling of the Labor Arbiter
 On October 13, 2008, petitioner filed a Complaint 22 against
respondents for unfair labor practices, damages, and attorney's fees before
the National Labor Relations Commission (NLRC), Quezon City, docketed as
NLRC Case No. NCR-10-14255-08. In his Position Paper and other written
submissions, 23 petitioner accused the respondents of illegal termination from
MWEU in connection with the events relative to his non-payment of union
dues; unlawful interference, coercion, and violation of the rights of MWC
employees to self-organization — in connection with the proposed CBA
submitted by MWEU leadership, which petitioner claims contained provisions
that discriminated against non-MWEU members. Petitioner prayed in his
Supplemental Position Paper that respondents be held guilty of unfair labor
practices and ordered to indemnify him moral damages in the amount of
P100,000.00, exemplary damages amounting to P50,000.00, and 10%
attorney's fees.
In their joint Position Paper and other pleadings, 24 respondents
claimed that the Labor Arbiter had no jurisdiction over the dispute, which is
intra-union in nature; that the Bureau of Labor Relations (BLR) was the proper
venue, in accordance with Article 226 of the Labor Code 25 and Section 1,
Rule XI of Department Order 40-03, series of 2003, of the DOLE; 26 and that
they were not guilty of unfair labor practices, discrimination, coercion or
restraint.
On May 29, 2009, Labor Arbiter Virginia T. Luyas-Azarraga issued her
Decision 27 which decreed as follows:
Indeed the filing of the instant case is still premature. Section 5,
Article X-Investigation Procedures and Appeal Process of the Union
Constitution and By-Laws provides that:
Section 5. Any dismissed and/or expelled member
shall have the rights to appeal to the Executive Board
within seven (7) days from the date of notice of the said
dismissal and/or expulsion, which in [turn] shall be
referred to the General Membership Assembly. In case of
an appeal, a simple majority of the decision of the
Executive Board is imperative. The same shall be
approved/disapproved by a majority vote of the general
membership assembly in a meeting duly called for the
purpose.  caITAC

On the basis of the foregoing, the parties shall exhaust first all
the administrative remedies before resorting to compulsory arbitration.
Thus, instant case is referred back to the Union for the General
Assembly to act or deliberate complainant's appeal on the decision of
the Executive Board.
 WHEREFORE PREMISES CONSIDERED, instant case is
referred back to the Union level for the General Assembly to act on
complainant's appeal.
SO ORDERED. 28
Ruling of the National Labor Relations Commission
Petitioner appealed before the NLRC, where the case was docketed as
NLRC LAC No. 07-001913-09. On March 15, 2010, the NLRC issued its
Decision, 29 declaring as follows:
Complainant 30 imputes serious error to the Labor Arbiter when
she decided as follows:

a. Referring back the subject case to the Union level for the
General Assembly to act on his appeal.

b. Not ruling that respondents are guilty of ULP as charged.

c. Not granting to complainant moral and exemplary damages and

attorney's fees.

Complainant, in support of his charges, claims that respondents

restrained or coerced him in the exercise of his right as a union
member in violation of paragraph "a", Article 249 of the Labor
Code,31 particularly, in denying him the explanation as to whether
there was observance of the proper procedure in the increase of the
membership dues from P100.00 to P200.00 per month. Further,
complainant avers that he was denied the right to appeal his
suspension and expulsion in accordance with the provisions of the
Union's Constitution and By-Laws. In addition, complainant claims that
respondents attempted to cause the management to discriminate
against the members of WATER-AFWC thru the proposed CBA.
Pertinent to the issue then on hand, the Labor Arbiter ordered
that the case be referred back to the Union level for the General
Assembly to act on complainant's appeal. Hence, these appeals.
After a careful look at all the documents submitted and a
meticulous review of the facts, We find that this Commission lacks the
jurisdictional competence to act on this case.
Article 217 of the Labor Code,32 as amended, specifically
enumerates the cases over which the Labor Arbiters and the
Commission have original and exclusive jurisdiction. A perusal of the
record reveals that the causes of action invoked by complainant do not
fall under any of the enumerations therein. Clearly, We have no
jurisdiction over the same.
 Moreover, pursuant to Section 1, Rule XI, as amended, DOLE
Department Order No. 40-03 in particular, Item A, paragraphs (h) and
(j) and Item B, paragraph (a)(3), respectively, provide:
"A. Inter-Intra-Union disputes shall include:
"(h) violation of or disagreements over any provision of
the Constitution and By-Laws of a Union or workers'
association.
"(j) violation of the rights and conditions of membership
in a Union or workers' association.
"B. Other Labor Relations disputes, not otherwise
covered by Article 217 of the Labor Code,shall include —
"3. a labor union and an individual who is not a member
of said union."
Clearly, the above-mentioned disputes and conflict fall under the
jurisdiction of the Bureau of Labor Relations, as these are inter/intra-
union disputes.
WHEREFORE, the decision of the Labor Arbiter a quo dated
May 29, 2009 is hereby declared NULL and VOID for being rendered
without jurisdiction and the instant complaint is DISMISSED.
SO ORDERED. 33
Petitioner moved for reconsideration, 34 but in a June 16, 2010
Resolution, 35 the motion was denied and the NLRC sustained its Decision.
Ruling of the Court of Appeals
In a Petition for Certiorari 36 filed with the CA and docketed as CA-G.R.
SP No. 115639, petitioner sought to reverse the NLRC Decision and be
awarded his claim for damages and attorney's fees on account of
respondents' unfair labor practices, arguing among others that his charge of
unfair labor practices is cognizable by the Labor Arbiter; that the fact that the
dispute is inter- or intra-union in nature cannot erase the fact that respondents
were guilty of unfair labor practices in interfering and restraining him in the
exercise of his right to self-organization as member of both MWEU and
WATER-AFWC, and in discriminating against him and other members through
the provisions of the proposed 2008 CBA which they drafted; that his failure to
pay the increased union dues was proper since the approval of said increase
was arrived at without observing the prescribed voting procedure laid down in
the Labor Code; that he is entitled to an award of damages and attorney's
fees as a result of respondents' illegal acts in discriminating against him; and
that in ruling the way it did, the NLRC committed grave abuse of discretion.  ICHDca

On April 24, 2012, the CA issued the assailed Decision containing the
following pronouncement:
 The petition lacks merit.
Petitioner's causes of action against MWEU are inter/intra-union
disputes cognizable by the BLR whose functions and jurisdiction are
largely confined to union matters, collective bargaining registry, and
labor education. Section 1, Rule XI of Department Order (D.O.) No. 40-
03, Series of 2003, of the Department of Labor and Employment
enumerates instances of inter/intra-union disputes, viz.:
Section 1. Coverage. — Inter/intra-union disputes
shall include:
xxx xxx xxx
(b) conduct of election of union and workers'
association officers/nullification of election of union and
workers' association officers;
(c) audit/accounts examination of union or
workers' association funds;
xxx xxx xxx
(g) validity/invalidity of impeachment/expulsion of
union and workers' association officers and members;
xxx xxx xxx
(j) violations of or disagreements over any
provision in a union or workers' association constitution
and by-laws;
xxx xxx xxx
(l) violations of the rights and conditions of union
or workers' association membership;
xxx xxx xxx
(n) such other disputes or conflicts involving the
rights to self-organization, union membership and
collective bargaining —

(1) between and among legitimate labor organizations;

(2) between and among members of a union or workers'

association.

In brief, "Inter-Union Dispute" refers to any conflict between and

among legitimate labor unions involving representation questions for
purposes of collective bargaining or to any other conflict or dispute
between legitimate labor unions. "Intra-Union Dispute" refers to any
conflict between and among union members, including grievances
arising from any violation of the rights and conditions of membership,
violation of or disagreement over any provision of the union's
constitution and by-laws, or disputes arising from chartering or
affiliation of union. On the other hand, the circumstances of unfair labor
practices (ULP) of a labor organization are stated in Article 249 of
the Labor Code,to wit:
Article 249. Unfair labor practices of labor organizations.
It shall be unlawful for labor organization, its officers,
agents, or representatives to commit any of the following
unfair labor practices:

(a) To restrain or coerce employees in the exercise of their right to

self-organization; Provided, That the labor organization
shall have the right to prescribe its own rules with respect
to the acquisition or retention of membership;

(b) To cause or attempt to cause an employer to discriminate

against an employee, including discrimination against an
employee with respect to whom membership in such
organization has been denied or terminated on any ground
other than the usual terms and conditions under which
membership or continuation of membership is made
available to other members;

xxx xxx xxx

Applying the aforementioned rules, We find that the issues

arising from petitioner's right to information on the increased
membership dues, right to appeal his suspension and expulsion
according to CBL provisions, and right to vote and be voted on are
essentially intra-union disputes; these involve violations of rights and
conditions of union membership. But his claim that a director of MWEU
warned that non-MWEU members would not receive CBA benefits is
an inter-union dispute. It is more of an "interference" by a rival union to
ensure the loyalty of its members and to persuade non-members to
join their union. This is not an actionable wrong because interfering in
the exercise of the right to organize is itself a function of self-
organizing. 37 As long as it does not amount to restraint or coercion, a
labor organization may interfere in the employees' right to self-
organization. 38 Consequently, a determination of validity or illegality of
the alleged acts necessarily touches on union matters, not ULPs, and
are outside the scope of the labor arbiter's jurisdiction.
As regards petitioner's other accusations, i.e., discrimination in
terms of meting out the penalty of expulsion against him alone, and
attempt to cause the employer, MWC, to discriminate against non-
MWEU members in terms of retrenchment or reduction of personnel,
and signing bonus, while We may consider them as falling within the
 concept of ULP under Article 249(a) and (b), still, petitioner's complaint
cannot prosper for lack of substantial evidence. Other than his bare
allegation, petitioner offered no proof that MWEU did not penalize
some union members who failed to pay the increased dues. On the
proposed discriminatory CBA provisions, petitioner merely attached the
pages containing the questioned provisions without bothering to reveal
the MWEU representatives responsible for the said proposal. Article
249 mandates that ". . . only the officers, members of the governing
boards, representatives or agents or members of labor associations or
organizations who have actually participated in, authorized or ratified
unfair labor practices shall be held criminally liable." Plain accusations
against all MWEU officers, without specifying their actual participation,
do not suffice. Thus, the ULP charges must necessarily fail.  TCAScE

In administrative and quasi-judicial proceedings, only substantial

evidence is necessary to establish the case for or against a party.
Substantial evidence is that amount of relevant evidence which a
reasonable mind might accept as adequate to justify a conclusion.
Petitioner failed to discharge the burden of proving, by substantial
evidence, the allegations of ULP in his complaint. The NLRC,
therefore, properly dismissed the case.
FOR THESE REASONS, the petition is DISMISSED.
SO ORDERED. 39
Thus, the instant Petition.
Issue
In an August 28, 2013 Resolution, 40 this Court resolved to give due
course to the Petition, which claims that the CA erred:

A. IN DECLARING THAT THE PRESENCE OF INTER/INTRA-UNION

CONFLICTS NEGATES THE COMPLAINT FOR UNFAIR LABOR
PRACTICES AGAINST A LABOR ORGANIZATION AND ITS
OFFICERS, AND IN AFFIRMING THAT THE NLRC PROPERLY
DISMISSED THE CASE FOR ALLEGED LACK OF
JURISDICTION.

B. IN NOT RULING THAT RESPONDENTS ARE GUILTY OF UNFAIR

LABOR PRACTICES UNDER ARTICLE 249(a) AND (b) OF
THE LABOR CODE.

C. IN DECLARING THAT THE THREATS MADE BY A UNION

OFFICER AGAINST MEMBERS OF A RIVAL UNION
IS (sic) MERELY AN "INTERFERENCE" AND DO NOT AMOUNT
TO "RESTRAINT" OR "COERCION".
 D. IN DECLARING THAT PETITIONER FAILED TO PRESENT
SUBSTANTIAL EVIDENCE IN PROVING RESPONDENTS'
SPECIFIC ACTS OF UNFAIR LABOR PRACTICES.

E. IN NOT RULING THAT RESPONDENTS ARE SOLIDARILY LIABLE

TO PETITIONER FOR MORAL AND EXEMPLARY DAMAGES,
AND ATTORNEY'S FEES. 41

Petitioner's Arguments
Praying that the assailed CA dispositions be set aside and that
respondents be declared guilty of unfair labor practices under Article 249 (a)
and (b) and adjudged liable for damages and attorney's fees as prayed for in
his complaint, petitioner maintains in his Petition and Reply 42 that
respondents are guilty of unfair labor practices which he clearly enumerated
and laid out in his pleadings below; that these unfair labor practices
committed by respondents fall within the jurisdiction of the Labor Arbiter; that
the Labor Arbiter, the NLRC, and the CA failed to rule on his accusation of
unfair labor practices and simply dismissed his complaint on the ground that
his causes of action are intra- or inter-union in nature; that admittedly, some of
his causes of action involved intra- or inter-union disputes, but other acts of
respondents constitute unfair labor practices; that he presented substantial
evidence to prove that respondents are guilty of unfair labor practices by
failing to observe the proper procedure in the imposition of the increased
monthly union dues, and in unduly imposing the penalties of suspension and
expulsion against him; that under the union's constitution and by-laws, he is
given the right to appeal his suspension and expulsion to the general
membership assembly; that in denying him his rights as a union member and
expelling him, respondents are guilty of malice and evident bad faith; that
respondents are equally guilty for violating and curtailing his rights to vote and
be voted to a position within the union, and for discriminating against non-
MWEU members; and that the totality of respondents' conduct shows that
they are guilty of unfair labor practices.
Respondent's Arguments
In their joint Comment, 43 respondents maintain that petitioner raises
issues of fact which are beyond the purview of a petition for review
on certiorari; that the findings of fact of the CA are final and conclusive; that
the Labor Arbiter, NLRC, and CA are one in declaring that there is no unfair
labor practices committed against petitioner; that petitioner's other allegations
fall within the jurisdiction of the BLR, as they refer to intra- or inter-union
disputes between the parties; that the issues arising from petitioner's right to
information on the increased dues, right to appeal his suspension and
expulsion, and right to vote and be voted upon are essentially intra-union in
nature; that his allegations regarding supposed coercion and restraint relative
to benefits in the proposed CBA do not constitute an actionable wrong; that all
of the acts questioned by petitioner are covered by Section 1, Rule XI of
Department Order 40-03, series of 2003 as intra-/inter-union disputes which
do not fall within the jurisdiction of the Labor Arbiter; that in not paying his
union dues, petitioner is guilty of insubordination and deserved the penalty of
expulsion; that petitioner failed to petition to convene the general assembly
through the required signature of 30% of the union membership in good
standing pursuant to Article VI, Section 2 (a) of MWEU's Constitution and By-
Laws or by a petition of the majority of the general membership in good
standing under Article VI, Section 3; and that for his failure to resort to said
remedies, petitioner can no longer question his suspension or expulsion and
avail of his right to appeal. 
cTDaEH

Our Ruling
The Court partly grants the Petition.
In labor cases, issues of fact are for the labor tribunals and the CA to
resolve, as this Court is not a trier of facts. However, when the conclusion
arrived at by them is erroneous in certain respects, and would result in
injustice as to the parties, this Court must intervene to correct the error. While
the Labor Arbiter, NLRC, and CA are one in their conclusion in this case, they
erred in failing to resolve petitioner's charge of unfair labor practices against
respondents.
It is true that some of petitioner's causes of action constitute intra-union
cases cognizable by the BLR under Article 226 of the Labor Code.
An intra-union dispute refers to any conflict between and among
union members, including grievances arising from any violation of the
rights and conditions of membership, violation of or disagreement over
any provision of the union's constitution and by-laws, or disputes
arising from chartering or disaffiliation of the union. Sections 1 and 2,
Rule XI of Department Order No. 40-03, Series of 2003 of the DOLE
enumerate the following circumstances as inter/intra-union
disputes . . . . 44
However, petitioner's charge of unfair labor practices falls within
the original and exclusive jurisdiction of the Labor Arbiters, pursuant to Article
217 of the Labor Code.In addition, Article 247 of the same Code provides that
"the civil aspects of all cases involving unfair labor practices, which may
include claims for actual, moral, exemplary and other forms of damages,
attorney's fees and other affirmative relief, shall be under the jurisdiction of the
Labor Arbiters."
 Unfair labor practices may be committed both by the employer under
Article 248 and by labor organizations under Article 249 of the Labor
Code,45 which provides as follows:
ART. 249. Unfair labor practices of labor organizations. — It
shall be unfair labor practice for a labor organization, its officers,
agents or representatives:
(a) To restrain or coerce employees in the exercise of their right
to self-organization. However, a labor organization shall have the right
to prescribe its own rules with respect to the acquisition or retention of
membership;
(b) To cause or attempt to cause an employer to discriminate
against an employee, including discrimination against an employee
with respect to whom membership in such organization has been
denied or to terminate an employee on any ground other than the
usual terms and conditions under which membership or continuation of
membership is made available to other members;
(c) To violate the duty, or refuse to bargain collectively with the
employer, provided it is the representative of the employees;
(d) To cause or attempt to cause an employer to pay or deliver
or agree to pay or deliver any money or other things of value, in the
nature of an exaction, for services which are not performed or not to be
performed, including the demand for fee for union negotiations;
(e) To ask for or accept negotiation or attorney's fees from
employers as part of the settlement of any issue in collective
bargaining or any other dispute; or
(f) To violate a collective bargaining agreement.
The provisions of the preceding paragraph notwithstanding, only
the officers, members of governing boards, representatives or agents
or members of labor associations or organizations who have actually
participated in, authorized or ratified unfair labor practices shall be held
criminally liable. (As amended by Batas Pambansa Bilang 130, August
21, 1981).
Petitioner contends that respondents committed acts constituting unfair
labor practices — which charge was particularly laid out in his pleadings, but
that the Labor Arbiter, the NLRC, and the CA ignored it and simply dismissed
his complaint on the ground that his causes of action were intra- or inter-union
in nature. Specifically, petitioner claims that he was suspended and expelled
from MWEU illegally as a result of the denial of his right to appeal his case to
the general membership assembly in accordance with the union's constitution
and by-laws. On the other hand, respondents counter that such charge is
intra-union in nature, and that petitioner lost his right to appeal when he failed
to petition to convene the general assembly through the required signature of
30% of the union membership in good standing pursuant to Article VI, Section
2 (a) of MWEU's Constitution and By-Laws or by a petition of the majority of
the general membership in good standing under Article VI, Section 3.
Under Article VI, Section 2 (a) of MWEU's Constitution and By-Laws,
the general membership assembly has the power to "review revise modify
affirm or repeal [sic] resolution and decision of the Executive Board and/or
committees upon petition of thirty percent (30%) of the Union in good
standing," 46 and under Section 2 (d), to "revise, modify, affirm or reverse all
expulsion cases." 47 Under Section 3 of the same Article, "[t]he decision of the
Executive Board may be appealed to the General Membership which by a
simple majority vote reverse the decision of said body. If the general
Assembly is not in session the decision of the Executive Board may be
reversed by a petition of the majority of the general membership in good
standing." 48 And, in Article X, Section 5, "[a]ny dismissed and/or expelled
member shall have the right to appeal to the Executive Board within seven
days from notice of said dismissal and/or expulsion which, in [turn] shall be
referred to the General membership assembly. In case of an appeal, a simple
majority of the decision of the Executive Board is imperative. The same shall
be approved/disapproved by a majority vote of the general membership
assembly in a meeting duly called for the purpose." 49 cSaATC

In regard to suspension of a union member, MWEU's Constitution and

By-Laws provides under Article X, Section 4 thereof that "[a]ny suspended
member shall have the right to appeal within three (3) working days from the
date of notice of said suspension. In case of an appeal a simple majority of
vote of the Executive Board shall be necessary to nullify the suspension."
Thus, when an MWEU member is suspended, he is given the right to
appeal such suspension within three working days from the date of notice of
said suspension, which appeal the MWEU Executive Board is obligated to act
upon by a simple majority vote. When the penalty imposed is expulsion, the
expelled member is given seven days from notice of said dismissal and/or
expulsion to appeal to the Executive Board, which is required to act by a
simple majority vote of its members. The Board's decision shall then be
approved/disapproved by a majority vote of the general membership
assembly in a meeting duly called for the purpose.
The documentary evidence is clear that when petitioner received
Borela's August 21, 2007 letter informing him of the Executive Board's
unanimous approval of the grievance committee recommendation to suspend
him for the second time effective August 24, 2007, he immediately and timely
filed a written appeal. However, the Executive Board — then consisting of
respondents Borela, Tierra, Bolo, Casañas, Fernandez, Rendon,
Montemayor, Torres, Quebral, Pagulayan, Cancino, Maga, Cometa,
Mancenido, and two others who are not respondents herein — did not act
thereon. Then again, when petitioner was charged for the third time and
meted the penalty of expulsion from MWEU by the unanimous vote of the
Executive Board, his timely appeal was again not acted upon by said board —
this time consisting of respondents Borela, Quebral, Tierra, Imana, Rendon,
Yeban, Cancino, Torres, Montemayor, Mancenido, Mandilag, Fernandez,
Buenaventura, Apilado, Maga, Barbero, Cometa, Bolo, and Manlapaz.
Thus, contrary to respondents' argument that petitioner lost his right to
appeal when he failed to petition to convene the general assembly through
the required signature of 30% of the union membership in good standing
pursuant to Article VI, Section 2 (a) of MWEU's Constitution and By-Laws or
by a petition of the majority of the general membership in good standing under
Article VI, Section 3, this Court finds that petitioner was illegally suspended for
the second time and thereafter unlawfully expelled from MWEU due to
respondents' failure to act on his written appeals. The required petition to
convene the general assembly through the required signature of 30% (under
Article VI, Section 2 [a]) or majority (under Article VI, Section 3) of the union
membership does not apply in petitioner's case; the Executive Board must
first act on his two appeals before the matter could properly be referred to the
general membership. Because respondents did not act on his two appeals,
petitioner was unceremoniously suspended, disqualified and deprived of his
right to run for the position of MWEU Vice-President in the September 14,
2007 election of officers, expelled from MWEU, and forced to join another
union, WATER-AFWC. For these, respondents are guilty of unfair labor
practices under Article 249 (a) and (b) — that is, violation of petitioner's right
to self-organization, unlawful discrimination, and illegal termination of his
union membership — which case falls within the original and exclusive
jurisdiction of the Labor Arbiters, in accordance with Article 217 of the Labor
Code.
The primary concept of unfair labor practices is stated in Article 247 of
the Labor Code,which states:
Article 247. Concept of unfair labor practice and procedure for
prosecution thereof. — Unfair labor practices violate the constitutional
right of workers and employees to self-organization, are inimical to the
legitimate interests of both labor and management, including their right
to bargain collectively and otherwise deal with each other in an
atmosphere of freedom and mutual respect, disrupt industrial peace
and hinder the promotion of healthy and stable labor-management
relations.
"In essence, [unfair labor practice] relates to the commission of acts
that transgress the workers' right to organize." 50 "[A]ll the prohibited acts
constituting unfair labor practice in essence relate to the workers' right to self-
organization." 51 "[T]he term unfair labor practice refers to that gamut of
offenses defined in the Labor Code which, at their core, violates the
constitutional right of workers and employees to self-organization." 52
Guaranteed to all employees or workers is the 'right to self-
organization and to form, join, or assist labor organizations of their own
choosing for purposes of collective bargaining.' This is made plain by
no less than three provisions of the Labor Code of the Philippines.
Article 243 of the Code provides as follows:
ART. 243. Coverage and employees' right to self-
organization. — All persons employed in commercial,
industrial and agricultural enterprises and in religious,
charitable, medical, or educational institutions whether
operating for profit or not, shall have the right to self-
organization and to form, join, or assist labor
organizations of their own choosing for purposes or
collective bargaining. Ambulant, intermittent and itinerant
workers, self-employed people, rural workers and those
without any definite employers may form labor
organizations for their mutual aid and protection. cHDAIS

Article 248 (a) declares it to be an unfair labor practice for an

employer, among others, to 'interfere with, restrain or coerce
employees in the exercise of their right to self-organization.' Similarly,
Article 249 (a) makes it an unfair labor practice for a labor organization
to 'restrain or coerce employees in the exercise of their rights to self-
organization . . .'
xxx xxx xxx
The right of self-organization includes the right to organize or
affiliate with a labor union or determine which of two or more unions in
an establishment to join, and to engage in concerted activities with co-
workers for purposes of collective bargaining through representatives
of their own choosing, or for their mutual aid and protection, i.e., the
protection, promotion, or enhancement of their rights and interests. 53
As members of the governing board of MWEU, respondents are
presumed to know, observe, and apply the union's constitution and by-laws.
Thus, their repeated violations thereof and their disregard of petitioner's rights
as a union member — their inaction on his two appeals which resulted in his
suspension, disqualification from running as MWEU officer, and subsequent
expulsion without being accorded the full benefits of due process — connote
willfulness and bad faith, a gross disregard of his rights thus causing untold
suffering, oppression and, ultimately, ostracism from MWEU. "Bad faith
implies breach of faith and willful failure to respond to plain and well
understood obligation." 54 This warrants an award of moral damages in the
amount of P100,000.00. Moreover, the Civil Code provides:
Art. 32. Any public officer or employee, or any private individual,
who directly or indirectly obstructs, defeats, violates or in any manner
impedes or impairs any of the following rights and liberties of another
person shall be liable to the latter for damages:
xxx xxx xxx
(12) The right to become a member of associations or societies
for purposes not contrary to law;
In Vital-Gozon v. Court of Appeals, 55 this Court declared, as follows:
Moral damages include physical suffering, mental anguish,
fright, serious anxiety, besmirched reputation, wounded feelings, moral
shock, social humiliation, and similar injury. They may be recovered if
they are the proximate result of the defendant's wrongful act or
omission. The instances when moral damages may be recovered
are, inter alia, 'acts and actions referred to in Articles 21, 26, 27, 28,
29, 30, 32, 34 and 35 of the Civil Code,' which, in turn, are found in the
Chapter on Human Relations of the Preliminary Title of the Civil Code..
..
Under the circumstances, an award of exemplary damages in the
amount of P50,000.00, as prayed for, is likewise proper. "Exemplary damages
are designed to permit the courts to mould behavior that has socially
deleterious consequences, and their imposition is required by public policy to
suppress the wanton acts of the offender." 56 This should prevent respondents
from repeating their mistakes, which proved costly for petitioner.
Under Article 2229 of the Civil Code,'[e]xemplary or corrective
damages are imposed, by way of example or correction for the public
good, in addition to the moral, temperate, liquidated or compensatory
damages.' As this court has stated in the past: 'Exemplary damages
are designed by our civil law to permit the courts to reshape behaviour
that is socially deleterious in its consequence by creating negative
incentives or deterrents against such behaviour.' 57
Finally, petitioner is also entitled to attorney's fees equivalent to 10 per
cent (10%) of the total award. The unjustified acts of respondents clearly
compelled him to institute an action primarily to vindicate his rights and protect
his interest. Indeed, when an employee is forced to litigate and incur
expenses to protect his rights and interest, he is entitled to an award of
attorney's fees. 58
WHEREFORE, the Petition is PARTIALLY GRANTED. The assailed
April 24, 2012 Decision of the Court of Appeals in CA-G.R. SP No. 115639 is
hereby MODIFIED, in that all of the respondents — except for Carlos Villa,
 Ric Briones, and Chito Bernardo — are declared guilty of unfair labor
practices and ORDERED TO INDEMNIFY petitioner Allan M. Mendoza the
amounts of P100,000.00 as and by way of moral damages, P50,000.00 as
exemplary damages, and attorney's fees equivalent to 10 per cent (10%) of
the total award.
SO ORDERED.
 (Mendoza v. Officers of Manila Water Employees Union, G.R. No. 201595,
|||

[January 25, 2016], 779 PHIL 96-122)

[G.R. No. 208986. January 13, 2016.]

HIJO RESOURCES CORPORATION, petitioner, vs. EPIFANIO

P. MEJARES, REMEGIO C. BALURAN, JR., DANTE SAYCON,
and CECILIO CUCHARO, represented by NAMABDJERA-
HRC, respondents.

DECISION

CARPIO, J  :p

The Case
This petition for review 1 assails the 29 August 2012 Decision 2 and the
13 August 2013 Resolution 3 of the Court of Appeals in CA-G.R. SP No.
04058-MIN. The Court of Appeals reversed and set aside the Resolutions
dated 29 June 2009 and 16 December 2009 of the National Labor Relations
Commission (NLRC) in NLRC No. MIC-03-000229-08 (RAB XI-09-00774-
2007), and remanded the case to the Regional Arbitration Branch, Region XI,
Davao City for further proceedings. 
ISHCcT

The Facts
Respondents Epifanio P. Mejares, Remegio C. Baluran, Jr., Dante
Saycon, and Cecilio Cucharo (respondents) were among the complainants,
represented by their labor union named "Nagkahiusang Mamumuo ng Bit,
Djevon, at Raquilla Farms sa Hijo Resources Corporation" (NAMABDJERA-
HRC), who filed with the NLRC an illegal dismissal case against petitioner
Hijo Resources Corporation (HRC).
 Complainants (which include the respondents herein) alleged that
petitioner HRC, formerly known as Hijo Plantation Incorporated (HPI), is the
owner of agricultural lands in Madum, Tagum, Davao del Norte, which were
planted primarily with Cavendish bananas. In 2000, HPI was renamed as
HRC. In December 2003, HRC's application for the conversion of its
agricultural lands into agri-industrial use was approved. The machineries and
equipment formerly used by HPI continued to be utilized by HRC.
Complainants claimed that they were employed by HPI as farm workers
in HPI's plantations occupying various positions as area harvesters, packing
house workers, loaders, or labelers. In 2001, complainants were absorbed by
HRC, but they were working under the contractor-growers: Buenaventura
Tano (Bit Farm); Djerame Pausa (Djevon Farm); and Ramon Q. Laurente
(Raquilla Farm). Complainants asserted that these contractor-growers
received compensation from HRC and were under the control of HRC. They
further alleged that the contractor-growers did not have their own
capitalization, farm machineries, and equipment.
On 1 July 2007, complainants formed their union NAMABDJERA-HRC,
which was later registered with the Department of Labor and Employment
(DOLE). On 24 August 2007, NAMABDJERA-HRC filed a petition for
certification election before the DOLE.
When HRC learned that complainants formed a union, the three
contractor-growers filed with the DOLE a notice of cessation of business
operations. In September 2007, complainants were terminated from their
employment on the ground of cessation of business operations by the
contractor-growers of HRC. On 19 September 2007, complainants,
represented by NAMABDJERA-HRC, filed a case for unfair labor practices,
illegal dismissal, and illegal deductions with prayer for moral and exemplary
damages and attorney's fees before the NLRC.
On 19 November 2007, DOLE Med-Arbiter Lito A. Jasa issued an
Order, 4 dismissing NAMABDJERA-HRC's petition for certification election on
the ground that there was no employer-employee relationship between
complainants (members of NAMABDJERA-HRC) and HRC. Complainants did
not appeal the Order of Med-Arbiter Jasa but pursued the illegal dismissal
case they filed.
On 4 January 2008, HRC filed a motion to inhibit Labor Arbiter Maria
Christina S. Sagmit and moved to dismiss the complaint for illegal dismissal.
The motion to dismiss was anchored on the following arguments: (1) Lack of
jurisdiction under the principle of res judicata; and (2) The Order of the Med-
Arbiter finding that complainants were not employees of HRC, which
complainants did not appeal, had become final and executory.
 The Labor Arbiter's Ruling
On 5 February 2008, Labor Arbiter Sagmit denied the motion to inhibit.
Labor Arbiter Sagmit likewise denied the motion to dismiss in an Order dated
12 February 2008. Labor Arbiter Sagmit held that res judicata does not apply.
Citing the cases of Manila Golf & Country Club, Inc. v. IAC 5 and Sandoval
Shipyards, Inc. v. Pepito, 6 the Labor Arbiter ruled that the decision of the
Med-Arbiter in a certification election case, by the nature of that proceedings,
does not foreclose further dispute between the parties as to the existence or
non-existence of employer-employee relationship between them. Thus, the
finding of Med-Arbiter Jasa that no employment relationship exists between
HRC and complainants does not bar the Labor Arbiter from making his own
independent finding on the same issue. The non-litigious nature of the
proceedings before the Med-Arbiter does not prevent the Labor Arbiter from
hearing and deciding the case. Thus, Labor Arbiter Sagmit denied the motion
to dismiss and ordered the parties to file their position papers.
HRC filed with the NLRC a petition for certiorari with a prayer for
temporary restraining order, seeking to nullify the 5 February 2008 and 12
February 2008 Orders of Labor Arbiter Sagmit.
The Ruling of the NLRC
The NLRC granted the petition, holding that Labor Arbiter Sagmit
gravely abused her discretion in denying HRC's motion to dismiss. The NLRC
held that the Med-Arbiter Order dated 19 November 2007 dismissing the
certification election case on the ground of lack of employer-employee
relationship between HRC and complainants (members of NAMABDJERA-
HRC) constitutes res judicata under the concept of conclusiveness of
judgment, and thus, warrants the dismissal of the case. The NLRC ruled that
the Med-Arbiter exercises quasi-judicial power and the Med-Arbiter's
decisions and orders have, upon their finality, the force and effect of a final
judgment within the purview of the doctrine of res judicata.
On the issue of inhibition, the NLRC found it moot and academic in view
of Labor Arbiter Sagmit's voluntary inhibition from the case as per Order dated
11 March 2009.
The Ruling of the Court of Appeals
The Court of Appeals found the ruling in the Sandoval case more
applicable in this case. The Court of Appeals noted that the Sandoval case,
which also involved a petition for certification election and an illegal dismissal
case filed by the union members against the alleged employer, is on all fours
with this case. The issue in Sandoval on the effect of the Med-Arbiter's
findings as to the existence of employer-employee relationship is the very
same issue raised in this case. On the other hand, the case of Chris
Garments Corp. v. Hon. Sto. Tomas 7 cited by the NLRC, which involved
three petitions for certification election filed by the same union, is of a different
factual milieu.
The Court of Appeals held that the certification proceedings before the
Med-Arbiter are non-adversarial and merely investigative. On the other hand,
under Article 217 of the Labor Code, the Labor Arbiter has original and
exclusive jurisdiction over illegal dismissal cases. Although the proceedings
before the Labor Arbiter are also described as non-litigious, the Court of
Appeals noted that the Labor Arbiter is given wide latitude in ascertaining the
existence of employment relationship. Thus, unlike the Med-Arbiter, the Labor
Arbiter may conduct clarificatory hearings and even avail of ocular inspection
to ascertain facts speedily.
Hence, the Court of Appeals concluded that the decision in a
certification election case does not foreclose further dispute as to the
existence or non-existence of an employer-employee relationship between
HRC and the complainants.
On 29 August 2012, the Court of Appeals promulgated its Decision, the
dispositive portion of which reads:
WHEREFORE, the petition is hereby GRANTED and the
assailed Resolutions dated June 29, 2009 and December 16, 2009 of
the National Labor Relations Commission are hereby REVERSED
AND SET ASIDE. Let NLRC CASE No. RAB-XI-09-00774-0707 be
remanded to the Regional Arbitration Branch, Region XI, Davao City
for further proceedings.
SO ORDERED. 8
The Issue
Whether the Court of Appeals erred in setting aside the NLRC ruling
and remanding the case to the Labor Arbiter for further proceedings.
The Ruling of the Court
We find the petition without merit.
There is no question that the Med-Arbiter has the authority to determine
the existence of an employer-employee relationship between the parties in a
petition for certification election. As held in M.Y. San Biscuits, Inc. v. Acting
Sec. Laguesma: 9
Under Article 226 of the Labor Code, as amended, the Bureau
of Labor Relations (BLR), of which the med-arbiter is an officer, has
the following jurisdiction —
"ART. 226. Bureau of Labor Relations. — The
Bureau of Labor Relations and the Labor Relations
 Division[s] in the regional offices of the Department of
Labor shall have original and exclusive authority to act, at
their own initiative or upon request of either or both
parties, on all inter-union and intra-union conflicts, and all
disputes, grievances or problems arising from or
affecting labor-management relations in all workplaces
whether agricultural or non-agricultural, except those
arising from the implementation or interpretation of
collective bargaining agreements which shall be the
subject of grievance procedure and/or voluntary
arbitration.
The Bureau shall have fifteen (15) working days to
act on labor cases before it, subject to extension by
agreement of the parties." (Italics supplied)
From the foregoing, the BLR has the original and exclusive
jurisdiction to inter alia, decide all disputes, grievances or problems
arising from or affecting labor-management relations in all workplaces
whether agricultural or non-agricultural. Necessarily, in the exercise of
this jurisdiction over labor-management relations, the med-arbiter has
the authority, original and exclusive, to determine the existence of an
employer-employee relationship between the parties.
Apropos to the present case, once there is a determination as to
the existence of such a relationship, the med-arbiter can then decide
the certification election case. As the authority to determine the
employer-employee relationship is necessary and indispensable in the
exercise of jurisdiction by the med-arbiter, his finding thereon may only
be reviewed and reversed by the Secretary of Labor who exercises
appellate jurisdiction under Article 259 of the Labor Code, as
amended, which provides —
"ART. 259. Appeal from certification election
orders. — Any party to an election may appeal the order
or results of the election as determined by the Med-
Arbiter directly to the Secretary of Labor and Employment
on the ground that the rules and regulations or parts
thereof established by the Secretary of Labor and
Employment for the conduct of the election have been
violated. Such appeal shall be decided within fifteen (15)
calendar days." 10
In this case, the Med-Arbiter issued an Order dated 19 November 2007,
dismissing the certification election case because of lack of employer-
employee relationship between HRC and the members of the respondent
union. The order dismissing the petition was issued after the members of the
respondent union were terminated from their employment in September 2007,
which led to the filing of the illegal dismissal case before the NLRC on 19
September 2007. Considering their termination from work, it would have been
futile for the members of the respondent union to appeal the Med-Arbiter's
order in the certification election case to the DOLE Secretary. Instead, they
pursued the illegal dismissal case filed before the NLRC.
The Court is tasked to resolve the issue of whether the Labor Arbiter, in
the illegal dismissal case, is bound by the ruling of the Med-Arbiter regarding
the existence or non-existence of employer-employee relationship between
the parties in the certification election case. 
CAacTH

The Court rules in the negative. As found by the Court of Appeals, the
facts in this case are very similar to those in the Sandoval case, which also
involved the issue of whether the ruling in a certification election case on the
existence or non-existence of an employer-employee relationship operates
as res judicata in the illegal dismissal case filed before the NLRC.
In Sandoval, the DOLE Undersecretary reversed the finding of the Med-
Arbiter in a certification election case and ruled that there was no employer-
employee relationship between the members of the petitioner union and
Sandoval Shipyards, Inc. (SSI), since the former were employees of the
subcontractors. Subsequently, several illegal dismissal cases were filed by
some members of the petitioner union against SSI. Both the Labor Arbiter and
the NLRC ruled that there was no employer-employee relationship between
the parties, citing the resolution of the DOLE Undersecretary in the
certification election case. The Court of Appeals reversed the NLRC ruling
and held that the members of the petitioner union were employees of SSI. On
appeal, this Court affirmed the appellate court's decision and ruled that the
Labor Arbiter and the NLRC erred in relying on the pronouncement of the
DOLE Undersecretary that there was no employer-employee relationship
between the parties. The Court cited the ruling in the Manila Golf 11 case that
the decision in a certification election case, by the very nature of that
proceeding, does not foreclose all further dispute between the parties as to
the existence or non-existence of an employer-employee relationship between
them.
This case is different from the Chris Garments case cited by the NLRC
where the Court held that the matter of employer-employee relationship has
been resolved with finality by the DOLE Secretary, whose factual findings
were not appealed by the losing party. As mentioned earlier, the Med-
Arbiter's order in this case dismissing the petition for certification,
election on the basis of non-existence of employer-employee
relationship was issued after the members of the respondent union were
dismissed from their employment. The purpose of a petition for certification
election is to determine which organization will represent the employees in
their collective bargaining with the employer. 12 The respondent union,
without its member-employees, was thus stripped of its personality to
 challenge the Med-Arbiter's decision in the certification election case.
Thus, the members of the respondent union were left with no option but
to pursue their illegal dismissal case filed before the Labor Arbiter. To
dismiss the illegal dismissal case filed before the Labor Arbiter on the basis of
the pronouncement of the Med-Arbiter in the certification election case that
there was no employer-employee relationship between the parties, which the
respondent union could not even appeal to the DOLE Secretary because of
the dismissal of its members, would be tantamount to denying due process to
the complainants in the illegal dismissal case. This, we cannot allow.
WHEREFORE, we DENY the petition. We AFFIRM the 29 August 2012
Decision and the 13 August 2013 Resolution of the Court of Appeals in CA-
G.R. SP No. 04058-MIN.
SO ORDERED.
 (Hijo Resources Corp. v. Mejares, G.R. No. 208986, [January 13, 2016], 778
|||

PHIL 344-354)

G.R. No. 202961. February 4, 2015.]

EMER MILAN, RANDY MASANGKAY, WILFREDO JAVIER,

RONALDO DAVID, BONIFACIO MATUNDAN, NORA
MENDOZA, et al., petitioners, vs. NATIONAL LABOR
RELATIONS COMMISSION, SOLID MILLS, INC., and/or PHILIP
ANG, respondents.

DECISION

LEONEN, J  : p

An employer is allowed to withhold terminal pay and benefits pending the

employee's return of its properties.
Petitioners are respondent Solid Mills, Inc.'s (Solid Mills)
employees. 1 They are represented by the National Federation of Labor Unions
(NAFLU), their collective bargaining agent. 2
As Solid Mills' employees, petitioners and their families were allowed to
occupy SMI Village, a property owned by Solid Mills. 3 According to Solid Mills,
this was "[o]ut of liberality and for the convenience of its employees . . . [and] on
the condition that the employees . . . would vacate the premises anytime the
Company deems fit." 4
In September 2003, petitioners were informed that effective October 10,
2003, Solid Mills would cease its operations due to serious business
losses. 5 NAFLU recognized Solid Mills' closure due to serious business losses in
the memorandum of agreement dated September 1, 2003. 6 The memorandum
of agreement provided for Solid Mills' grant of separation pay less
accountabilities, accrued sick leave benefits, vacation leave benefits, and 13th
month pay to the employees. 7 Pertinent portions of the agreement provide:
WHEREAS, the COMPANY has incurred substantial financial
losses and is currently experiencing further severe financial losses;
WHEREAS, in view of such irreversible financial losses,
the COMPANY will cease its operations on October 10, 2003;
WHEREAS, all employees of the COMPANY on account of
irreversible financial losses, will be dismissed from employment effective
October 10, 2003;
In view thereof, the parties agree as follows:
1. That UNION acknowledges that the COMPANY is experiencing
severe financial losses and as a consequence of which,
management is constrained to cease the company's
operations.
2. The UNION acknowledges that under Article 283 of the Labor
Code,separation pay is granted to employees who are
dismissed due to closures or cessation of operations NOT
DUE to serious business losses.
3. The UNION acknowledges that in view of the serious business
losses the Company has been experiencing as seen in
their audited financial statements, employees ARE NOT
granted separation benefits under the law.
4. The COMPANY, by way of goodwill and in the spirit of
generosity agrees to grant financial assistance less
accountabilities to members of the Union based on
length of service to be computed as follows: (Italics in this
paragraph supplied)
 Number of days — 12.625 for every year of service
5. In view of the above, the members of the UNION will receive
such financial assistance on an equal monthly installments
basis based on the following schedule:
  First Check due on January 5, 2004 and every 5th of the
month thereafter until December 5, 2004.
6. The COMPANY commits to pay any accrued benefits the
Union members are entitled to, specifically those arising
from sick and vacation leave benefits and 13th month pay,
less accountabilities based on the following schedule:
 One Time Cash Payment to be distributed anywhere
from. . . .
xxx xxx xxx
8. The foregoing agreement is entered into with full knowledge by
the parties of their rights under the law and they hereby
bind themselves not to conduct any concerted action of
whatsoever kind, otherwise the grant of financial
assistance as discussed above will be
withheld. 8 (Emphasis in the original) 
DacASC

Solid Mills filed its Department of Labor and Employment termination

report on September 2, 2003. 9
Later, Solid Mills, through Alfredo Jingco, sent to petitioners individual
notices to vacate SMI Village. 10
Petitioners were no longer allowed to report for work by October 10,
2003. 11 They were required to sign a memorandum of agreement with release
and quitclaim before their vacation and sick leave benefits, 13th month pay, and
separation pay would be released. 12 Employees who signed the memorandum
of agreement were considered to have agreed to vacate SMI Village, and to the
demolition of the constructed houses inside as condition for the release of their
termination benefits and separation pay. 13 Petitioners refused to sign the
documents and demanded to be paid their benefits and separation pay. 14
Hence, petitioners filed complaints before the Labor Arbiter for alleged
non-payment of separation pay, accrued sick and vacation leaves, and 13th
month pay. 15 They argued that their accrued benefits and separation pay should
not be withheld because their payment is based on company policy and
practice. 16 Moreover, the 13th month pay is based on law,
specifically, Presidential Decree No. 851. 17 Their possession of Solid Mills
property is not an accountability that is subject to clearance procedures. 18 They
had already turned over to Solid Mills their uniforms and equipment when Solid
Mills ceased operations. 19
On the other hand, Solid Mills argued that petitioners' complaint was
premature because they had not vacated its property. 20
 The Labor Arbiter ruled in favor of petitioners. 21 According to the Labor
Arbiter, Solid Mills illegally withheld petitioners' benefits and separation
pay. 22 Petitioners' right to the payment of their benefits and separation pay was
vested by law and contract. 23 The memorandum of agreement dated September
1, 2003 stated no condition to the effect that petitioners must vacate Solid Mills'
property before their benefits could be given to them. 24 Petitioners' possession
should not be construed as petitioners' "accountabilities" that must be cleared
first before the release of benefits. 25 Their possession "is not by virtue of any
employer-employee relationship." 26 It is a civil issue, which is outside the
jurisdiction of the Labor Arbiter. 27
The dispositive portion of the Labor Arbiter's decision reads:
WHEREFORE, premises considered, judgment is
entered ORDERING respondents SOLID MILLS, INC. and/or PHILIP
ANG (President), in solido to pay the remaining 21 complainants:
1) 19 of which, namely EMER MILAN, RAMON
MASANGKAY, ALFREDO JAVIER, RONALDO DAVID,
BONIFACIO MATUNDAN, NORA MENDOZA, MYRNA IGCAS,
RAUL DE LAS ALAS, RENATO ESTOLANO, REX S.
DIMAFELIX, MAURA MILAN, JESSICA BAYBAYON, ALFREDO
MENDOZA, ROBERTO IGCAS, ISMAEL MATA, CARLITO
DAMIAN, TEODORA MAHILOM, MARILOU LINGA, RENATO
LINGA their separation pay of 12.625 days' pay per year of
service, pro-rated 13th month pay for 2003 and accrued vacation
and sick leaves, plus 12% interest p.a. from date of filing of the
lead case/judicial demand on 12/08/03 until actual payment
and/or finality;
2) the remaining 2 of which, complainants CLEOPATRA
ZACARIAS, as she already received on 12/19/03 her accrued
13th month pay for 2003, accrued VL/SL total amount of
P15,435.16, likewise, complainant Jerry L. Sesma as he already
received his accrued 13th month pay for 2003, SL/VL in the total
amount of P10,974.97, shall be paid only their separation pay of
12.625 days' pay per year of service but also with 12% interest
p.a. from date of filing of the lead case/judicial demand on
12/08/03 until actual payment and/or finality, which computation
as of date, amount to as shown in the attached computation
sheet.
3) Nine (9) individual complaints viz., of Maria Agojo, Joey
Suarez, Ronaldo Vergara, Ronnie Vergara, Antonio R. Dulo, Sr.,
Bryan D. Durano, Silverio P. Durano, Sr., Elizabeth Duarte and
Purificacion Malabanan are DISMISSED WITH PREJUDICE due
to amicable settlement, whereas, that of [RONIE ARANAS],
[EMILITO NAVARRO], [NONILON PASCO], [GENOVEVA
 PASCO], [OLIMPIO A. PASCO] are DISMISSED WITHOUT
PREJUDICE, for lack of interest and/or failure to prosecute.
The Computation and Examination unit is directed to cause
the computation of the award in Pars. 2 and 3
above. 28 (Emphasis in the original)
Solid Mills appealed to the National Labor Relations Commission. 29 It
prayed for, among others, the dismissal of the complaints against it and the
reversal of the Labor Arbiter's decision. 30
The National Labor Relations Commission affirmed paragraph 3 of the
Labor Arbiter's dispositive portion, but reversed paragraphs 1 and 2. Thus:
WHEREFORE, the Decision of Labor Arbiter Renaldo O.
Hernandez dated 10/17/05 is AFFIRMED in so far as par. 3 thereof is
concerned but modified in that paragraphs 1 and 2 thereof are
REVERSED and SET ASIDE. Accordingly, the following complainants,
namely: Emir Milan, Ramon Masangkay, Alfredo Javier, Ronaldo David,
Bonifacio Matundan, Nora Mendoza, Myrna Igcas, Raul De Las Alas,
Renato Estolano, Rex S. Dimaf[e]lix, Maura Milan, Jessica Baybayon,
Alfredo Mendoza, Roberto Igcas, Cleopatra Zacarias and Jerry L.
Sesma's monetary claims in the form of separation pay, accrued 13th
month pay for 2003, accrued vacation and sick leave pays are held in
abeyance pending compliance of their accountabilities to respondent
company by turning over the subject lots they respectively occupy at SMI
Village Sucat Muntinlupa City, Metro Manila to herein respondent
company. 31 CAacTH

The National Labor Relations Commission noted that complainants Marilou

Linga, Renato Linga, Ismael Mata, and Carlito Damian were already paid their
respective separation pays and benefits. 32 Meanwhile, Teodora Mahilom already
retired long before Solid Mills' closure. 33 She was already given her retirement
benefits. 34
The National Labor Relations Commission ruled that because of
petitioners' failure to vacate Solid Mills' property, Solid Mills was justified in
withholding their benefits and separation pay. 35 Solid Mills granted the
petitioners the privilege to occupy its property on account of petitioners'
employment. 36 It had the prerogative to terminate such privilege. 37 The
termination of Solid Mills and petitioners' employer-employee relationship made it
incumbent upon petitioners to turn over the property to Solid Mills. 38
Petitioners filed a motion for partial reconsideration on October 18,
2010, 39 but this was denied in the November 30, 2010 resolution. 40
 Petitioners, thus, filed a petition for certiorari 41 before the Court of Appeals
to assail the National Labor Relations Commission decision of August 31, 2010
and resolution of November 30, 2010. 42
On January 31, 2012, the Court of Appeals issued a decision dismissing
petitioners' petition, 43 thus:
WHEREFORE, the petition is hereby ordered DISMISSED. 44
The Court of Appeals ruled that Solid Mills' act of allowing its employees to
make temporary dwellings in its property was a liberality on its part. It may be
revoked any time at its discretion. 45 As a consequence of Solid Mills' closure and
the resulting termination of petitioners, the employer-employee relationship
between them ceased to exist. There was no more reason for them to stay in
Solid Mills' property. 46 Moreover, the memorandum of agreement between Solid
Mills and the union representing petitioners provided that Solid Mills' payment of
employees' benefits should be "less accountabilities." 47
On petitioners' claim that there was no evidence that Teodora Mahilom
already received her retirement pay, the Court of Appeals ruled that her
complaint filed before the Labor Arbiter did not include a claim for retirement pay.
The issue was also raised for the first time on appeal, which is not allowed. 48 In
any case, she already retired before Solid Mills ceased its operations. 49
The Court of Appeals agreed with the National Labor Relations
Commission's deletion of interest since it found that Solid Mills' act of withholding
payment of benefits and separation pay was proper. Petitioners' terminal benefits
and pay were withheld because of petitioners' failure to vacate Solid Mills'
property. 50
Finally, the Court of Appeals noted that Carlito Damian already received
his separation pay and benefits. 51 Hence, he should no longer be awarded these
claims. 52
In the resolution promulgated on July 16, 2012, the Court of Appeals
denied petitioners' motion for reconsideration. 53
Petitioners raise in this petition the following errors:
I
WHETHER OR NOT THE HONORABLE COURT OF APPEALS
COMMITTED REVERSIBLE ERROR WHEN IT RULED THAT
PAYMENT OF THE MONETARY CLAIMS OF PETITIONERS SHOULD
BE HELD IN ABEYANCE PENDING COMPLIANCE OF THEIR
ACCOUNTABILITIES TO RESPONDENT SOLID MILLS BY TURNING
OVER THE SUBJECT LOTS THEY RESPECTIVELY OCCUPY AT SMI
VILLAGE, SUCAT, MUNTINLUPA CITY.
 II
WHETHER OR NOT THE HONORABLE COURT OF APPEALS
COMMITTED REVERSIBLE ERROR WHEN IT UPHELD THE RULING
OF THE NLRC DELETING THE INTEREST OF 12% PER ANNUM
IMPOSED BY THE HONORABLE LABOR ARBITER HERNANDEZ ON
THE AMOUNT DUE FROM THE DATE OF FILING OF THE LEAD
CASE/JUDICIAL DEMAND ON DECEMBER 8, 2003 UNTIL ACTUAL
PAYMENT AND/OR FINALITY.
III
WHETHER OR NOT THE HONORABLE COURT OF APPEALS
COMMITTED REVERSIBLE ERROR WHEN IT UPHELD THE RULING
OF THE NLRC DENYING THE CLAIM OF TEODORA MAHILOM FOR
PAYMENT OF RETIREMENT BENEFITS DESPITE LACK OF ANY
EVIDENCE THAT SHE RECEIVED THE SAME.
IV
WHETHER OR NOT PETITIONER CARLITO DAMIAN IS
ENTITLED TO HIS MONETARY BENEFITS FROM RESPONDENT
SOLID MILLS. 54
Petitioners argue that respondent Solid Mills and NAFLU's memorandum
of agreement has no provision stating that benefits shall be paid only upon return
of the possession of respondent Solid Mills' property. 55 It only provides that the
benefits shall be "less accountabilities," which should not be interpreted to
include such possession. 56 The fact that majority of NAFLU's members were not
occupants of respondent Solid Mills' property is evidence that possession of the
property was not contemplated in the agreement. 57 "Accountabilities" should be
interpreted to refer only to accountabilities that were incurred by petitioners while
they were performing their duties as employees at the worksite. 58 Moreover,
applicable laws, company practice, or policies do not provide that 13th month
pay, and sick and vacation leave pay benefits, may be withheld pending
satisfaction of liabilities by the employee. 59
Petitioners also point out that the National Labor Relations Commission
and the Court of Appeals have no jurisdiction to declare that petitioners' act of
withholding possession of respondent Solid Mills' property is illegal. 60 The
regular courts have jurisdiction over this issue. 61 It is independent from the issue
of payment of petitioners' monetary benefits. 62
For these reasons, and because, according to petitioners, the amount of
monetary award is no longer in question, petitioners are entitled to 12% interest
per annum. 63
Petitioners also argue that Teodora Mahilom and Carlito Damian are
entitled to their claims. They insist that Teodora Mahilom did not receive her
retirement benefits and that Carlito Damian did not receive his separation
benefits. 64
Respondents Solid Mills and Philip Ang, in their joint comment, argue that
petitioners' failure to turn over respondent Solid Mills' property "constituted an
unsatisfied accountability" for which reason "petitioners' benefits could rightfully
be withheld." 65 The term "accountability" should be given its natural and ordinary
meaning. 66 Thus, it should be interpreted as "a state of being liable or
responsible," or "obligation." 67 Petitioners' differentiation between
accountabilities incurred while performing jobs at the worksite and
accountabilities incurred outside the worksite is baseless because the agreement
with NAFLU merely stated "accountabilities," without qualification. 68  DHIETc

On the removal of the award of 12% interest per annum, respondents

argue that such removal was proper since respondent Solid Mills was justified in
withholding the monetary claims. 69
Respondents argue that Teodora Mahilom had no more cause of action for
retirement benefits claim. 70 She had already retired more than a decade before
Solid Mills' closure. She also already received her retirement benefits in
1991. 71 Teodora Mahilom's claim was also not included in the complaint filed
before the Labor Arbiter. It was improper to raise this claim for the first time on
appeal. In any case, Teodora Mahilom's claim was asserted long after the three-
year prescriptive period provided in Article 291 of the Labor Code. 72
Lastly, according to respondents, it would be unjust if Carlito Damian
would be allowed to receive monetary benefits again, which he, admittedly,
already received from Solid Mills. 73

The National Labor Relations

Commission may preliminarily
determine issues related to rights
arising from an employer-employee
relationship

The National Labor Relations Commission has jurisdiction to determine,

preliminarily, the parties' rights over a property, when it is necessary to determine
an issue related to rights or claims arising from an employer-employee
relationship.
Article 217 provides that the Labor Arbiter, in his or her original jurisdiction,
and the National Labor Relations Commission, in its appellate jurisdiction, may
determine issues involving claims arising from employer-employee relations.
Thus:
ART. 217. JURISDICTION OF LABOR ARBITERS AND THE
COMMISSION. — (1) Except as otherwise provided under this Code, the
Labor Arbiters shall have original and exclusive jurisdiction to hear and
decide within thirty (30) calendar days after the submission of the case
by the parties for decision without extension, even in the absence of
stenographic notes, the following cases involving workers, whether
agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;  CaATDE

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 (P5,000.00),
regardless of whether accompanied with a claim for
reinstatement.
(2) The Commission shall have exclusive appellate jurisdiction
over all cases decided by Labor Arbiters. (Emphasis supplied)
Petitioners' claim that they have the right to the immediate release of their
benefits as employees separated from respondent Solid Mills is a question
arising from the employer-employee relationship between the parties.
Claims arising from an employer-employee relationship are not limited to
claims by an employee. Employers may also have claims against the employee,
which arise from the same relationship.
In Bañez v. Valdevilla, 74 this court ruled that Article 217 of the Labor
Code also applies to employers' claim for damages, which arises from or is
connected with the labor issue. Thus:
Whereas this Court in a number of occasions had applied the
jurisdictional provisions of Article 217 to claims for damages filed by
 employees, we hold that by the designating clause "arising from the
employer-employee relations" Article 217 should apply with equal force
to the claim of an employer for actual damages against its dismissed
employee, where the basis for the claim arises from or is necessarily
connected with the fact of termination, and should be entered as a
counterclaim in the illegal dismissal case. 75
Bañez was cited inDomondon v. National Labor Relations
Commission. 76 One of the issues in Domondon is whether the Labor Arbiter has
jurisdiction to decide an issue on the transfer of ownership of a vehicle assigned
to the employee. It was argued that only regular courts have jurisdiction to decide
the issue. 77
This court ruled that since the transfer of ownership of the vehicle to the
employee was connected to his separation from the employer and arose from the
employer-employee relationship of the parties, the employer's claim fell within the
Labor Arbiter's jurisdiction. 78
As a general rule, therefore, a claim only needs to be sufficiently
connected to the labor issue raised and must arise from an employer-employee
relationship for the labor tribunals to have jurisdiction.
In this case, respondent Solid Mills claims that its properties are in
petitioners' possession by virtue of their status as its employees. Respondent
Solid Mills allowed petitioners to use its property as an act of liberality. Put in
other words, it would not have allowed petitioners to use its property had they not
been its employees. The return of its properties in petitioners' possession by
virtue of their status as employees is an issue that must be resolved to determine
whether benefits can be released immediately. The issue raised by the employer
is, therefore, connected to petitioners' claim for benefits and is sufficiently
intertwined with the parties' employer-employee relationship. Thus, it is properly
within the labor tribunals' jurisdiction.

II

Institution of clearance procedures

has legal bases

Requiring clearance before the release of last payments to the employee is

a standard procedure among employers, whether public or private. Clearance
procedures are instituted to ensure that the properties, real or personal,
belonging to the employer but are in the possession of the separated employee,
are returned to the employer before the employee's departure.
As a general rule, employers are prohibited from withholding wages from
employees. The Labor Code provides:
 Art. 116. Withholding of wages and kickbacks prohibited. — It
shall be unlawful for any person, directly or indirectly, to withhold any
amount from the wages of a worker or induce him to give up any part of
his wages by force, stealth, intimidation, threat or by any other means
whatsoever without the worker's consent.
The Labor Code also prohibits the elimination or diminution of benefits.
Thus:
Art. 100. Prohibition against elimination or diminution of
benefits. — Nothing in this Book shall be construed to eliminate or in
any way diminish supplements, or other employee benefits being
enjoyed at the time of promulgation of this Code.
However, our law supports the employers' institution of clearance
procedures before the release of wages. As an exception to the general rule that
wages may not be withheld and benefits may not be diminished, the Labor
Code provides:
Art. 113. Wage deduction. — No employer, in his own behalf or
in behalf of any person, shall make any deduction from the wages of his
employees, except:
1. In cases where the worker is insured with his consent by the
employer, and the deduction is to recompense the employer for the
amount paid by him as premium on the insurance;
2. For union dues, in cases where the right of the worker or his
union to check-off has been recognized by the employer or authorized in
writing by the individual worker concerned; and
3. In cases where the employer is authorized by law or
regulations issued by the Secretary of Labor and Employment.
(Emphasis supplied)
The Civil Code provides that the employer is authorized to withhold wages
for debts due:
Article 1706. Withholding of the wages, except for a debt due,
shall not be made by the employer.
"Debt" in this case refers to any obligation due from the employee to the
employer. It includes any accountability that the employee may have to the
employer. There is no reason to limit its scope to uniforms and equipment, as
petitioners would argue.
More importantly, respondent Solid Mills and NAFLU, the union
representing petitioners, agreed that the release of petitioners' benefits shall be
"less accountabilities."
 "Accountability," in its ordinary sense, means obligation or debt. The
ordinary meaning of the term "accountability" does not limit the definition of
accountability to those incurred in the worksite. As long as the debt or obligation
was incurred by virtue of the employer-employee relationship, generally, it shall
be included in the employee's accountabilities that are subject to clearance
procedures.  AHDcCT

It may be true that not all employees enjoyed the privilege of staying in
respondent Solid Mills' property. However, this alone does not imply that this
privilege when enjoyed was not a result of the employer-employee relationship.
Those who did avail of the privilege were employees of respondent Solid Mills.
Petitioners' possession should, therefore, be included in the term "accountability."
Accountabilities of employees are personal. They need not be uniform
among all employees in order to be included in accountabilities incurred by virtue
of an employer-employee relationship.
Petitioners do not categorically deny respondent Solid Mills' ownership of
the property, and they do not claim superior right to it. What can be gathered
from the findings of the Labor Arbiter, National Labor Relations Commission, and
the Court of Appeals is that respondent Solid Mills allowed the use of its property
for the benefit of petitioners as its employees. Petitioners were merely allowed to
possess and use it out of respondent Solid Mills' liberality. The employer may,
therefore, demand the property at will. 79
The return of the property's possession became an obligation or liability on
the part of the employees when the employer-employee relationship ceased.
Thus, respondent Solid Mills has the right to withhold petitioners' wages and
benefits because of this existing debt or liability. In Solas v. Power and
Telephone Supply Phils., Inc., et al. , this court recognized this right of the
employer when it ruled that the employee in that case was not constructively
dismissed. 80 Thus:
There was valid reason for respondents' withholding of petitioner's
salary for the month of February 2000. Petitioner does not deny that he
is indebted to his employer in the amount of around P95,000.00.
Respondents explained that petitioner's salary for the period of February
1-15, 2000 was applied as partial payment for his debt and for
withholding taxes on his income; while for the period of February 15-28,
2000, petitioner was already on absence without leave, hence, was not
entitled to any pay. 81
The law does not sanction a situation where employees who do not even
assert any claim over the employer's property are allowed to take all the benefits
out of their employment while they simultaneously withhold possession of their
employer's property for no rightful reason.
 Withholding of payment by the employer does not mean that the employer
may renege on its obligation to pay employees their wages, termination
payments, and due benefits. The employees' benefits are also not being
reduced. It is only subjected to the condition that the employees return properties
properly belonging to the employer. This is only consistent with the equitable
principle that "no one shall be unjustly enriched or benefited at the expense of
another." 82
For these reasons, we cannot hold that petitioners are entitled to interest of
their withheld separation benefits. These benefits were properly withheld by
respondent Solid Mills because of their refusal to return its property.

III

Mahilom and Damian are not

entitled to the benefits claimed

Teodora Mahilom is not entitled to separation benefits.

Both the National Labor Relations Commission and the Court of Appeals
found that Teodora Mahilom already retired long before respondent Solid Mills'
closure. They found that she already received her retirement benefits. We have
no reason to disturb this finding. This court is not a trier of facts. Findings of the
National Labor Relations Commission, especially when affirmed by the Court of
Appeals, are binding upon this court. 83
Moreover, Teodora Mahilom's claim for retirement benefits was not
included in her complaint filed before the Labor Arbiter. Hence, it may not be
raised in the appeal.
Similarly, the National Labor Relations Commission and the Court of
Appeals found that Carlito Damian already received his terminal benefits. Hence,
he may no longer claim terminal benefits.
The fact that respondent Solid Mills has not yet demolished Carlito
Damian's house in SMI Village is not evidence that he did not receive his
benefits. Both the National Labor Relations Commission and the Court of
Appeals found that he executed an affidavit stating that he already received the
benefits.
Absent any showing that the National Labor Relations Commission and the
Court of Appeals misconstrued these facts, we will not reverse these findings.
Our laws provide for a clear preference for labor. This is in recognition of
the asymmetrical power of those with capital when they are left to negotiate with
their workers without the standards and protection of law. In cases such as
these, the collective bargaining unit of workers are able to get more benefits and
in exchange, the owners are able to continue with the program of cutting their
losses or wind down their operations due to serious business losses. The
company in this case did all that was required by law.  CSIcTa

The preferential treatment given by our law to labor, however, is not a

license for abuse. 84 It is not a signal to commit acts of unfairness that will
unreasonably infringe on the property rights of the company. Both labor and
employer have social utility, and the law is not so biased that it does not find a
middle ground to give each their due.
Clearly, in this case, it is for the workers to return their housing in
exchange for the release of their benefits. This is what they agreed upon. It is
what is fair in the premises.
WHEREFORE, the petition is DENIED. The Court of Appeals' decision
is AFFIRMED.
 (Milan v. National Labor Relations Commission, G.R. No. 202961, [February 4,
|||

2015], 753 PHIL 217-239)

[G.R. No. 198587. January 14, 2015.]

SAUDI ARABIAN AIRLINES (SAUDIA) and BRENDA J.

BETIA, petitioners, vs. MA. JOPETTE M. REBESENCIO,
MONTASSAH B. SACAR-ADIONG, ROUEN RUTH A.
CRISTOBAL and LORAINE S. SCHNEIDER-CRUZ, respondents.

DECISION

LEONEN, J  :p

All Filipinos are entitled to the protection of the rights guaranteed in

the Constitution.
This is a Petition for Review on Certiorari with application for the
issuance of a temporary restraining order and/or writ of preliminary injunction
under Rule 45 of the 1997 Rules of Civil Procedure praying that judgment be
rendered reversing and setting aside the June 16, 2011 Decision 1 and
September 13, 2011 Resolution 2 of the Court of Appeals in CA-G.R. SP. No.
113006.
Petitioner Saudi Arabian Airlines (Saudia) is a foreign corporation
established and existing under the laws of Jeddah, Kingdom of Saudi Arabia.
It has a Philippine office located at 4/F, Metro House Building, Sen. Gil
J. Puyat Avenue, Makati City. 3 In its Petition filed with this court, Saudia
identified itself as follows:
1. Petitioner SAUDIA is a foreign corporation established and
existing under the Royal Decree No. M/24 of 18.07.1385H
(10.02.1962G) in Jeddah, Kingdom of Saudi Arabia ("KSA"). Its
Philippine Office is located at 4/F Metro House Building, Sen. Gil
J. Puyat Avenue, Makati City (Philippine Office). It may be served with
orders of this Honorable Court through undersigned counsel at 4th and
6th Floors, Citibank Center Bldg., 8741 Paseo de Roxas, Makati
City. 4 (Emphasis supplied)
Respondents (complainants before the Labor Arbiter) were recruited
and hired by Saudia as Temporary Flight Attendants with the accreditation
and approval of the Philippine Overseas Employment Administration. 5 After
undergoing seminars required by the Philippine Overseas Employment
Administration for deployment overseas, as well as training modules offered
by Saudia (e.g., initial flight attendant/training course and transition training),
and after working as Temporary Flight Attendants, respondents became
Permanent Flight Attendants. They then entered into Cabin Attendant
contracts with Saudia: Ma. Jopette M. Rebesencio (Ma. Jopette) on May 16,
1990; 6 Montassah B. Sacar-Adiong (Montassah) and Rouen Ruth A.
Cristobal (Rouen Ruth) on May 22, 1993; 7 and Loraine Schneider-Cruz
(Loraine) on August 27, 1995. 8
Respondents continued their employment with Saudia until they were
separated from service on various dates in 2006. 9
Respondents contended that the termination of their employment was
illegal. They alleged that the termination was made solely because they were
pregnant. 10
As respondents alleged, they had informed Saudia of their respective
pregnancies and had gone through the necessary procedures to process their
maternity leaves. Initially, Saudia had given its approval but later on informed
respondents that its management in Jeddah, Saudi Arabia had disapproved
their maternity leaves. In addition, it required respondents to file their
resignation letters. 11
 Respondents were told that if they did not resign, Saudia would
terminate them all the same. The threat of termination entailed the loss of
benefits, such as separation pay and ticket discount entitlements. 12 DHITCc

Specifically, Ma. Jopette received a call on October 16, 2006 from

Saudia's Base Manager, Abdulmalik Saddik (Abdulmalik). 13 Montassah was
informed personally by Abdulmalik and a certain Faisal Hussein on October
20, 2006 after being required to report to the office one (1) month into her
maternity leave. 14 Rouen Ruth was also personally informed by Abdulmalik
on October 17, 2006 after being required to report to the office by her Group
Supervisor. 15 Loraine received a call on October 12, 2006 from her Group
Supervisor, Dakila Salvador. 16
Saudia anchored its disapproval of respondents' maternity leaves and
demand for their resignation on its "Unified Employment Contract for Female
Cabin Attendants" (Unified Contract). 17 Under the Unified Contract, the
employment of a Flight Attendant who becomes pregnant is rendered void. It
provides:

(H) Due to the essential nature of the Air Hostess functions to be

physically fit on board to provide various services required in
normal or emergency cases on both domestic/international flights
beside her role in maintaining continuous safety and security of
passengers, and since she will not be able to maintain the
required medical fitness while at work in case of
pregnancy, accordingly, if the Air Hostess becomes pregnant
at any time during the term of this contract, this shall render
her employment contract as void and she will be terminated
due to lack of medical fitness. 18 (Emphasis supplied)

In their Comment on the present Petition, 19 respondents emphasized

that the Unified Contract took effect on September 23, 2006 (the first day of
Ramadan), 20 well after they had filed and had their maternity leaves
approved. Ma. Jopette filed her maternity leave application on September 5,
2006. 21 Montassah filed her maternity leave application on August 29, 2006,
and its approval was already indicated in Saudia's computer system by
August 30, 2006. 22 Rouen Ruth filed her maternity leave application on
September 13, 2006, 23 and Loraine filed her maternity leave application on
August 22, 2006. 24
Rather than comply and tender resignation letters, respondents filed
separate appeal letters that were all rejected. 25
Despite these initial rejections, respondents each received calls on the
morning of November 6, 2006 from Saudia's office secretary informing them
that their maternity leaves had been approved. Saudia, however, was quick to
renege on its approval. On the evening of November 6, 2006, respondents
again received calls informing them that it had received notification from
Jeddah, Saudi Arabia that their maternity leaves had been disapproved. 26
Faced with the dilemma of resigning or totally losing their benefits,
respondents executed handwritten resignation letters. In Montassah's and
Rouen Ruth's cases, their resignations were executed on Saudia's blank
letterheads that Saudia had provided. These letterheads already had the word
"RESIGNATION" typed on the subject portions of their headings when these
were handed to respondents. 27
On November 8, 2007, respondents filed a Complaint against Saudia
and its officers for illegal dismissal and for underpayment of salary, overtime
pay, premium pay for holiday, rest day, premium, service incentive leave pay,
13th month pay, separation pay, night shift differentials, medical expense
reimbursements, retirement benefits, illegal deduction, lay-over expense and
allowances, moral and exemplary damages, and attorney's fees. 28 The case
was initially assigned to Labor Arbiter Hermino V. Suelo and docketed as
NLRC NCR Case No. 00-11-12342-07.
Saudia assailed the jurisdiction of the Labor Arbiter. 29 It claimed that all
the determining points of contact referred to foreign law and insisted that the
Complaint ought to be dismissed on the ground of forum non conveniens. 30 It
added that respondents had no cause of action as they resigned voluntarily. 31
On December 12, 2008, Executive Labor Arbiter Fatima Jambaro-
Franco rendered the Decision 32 dismissing respondents' Complaint. The
dispositive portion of this Decision reads:
WHEREFORE, premises considered, judgment is hereby
rendered DISMISSING the instant complaint for lack of
jurisdiction/merit. 33
On respondents' appeal, the National Labor Relations Commission's
Sixth Division reversed the ruling of Executive Labor Arbiter Jambaro-Franco.
It explained that "[c]onsidering that complainants-appellants are OFWs, the
Labor Arbiters and the NLRC has [sic] jurisdiction to hear and decide their
complaint for illegal termination." 34 On the matter of forum non conveniens, it
noted that there were no special circumstances that warranted its abstention
from exercising jurisdiction. 35 On the issue of whether respondents were
validly dismissed, it held that there was nothing on record to support Saudia's
claim that respondents resigned voluntarily.  cEaSHC

The dispositive portion of the November 19, 2009 National Labor

Relations Commission Decision 36 reads:
WHEREFORE, premises considered, judgment is hereby
rendered finding the appeal impressed with merit. The respondents-
 appellees are hereby directed to pay complainants-appellants the
aggregate amount of SR614,001.24 corresponding to their backwages
and separation pay plus ten (10%) percent thereof as attorney's fees.
The decision of the Labor Arbiter dated December 12, 2008 is hereby
VACATED and SET ASIDE. Attached is the computation prepared by
this Commission and made an integral part of this Decision. 37
In the Resolution dated February 11, 2010, 38 the National Labor
Relations Commission denied petitioners' Motion for Reconsideration.
In the June 16, 2011 Decision, 39 the Court of Appeals denied
petitioners' Rule 65 Petition and modified the Decision of the National Labor
Relations Commission with respect to the award of separation pay and
backwages.
The dispositive portion of the Court of Appeals Decision reads:
WHEREFORE, the instant petition is hereby DENIED. The
Decision dated November 19, 2009 issued by public respondent, Sixth
Division of the National Labor Relations Commission — National
Capital Region is MODIFIED only insofar as the computation of the
award of separation pay and backwages. For greater clarity, petitioners
are ordered to pay private respondents separation pay which shall be
computed from private respondents' first day of employment up to the
finality of this decision, at the rate of one month per year of service and
backwages which shall be computed from the date the private
respondents were illegally terminated until finality of this decision.
Consequently, the ten percent (10%) attorney's fees shall be based on
the total amount of the award. The assailed Decision is affirmed in all
other respects.
The labor arbiter is hereby DIRECTED to make a recomputation
based on the foregoing. 40
In the Resolution dated September 13, 2011, 41 the Court of Appeals
denied petitioners' Motion for Reconsideration.
Hence, this Appeal was filed.
The issues for resolution are the following:
First, whether the Labor Arbiter and the National Labor Relations
Commission
Second, whether respondents voluntarily resigned or were illegally
terminated; and
Lastly, whether Brenda J. Betia may be held personally liable along with
Saudi Arabian Airlines.
I
 Summons were validly served on Saudia and jurisdiction over it validly
acquired.
There is no doubt that the pleadings and summons were served on
Saudia through its counsel. 42 Saudia, however, claims that the Labor Arbiter
and the National Labor Relations Commission had no jurisdiction over it
because summons were never served on it but on "Saudia
Manila." 43 Referring to itself as "Saudia Jeddah," it claims that "Saudia
Jeddah" and not "Saudia Manila" was the employer of respondents because:
First, "Saudia Manila" was never a party to the Cabin Attendant
contracts entered into by respondents;
Second, it was "Saudia Jeddah" that provided the funds to pay for
respondents' salaries and benefits; and
Lastly, it was with "Saudia Jeddah" that respondents filed their
resignations. 44 CTIEac

Saudia posits that respondents' Complaint was brought against the

wrong party because "Saudia Manila," upon which summons was served, was
never the employer of respondents. 45
Saudia is vainly splitting hairs in its effort to absolve itself of liability.
Other than its bare allegation, there is no basis for concluding that "Saudia
Jeddah" is distinct from "Saudia Manila."
What is clear is Saudia's statement in its own Petition that what it has is
a "Philippine Office . . . located at 4/F Metro House Building, Sen. Gil J. Puyat
Avenue, Makati City." 46 Even in the position paper that Saudia submitted to
the Labor Arbiter, 47 what Saudia now refers to as "Saudia Jeddah" was then
only referred to as "Saudia Head Office at Jeddah, KSA," 48 while what Saudia
now refers to as "Saudia Manila" was then only referred to as "Saudia's office
in Manila." 49
By its own admission, Saudia, while a foreign corporation, has a
Philippine office.
Section 3 (d) of Republic Act No. 7042, otherwise known as the Foreign
Investments Act of 1991, provides the following:
The phrase "doing business" shall include . . . opening offices,
whether called "liaison" offices or branches; . . . and any other act
or acts that imply a continuity of commercial dealings or arrangements
and contemplate to that extent the performance of acts or works, or the
exercise of some of the functions normally incident to, and in
progressive prosecution of commercial gain or of the purpose and
object of the business organization. (Emphasis supplied)
 A plain application of Section 3 (d) of the Foreign Investments Act leads
to no other conclusion than that Saudia is a foreign corporation doing
business in the Philippines. As such, Saudia may be sued in the Philippines
and is subject to the jurisdiction of Philippine tribunals.
Moreover, since there is no real distinction between "Saudia Jeddah"
and "Saudia Manila" — the latter being nothing more than Saudia's local office
— service of summons to Saudia's office in Manila sufficed to vest jurisdiction
over Saudia's person in Philippine tribunals.
II
Saudia asserts that Philippine courts and/or tribunals are not in a
position to make an intelligent decision as to the law and the facts. This is
because respondents' Cabin Attendant contracts require the application of the
laws of Saudi Arabia, rather than those of the Philippines. 50 It claims that the
difficulty of ascertaining foreign law calls into operation the principle of forum
non conveniens, thereby rendering improper the exercise of jurisdiction by
Philippine tribunals. 51
A choice of law governing the validity of contracts or the interpretation
of its provisions does not necessarily imply forum non conveniens. Choice of
law and forum non conveniens are entirely different matters.
Choice of law provisions are an offshoot of the fundamental principle of
autonomy of contracts. Article 1306 of the Civil Code firmly ensconces this:
Article 1306. The contracting parties may establish such stipulations,
clauses, terms and conditions as they may deem convenient, provided
they are not contrary to law, morals, good customs, public order, or
public policy.
In contrast, forum non conveniens is a device akin to the rule against
forum shopping. It is designed to frustrate illicit means for securing
advantages and vexing litigants that would otherwise be possible if the venue
of litigation (or dispute resolution) were left entirely to the whim of either party.
Contractual choice of law provisions factor into transnational litigation
and dispute resolution in one of or in a combination of four ways: (1)
procedures for settling disputes, e.g., arbitration; (2) forum, i.e., venue; (3)
governing law; and (4) basis for interpretation. Forum non conveniens relates
to, but is not subsumed by, the second of these.  SaCIDT

Likewise, contractual choice of law is not determinative of jurisdiction.

Stipulating on the laws of a given jurisdiction as the governing law of a
contract does not preclude the exercise of jurisdiction by tribunals elsewhere.
The reverse is equally true: The assumption of jurisdiction by tribunals does
not ipso facto mean that it cannot apply and rule on the basis of the parties'
stipulation. In Hasegawa v. Kitamura: 52
Analytically, jurisdiction and choice of law are two distinct
concepts. Jurisdiction considers whether it is fair to cause a defendant
to travel to this state; choice of law asks the further question whether
the application of a substantive law which will determine the merits of
the case is fair to both parties. The power to exercise jurisdiction does
not automatically give a state constitutional authority to apply forum
law. While jurisdiction and the choice of the lex fori will often coincide,
the "minimum contacts" for one do not always provide the necessary
"significant contacts" for the other. The question of whether the law of
a state can be applied to a transaction is different from the question of
whether the courts of that state have jurisdiction to enter a judgment. 53
As various dealings, commercial or otherwise, are facilitated by the
progressive ease of communication and travel, persons from various
jurisdictions find themselves transacting with each other. Contracts involving
foreign elements are, however, nothing new. Conflict of laws situations
precipitated by disputes and litigation anchored on these contracts are not
totally novel.
Transnational transactions entail differing laws on the requirements for
the validity of the formalities and substantive provisions of contracts and their
interpretation. These transactions inevitably lend themselves to the possibility
of various fora for litigation and dispute resolution. As observed by an eminent
expert on transnational law:
The more jurisdictions having an interest in, or merely even a point of
contact with, a transaction or relationship, the greater the number of
potential fora for the resolution of disputes arising out of or related to
that transaction or relationship. In a world of increased mobility, where
business and personal transactions transcend national boundaries, the
jurisdiction of a number of different fora may easily be invoked in a
single or a set of related disputes. 54
Philippine law is definite as to what governs the formal or extrinsic
validity of contracts. The first paragraph of Article 17 of the Civil
Code provides that "[t]he forms and solemnities of contracts . . . shall be
governed by the laws of the country in which they are executed" 55 (i.e., lex
loci celebrationis).
In contrast, there is no statutorily established mode of settling conflict of
laws situations on matters pertaining to substantive content of contracts. It
has been noted that three (3) modes have emerged: (1) lex loci contractus or
the law of the place of the making; (2) lex loci solutionis or the law of the
place of performance; and (3) lex loci intentionis or the law intended by the
parties. 56
 Given Saudia's assertions, of particular relevance to resolving the
present dispute is lex loci intentionis. cHECAS

An author observed that Spanish jurists and commentators "favor lex

loci intentionis." 57 These jurists and commentators proceed from the Civil
Code of Spain, which, like our Civil Code, is silent on what governs the
intrinsic validity of contracts, and the same civil law traditions from which we
draw ours.
In this jurisdiction, this court, in Philippine Export and Foreign Loan
Guarantee v. V.P. Eusebio Construction, Inc., 58 manifested preference for
"allow[ing] the parties to select the law applicable to their contract":
No conflicts rule on essential validity of contracts is expressly
provided for in our laws. The rule followed by most legal systems,
however, is that the intrinsic validity of a contract must be governed by
the lex contractus or "proper law of the contract." This is the law
voluntarily agreed upon by the parties (the lex loci voluntatis) or the
law intended by them either expressly or implicitly (the lex loci
intentionis). The law selected may be implied from such factors as
substantial connection with the transaction, or the nationality or
domicile of the parties. Philippine courts would do well to adopt the first
and most basic rule in most legal systems, namely, to allow the parties
to select the law applicable to their contract, subject to the limitation
that it is not against the law, morals, or public policy of the forum and
that the chosen law must bear a substantive relationship to the
transaction. 59 (Emphasis in the original)
Saudia asserts that stipulations set in the Cabin Attendant contracts
require the application of the laws of Saudi Arabia. It insists that the need to
comply with these stipulations calls into operation the doctrine of forum non
conveniens and, in turn, makes it necessary for Philippine tribunals to refrain
from exercising jurisdiction.
As mentioned, contractual choice of laws factors into transnational
litigation in any or a combination of four (4) ways. Moreover, forum non
conveniens relates to one of these: choosing between multiple possible fora.
Nevertheless, the possibility of parallel litigation in multiple fora — along
with the host of difficulties it poses — is not unique to transnational litigation. It
is a difficulty that similarly arises in disputes well within the bounds of a
single n jurisdiction. 
aTHCSE

When parallel litigation arises strictly within the context of a single

jurisdiction, such rules as those on forum shopping, litis pendentia, and res
judicata come into operation. Thus, in the Philippines, the 1997 Rules on Civil
Procedure provide for willful and deliberate forum shopping as a ground not
only for summary dismissal with prejudice but also for citing parties and
counsels in direct contempt, as well as for the imposition of administrative
sanctions. 60 Likewise, the same rules expressly provide that a party may
seek the dismissal of a Complaint or another pleading asserting a claim on
the ground "[t]hat there is another action pending between the same parties
for the same cause," i.e., litis pendentia, or "[t]hat the cause of action is barred
by a prior judgment," 61 i.e., res judicata.
Forum non conveniens, like the rules of forum shopping, litis pendentia,
and res judicata, is a means of addressing the problem of parallel litigation.
While the rules of forum shopping, litis pendentia, and res judicata are
designed to address the problem of parallel litigation within a single
jurisdiction, forum non conveniens is a means devised to address parallel
litigation arising in multiple jurisdictions.
Forum non conveniens literally translates to "the forum is
inconvenient." 62 It is a concept in private international law and was devised to
combat the "less than honorable" reasons and excuses that litigants use to
secure procedural advantages, annoy and harass defendants, avoid
overcrowded dockets, and select a "friendlier" venue. 63 Thus, the doctrine
of forum non conveniens addresses the same rationale that the rule against
forum shopping does, albeit on a multijurisdictional scale.
Forum non conveniens, like res judicata, 64 is a concept originating in
common law. 65 However, unlike the rule on res judicata, as well as those
on litis pendentia and forum shopping, forum non conveniens finds no textual
anchor, whether in statute or in procedural rules, in our civil law system.
Nevertheless, jurisprudence has applied forum non conveniens as basis for a
court to decline its exercise of jurisdiction. 66
Forum non conveniens is soundly applied not only to address parallel
litigation and undermine a litigant's capacity to vex and secure undue
advantages by engaging in forum shopping on an international scale. It is also
grounded on principles of comity and judicial efficiency.
Consistent with the principle of comity, a tribunal's desistance in
exercising jurisdiction on account of forum non conveniens is a deferential
gesture to the tribunals of another sovereign. It is a measure that prevents the
former's having to interfere in affairs which are better and more competently
addressed by the latter. Further, forum non conveniens entails a recognition
not only that tribunals elsewhere are better suited to rule on and resolve a
controversy, but also, that these tribunals are better positioned to enforce
judgments and, ultimately, to dispense justice. Forum non
conveniens prevents the embarrassment of an awkward situation where a
tribunal is rendered incompetent in the face of the greater capability — both
analytical and practical — of a tribunal in another jurisdiction.
 The wisdom of avoiding conflicting and unenforceable judgments is as
much a matter of efficiency and economy as it is a matter of international
courtesy. A court would effectively be neutering itself if it insists on
adjudicating a controversy when it knows full well that it is in no position to
enforce its judgment. Doing so is not only an exercise in futility; it is an act of
frivolity. It clogs the dockets of a tribunal and leaves it to waste its efforts on
affairs, which, given transnational exigencies, will be reduced to mere
academic, if not trivial, exercises.
Accordingly, under the doctrine of forum non conveniens, "a court, in
conflicts of law cases, may refuse impositions on its jurisdiction where it is not
the most 'convenient' or available forum and the parties are not precluded
from seeking remedies elsewhere." 67 In Puyat v. Zabarte, 68 this court
recognized the following situations as among those that may warrant a court's
desistance from exercising jurisdiction:

1) The belief that the matter can be better tried and decided elsewhere,
either because the main aspects of the case transpired in a
foreign jurisdiction or the material witnesses have their residence
there;

2) The belief that the non-resident plaintiff sought the forum[,] a practice
known as forum shopping[,] merely to secure procedural
advantages or to convey or harass the defendant;

3) The unwillingness to extend local judicial facilities to non-residents or

aliens when the docket may already be overcrowded;

4) The inadequacy of the local judicial machinery for effectuating the

right sought to be maintained; and

5) The difficulty of ascertaining foreign law. 69

In Bank of America, NT&SA, Bank of America International, Ltd. v.

Court of Appeals, 70 this court underscored that a Philippine court may
properly assume jurisdiction over a case if it chooses to do so to the extent:
"(1) that the Philippine Court is one to which the parties may conveniently
resort to; (2) that the Philippine Court is in a position to make an intelligent
decision as to the law and the facts; and (3) that the Philippine Court has or is
likely to have power to enforce its decision." 71
The use of the word "may" (i.e., "may refuse impositions on its
jurisdiction") 72 in the decisions shows that the matter of jurisdiction rests on
the sound discretion of a court. Neither the mere invocation of forum non
conveniens nor the averment of foreign elements operates to automatically
divest a court of jurisdiction. Rather, a court should renounce jurisdiction only
"after 'vital facts are established, to determine whether special circumstances'
require the court's desistance." 73 As the propriety of applying forum non
conveniens is contingent on a factual determination, it is, therefore, a matter
of defense. 74 
IDSEAH

The second sentence of Rule 9, Section 1 of the 1997 Rules of Civil

Procedure is exclusive in its recital of the grounds for dismissal that are
exempt from the omnibus motion rule: (1) lack of jurisdiction over the subject
matter; (2) litis pendentia; (3) res judicata; and (4) prescription. Moreover,
dismissal on account of forum non conveniens is a fundamentally
discretionary matter. It is, therefore, not a matter for a defendant to foist upon
the court at his or her own convenience; rather, it must be pleaded at the
earliest possible opportunity.
On the matter of pleading forum non conveniens, we state the rule,
thus: Forum non conveniens must not only be clearly pleaded as a ground for
dismissal; it must be pleaded as such at the earliest possible
opportunity. Otherwise, it shall be deemed waived.
This court notes that in Hasegawa, 76 n this court stated that forum non
conveniens is not a ground for a motion to dismiss. The factual ambience of
this case however does not squarely raise the viability of this doctrine. Until
the opportunity comes to review the use of motions to dismiss for parallel
litigation, Hasegawa remains existing doctrine.
Consistent with forum non conveniens as fundamentally a factual
matter, it is imperative that it proceed from a factually established basis. It
would be improper to dismiss an action pursuant to forum non
conveniens based merely on a perceived, likely, or hypothetical multiplicity of
fora. Thus, a defendant must also plead and show that a prior suit has, in
fact, been brought in another jurisdiction.
The existence of a prior suit makes real the vexation engendered by
duplicitous litigation, the embarrassment of intruding into the affairs of another
sovereign, and the squandering of judicial efforts in resolving a dispute
already lodged and better resolved elsewhere. As has been noted:
A case will not be stayed or dismissed on [forum] non
conveniens grounds unless the plaintiff is shown to have an available
alternative forum elsewhere. On this, the moving party bears the
burden of proof.
A number of factors affect the assessment of an alternative
forum's adequacy. The statute of limitations abroad may have run, of
the foreign court may lack either subject matter or personal jurisdiction
over the defendant. . . . Occasionally, doubts will be raised as to the
integrity or impartiality of the foreign court (based, for example, on
 suspicions of corruption or bias in favor of local nationals), as to the
fairness of its judicial procedures, or as to is operational efficiency
(due, for example, to lack of resources, congestion and delay, or
interfering circumstances such as a civil unrest). In one noted case, [it
was found] that delays of 'up to a quarter of a century' rendered the
foreign forum. . . inadequate for these purposes. 77
We deem it more appropriate and in the greater interest of prudence
that a defendant not only allege supposed dangerous tendencies in litigating
in this jurisdiction; the defendant must also show that such danger is real and
present in that litigation or dispute resolution has commenced in another
jurisdiction and that a foreign tribunal has chosen to exercise jurisdiction.
III
Forum non conveniens finds no application and does not operate to
divest Philippine tribunals of jurisdiction and to require the application of
foreign law.
Saudia invokes forum non conveniens to supposedly effectuate the
stipulations of the Cabin Attendant contracts that require the application of the
laws of Saudi Arabia.
Forum non conveniens relates to forum, not to the choice of governing
law. That forum non conveniens may ultimately result in the application of
foreign law is merely an incident of its application. In this strict sense, forum
non conveniens is not applicable. It is not the primarily pivotal consideration in
this case.
In any case, even a further consideration of the applicability of forum
non conveniens on the incidental matter of the law governing respondents'
relation with Saudia leads to the conclusion that it is improper for Philippine
tribunals to divest themselves of jurisdiction.
Any evaluation of the propriety of contracting parties' choice of a forum
and its incidents must grapple with two (2) considerations: first, the availability
and adequacy of recourse to a foreign tribunal; and second, the question of
where, as between the forum court and a foreign court, the balance of
interests inhering in a dispute weighs more heavily.
The first is a pragmatic matter. It relates to the viability of ceding
jurisdiction to a foreign tribunal and can be resolved by juxtaposing the
competencies and practical circumstances of the tribunals in alternative fora.
Exigencies, like the statute of limitations, capacity to enforce orders and
judgments, access to records, requirements for the acquisition of jurisdiction,
and even questions relating to the integrity of foreign courts, may render
undesirable or even totally unfeasible recourse to a foreign court. As
mentioned, we consider it in the greater interest of prudence that a defendant
show, in pleading forum non conveniens, that litigation has commenced in
another jurisdiction and that a foreign tribunal has, in fact, chosen to exercise
jurisdiction.
Two (2) factors weigh into a court's appraisal of the balance of interests
inhering in a dispute: first, the vinculum which the parties and their relation
have to a given jurisdiction; and second, the public interest that must animate
a tribunal, in its capacity as an agent of the sovereign, in choosing to assume
or decline jurisdiction. The first is more concerned with the parties, their
personal circumstances, and private interests; the second concerns itself with
the state and the greater social order.  AHCETa

In considering the vinculum, a court must look into the preponderance

of linkages which the parties and their transaction may have to either
jurisdiction. In this respect, factors, such as the parties' respective nationalities
and places of negotiation, execution, performance, engagement or
deployment, come into play.
In considering public interest, a court proceeds with a consciousness
that it is an organ of the state. It must, thus, determine if the interests of the
sovereign (which acts through it) are outweighed by those of the alternative
jurisdiction. In this respect, the court delves into a consideration of public
policy. Should it find that public interest weighs more heavily in favor of its
assumption of jurisdiction, it should proceed in adjudicating the dispute, any
doubt or contrary view arising from the preponderance of linkages
notwithstanding.
Our law on contracts recognizes the validity of contractual choice of law
provisions. Where such provisions exist, Philippine tribunals, acting as the
forum court, generally defer to the parties' articulated choice.
This is consistent with the fundamental principle of autonomy of
contracts. Article 1306 of the Civil Code expressly provides that "[t]he
contracting parties may establish such stipulations, clauses, terms and
conditions as they may deem convenient." 78 Nevertheless, while a Philippine
tribunal (acting as the forum court) is called upon to respect the parties' choice
of governing law, such respect must not be so permissive as to lose sight of
considerations of law, morals, good customs, public order, or public policy that
underlie the contract central to the controversy.
Specifically with respect to public policy, in Pakistan International
Airlines Corporation v. Ople, 79 this court explained that:  cHaCAS

counter-balancing the principle of autonomy of contracting parties is

the equally general rule that provisions of applicable law,
especially provisions relating to matters affected with public policy, are
deemed written into the contract. Put a little differently, the governing
 principle is that parties may not contract away applicable provisions of
law especially peremptory provisions dealing with matters heavily
impressed with public interest. 80 (Emphasis supplied)
Article II, Section 14 of the 1987 Constitution provides that "[t]he
State . . . shall ensure the fundamental equality before the law of women and
men." Contrasted with Article II, Section 1 of the 1987 Constitution's
statement that "[n]o person shall . . . be denied the equal protection of the
laws," Article II, Section 14 exhorts the State to "ensure." This does not only
mean that the Philippines shall not countenance nor lend legal recognition
and approbation to measures that discriminate on the basis of one's being
male or female. It imposes an obligation to actively engage in securing the
fundamental equality of men and women.
The Convention on the Elimination of all Forms of Discrimination
against Women (CEDAW), signed and ratified by the Philippines on July 15,
1980, and on August 5, 1981, respectively, 81 is part of the law of the land. In
view of the widespread signing and ratification of, as well as adherence (in
practice) to it by states, it may even be said that many provisions of the
CEDAW may have become customary international law. The CEDAW gives
effect to the Constitution's policy statement in Article II, Section 14. Article I of
the CEDAW defines "discrimination against women" as:
any distinction, exclusion or restriction made on the basis of sex which
has the effect or purpose of impairing or nullifying the recognition,
enjoyment or exercise by women, irrespective of their marital status,
on a basis of equality of men and women, of human rights and
fundamental freedoms in the political, economic, social, cultural, civil or
any other field. 82
The constitutional exhortation to ensure fundamental equality, as
illumined by its enabling law, the CEDAW, must inform and animate all the
actions of all personalities acting on behalf of the State. It is, therefore, the
bounden duty of this court, in rendering judgment on the disputes brought
before it, to ensure that no discrimination is heaped upon women on the mere
basis of their being women. This is a point so basic and central that all our
discussions and pronouncements — regardless of whatever averments there
may be of foreign law — must proceed from this premise.
So informed and animated, we emphasize the glaringly discriminatory
nature of Saudia's policy. As argued by respondents, Saudia's policy entails
the termination of employment of flight attendants who become pregnant. At
the risk of stating the obvious, pregnancy is an occurrence that pertains
specifically to women. Saudia's policy excludes from and restricts employment
on the basis of no other consideration but sex.
 We do not lose sight of the reality that pregnancy does present physical
limitations that may render difficult the performance of functions associated
with being a flight attendant. Nevertheless, it would be the height of iniquity to
view pregnancy as a disability so permanent and immutable that it must entail
the termination of one's employment. It is clear to us that any individual,
regardless of gender, may be subject to exigencies that limit the performance
of functions. However, we fail to appreciate how pregnancy could be such an
impairing occurrence that it leaves no other recourse but the complete
termination of the means through which a woman earns a living.
Apart from the constitutional policy on the fundamental equality before
the law of men and women, it is settled that contracts relating to labor and
employment are impressed with public interest. Article 1700 of the Civil
Code provides that "[t]he relation between capital and labor are not merely
contractual. They are so impressed with public interest that labor contracts
must yield to the common good."
Consistent with this, this court's pronouncements in Pakistan
International Airlines Corporation  83 are clear and unmistakable:  DACcIH

Petitioner PIA cannot take refuge in paragraph 10 of its

employment agreement which specifies, firstly, the law of Pakistan as
the applicable law of the agreement and, secondly, lays the venue for
settlement of any dispute arising out of or in connection with the
agreement "only [in] courts of Karachi, Pakistan". The first clause of
paragraph 10 cannot be invoked to prevent the application of
Philippine labor laws and regulations to the subject matter of this
case, i.e., the employer-employee relationship between petitioner PIA
and private respondents. We have already pointed out that the
relationship is much affected with public interest and that the otherwise
applicable Philippine laws and regulations cannot be rendered illusory
by the parties agreeing upon some other law to govern their
relationship. . . . Under these circumstances, paragraph 10 of the
employment agreement cannot be given effect so as to oust Philippine
agencies and courts of the jurisdiction vested upon them by Philippine
law. 84 (Emphasis supplied)
As the present dispute relates to (what the respondents allege to be)
the illegal termination of respondents' employment, this case is immutably a
matter of public interest and public policy. Consistent with clear
pronouncements in law and jurisprudence, Philippine laws properly find
application in and govern this case. Moreover, as this premise for Saudia's
insistence on the application forum non conveniens has been shattered, it
follows that Philippine tribunals may properly assume jurisdiction over the
present controversy.
 Philippine jurisprudence provides ample illustrations of when a court's
renunciation of jurisdiction on account of forum non conveniens is proper or
improper.
In Philsec Investment Corporation v. Court of Appeals, 85 this court
noted that the trial court failed to consider that one of the plaintiffs was a
domestic corporation, that one of the defendants was a Filipino, and that it
was the extinguishment of the latter's debt that was the object of the
transaction subject of the litigation. Thus, this court held, among others, that
the trial court's refusal to assume jurisdiction was not justified by forum non
conveniens and remanded the case to the trial court.
In Raytheon International, Inc. v. Rouzie, Jr., 86 this court sustained the
trial court's assumption of jurisdiction considering that the trial court could
properly enforce judgment on the petitioner which was a foreign corporation
licensed to do business in the Philippines.
In Pioneer International, Ltd. v. Guadiz, Jr., 87 this court found no
reason to disturb the trial court's assumption of jurisdiction over a case in
which, as noted by the trial court, "it is more convenient to hear and decide
the case in the Philippines because Todaro [the plaintiff] resides in the
Philippines and the contract allegedly breached involve[d] employment in the
Philippines." 88
In Pacific Consultants International Asia, Inc. v. Schonfeld, 89 this court
held that the fact that the complainant in an illegal dismissal case was a
Canadian citizen and a repatriate did not warrant the application of forum non
conveniens considering that: (1) the Labor Code does not include forum non
conveniens as a ground for the dismissal of a complaint for illegal dismissal;
(2) the propriety of dismissing a case based on forum non
conveniens requires a factual determination; and (3) the requisites for
assumption of jurisdiction as laid out in Bank of America, NT&SA 90 were all
satisfied. 
HSCATc

In contrast, this court ruled in The Manila Hotel Corp. v. National Labor
Relations Commission 91 that the National Labor Relations Commission was a
seriously inconvenient forum. In that case, private respondent Marcelo G.
Santos was working in the Sultanate of Oman when he received a letter from
Palace Hotel recruiting him for employment in Beijing, China. Santos
accepted the offer. Subsequently, however, he was released from
employment supposedly due to business reverses arising from political
upheavals in China (i.e., the Tiananmen Square incidents of 1989). Santos
later filed a Complaint for illegal dismissal impleading Palace Hotel's General
Manager, Mr. Gerhard Schmidt, the Manila Hotel International Company Ltd.
(which was responsible for training Palace Hotel's personnel and staff), and
the Manila Hotel Corporation (which owned 50% of Manila Hotel International
Company Ltd.'s capital stock).
In ruling against the National Labor Relations Commission's exercise of
jurisdiction, this court noted that the main aspects of the case transpired in
two (2) foreign jurisdictions, Oman and China, and that the case involved
purely foreign elements. Specifically, Santos was directly hired by a foreign
employer through correspondence sent to Oman. Also, the proper defendants
were neither Philippine nationals nor engaged in business in the Philippines,
while the main witnesses were not residents of the Philippines. Likewise, this
court noted that the National Labor Relations Commission was in no position
to conduct the following: first, determine the law governing the employment
contract, as it was entered into in foreign soil; second, determine the facts, as
Santos' employment was terminated in Beijing; and third, enforce its
judgment, since Santos' employer, Palace Hotel, was incorporated under the
laws of China and was not even served with summons.
Contrary to Manila Hotel, the case now before us does not entail a
preponderance of linkages that favor a foreign jurisdiction.
Here, the circumstances of the parties and their relation do not
approximate the circumstances enumerated in Puyat, 92 which this court
recognized as possibly justifying the desistance of Philippine tribunals from
exercising jurisdiction.
First, there is no basis for concluding that the case can be more
conveniently tried elsewhere. As established earlier, Saudia is doing business
in the Philippines. For their part, all four (4) respondents are Filipino citizens
maintaining residence in the Philippines and, apart from their previous
employment with Saudia, have no other connection to the Kingdom of Saudi
Arabia. It would even be to respondents' inconvenience if this case were to be
tried elsewhere.
Second, the records are bereft of any indication that respondents filed
their Complaint in an effort to engage in forum shopping or to vex and
inconvenience Saudia.
Third, there is no indication of "unwillingness to extend local judicial
facilities to non-residents or aliens." 93 That Saudia has managed to bring the
present controversy all the way to this court proves this.
Fourth, it cannot be said that the local judicial machinery is inadequate
for effectuating the right sought to be maintained. Summons was properly
served on Saudia and jurisdiction over its person was validly acquired.
Lastly, there is not even room for considering foreign law. Philippine law
properly governs the present dispute.
 As the question of applicable law has been settled, the supposed
difficulty of ascertaining foreign law (which requires the application of forum
non conveniens) provides no insurmountable inconvenience or special
circumstance that will justify depriving Philippine tribunals of jurisdiction.
Even if we were to assume, for the sake of discussion, that it is the laws
of Saudi Arabia which should apply, it does not follow that Philippine tribunals
should refrain from exercising jurisdiction. To recall our pronouncements
in Puyat, 94 as well as in Bank of America, NT&SA, 95 it is not so much
the mere applicability of foreign law which calls into operation forum non
conveniens. Rather, what justifies a court's desistance from exercising
jurisdiction is "[t]he difficulty of ascertaining foreign law" 96 or the inability of a
"Philippine Court . . . to make an intelligent decision as to the law[.]" 97  IDTSEH

Consistent with lex loci intentionis, to the extent that it is proper and

practicable (i.e., "to make an intelligent decision"), 98 Philippine tribunals may
apply the foreign law selected by the parties. In fact, (albeit without meaning
to make a pronouncement on the accuracy and reliability of respondents'
citation) in this case, respondents themselves have made averments as to the
laws of Saudi Arabia. In their Comment, respondents write:
Under the Labor Laws of Saudi Arabia and the Philippines[,] it is
illegal and unlawful to terminate the employment of any woman by
virtue of pregnancy. The law in Saudi Arabia is even more harsh and
strict [sic] in that no employer can terminate the employment of a
female worker or give her a warning of the same while on Maternity
Leave, the specific provision of Saudi Labor Laws on the matter is
hereto quoted as follows:
"An employer may not terminate the employment
of a female worker or give her a warning of the same
while on maternity leave." (Article 155, Labor Law of the
Kingdom of Saudi Arabia, Royal Decree No. M/51.) 99
All told, the considerations for assumption of jurisdiction by Philippine
tribunals as outlined in Bank of America, NT&SA 100 have been satisfied.
First, all the parties are based in the Philippines and all the material incidents
transpired in this jurisdiction. Thus, the parties may conveniently seek relief
from Philippine tribunals. Second, Philippine tribunals are in a position to
make an intelligent decision as to the law and the facts. Third, Philippine
tribunals are in a position to enforce their decisions. There is no compelling
basis for ceding jurisdiction to a foreign tribunal. Quite the contrary, the
immense public policy considerations attendant to this case behoove
Philippine tribunals to not shy away from their duty to rule on the case.
IV
Respondents were illegally terminated.
 In Bilbao v. Saudi Arabian Airlines, 101 this court defined voluntary
resignation as "the voluntary act of an employee who is in a situation where
one believes that personal reasons cannot be sacrificed in favor of the
exigency of the service, and one has no other choice but to dissociate oneself
from employment. It is a formal pronouncement or relinquishment of an office,
with the intention of relinquishing the office accompanied by the act of
relinquishment." 102 Thus, essential to the act of resignation is voluntariness. It
must be the result of an employee's exercise of his or her own will.
In the same case of Bilbao, this court advanced a means for
determining whether an employee resigned voluntarily:
As the intent to relinquish must concur with the overt act of
relinquishment, the acts of the employee before and after the alleged
resignation must be considered in determining whether he or she, in
fact, intended to sever his or her employment. 103 (Emphasis supplied)
On the other hand, constructive dismissal has been defined as
"cessation of work because 'continued employment is rendered impossible,
unreasonable or unlikely, as an offer involving a demotion in rank or a
diminution in pay' and other benefits." 104
In Penaflor v. Outdoor Clothing Manufacturing
Corporation, 105 constructive dismissal has been described as tantamount to
"involuntarily [sic] resignation due to the harsh, hostile, and unfavorable
conditions set by the employer." 106 In the same case, it was noted that "[t]he
gauge for constructive dismissal is whether a reasonable person in the
employee's position would feel compelled to give up his employment under
the prevailing circumstances." 107
Applying the cited standards on resignation and constructive dismissal,
it is clear that respondents were constructively dismissed. Hence, their
termination was illegal.
The termination of respondents' employment happened when they were
pregnant and expecting to incur costs on account of child delivery and infant
rearing. As noted by the Court of Appeals, pregnancy is a time when they
need employment to sustain their families. 108 Indeed, it goes against normal
and reasonable human behavior to abandon one's livelihood in a time of great
financial need. SICDAa

It is clear that respondents intended to remain employed with Saudia.

All they did was avail of their maternity leaves. Evidently, the very nature of a
maternity leave means that a pregnant employee will not report for work only
temporarily and that she will resume the performance of her duties as soon as
the leave allowance expires.
 It is also clear that respondents exerted all efforts to remain employed
with Saudia. Each of them repeatedly filed appeal letters (as much as five [5]
letters in the case of Rebesencio) 109 asking Saudia to reconsider the
ultimatum that they resign or be terminated along with the forfeiture of their
benefits. Some of them even went to Saudia's office to personally seek
reconsideration. 110
Respondents also adduced a copy of the "Unified Employment Contract
for Female Cabin Attendants." 111 This contract deemed void the employment
of a flight attendant who becomes pregnant and threatened termination due to
lack of medical fitness. 112 The threat of termination (and the forfeiture of
benefits that it entailed) is enough to compel a reasonable person in
respondents' position to give up his or her employment.
Saudia draws attention to how respondents' resignation letters were
supposedly made in their own handwriting. This minutia fails to surmount all
the other indications negating any voluntariness on respondents' part. If at all,
these same resignation letters are proof of how any supposed resignation did
not arise from respondents' own initiative. As earlier pointed out, respondents'
resignations were executed on Saudia's blank letterheads that Saudia had
provided. These letterheads already had the word "RESIGNATION" typed on
the subject portion of their respective headings when these were handed to
respondents. 113
"In termination cases, the burden of proving just or valid cause for
dismissing an employee rests on the employer." 114 In this case, Saudia
makes much of how respondents supposedly completed their exit interviews,
executed quitclaims, received their separation pay, and took more than a year
to file their Complaint. 115 If at all, however, these circumstances prove only
the fact of their occurrence, nothing more. The voluntariness of respondents'
departure from Saudia is non sequitur.
Mere compliance with standard procedures or processes, such as the
completion of their exit interviews, neither negates compulsion nor indicates
voluntariness.
As with respondent's resignation letters, their exit interview forms even
support their claim of illegal dismissal and militates against Saudia's
arguments. These exit interview forms, as reproduced by Saudia in its own
Petition, confirms the unfavorable conditions as regards respondents'
maternity leaves. Ma. Jopette's and Loraine's exit interview forms are
particularly telling:
a. From Ma. Jopette's exit interview form:

3. In what respects has the job met or failed to meet your
expectations?
  THE SUDDEN TWIST OF DECISION REGARDING THE
MATERNITY LEAVE. 116

b. From Loraine's exit interview form:

1. What are your main reasons for leaving Saudia? What

company are you joining?

xxx xxx xxx

 Others

CHANGING POLICIES REGARDING MATERNITY

LEAVE (PREGNANCY). 117

As to respondents' quitclaims, in Phil. Employ Services and Resources,

Inc. v. Paramio, 118 this court noted that "[i]f (a) there is clear proof that the
waiver was wangled from an unsuspecting or gullible person; or (b) the terms
of the settlement are unconscionable, and on their face invalid, such
quitclaims must be struck down as invalid or illegal." 119 Respondents
executed their quitclaims after having been unfairly given an ultimatum to
resign or be terminated (and forfeit their benefits).
V
Having been illegally and unjustly dismissed, respondents are entitled
to full backwages and benefits from the time of their termination until the
finality of this Decision. They are likewise entitled to separation pay in the
amount of one (1) month's salary for every year of service until the finality of
this Decision, with a fraction of a year of at least six (6) months being counted
as one (1) whole year.  DHIcET

Moreover, "[m]oral damages are awarded in termination cases where

the employee's dismissal was attended by bad faith, malice or fraud, or where
it constitutes an act oppressive to labor, or where it was done in a manner
contrary to morals, good customs or public policy." 120 In this case, Saudia
terminated respondents' employment in a manner that is patently
discriminatory and running afoul of the public interest that underlies employer-
employee relationships. As such, respondents are entitled to moral damages.
To provide an "example or correction for the public good" 121 as against
such discriminatory and callous schemes, respondents are likewise entitled to
exemplary damages.
In a long line of cases, this court awarded exemplary damages to
illegally dismissed employees whose "dismissal[s were] effected in a wanton,
oppressive or malevolent manner." 122 This court has awarded exemplary
damages to employees who were terminated on such frivolous, arbitrary, and
unjust grounds as membership in or involvement with labor unions, 123 injuries
sustained in the course of employment, 124 development of a medical
condition due to the employer's own violation of the employment
contract, 125 and lodging of a Complaint against the employer. 126 Exemplary
damages were also awarded to employees who were deemed illegally
dismissed by an employer in an attempt to evade compliance with statutorily
established employee benefits. 127 Likewise, employees dismissed for
supposedly just causes, but in violation of due process requirements, were
awarded exemplary damages. 128
These examples pale in comparison to the present controversy.
Stripped of all unnecessary complexities, respondents were dismissed for no
other reason than simply that they were pregnant. This is as wanton,
oppressive, and tainted with bad faith as any reason for termination of
employment can be. This is no ordinary case of illegal dismissal. This is a
case of manifest gender discrimination. It is an affront not only to our statutes
and policies on employees' security of tenure, but more so, to
the Constitution's dictum of fundamental equality between men and
women. 129 The award of exemplary damages is, therefore, warranted, not
only to remind employers of the need to adhere to the requirements of
procedural and substantive due process in termination of employment, but
more importantly, to demonstrate that gender discrimination should in no case
be countenanced.
Having been compelled to litigate to seek reliefs for their illegal and
unjust dismissal, respondents are likewise entitled to attorney's fees in the
amount of 10% of the total monetary award. 130
VI
Petitioner Brenda J. Betia may not be held liable.
A corporation has a personality separate and distinct from those of the
persons composing it. Thus, as a rule, corporate directors and officers are not
liable for the illegal termination of a corporation's employees. It is only when
they acted in bad faith or with malice that they become solidarily liable with
the corporation. 131
In Ever Electrical Manufacturing, Inc. (EEMI) v. Samahang
Manggagawa ng Ever Electrical, 132 this court clarified that "[b]ad faith does
not connote bad judgment or negligence; it imports a dishonest purpose or
some moral obliquity and conscious doing of wrong; it means breach of a
known duty through some motive or interest or ill will; it partakes of the nature
of fraud." 133
 Respondents have not produced proof to show that Brenda J. Betia
acted in bad faith or with malice as regards their termination. Thus, she may
not be held solidarily liable with Saudia.
WHEREFORE, with the MODIFICATIONS that first, petitioner Brenda J.
Betia is not solidarily liable with petitioner Saudi Arabian Airlines, and second,
that petitioner Saudi Arabian Airlines is liable for moral and exemplary
damages. The June 16, 2011 Decision and the September 13, 2011
Resolution of the Court of Appeals in CA-G.R. SP. No. 113006 are
hereby AFFIRMED in all other respects. Accordingly, petitioner Saudi Arabian
Airlines is ordered to pay respondents:
(1) Full backwages and all other benefits computed from the respective
dates in which each of the respondents were illegally terminated
until the finality of this Decision;
(2) Separation pay computed from the respective dates in which each
of the respondents commenced employment until the finality of
this Decision at the rate of one (1) month's salary for every year
of service, with a fraction of a year of at least six (6) months being
counted as one (1) whole year;
(3) Moral damages in the amount of P100,000.00 per respondent;
(4) Exemplary damages in the amount of P200,000.00 per respondent;
and
(5) Attorney's fees equivalent to 10% of the total award.
Interest of 6% per annum shall likewise be imposed on the total
judgment award from the finality of this Decision until full satisfaction thereof.
This case is REMANDED to the Labor Arbiter to make a detailed
computation of the amounts due to respondents which petitioner Saudi
Arabian Airlines should pay without delay.
SO ORDERED.
 (Saudi Arabian Airlines (Saudia) v. Rebesencio, G.R. No. 198587, [January 14,
|||

2015], 750 PHIL 791-846)

G.R. No. 188047. November 28, 2016.]

LIGHT RAIL TRANSIT AUTHORITY, petitioner, vs. BIENVENIDO

R. ALVAREZ, CARLOS S. VELASCO, ASCENCION A.
 GARGALICANO, MARLON E. AGUINALDO, PETRONILO T.
LEGASPI, BONIFACIO A. ESTOPIA, ANDRE A. DELA
MERCED, JOSE NOVIER D. BAYOT, ROLANDO AMAZONA
and MARLINO HERRERA, respondents.

DECISION

JARDELEZ, J  : p

This is a Petition for Review on Certiorari 1 assailing the Decision 2 and

Resolution 3 of the Court of Appeals (CA) in CA-G.R. SP No. 103278 dated
February 20, 2009 and May 22, 2009, respectively. The Decision and
Resolution dismissed the Petition for Certiorari 4 filed by the Light Rail Transit
Authority (LRTA), which sought to annul and reverse the Resolution 5 of the
National Labor Relations Commission (NLRC) in NLRC CA Case No. 046112-
05 dated November 5, 2007.

The Facts

LRTA is a government-owned and controlled corporation created by

virtue of Executive Order No. 603, 6 for the purpose of the construction,
operation, maintenance, and/or lease of light rail transit system in the
Philippines. 7 Private respondents Bienvenido R. Alvarez, Carlos S. Velasco,
Ascencion A. Gargalicano, Marlon E. Aguinaldo, Petronilo T. Legaspi,
Bonifacio A. Estopia, Andre A. Dela Merced, Jose Novier D. Bayot, Rolando
C. Amazona and Marlino G. Herrera (private respondents) are former
employees of Meralco Transit Organization, Inc. (METRO). 8
On June 8, 1984, METRO and LRTA entered into an agreement called
"Agreement for the Management and Operation of the Light Rail Transit
System" (AMO-LRTS) for the operation and management of the light rail
transit system. 9 LRTA shouldered and provided for all the operating
expenses of METRO. 10 Also, METRO signed a Collective Bargaining
Agreement (CBA) with its employees wherein provisions on wage increases
and benefits were approved by LRTA's Board of Directors. 11
However, on April 7, 1989, the Commission on Audit (COA) nullified
and voided the AMO-LRTS. 12 To resolve the issue, LRTA decided to acquire
METRO by purchasing all of its shares of stocks on June 8, 1989. METRO,
thus, became a wholly-owned subsidiary of LRTA. Since then, METRO has
been renamed to Metro Transit Organization, Inc. 13 Also, by virtue of the
acquisition, LRTA appointed the new set of officers, from chairman to
members of the board, and top management of METRO. 14 LRTA and
METRO declared and continued the implementation of the AMO-LRTS and
the non-interruption of employment relations of the employees of METRO.
They likewise continued the establishment and funding of the Metro, Inc.
Employees Retirement Plan which covers the past services of all METRO
regular employees from the date of their employment. They confirmed that all
CBAs remained in force and effect. LRTA then sanctioned the CBA's of the
union of rank and file employees and the union of supervisory employees. 15
On November 17, 1997, the METRO general manager (who was
appointed by LRTA) announced in a memorandum that its board of directors
approved the severance/resignation benefit of METRO employees at one and
a half (1 1/2) months salaries for every year of service. 16
On July 25, 2000, the union of rank and file employees of METRO
declared a strike over a retirement fund dispute. 17 By virtue of its ownership
of METRO, LRTA assumed the obligation to update the Metro, Inc.
Employees Retirement Fund with the Bureau of Treasury. 18
A few months later, or on September 30, 2000, LRTA stopped the
operation of METRO. 19 On April 5, 2001, METRO's Board of Directors
approved the release and payment of the first fifty percent (50%) of the
severance pay to the displaced METRO employees, including private
respondents, who were issued certifications of eligibility for severance pay
along with the memoranda to receive the same. 20
Upon the request of the COA corporate auditor assigned at LRTA, COA
issued an Advisory Opinion through its Legal Department, and an
Advise (sic) from Chairman Guillermo N. Carague, that LRTA is liable, as
owner of its wholly-owned subsidiary METRO, to pay the severance pay of
the latter's employees. 21
LRTA earmarked an amount of P271,000,000.00 for the severance pay
of METRO employees in its approved corporate budget for the year
2002. 22 However, METRO only paid the first fifty percent (50%) of the
severance pay of private respondents, thus, the following balance:
  NAME MAN NO. 50% (Php)  
         
1. Marlon E. Aguinaldo 0303 243,482.55 

2. Bie[n]venido R. Alvarez 0304 193,952.82 

3. Bonifacio A. Estopia 0313 242,456.29 

4. Petronilo J. Legaspi 0323 245,566.24 

 5. Andre A. [Dela] Merced 0328 322,187.70 

6. Marlino G. Herrera 0400 239,055.57 

7. Rolando C. Amazona 0485 231,432.00 

8. Jose Novier D. Bayot 1201 231,494.17 

9. Ascencion A. Gargalicano 1212 175,733.82 

10. Carlos S. Velasco 1863 103,330.08 

      –––––––––––– 

      2,228,691.24 23

      =========== 

 
Private respondents repeatedly and formally asked LRTA, being the
principal owner of METRO, to pay the balance of their severance pay, but to
no avail. 24 Thus, they filed a complaint before the Arbitration Branch of the
NLRC, docketed as NLRC NCR Case No. 00-08-09472-04, praying for the
payment of 13th month pay, separation pay, and refund of salary deductions,
against LRTA and METRO. 25
In a Decision 26 dated July 22, 2005, Labor Arbiter (LA) Elias H. Salinas
ruled in favor of private respondents. In arriving at his Decision, the LA
adopted the ruling in Light Rail Transit Authority v. National Labor Relations
Commission, Ricardo B. Malanao, et al. 27 (Malanao), which at that time was
affirmed by the CA (Twelfth Division). The LA adopted the ruling
in Malanao because it involved the same claims, facts, and issues as in this
case. 28 Malanao ordered respondents LRTA and METRO to jointly and
severally pay the balance of the severance pay of the complainants therein.
Thus, the dispositive portion 29 of the LA Decision reads:
WHEREFORE, premises considered, judgment is hereby
rendered ordering respondents Light Rail Transit Authority and Metro
Transit Organization, Inc. to pay complainants the balance of their
severance pay as follows:
  NAME 50% Balance of Severance

    Pay  
1. Marlon E. Aguinaldo P243,482.55 

2. Bie[n]venido R. Alvarez P193,952.82 

3. Bonifacio A. Estopia P242,456.29 

 4. Petronilo J. Legaspi P245,566.24 

5. Andre A. [Dela] Merced P322,187.70 

6. Marlino G. Herrera P239,055.57 

7. Rolando C. Amazona P231,432.00 

8. Jose Novier D. Bayot P231,494.17 

9. Ascencion A. Gargalicano P175,733.82 

10. Carlos S. Velasco P103,330.08 

    ––––––––––– 

    P2,228,691.24 

    ========== 

 
Respondents are further ordered to pay the sum equivalent to
ten per cent of the foregoing amount as and by way of attorney's fees.
All other claims are ordered dismissed for lack of merit.
SO ORDERED. 30
On September 29, 2005, LRTA and METRO separately appealed the
LA's Decision before the NLRC, docketed as NLRC CA Case No. 046112-
05. 31
In its Resolution dated November 5, 2007, the NLRC dismissed
METRO's appeal for failure to file the required appeal bond. Therefore, the
NLRC ruled that the appealed Decision of the LA (as regards METRO) is
declared final and executory. 32 In the same Resolution, the NLRC sustained
the Decision of the LA in toto, and therefore dismissed LRTA's appeal for lack
of merit. The dispositive portion reads:
WHEREFORE, premises considered, the Metro, Inc[.]'s Appeal
is DISMISSED for failure to get perfected. LRTA's Appeal is likewise
DISMISSED for lack of merit. Accordingly, the Decision appealed from
is SUSTAINED in toto. 33
LRTA's motion for reconsideration of the Resolution was
denied. 34 Thus, LRTA filed a Petition for Certiorari 35 with the CA.
CA Decision
The CA denied LRTA's petition. First, the CA ruled that since LRTA
failed to comply with the mandatory appeal bond, it lost its right to
appeal. 36 Consequently, the LA's ruling already became final and
executory. 37
On the merits of the case, the CA noted that the monetary claims
emanated from the CBA; hence, the controversy must be settled in light of the
CBA. As the CBA controls, it is clear that LRTA has to pay the remaining fifty
percent (50%) of the retirement benefits due to the private respondents. The
CA held that whether the NLRC has jurisdiction to hear the case, the result
would be the same: that LRTA has financial obligations to private
respondents. 38
Finally, on the issue of jurisdiction, the CA found that METRO, even if it
is a subsidiary of LRTA, remains a private corporation. This being the case,
the money claim brought against it falls under the original and exclusive
jurisdiction of the LA. Also, the CA agreed with the NLRC that the principle
of stare decisis applies to this case. The NLRC applied the CA's Decision
in Malanao, ruling that LRTA is liable for the fifty percent (50%) balance of the
separation pay of the private respondents therein. 39
LRTA filed a Motion for Reconsideration 40 arguing that contrary to what
the CA declared, it filed the mandatory appeal bond. 41 It also claimed that the
NLRC had no jurisdiction over LRTA, and that the NLRC erred in
applying stare decisis. 42 The CA, however, denied LRTA's motion for lack of
merit. 43
Hence, this petition.
Pending resolution of the case by this Court, private respondents filed
with the NLRC a Motion for Issuance of a Writ of Execution 44 dated
September 4, 2009.
On August 5, 2010, private respondents filed an Urgent
Manifestation 45 with this Court, informing us that a Writ of Execution 46 has
been issued on July 9, 2010 by the LA, since no Temporary Restraining Order
was issued by the CA or this Court. There being no response from LRTA after
service of the writ, and upon motion of private respondents, the LA
ordered 47 the release of the cash bond deposited by LRTA, and which was
subsequently released to the private respondents. Thus, they prayed that the
case be dismissed for having been moot and academic. 48 In a Reply (To
Respondents' Urgent Manifestation), 49 LRTA argued that the case has not
become moot and academic.
The Petition
LRTA now appeals the CA Decision and argues 50 that the CA erred in:
1) Ruling that the LA and NLRC have jurisdiction over LRTA;
 2) Holding LRTA jointly and severally liable for private respondents'
money claims; and
3) Wrongly applying the doctrine of stare decisis.
The Court's Ruling
We deny the petition.
The same factual setting, (save for the identity of private respondents)
and issues raised in this case also obtained in Light Rail Transit Authority v.
Mendoza 51 (Mendoza). In that case, this Court ruled that LRTA is solidarily
liable for the remaining fifty percent (50%) of the respondents' separation pay.
The doctrine of stare decisis, therefore, warrants the dismissal of this petition.
The rule of stare decisis is a bar to any attempt to re-litigate the same issue
where the same questions relating to the same event have been put forward
by parties similarly situated as in a previous case litigated and decided by a
competent court. 52 Thus, the Court's ruling in Mendoza regarding LRTA's
solidary liability for respondents' monetary claims arising from the very same
AMO-LRTS which private respondents sought to enforce in the proceedings a
quo applies to the present case. Consequently, LRTA's appeal must be
dismissed.
The LA and the NLRC have
jurisdiction over private
respondents' money claims.
LRTA argues that the LA and NLRC do not have jurisdiction over the
case. LRTA cites Light Rail Transit Authority v. Venus, Jr. 53 (Venus) to
support its claim.
We disagree. LRTA's reliance on Venus is misplaced. Venus involves
the illegal dismissal of the complainants. The proceedings a quo is not for an
illegal dismissal case, but for the monetary claims of respondents against
METRO and LRTA. Thus, unlike in Venus, this case does not involve the
issue of respondents' employment with METRO or LRTA. In fact,
in Mendoza, this Court held, "[a]s we see it, the jurisdictional issue should not
have been brought up in the first place because the respondents' claim does
not involve their employment with LRTA. There is no dispute on this aspect of
the case. The respondents were hired by METRO and, were, therefore its
employees." 54
The only issue, therefore, as in Mendoza, is whether LRTA can be
made liable by the labor tribunals for private respondents' money claim
despite the absence of an employer-employee relationship, and though LRTA
is a government-owned and controlled corporation.
 We rule in the affirmative. In Mendoza, this Court upheld the jurisdiction
of the labor tribunals over LRTA, citing Philippine National Bank v. Pabalan: 55
. . . By engaging in a particular business thru the instrumentality
of a corporation, the government divests itself pro hac vice of its
sovereign character, so as to render the corporation subject to the
rules of law governing private corporations. 56
This Court further ruled that LRTA must submit itself to the provisions
governing private corporations, including the Labor Code, for having
conducted business through a private corporation, in this case, METRO. 57
In this case, the NLRC accordingly declared, "[LRTA's] contractual
commitments with [METRO] and its employees arose out of its business
relations with [METRO] which is private in nature. Such private relation was
not changed notwithstanding the subsequent acquisition by [LRTA] of full
ownership of [METRO] and take-over of its business operations at LRT." 58
In view of the foregoing, we rule that the CA did not err when it upheld
the jurisdiction of the labor tribunals over private respondents' money claims
against LRTA. 59
LRTA is solidarily liable with
METRO for the payment of
private respondents' separation
pay.
LRTA claims that it is not the real or actual or indirect employer of
private respondents. 60 It argues that there being no employer-employee
relationship, it is legally inconceivable how LRTA can be held solidarily liable
with METRO for the payment of private respondents' separation
differentials. 61
Again, we disagree. LRTA is liable for the balance of private
respondents' separation pay.
First, LRTA is contractually obligated to pay the retirement or
severance/resignation pay of METRO employees. Citing evidence on record,
the LA found that:
. . . On November 17, 1997, the Metro, Inc. general manager
appointed by LRTA announced in a memorandum that its Board of
Directors approved the severance/resignation benefit of Metro, Inc.
employees at one and a half (1.5) months salaries for every year of
service. . . . By virtue of its ownership of Metro, Inc. LRTA officially and
formally assumed by authority of its board the obligation to update the
Metro, Inc. Employees Retirement Fund with the Bureau of Treasury,
to ensure that the fund fully covers all retirement benefits payable to
Metro, Inc[.] employees . . . . [T]he LRTA's appointed Board of
Directors for Metro, Inc. approved the release and payment of the first
fifty (50%) per cent of the severance pay to the displaced Metro, Inc.
employees . . . and complainants were issued the certifications of
eligibility for severance pay/benefit and the memoranda to receive the
same . . . . 62
On this same issue, we again quote this Court's ruling in Mendoza:
First. LRTA obligated itself to fund METRO's retirement fund to
answer for the retirement or severance/resignation of METRO
employees as part of METRO's "operating expenses." Under Article
4.05.1 of the O & M agreement between LRTA and Metro, "The
Authority shall reimburse METRO for . . . "OPERATING EXPENSES . .
. ." In the letter to LRTA dated July 12, 2001, the Acting Chairman of
the METRO Board of Directors at the time, Wilfredo Trinidad, reminded
LRTA that funding provisions for the retirement fund have always been
considered operating expenses of Metro. The coverage of operating
expenses to include provisions for the retirement fund has never been
denied by LRTA.
In the same letter, Trinidad stressed that as a consequence of
the nonrenewal of the O & M agreement by LRTA, METRO was
compelled to close its business operations effective September 30,
2000. This created, Trinidad added, a legal obligation to pay the
qualified employees separation benefits under existing company policy
and collective bargaining agreements. The METRO Board of Directors
approved the payment of 50% of the employees' separation pay
because that was only what the Employees' Retirement Fund could
accommodate.
The evidence supports Trinidad's position. We refer principally
to Resolution No. 00-44 issued by the LRTA Board of Directors on July
28, 2000, in anticipation of and in preparation for the expiration of the
O & M agreement with METRO on July 31, 2000.
Specifically, the LRTA anticipated and prepared for the (1) non-
renewal (at its own behest) of the agreement, (2) the eventual
cessation of METRO operations, and (3) the involuntary loss of jobs of
the METRO employees; thus, (1) the extension of a two-month
bridging fund for METRO from August 1, 2000, to coincide with the
agreement's expiration on July 31, 2000; (2) METRO's cessation of
operations — it closed on September 30, 2000, the last day of the
bridging fund — and most significantly to the employees adversely
affected; (3) the updating of the "Metro, Inc., Employee Retirement
Fund with the Bureau of Treasury to ensure that the fund fully covers
all retirement benefits payable to the employees of Metro, Inc."
The clear language of Resolution No. 00-44, to our mind,
established the LRTA's obligation for the 50% unpaid balance of the
respondents' separation pay. Without doubt, it bound itself to provide
 the necessary funding to METRO's Employee Retirement Fund to fully
compensate the employees who had been involuntary retired by the
cessation of operations of METRO. This is not at all surprising
considering that METRO was a wholly owned subsidiary of the
LRTA. 63
Second, assuming arguendo that LRTA is not contractually liable to pay
the separation benefits, it is solidarily liable as an indirect employer of private
respondents.
Articles 107 and 109 of the Labor Code provide:
Art. 107.  Indirect employer. — The provisions of the
immediately preceding article shall likewise apply to any person,
partnership, association or corporation which, not being an employer,
contracts with an independent contractor for the performance of any
work, task, job or project.
xxx xxx xxx
Art. 109.  Solidary liability. — The provisions of existing laws to
the contrary notwithstanding, every employer or indirect employer shall
be held responsible with his contractor or subcontractor for any
violation of any provision of this Code. For purposes of determining the
extent of their civil liability under this Chapter, they shall be considered
as direct employers.
Based on the foregoing provisions, LRTA qualifies as an indirect
employer by contracting METRO to manage and operate the Metro Manila
light rail transit. Being an indirect employer, LRTA is solidarily liable with
METRO in accordance with Article 109 of the Labor Code. The fact that there
is no actual and direct employer-employee relationship between LRTA and
private respondents does not absolve the former from liability for the latter's
monetary claims. 64 The owner of the project is not the direct employer but
merely an indirect employer, by operation of law, of his contractor's
employees. 65
More, this Court has already ruled on this issue in Mendoza:
Second. Even on the assumption that the LRTA did not obligate
itself to fully cover the separation benefits of the respondents and
others similarly situated, it still cannot avoid liability for the
respondents' claim. It is solidari[l]y liable as an indirect employer under
the law for the respondents' separation pay. This liability arises from
the O & M agreement it had with METRO, which created a principal-job
contractor relationship between them, an arrangement it admitted
when it argued before the CA that METRO was an independent job
contractor who, it insinuated, should be solely responsible for the
respondents' claim.
 Under Article 107 of the Labor Code, an indirect employer is
"any person, partnership, association or corporation which, not being
an employer, contracts with an independent contractor for the
performance of any work, task, job or project."
On the other hand, Article 109 on solidary liability, mandates
that . . . "every employer or indirect employer shall be held responsible
with his contractor or subcontractor for any violation of any provisions
of this Code. For purposes of determining the extent of their civil
liability under this Chapter, they shall be considered as direct
employers."
Department Order No. 18-02. S. 2002, the rules implementing
Articles 106 to 109 of the Labor Code, provides in its Section 19 that
"the principal shall also be solidarily liable in case the contract between
the principal is preterminated for reasons not attributable to the
contractor or subcontractor."
Although the cessation of METRO's operations was due to a
nonrenewal of the O & M agreement and not a pretermination of the
contract, the cause of the nonrenewal and the effect on the employees
are the same as in the contract pretermination contemplated in the
rules. The agreement was not renewed through no fault of METRO, as
it was solely at the behest of LRTA. The fact is, under the
circumstances, METRO really had no choice on the matter,
considering that it was a mere subsidiary of LRTA.
Nevertheless, whether it is a pretermination or a nonrenewal of
the contract, the same adverse effect befalls the workers affected, like
the respondents in this case — the involuntary loss of their
employment, one of the contingencies addressed and sought to be
rectified by the rules. 66
In view of the foregoing, we affirm the CA in sustaining the decisions of
the LA and the NLRC ordering LRTA to pay the balance of private
respondents' separation pay.
WHEREFORE, the Petition is DENIED. The Decision dated February
20, 2009 of the Court of Appeals in CA-G.R. SP No. 103278 is AFFIRMED.
SO ORDERED.
 (Light Rail Transit Authority v. Alvarez, G.R. No. 188047, [November 28, 2016],
|||

801 PHIL 40-57)

G.R. No. 178055. July 2, 2014.]

 AMECOS INNOVATIONS, INC. and ANTONIO F.
MATEO, petitioners, vs. ELIZA R. LOPEZ, respondent.

DECISION

DEL CASTILLO, J  : p

Assailed in this Petition for Review on Certiorari 1 are the March 22, 2007
Resolution 2 of the Court of Appeals (CA) in CA-G.R. SP No. 96959 which
affirmed the June 30, 2006 Decision 3 of the Regional Trial Court (RTC) of
Caloocan City, Branch 121, dismissing the Complaint 4 for lack of jurisdiction,
and its May 23, 2007 Resolution 5 denying petitioners' Motion for
Reconsideration. 6

Factual Antecedents

Petitioner Amecos Innovations, Inc. (Amecos) is a corporation duly

incorporated under Philippine laws engaged in the business of selling assorted
products created by its President and herein co-petitioner, Antonio F. Mateo
(Mateo). On May 30, 2003, Amecos received a Subpoena 7 from the Office of the
City Prosecutor of Quezon City in connection with a complaint filed by the Social
Security System (SSS) for alleged delinquency in the remittance of SSS
contributions and penalty liabilities in violation of Section 22 (a) and 22 (d) in
relation to Section 28 (e) of the SSS law, as amended.
By way of explanation, Amecos attributed its failure to remit the SSS
contributions to herein respondent Eliza R. Lopez (respondent). Amecos claimed
that it hired respondent on January 15, 2001 as Marketing Assistant to promote
its products; that upon hiring, respondent refused to provide Amecos with her
SSS Number and to be deducted her contributions; that on the basis of the
foregoing, Amecos no longer enrolled respondent with the SSS and did not
deduct her corresponding contributions up to the time of her termination in
February 2002.
Amecos eventually settled its obligations with the SSS; consequently, SSS
filed a Motion to Withdraw Complaint 8 which was approved by the Office of the
City Prosecutor. 9
Thereafter, petitioners sent a demand letter 10 to respondent for
P27,791.65 representing her share in the SSS contributions and expenses for
processing, but to no avail. Thus, petitioners filed the instant Complaint for sum
of money and damages against respondent docketed as Civil Case No. 04-
27802 and raffled to Branch 51 of the Metropolitan Trial Court (MeTC) of
Caloocan City. Petitioners claimed that because of respondent's
misrepresentation, they suffered actual damages in the amount of P27,791.65
allegedly incurred by Amecos by way of settlement and payment of its obligations
with the SSS. 11 Mateo also allegedly suffered extreme embarrassment and
besmirched reputation as a result of the filing of the complaint by the SSS. Hence
they prayed for P50,000.00 as moral damages, P50,000.00 as exemplary
damages, P50,000.00 as attorney's fees, and costs of the suit.  CIHTac

Respondent filed her Answer with Motion to Dismiss 12 claiming that she

was formerly an employee of Amecos until her illegal dismissal in February 2002;
that Amecos deliberately failed to deduct and remit her SSS contributions; and
that petitioners filed the instant Complaint in retaliation to her filing of an illegal
dismissal case. Respondent also averred that the regular courts do not have
jurisdiction over the instant case as it arose out of their employer-employee
relationship.
The parties then submitted their respective Position Papers. 13

Ruling of the Metropolitan Trial Court

On March 24, 2006, the MeTC issued its Decision, 14 which decreed as

follows:
All viewed from the foregoing, the court hereby dismisses the
complaint for lack of jurisdiction.
SO ORDERED. 15

Ruling of the Regional Trial Court

Petitioners appealed to the RTC. On June 30, 2006, the RTC rendered its
Decision 16 disposing as follows:
WHEREFORE, premises considered, the instant appeal is
accordingly DISMISSED for lack of merit.
SO ORDERED. 17
The RTC affirmed the view taken by the MeTC that under Article 217 (a)
(4) of the Labor Code, 18 claims for actual, moral, exemplary and other forms of
damages arising from employer-employee relationship are under the jurisdiction
of the Labor Arbiters or the National Labor Relations Commission (NLRC); that
since petitioners and respondent were in an employer-employee relationship at
the time, the matter of SSS contributions was thus an integral part of that
relationship; and as a result, petitioners' cause of action for recovery of damages
from respondent falls under the jurisdiction of the Labor Arbiters, pursuant to
Article 217 (a) (4) of the Labor Code.
Petitioners filed a Motion for Reconsideration 19 which the RTC denied. 20

Ruling of the Court of Appeals

Petitioners thus instituted a Petition for Review 21 with the CA claiming that

the RTC seriously erred in sustaining the dismissal of the Complaint by the
MeTC on the ground of lack of jurisdiction. On March 22, 2007, the CA rendered
the assailed Resolution, viz.: SCaITA

ACCORDINGLY, the petition for review is DENIED DUE

COURSE and this case is DISMISSED.
SO ORDERED. 22
Finding no error in the Decision of the RTC, the CA held that:
. . . The matter of whether the SSS employer's contributive shares
required of the petitioners to be paid due to the complaint of the
respondent necessarily flowed from the employer-employee
relationship between the parties. As such, the lower courts were
correct in ruling that jurisdiction over the claim pertained to the Labor
Arbiter and the National Labor Relations Commission, not to the
regular courts, even if the claim was initiated by the employer against
the employee. 23
Petitioners moved to reconsider, but in the second assailed
Resolution 24 dated May 23, 2007, the CA denied petitioners' Motion for
Reconsideration. 25 Hence, the instant Petition.

Issues

The issues raised in this Petition are:

WHETHER THE REGULAR CIVIL COURT AND NOT THE
LABOR ARBITER OR . . . THE NATIONAL LABOR RELATIONS
COMMISSION HAS JURISDICTION OVER CLAIM[S] FOR
REIMBURSEMENT ARISING FROM EMPLOYER-EMPLOYEE
RELATIONS.
WHETHER THE REGULAR CIVIL COURT AND NOT THE
LABOR ARBITER OR . . . THE NATIONAL LABOR RELATIONS
COMMISSION HAS JURISDICTION OVER CLAIM[S] FOR DAMAGES
FOR MISREPRESENTATION ARISING FROM EMPLOYER-
EMPLOYEE RELATIONS. 26

Petitioners' Arguments
 In praying that the assailed CA Resolutions be set aside, petitioners argue
that their Complaint is one for recovery of a sum of money and damages based
on Articles 19, 27 22, 28 and 2154 29 of the Civil Code; that their cause of action is
based on solutio indebiti or unjust enrichment, which arose from respondent's
misrepresentation that there was no need to enroll her with the SSS as she was
concurrently employed by another outfit, Triple A Glass and Aluminum Company,
and that she was self-employed as well. They argue that the employer-employee
relationship between Amecos and respondent is merely incidental, and does not
necessarily place their dispute within the exclusive jurisdiction of the labor
tribunals; the true source of respondent's obligation is derived from Articles 19,
22, and 2154 of the Civil Code.They add that by reason of their payment of
respondent's counterpart or share in the SSS premiums even as it was not their
legal obligation to do so, respondent was unjustly enriched, for which reason she
must return what petitioners paid to the SSS.  IDSETA

Petitioners cite the pronouncements of the Court to the effect that where
the employer-employee relationship is merely incidental and the cause of action
proceeds from a different source of obligation, such as tort, malicious prosecution
or breach of contract, the regular courts have jurisdiction; 30 that when the cause
of action is based on Articles 19 and 21 of the Civil Code, the case is not
cognizable by the labor tribunals; 31 that money claims of workers which fall
within the original and exclusive jurisdiction of Labor Arbiters are those money
claims which have some reasonable causal connection with the employer-
employee relationship; 32 and that when a person unjustly retains a benefit to the
loss of another, or when a person retains money or property of another against
the fundamental principles of justice, equity and good conscience, a case
of solutio indebiti arises. 33

Respondent's Arguments

Respondent, on the other hand, maintains that jurisdiction over petitioners'

case lies with the Labor Arbiter, as their cause of action remains necessarily
connected to and arose from their employer-employee relationship. At any rate,
respondent insists that petitioners, as employers, have the legal duty to enroll her
with the SSS as their employee and to pay or remit the necessary contributions.

Our Ruling

The Court denies the Petition.

This Court holds that as between the parties, Article 217 (a) (4) of
the Labor Code is applicable. Said provision bestows upon the Labor Arbiter
original and exclusive jurisdiction over claims for damages arising from employer-
employee relations. The observation that the matter of SSS contributions
necessarily flowed from the employer-employee relationship between the parties
— shared by the lower courts and the CA — is correct; thus, petitioners' claims
should have been referred to the labor tribunals. In this connection, it is
noteworthy to state that "the Labor Arbiter has jurisdiction to award not only the
reliefs provided by labor laws, but also damages governed by the Civil Code." 34
At the same time, it cannot be assumed that since the dispute concerns
the payment of SSS premiums, petitioners' claim should be referred to the Social
Security Commission (SSC) pursuant to Republic Act No. 1161, as amended
by Republic Act No. 8282. 35 As far as SSS is concerned, there is no longer a
dispute with respect to petitioners' accountability to the System; petitioners
already settled their pecuniary obligations to it. Since there is no longer any
dispute regarding coverage, benefits, contributions and penalties to speak of, the
SSC need not be unnecessarily dragged into the picture. 36 Besides, it cannot be
made to act as a collecting agency for petitioners' claims against the respondent;
the Social Security Law should not be so interpreted, lest the SSC be swamped
with cases of this sort.
At any rate, it appears that petitioners do not have a cause of action
against respondent. The Complaint in Civil Case No. 04-27802 reads in part:
STATEMENT OF FACTS AND CAUSES OF ACTION
4. On or about 15 January 2001, [petitioners] hired [respondent] as a
Marketing Assistant to promote the products of [petitioners].
5. Immediately, [respondent] represented that she had other gainful work
and that she was also self-employed for which reason, she
refused to divulge her [SSS] Number and refused to be deducted
her share in the [SSS] contributions. In her bio-data submitted to
[petitioners], she did not even indicate her SSS [N]umber. . . .
[These] representations were later found out to be untrue and
[respondent] knew that.
6. Misled by such misrepresentation, [petitioners'] employees no longer
deducted her corresponding SSS contributions up to the time of
her termination from employment on or about 18 February 2002.
7. On or about 30 May 2003, to the unpleasant surprise and
consternation of [petitioner] Mateo, he received a Subpoena . . .
pursuant to a criminal complaint against [petitioner] Dr. Antonio
Mateo for alleged un-remitted SSS Contributions including that
corresponding to the [respondent]. Upon subsequent clarification
with the Social Security System, only that portion corresponding
to the [respondent's] supposed unremitted contribution remained
as the demandable amount. The total amount demanded was
P18,149.95. . . .
8. On or about 24 July 2003, [petitioner] Mateo had to explain to the
Social Security System the circumstances as to why no
contributions reflected for [respondent]. . . .
9. On or about 31 July 2003, [petitioners] had to pay the Social Security
System the amount of P18,149.95 including the share which
should have been deducted from [respondent] in the amount of
P12,291.62. . . .
10. With this development, some of [petitioners'] employees felt troubled
and started to doubt . . . whether or not their SSS contributions
were being remitted or paid by the [petitioners]. [Petitioner] Mateo
had to explain to them why there was an alleged deficiency in
SSS contributions and had to assure them that their contributions
were properly remitted.
11. As a result of these events, [petitioner] Mateo, for days, felt deep
worry and fear leading to sleepless nights that the Social Security
System might prosecute him for a possible criminal offense.
12. [Petitioner] Mateo also felt extreme embarrassment and besmirched
reputation as he, being a recognized inventor, a dean of a
reputable university and a dedicated teacher, was made the butt
of ridicule and viewed as a shrewd businessman capitalizing on
even the SSS contributions of his employees. . . .
13. On or about 15 January 2004, in order to [recover] what is due
[petitioners], they sent a demand letter to [respondent] for her to
pay the amount of P27,791.65 as her share in the SSS
contributions and other expenses for processing. . . .
14. This demand, however, fell on deaf ears as [respondent] did not pay
and has not paid to date the amount of her share in the SSS
contributions and other amounts demanded.
15. For such malicious acts and the suffering befalling [petitioner] Mateo,
[respondent] is liable for moral damages in the amount of FIFTY
THOUSAND PESOS (P50,000.00).
16. For having made gross misrepresentation, she is liable for exemplary
damages in the amount of FIFTY THOUSAND PESOS
(P50,000.00) to serve as a warning for the public not to follow her
evil example.
17. As [petitioners] were compelled to file the instant suit to protect and
vindicate [their] right and reputation, [respondent] should also be
held liable for attorney's fees in the amount of FIFTY THOUSAND
PESOS (P50,000.00) in addition to the costs of this suit.
PRAYER
 [Petitioners] respectfully [pray] that a judgment, in [their] favor and
against [respondent], be rendered by this Honorable Court, ordering
[respondent]: ADEacC

1. To pay the amount due of TWENTY SEVEN THOUSAND SEVEN

HUNDRED NINETY ONE AND 65/100 (P27,791.65) representing
her share in the SSS contributions and processing costs, with
interest, at legal rate, from the time of the filing of this Complaint;
2. To pay FIFTY THOUSAND PESOS (P50,000.00) for moral damages;
3. To pay FIFTY THOUSAND PESOS (P50,000.00) for exemplary
damages;
4. To pay FIFTY THOUSAND PESOS (P50,000.00) as attorney's fees;
5. To pay the costs of this suit.
[Petitioners] further [pray] for such other relief as are just and
equitable under the circumstances. 37
In fine, petitioners alleged that respondent misrepresented that she was
simultaneously employed by another company; consequently, they did not enroll
her with the SSS or pay her SSS contributions. Likewise, when petitioners
eventually paid respondent's SSS contributions as a result of the filing of a
complaint by the SSS, respondent was unjustly enriched because the amount
was not deducted from her wages in Amecos.
The evidence, however, indicates that while respondent was employed,
Amecos did not remit premium contributions — both employer and employees'
shares — to the SSS; the SSS demand letter 38 sent to it covers non-payment of
SSS premium contributions from January 2001 up to April 2002, amounting to
P85,687.84. 39 The Amecos payroll 40 covering the period from January 30 to
November 29, 2001 likewise shows that no deductions for SSS contributions
were being made from respondent's salaries. This can only mean that during the
period, Amecos was not remitting SSS contributions — whether the employer or
employees' shares — pertaining to respondent. As such, during her employment
with Amecos, respondent was never covered under the System as SSS did not
know in the first instance that petitioners employed her, since the petitioners
were not remitting her contributions. Petitioners were forced to remit monthly
SSS contributions only when SSS filed I.S. No. 03-6068 with the Quezon City
Prosecutor's Office. By that time, however, respondent was no longer with
Amecos, as her employment was terminated sometime in mid-February of 2002.
Given the above facts, it is thus clear that petitioners have no cause of
action against the respondent in Civil Case No. 04-27802. Since Amecos did not
remit respondent's full SSS contributions, the latter was never covered by and
protected under the System. If she was never covered by the System, certainly
there is no sense in making her answerable for the required contributions during
the period of her employment. And it follows as a matter of consequence that
claims for other damages founded on the foregoing non-existent cause of action
should likewise fail.
WHEREFORE, premises considered, the Petition is DENIED. The assailed
March 22, 2007 and the May 23, 2007 Resolutions of the Court of Appeals in CA-
G.R. SP No. 96959 are AFFIRMED.
SO ORDERED.
 (Amecos Innovations, Inc. v. Lopez, G.R. No. 178055, [July 2, 2014], 738 PHIL
|||

121-134)

G.R. No. 200088. February 26, 2018.]

PHILIPPINE AIRLINES, INC., petitioner, vs. AIRLINE PILOTS

ASSOCIATION OF THE PHILIPPINES, SOTICO T. LLOREN,
RONALDO V. CUNANAN, LEONCIO H. MANARANG, JR.,
VICTOR N. AGUILAR, RODOLFO M. MEDINA, RENATO A.
FLESTADO, ROMEO L. LORENZO, WESLEY V. TATE,
SALVADOR S. ARCEO, JR., MARIANO V. NAVARETTE, JR.,
WILLIAM Z. CENZON, LIBERATE D. GUTIZA, MANUEL F.
FORONDA, ISMAEL C. LAPUS, JR., RAQUELITO L.
CAMACHO, JOHN JOSEPH V. DE GUZMAN, EFREN L.
PATTUGALAN, JIMMY JESUS D. ARRANZA, PAUL DE LEON,
ANTONIO A. CAYABA, DIOSDADO S. JUAN, JR., ORLANDO A.
DEL CASTILLO, DEOGRACIAS C. CABALLERO, JR., and
FLORENDO R. UMALI, respondents.

DECISION

MARTIRES, J  : p

This is a petition for review on certiorari under Rule 45 of the Rules of

Court seeking the reversal of the 26 August 2011 Decision 1 and 05 January
2012 Resolution 2 of the Court of Appeals (CA) in CA-G.R. SP No. 113985,
which affirmed with modification the 27 April 2009 3 and 26 February
2010 4 Resolutions of the National Labor Relations Commission (NLRC) in
NLRC LAC No. 036558-03 (RA-10-08), which likewise affirmed with
modification the 22 April 2008 Decision 5 of the Labor Arbiter (LA) in NLRC
NCR No. 04-04906-03.  ATICcS

THE FACTS

The present case arose from a labor dispute between petitioner

Philippine Airlines, Inc. (PAL) and respondent Airline Pilots' Association of the
Philippines (ALPAP), a duly registered labor organization and the exclusive
bargaining agent of all commercial pilots of PAL. On 9 December 1997,
ALPAP filed with the Department of Labor and Employment (DOLE) a notice
of strike alleging that PAL committed unfair labor practice. On 23 December
1997, the Secretary of DOLE (SOLE) assumed jurisdiction over the dispute
and thereafter prohibited ALPAP from staging a strike and committing any act
that could exacerbate the dispute. 6
Despite the prohibition by the SOLE, ALPAP staged a strike on 5 June
1998. A return-to-work order 7 was issued by the SOLE on 7 June 1998, but
ALPAP defied the same and went on with their strike. Consequently, on 1
June 1999, the SOLE issued a resolution 8 which declared the illegality of the
strike staged by ALPAP and the loss of employment status of the officers who
participated in the strike.
The SOLE's resolution was upheld by the CA in CA-G.R. SP No.
54880. 9 The matter was eventually elevated to this Court in G.R. No. 152306.
In a Resolution, 10 dated 10 April 2002, the Court dismissed ALPAP's petition
for failure to show that the CA committed grave abuse of discretion or a
reversible error. The resolution attained finality on 29 August 2002. 11
On 22 April 2003, or almost eight (8) months from the finality of the
Court's 10 April 2002 Resolution, PAL filed before the LA a complaint 12 for
damages against ALPAP, as well as some of its officers and members.
PAL alleged, among others, that on 6 June 1998, the second day of the
illegal strike conducted by ALPAP, its striking pilots abandoned three (3) PAL
aircraft, as follows: (i) PR 730 bound for Paris, France, at Bangkok, Thailand;
(ii) PR 741 bound for Manila, at Bangkok, Thailand; and (iii) PR 104 bound for
Manila, at San Francisco, California, U.S.A. Because of the deliberate and
malicious abandonment of the said flights, its passengers were stranded, and
rendered PAL liable for violation of its contract of carriage. Thus, PAL was
compelled to incur expenses by way of hotel accommodations, meals for the
stranded passengers, airport parking fees, and other operational expenses.
PAL further alleged that its operation was crippled by the illegal strike
resulting in several losses from ticket refunds, extraordinary expenses to cope
with the shutdown situation, and lost income from the cancelled domestic and
international flights. PAL claimed that, as a result of the illegal strike, it
suffered actual damages in the amount of P731,078,988.59. PAL further
prayed that it be awarded P300,000,000.00 and P3,000,000.00 as exemplary
damages and attorney's fees, respectively.
The LA Ruling

In its decision, dated 22 April 2008, the LA dismissed PAL's complaint.

It ruled that it had no jurisdiction to resolve the issue on damages. It noted
that the SOLE did not certify the controversy for compulsory arbitration to the
NLRC nor in any occasion did the parties agree to refer the same to voluntary
arbitration under Article 263 (h) of the Labor Code. Hence, jurisdiction to
resolve all issues arising from the labor dispute, including the claim for
damages arising from the illegal strike, was left with the SOLE to the
exclusion of all other fora.
The LA further ruled that PAL's cause of action had already been
barred by prescription. It opined that since the complaint was premised on the
illegality of the strike held by the respondents, the accrual of PAL's cause of
action should be reckoned either on 5 June 1998, the first day of the strike, or
on 7 June 1998, when the respondents defied the SOLE's return-to-work
order. Hence, PAL's 22 April 2003 complaint was filed beyond the 3-year
prescriptive period set forth in Article 291 of the Labor Code. The LA
suggested, however, that PAL's cause of action may be treated as an
independent civil action in another forum. The dispositive portion reads:
WHEREFORE, the complaint is DISMISSED for lack of merit.
SO ORDERED. 13
Aggrieved, PAL elevated an appeal to the NLRC.
The NLRC Ruling

In its resolution, dated 27 April 2009, the NLRC affirmed with

modification the LA's 22 April 2008 decision. It ruled that labor tribunals have
no jurisdiction over the claims interposed by PAL. It opined that the reliefs
prayed for by PAL should have been ventilated before the regular courts
considering that they are based on the tortuous acts allegedly committed by
the respondents. It explained that the airline pilots' refusal to fly their assigned
aircrafts constitutes breach of contractual obligation which is intrinsically a civil
dispute. The dispositive portion of the resolution states:  TIADCc
 WHEREFORE, except for the MODIFICATION that the phrase
"for lack of merit" in the dispositive portion is deleted therefrom, the
appealed Decision is hereby AFFIRMED.
SO ORDERED. 14
PAL moved for reconsideration, but the same was denied by the NLRC
in its resolution, dated 26 February 2010.
Unconvinced, PAL filed a petition for certiorari under Rule 65 of
the Rules of Court before the CA.
The CA Ruling

In its assailed Decision, dated 26 August 2011, the CA partially granted

PAL's petition. It ruled that while the NLRC correctly sustained the LA's
dismissal of the complaint for lack of jurisdiction, it declared that the NLRC
gravely abused its discretion when it affirmed the LA's pronouncement that
PAL's cause of action had already prescribed.
The appellate court concurred with the NLRC's opinion that exclusive
jurisdiction over PAL's claim for damages lies with the regular courts and not
with the SOLE. It ratiocinated that while Article 263 (g) of the Labor
Code vests in the SOLE the authority to resolve all questions and
controversies arising from a labor dispute over which it assumed jurisdiction,
said authority must be interpreted to cover only those causes of action which
are based on labor laws. Stated differently, causes of action based on an
obligation or duty not provided under the labor laws are beyond the SOLE's
jurisdiction. It continued that only those issues that arise from the assumed
labor dispute, which has a direct causal connection to the employer-employee
relationship between the parties, will fall under the jurisdiction of the SOLE. It
pointed out that the damages caused by the wilful acts of the striking pilots in
abandoning their aircraft are recoverable under civil law and are thus within
the jurisdiction of the regular courts.
Further, the appellate court held that PAL's cause of action accrued
only on 29 August 2002, the date when this Court's resolution sustaining the
finding of the strike's illegality had attained finality. The dispositive portion of
the assailed decision reads:
WHEREFORE, premises considered, the Petition
for Certiorari is PARTIALLY GRANTED. The April 27, 2009 and
February 26, 2010 NLRC Resolutions are MODIFIED as follows:
1) The complaint for damages arising from the illegal strike
claimed by the petitioner lies not within the jurisdiction of the DOLE
Secretary or the Labor Arbiter but with the regular courts; and
 2) Petitioner's cause of action for damages has not yet
prescribed.
No costs.
SO ORDERED. 15
PAL moved for partial reconsideration but the same was denied by the
CA in its assailed Resolution, dated 5 January 2012.
Hence, this petition.

THE ISSUE

WHETHER THE NLRC AND THE LABOR ARBITER HAVE

JURISDICTION OVER PAL'S CLAIMS AGAINST THE
RESPONDENTS FOR DAMAGES INCURRED AS A
CONSEQUENCE OF THE LATTER'S ACTIONS DURING THE
ILLEGAL STRIKE.

THE COURT'S RULING

The petition is partially meritorious.

Labor tribunals have jurisdiction
over actions for damages arising
from a labor strike.

Under Article 217 [now Article 224] of the Labor Code, as amended by

Section 9 of R.A. No. 6715, the LA and the NLRC have jurisdiction to resolve
cases involving claims for damages arising from employer-employee
relationship, to wit:
ART. 217. Jurisdiction of Labor Arbiters and the Commission —
(a) Except as otherwise provided under this Code, the Labor Arbiters
shall have original and exclusive jurisdiction to hear and decide, within
thirty (30) calendar days after the submission of the case by the parties
for decision without extension, even in the absence of stenographic
notes, the following cases involving all workers, whether agricultural or
nonagricultural: 
AIDSTE

1. Unfair labor practice cases;

2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that
workers may file involving wages, rates of pay, hours of
work and other terms and conditions of employment;
 4. Claims for actual, moral, exemplary and other forms of
damages arising from employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code
including questions involving the legality of strikes
and lockouts; and
6. Except claims for Employees Compensation, Social Security,
Medicare and maternity benefits, all other claims, arising
from employer-employee relations, including those of
persons in domestic or household service, involving an
amount exceeding five thousand pesos (P5,000.00)
regardless of whether accompanied with a claim for
reinstatement.
[emphases supplied]
It is settled, however, that not every controversy or money claim by an
employee against the employer or vice-versa falls within the jurisdiction of the
labor arbiter. 16 Intrinsically, civil disputes, although involving the claim of an
employer against its employees, are cognizable by regular courts. 17
To determine whether a claim for damages under paragraph 4 of Article
217 is properly cognizable by the labor arbiter, jurisprudence has evolved the
"reasonable connection rule" which essentially states that the claim for
damages must have reasonable causal connection with any of the claims
provided for in that article. A money claim by a worker against the employer or
vice-versa is within the exclusive jurisdiction of the labor arbiter only if there is
a "reasonable causal connection" between the claim asserted and employee-
employer relations. Only if there is such a connection with the other claims
can the claim for damages be considered as arising from employer-employee
relations. 18 Absent such a link, the complaint will be cognizable by the regular
courts.
The appellate court was of the opinion that, applying the reasonable
connection rule, PAL's claims for damages have no relevant connection
whatsoever to the employer-employee relationship between the parties. Thus,
the claim is within the exclusive jurisdiction of the regular courts. It explained
that Article 217 of the Labor Code does not include a claim for damages
wherein the employer-employee relation is merely incidental, and where the
claim is largely civil in character.
The appellate court is mistaken.
The Court agrees with PAL that its claim for damages has reasonable
connection with its employer-employee relationship with the respondents.
Contrary to the pronouncements made by the appellate court, PAL's cause of
action is not grounded on mere acts of quasi-delict. The claimed damages
arose from the illegal strike and acts committed during the same which were
in turn closely related and intertwined with the respondents' allegations of
unfair labor practices against PAL. This could not even be disputed as even
the appellate court recognized this fact. In its 26 August 2011 Decision, the
CA made the following statements:
The damages caused by the willful act of the striking pilots in
abandoning their aircrafts, together with the passengers and cargo,
which resulted in injury to petitioner's business is recoverable under
civil law. 19 [emphasis supplied]
xxx xxx xxx
1) The complaint for damages arising from the illegal
strike claimed by petitioner lies not within the jurisdiction of the DOLE
Secretary or the Labor Arbiter but with the regular courts; x x
x 20 [emphasis supplied]
Since the loss and injury from which PAL seeks compensation have
reasonable causal connection with the alleged acts of unfair labor practice, a
claim provided for in Article 217 of the Labor Code, the question of damages
becomes a labor controversy and is therefore an employment relationship
dispute.
This issue is not novel. It has been previously decided by the Court in
several cases. AaCTcI

In Goodrich Employees Association v. Hon. Flores, 21 the Court

stressed the rule that cases involving unfair labor practices are within the
jurisdiction of the Court of Industrial Relations (CIR), the labor tribunal at that
time. The Court further emphasized that where the subject matter is within the
exclusive jurisdiction of the CIR, it must be deemed to have jurisdiction over
all incidental matters connected to the main issue.
Thus, in Holganza v. Hon. Apostol, 22 the Court reaffirmed the exclusive
jurisdiction of the labor tribunal over actions for damages arising from labor
controversies. In the said case, the Social Security System (SSS) filed with
the then Court of First Instance (CFI) of Rizal a complaint for damages with
writ of preliminary attachment against several of its employees. It alleged that
it sustained damages as a consequence of the picketing carried on by its
striking employees during a strike held against it. The striking employees
moved for the dismissal of the complaint on the ground of lack of jurisdiction,
but the trial court denied the same. Eventually, the issue reached this Court
which opined that the trial court is devoid of any jurisdiction to entertain the
said complaint for damages. In so ruling, the Court declared that exclusive
jurisdiction over disputes of this character belonged to the then CIR. To hold
otherwise would be to sanction split jurisdiction which is obnoxious to the
orderly administration of justice.
 A similar controversy arose in Philippine Long Distance Telephone
Company v. Free Telephone Workers Union. 23 The Court reiterated the rule
that regular courts are devoid of any jurisdiction over claims for damages
arising from a labor strike, thus:
It is clear from the records that the subject complaint for
damages is intertwined with or deeply rooted from the 1964 certified
labor dispute between appellant and appellees. As can be gleaned
from the aforesaid complaint, appellant is claiming against appellees
damages it allegedly sustained as a consequence of the strikes
declared by the appellees. It is therefore obvious in the light of the
established jurisprudence as aforestated that the lower court, Court of
First Instance of Manila, Branch XII, did not have jurisdiction over the
aforesaid complaint for damages; hence, all the proceedings taken
therein are void for lack of jurisdiction. 24
The rule stands even if the strike is illegal. In Antipolo Highway Lines
Employees Union v. Hon. Aquino. 25 Francisco De Jesus, the owner of
Antipolo Highway Lines (AHL), instituted a complaint for damages with
injunction against AHL Employees Union (AHLEU) and its officers before the
CFI of Rizal. De Jesus alleged that AHLEU staged a strike and posted picket
lines along AHL's compound, thereby preventing its employees from
performing their work and causing it to suffer losses and damages from the
non-operation of its buses. The Court ruled that the trial court lacked
jurisdiction over the complaints for damages and injunction because the illegal
strike and picket which allegedly caused damages to De Jesus were mere
incidents of the labor dispute between the parties, to wit:
Although it was artfully made to appear that the suit was one for
damages that did not divest the Court of Industrial Relations of its
jurisdiction. The Complaint itself, in paragraph 5, adverted to an "illegal
strike" and "picket lines," which are but mere incidents or
consequences of the unfair labor practice complained against by
petitioner Union. In other words, it is clear that the cause of action for
damages "arose out of or was necessarily intertwined with" an alleged
unfair labor practice committed by DE JESUS in refusing to sit at the
bargaining table. It is still the labor court, therefore, that has
jurisdiction, particularly under the principle that split jurisdiction is not to
be countenanced for being "obnoxious to the orderly administration of
justice." 26
Indeed, the aforecited cases were decided by this Court under R.A. No.
875 or the Industrial Peace Act. The Court is also not unmindful of the fact
that R.A. No. 875 had been completely superseded in 1974 by Presidential
Decree (P.D.) No. 442 or the Labor Code of the Philippines. Nevertheless, it
could not be denied that the underlying rationale for the rule finds application
even with the effectivity of the Labor Code. As in the Industrial Peace Act,
splitting of jurisdiction is abhorred under the Labor Code. 27
A case in point is National Federation of Labor v. Hon.
Eisma, 28 decided by the Court under the provisions of the Labor Code. In
case, as in those cited, the employer, Zamboanga Wood Products, Inc., filed,
before the CFI of Zamboanga City, a complaint for damages against the
officers and members of the labor union. The employer alleged that it incurred
damages because the union officers and members blockaded the road
leading to its manufacturing division, thus preventing customers and suppliers
free ingress to or egress from their premises. The labor union, however,
contended that jurisdiction over the controversy belongs to the labor arbiter
because the acts complained of were incidents of picketing by the defendants
who were then on strike against the employer.  EcTCAD

The Court ruled in favor of the labor union and nullified the proceedings
before the trial court. The Court opined that the complaint for damages is
deeply rooted in the labor dispute between the parties and thus should be
dismissed by the regular court for lack of jurisdiction. The Court stressed that
the wordings of Article 217 of the Labor Code is explicit and clear enough to
mean that exclusive jurisdiction over suits for damages arising from a strike
belongs to the labor arbiter, thus:
Article 217 is to be applied the way it is worded. The exclusive
original jurisdiction of a labor arbiter is therein provided for explicitly. It
means, it can only mean, that a court of first instance judge then, a
regional trial court judge now, certainly acts beyond the scope of the
authority conferred on him by law when he entertained the suit for
damages, arising from picketing that accompanied a strike. That was
squarely within the express terms of the law. Any deviation cannot
therefore be tolerated. So it has been the constant ruling of this Court
even prior to Lizarraga Hermanos v. Yap Tico, a 1913 decision. The
ringing words of the ponencia of Justice Moreland still call for
obedience. Thus, "The first and fundamental duty of courts, in our
judgment, is to apply the law. Construction and interpretation come
only after it has been demonstrated that application is impossible or
inadequate without them." It is so even after the lapse of sixty
years. 29 [Citations omitted]
Jurisprudence dictates that where the plaintiff's cause of action for
damages arose out of or was necessarily intertwined with an alleged unfair
labor practice, the jurisdiction is exclusively with the labor tribunal. Likewise,
where the damages separately claimed by the employer were allegedly
incurred as a consequence of strike or picketing of the union, such complaint
for damages is deeply rooted in the labor dispute between the parties and
within the exclusive jurisdiction of the labor arbiter. Consequently, the same
should be dismissed by ordinary courts for lack of jurisdiction. 30
From the foregoing, it is clear that the regular courts do not have
jurisdiction over PAL's claim of damages, the same being intertwined with its
labor dispute with the respondents over which the SOLE had assumed
jurisdiction. It is erroneous, therefore, for the CA to even suggest that PAL's
complaint should have been ventilated before the trial court.
A separate complaint for damages
runs counter to the rule against
split jurisdiction.

While there is merit in the contention that regular courts do not have
jurisdiction over claims for damages arising from a labor controversy, the
Court opines that PAL could no longer recover the alleged damages.
It must be recalled that the SOLE assumed jurisdiction over the labor
dispute between PAL and the respondents on 23 December 1997. In this
regard, it is settled that the authority of the SOLE to assume jurisdiction over a
labor dispute causing or likely to cause a strike or lockout in an industry
indispensable to national interest includes and extends to all questions and
controversies arising therefrom. 31 It has also been opined that when the very
reason for the SOLE's assumption of jurisdiction is the declaration of strike,
any issue regarding the strike is not merely incidental to but is essentially
involved in the labor dispute itself. 32
It bears emphasis, even at the risk of being repetitious, that it is beyond
question that the issue on damages is a controversy which arose from the
labor dispute between the parties herein. Consequently, when the SOLE
assumed jurisdiction over the labor dispute, the claim for damages was
deemed included therein. Thus, the issue on damages was also deemed
resolved when the SOLE decided the main controversy in its 1 June 1999
resolution declaring the illegality of the strike and the loss of employment
status of the striking officers of ALPAP, as well as when the case was finally
settled by this Court in its 10 April 2002 Resolution in G.R. No. 152306. This
is true even if the respective resolutions of the SOLE, CA, and this Court were
silent with respect to the damages.
To insist that PAL may recover the alleged damages through its
complaint before the LA would be to sanction a relitigation of the issue of
damages separately from the main issue of the legality of the strike from
which it is intertwined. This runs counter to the proscription against split
jurisdiction — the very principle invoked by PAL.
Likewise, PAL's claim for damages is barred under the doctrine of
immutability of final judgment. Under the said doctrine, a decision that has
acquired finality becomes immutable and unalterable, and may no longer be
modified in any respect, even if the modification is meant to correct erroneous
conclusions of fact and law, and whether it is made by the court that rendered
it or by the Highest Court of the land. Any act which violates this principle
must immediately be struck down. 33
Whether the damages claimed by PAL are recoverable and to what
extent would depend on the evidence in the illegal strike case which had long
attained finality. 34 PAL's recovery, therefore, would entail a relitigation of the
illegal strike case. The subject claim for damages would ultimately require the
modification of a final judgment. This cannot be done. The dismissal of the
present petition as well as the complaint for damages is therefore in order.
In any event, PAL only has itself to blame for this blunder. It was
already aware that it had sustained damages even before the SOLE issued its
resolution. It must be remembered that the damages allegedly sustained by
PAL were incurred as a consequence of the acts committed by the
respondents on the second day of the strike on 6 June 1998, or almost a year
prior to the issuance of the SOLE's resolution. However, PAL did not assert its
claim during the proceedings before the SOLE and, instead, acted on it only
after the decision on the main case attained finality. This is a grave error on
the part of PAL.
The proper recourse for PAL should have been to assert its claim for
damages before the SOLE and, as aptly stated by the LA, to elevate the case
to the CA when the SOLE failed to rule on the matter of damages. The 22
April 2008 LA decision, therefore, deserves reinstatement insofar as it
dismissed PAL's 22 April 2003 complaint for lack of jurisdiction for the reason
that the SOLE has exclusive jurisdiction over the same. Thus, the Court
quotes with approval the following pronouncements by the LA:
The respondents maintain that the complainant simply slept on
its rights when it failed to elevate the matter of damages to the Court of
Appeals. In this regard, we find the argument of the respondents
availing considering that upon the assumption of jurisdiction of the
Secretary of Labor over the labor disputes at PAL, all other issues had
been subsumed therein including the claim for damages arising from
the strike. This is clear from the language of Article 263 (g) of
the Labor Code granting the Secretary to order the "dismissal or loss of
employment status or payment by the locking-out employer of back
wages, damages and other affirmative relief even criminal prosecution
against either or both." 
HSAcaE

xxx xxx xxx

There is no quarrel regarding the jurisdiction of labor arbiters to
rule on the legality of strikes and lock-outs under Article 217 (a) (4) but
this refers to strikes or lock-outs in establishments that are not
 indispensable to national interest. However, if in his opinion the dispute
affects industries imbued with national interest, the Secretary of Labor
who has the authority, may assume jurisdiction over the dispute and
may opt to hear the same until its final disposition as is obtaining at
bar, or to certify the same for compulsory arbitration to the NLRC,
where it is the Commission that will hear and dispose of the certified
cases under Rule VIII of the Revised Rules of the NLRC. Even in
voluntary arbitration, should the disputants agree to submit the dispute
to voluntary arbitration, the Voluntary Arbitrator is not precluded from
awarding damages.
As the issue on the illegality of the strikes of June 5, 1998 has
already been passed upon by the Secretary of Labor when he
assumed jurisdiction to the exclusion of all others, all incidents arising
from the main issue of the legality of the strike are presumed to have
been ruled upon because they are deemed subsumed by the
assumption by the Secretary of Labor. 35
In sum, the Court finds meritorious PAL's claim that the CA erred in its
decision. Indeed, the CA erred when it ruled that regular courts have
jurisdiction to entertain claims for damages arising from strike as the same
violates the proscription against splitting of jurisdiction. The Court, however,
also finds that the LA was already divested of its jurisdiction to entertain PAL's
claim for damages as such issue was deemed included in the issue of legality
of strike of which the SOLE had assumed jurisdiction, pursuant to the rule
against splitting of jurisdiction. Unfortunately, for PAL's failure to raise the
claim during the pendency of the illegal strike case before the SOLE, the
same is deemed waived.
WHEREFORE, the 26 August 2011 Decision and 5 January 2012
Resolution of the Court of Appeals (CA) in CA-G.R. SP No. 113985 are SET
ASIDE. The 22 April 2008 Decision of the Labor Arbiter
is REINSTATED insofar as it dismissed the 22 April 2003 Complaint filed by
Philippine Airlines, Inc. in NLRC NCR No. 04-04906-03 for lack of jurisdiction.
SO ORDERED.
 (Philippine Airlines, Inc. v. Airline Pilots Association of the Philippines, G.R. No.
|||

200088, [February 26, 2018])

G.R. No. 202974. February 7, 2018.]

 NORMA D. CACHO and NORTH STAR INTERNATIONAL
TRAVEL, INC., petitioners, vs. VIRGINIA D.
BALAGTAS, respondent.

DECISION

LEONARDO-DE CASTRO, J  : p

Before the Court is a petition for review on certiorari under Rule 45 of

the Rules of Court, as amended, seeking to reverse and set aside the
Decision 1 dated November 9, 2011 and Resolution 2 dated August 6, 2012 of
the Court of Appeals in CA-G.R. SP No. 111637, which affirmed the Labor
Arbiter's Decision 3 dated March 28, 2005.  HTcADC

This case stemmed from a Complaint 4 for constructive dismissal filed

by respondent Virginia D. Balagtas (Balagtas) against petitioners North Star
International Travel, Inc. (North Star) and its President Norma D. Cacho
(Cacho) before the Labor Arbiter docketed as NLRC-NCR Case No. 04-
04736-04.
The facts as narrated by the Court of Appeals are as follows:
In her Position Paper submitted before the Labor Arbiter,
petitioner [Balagtas] alleged that she was a former employee of
respondent TQ3 Travel Solutions/North Star International Travel, Inc.,
a corporation duly registered with the Securities and Exchange
Commission (SEC) on February 12, 1990. She also alleged that she
was one of the original incorporators-directors of the said corporation
and, when it started its operations in 1990, she was the General
Manager and later became the Executive Vice President/Chief
Executive Officer.
On March 19, 2004 or after 14 years of service in the said
corporation, petitioner was placed under 30 days preventive
suspension pursuant to a Board Resolution passed by the Board of
Directors of the respondent Corporation due to her alleged
questionable transactions. On March 20, 2004, she was notified by
private respondent Norma Cacho of her suspension and ordered to
explain in writing to the Board of Directors her alleged fraudulent
transactions within 5 days from said notice. Petitioner promptly heeded
the order on March 29, 2004.
On April 5, 2004, while under preventive suspension, petitioner
wrote a letter to private respondent Norma Cacho informing the latter
that she was assuming her position as Executive Vice-President/Chief
Executive Officer effective on that date; however, she was prevented
from re-assuming her position. Petitioner also wrote a letter dated April
 12, 2004 to the Audit Manager inquiring about the status of the
examination of the financial statement of respondent corporation for
the year 2003, which request was, however, ignored. Consequently,
petitioner filed a complaint claiming that she was constructively and
illegally dismissed effective on April 12, 2004.
In their defense, respondents averred that, on March 19, 2004,
the majority of the Board of Directors of respondent corporation
decided to suspend petitioner for 30 days due to the questionable
documents and transactions she entered into without authority. The
preventive suspension was meant to prevent petitioner from
influencing potential witnesses and to protect the respondent
corporation's property. Subsequently, the Board of Directors
constituted an investigation committee tasked with the duty to
impartially assess the charges against petitioner.
Respondents alleged that petitioner violated her suspension
when, on several occasions, she went to the respondent corporation's
office and insisted on working despite respondent Norma Cacho's
protestation. Respondents also alleged that the complaint for
constructive dismissal was groundless. They asserted that petitioner
was not illegally dismissed but was merely placed under preventive
suspension. 5

The Decision of the Labor Arbiter

In his Decision dated March 28, 2005, the Labor Arbiter found that
respondent Balagtas was illegally dismissed from North Star, viz.:
WHEREFORE, judgment is hereby made finding the
complainant to have been illegally dismissed from employment on July
15, 2004 and concomitantly ordering the respondent North Star
International Travel, Inc., to pay her a separation pay computed at
thirty (30) days pay for every year of service with backwages, plus
commissions and such other benefits which she should have received
had she not been dismissed at all.
The respondent North Star International Travel, Inc. is further
ordered to pay complainant three (3) million pesos as moral damages
and two (2) million pesos as exemplary damages plus ten (10%)
percent attorney's fees. 6
Subsequently, petitioners appealed the case to the National Labor
Relations Commission (NLRC). In their Notice of Appeal, 7 they prayed that
Balagtas's Complaint be dismissed for lack of jurisdiction. While they
maintained that Balagtas was never dismissed, they also alleged that she was
a corporate officer, incorporator, and member of the North Star's Board of
Directors (The Board). Thus, the NLRC cannot take cognizance of her illegal
dismissal case, the same being an intra-corporate controversy, which properly
falls within the original and exclusive jurisdiction of the ordinary courts.

The Ruling of the NLRC

In its Resolution 8 dated September 30, 2008, the NLRC ruled in favor

of petitioners, viz.:
WHEREFORE, the questioned Decision of the Labor Arbiter is
REVERSED and SET ASIDE and the complaint is DISMISSED for lack
of jurisdiction. 9
The NLRC's findings are as follows: First, through a Board resolution
passed on March 31, 2003, Balagtas was elected as North Star's Executive
Vice President and Chief Executive Officer, as evidenced by a Secretary's
Certificate dated April 22, 2003. Second, in her Counter Affidavit executed
sometime in 2004 in relation to the criminal charges against her, respondent
Balagtas had in fact admitted occupying these positions, apart from being one
of North Star's incorporators. And, third, the position of "Vice President" is a
corporate office provided in North Star's by-laws. 10 
aScITE

Based on these findings, the NLRC ruled that respondent Balagtas

was a corporate officer of North Star at the time of her dismissal and not
a mere employee. A corporate officer's dismissal is always an intra-corporate
controversy, 11 a subject matter falling within the Regional Trial Court's (RTC)
jurisdiction. 12 Thus, the Labor Arbiter and the NLRC do not have jurisdiction
over Balagtas's Complaint.
The NLRC also held that petitioners North Star and Cacho were not
estopped from raising the issue of lack of jurisdiction. Citing Dy v.
National Labor Relations Commission, 13 the NLRC explained that the Labor
Arbiter heard and decided the case upon the theory that he had jurisdiction
over the Complaint. Thus, the Labor Arbiter's jurisdiction may be raised as an
issue on appeal.
Aggrieved, respondent Balagtas moved for reconsideration but was
denied. Thus, she elevated the case to the Court of Appeals via a petition
for certiorari.

The Ruling of the Court of Appeals

In its assailed Decision, the Court of Appeals found merit in Balagtas's

petition, viz.:
 WHEREFORE, the petition is hereby GRANTED. The
assailed Resolution, dated September 30, 2008 of the National Labor
Relations Commission dismissing the petitioner's complaint for lack of
jurisdiction, is hereby REVERSED and SET ASIDE. The Decision,
dated March 28, 2005 of the Labor Arbiter is AFFIRMED and this case
is ordered REMANDED to the NLRC for the re-computation of
petitioner's backwages and attorney's fees in accordance with this
Decision. 14
In ruling that the present case does not involve an intra-corporate
controversy, the Court of Appeals applied a two-tier test, viz.: (a)
the relationship test, and (b) the nature of controversy test.
Applying the relationship test, the Court of Appeals explained that no
intra-corporate relationship existed between respondent Balagtas and North
Star. While respondent Balagtas was North Star's Chief Executive
Officer and Executive Vice President, petitioners North Star and Cacho failed
to establish that occupying these positions made her a corporate officer. First,
respondent Balagtas held the Chief Executive Officer position as a mere
corporate title for the purpose of enlarging North Star's corporate image.
According to North Star's by-laws, the company President shall assume the
position of Chief Executive Officer. Thus, respondent Balagtas was not
empowered to exercise the functions of a corporate officer, which was lawfully
delegated to North Star's President, petitioner Cacho. 15 And, second,
petitioner North Star's By-laws only enumerate the position of Vice
President as one of its corporate officers. The NLRC should not have
assumed that the Vice President position is the same as the Executive Vice
President position that respondent Balagtas admittedly occupied.
Following Matling Industrial and Commercial Corporation v. Coros, 16 the
appellate court reminded that "a position must be expressly mentioned in the
by-laws in order to be considered a corporate office." 17
On the other hand, the Court of Appeals elucidated that based on the
allegations in herein respondent Balagtas's complaint filed before the Labor
Arbiter, the present case involved labor issues. Thus, even using the nature
of controversy test, it cannot be regarded as an intra-corporate dispute. 18
The subsequent motions for reconsideration were denied. 19
Hence, the present petition.

The Issues

Petitioners North Star and Cacho come before this Court raising the
following issues:
 A.
WHETHER RESPONDENT BALAGTAS IS A CORPORATE OFFICER
AS DEFINED BY THE CORPORATION CODE, CASE LAW, AND
NORTH STAR'S BY-LAWS
B.
WHETHER THE APPELLATE COURT'S DECISION REVERSING
THE NLRC'S FINDING THAT BALAGTAS WAS A CORPORATE
OFFICER FOR WHICH HER ACTION FOR ILLEGAL DISMISSAL
WAS INAPPROPRIATE FOR IT TO RESOLVE, WAS CORRECT
ESPECIALLY BECAUSE NO DISCUSSION OF THAT CONCLUSION
WAS MADE BY THE APPELLATE COURT IN ITS DECISION
C.
WHETHER THE AWARD BY THE APPELLATE COURT OF
SEPARATION PAY, BACKWAGES, DAMAGES, AND LAWYER'S
FEES TO BALAGTAS WAS APPROPRIATE 20
Petitioners Cacho and North Star insist that the present case's subject
matter is an intra-corporate controversy. They maintain that respondent
Balagtas, as petitioner North Star's Executive Vice President and Chief
Executive Officer, was its corporate officer. Particularly, they argue that: first,
under petitioner North Star's by-laws, vice-presidents are listed as corporate
officers. Thus, the NLRC erred when it differentiated between: (a) "vice
president" as a corporate office provided in petitioner North Star's by-laws,
and (b) "Executive Vice President," the position occupied by respondent
Balagtas. Its interpretation unduly supplanted the Board's wisdom and
authority in handling its corporate affairs. Her appointment as one of petitioner
North Star's vice presidents is evidenced by the Secretary's
Certificate dated April 22, 2003. As held in Matling, if the position or office is
created by the by-laws and the appointing authority is the board of
directors, then it is a corporate office. Second, she had already been a
corporate officer of petitioner North Star for quite some time, having been
appointed as General Manager through a Board Resolution in 1997 and,
subsequently, as Executive Vice President and General Manager in 2001, as
evidenced by the Secretary's Certificate dated March 23, 2001. And third,
respondent Balagtas has openly admitted her appointments to these
positions. She even acknowledged being a member of the Board and at the
same time petitioner North Star's Executive Vice President and General
Manager. 21
Considering all these in applying the relationship test, petitioners
Cacho and North Star assert that respondent Balagtas is not petitioner North
Star's mere employee but a corporate officer thereof whose dismissal is
categorized as an intra-corporate matter. 22  HEITAD
 Petitioners Cacho and North Star further cite Espino v. National Labor
Relations Commission 23 where the Court held that a corporate officer's
dismissal is always a corporate act. It cannot be considered as a simple labor
case. Thus, under the nature of the controversy test, the present case is an
intra-corporate dispute because the primary subject matter herein is the
dismissal of a corporate officer.
In refuting petitioners Cacho and North Star's allegations, respondent
Balagtas avers that: first, she was not a corporate officer of petitioner North
Star. The Board Resolution and Secretary's Certificates that purportedly
support petitioners Cacho and North Star's claims were falsified, forged, and
invalid. Petitioners Cacho and North Star failed to show that the Executive
Vice President position she had occupied was a corporate office. Said
position was a mere nomenclature as she was never empowered to exercise
the functions of a corporate officer. In fact, in the 2003 General Information
Sheet (GIS) of petitioner North Star, the field "corporate position" opposite
respondent Balagtas's name was filled out as "not applicable." Second, she
was no longer a stockholder and director of petitioner North Star. Third, she
was merely an employee. Petitioner Cacho was the one who hired her,
determined her compensation, directed and controlled the manner she
performed her work, and ultimately, dismissed her from employment. Fourth,
the issue of whether or not she was a corporate officer is irrelevant because
her claim for back wages, commissions, and other monies is clearly
categorized as a labor dispute, not an intra-corporate controversy. 24 And fifth,
petitioners Cacho and North Star are already estopped from questioning the
jurisdiction of the Labor Arbiter. They actively participated in the proceedings
before the Labor Arbiter and cannot assail the validity of such proceedings
only after obtaining an unfavorable judgment. 25

The Ruling of the Court

The petition is meritorious.

The sole issue before the Court is whether or not the present case is an
intra-corporate controversy within the jurisdiction of the regular courts or an
ordinary labor dispute that the Labor Arbiter may properly take cognizance of.
Respondent Balagtas's dismissal is
an intra-corporate controversy

At the onset, We agree with the appellate court's ruling that a two-tier
test must be employed to determine whether an intra-corporate controversy
exists in the present case, viz.: (a) the relationship test, and (b) the nature
of the controversy test. This is consistent with the Court's rulings in Reyes
v. Regional Trial Court of Makati, Branch 142, 26 Speed Distributing
Corporation v. Court of Appeals, 27 and Real v. Sangu Philippines, Inc. 28
A. Relationship Test

A dispute is considered an intra-corporate controversy under

the relationship test when the relationship between or among the
disagreeing parties is any one of the following: (a) between the corporation,
partnership, or association and the public; (b) between the corporation,
partnership, or association and its stockholders, partners, members,
or officers; (c) between the corporation, partnership, or association and the
State as far as its franchise, permit or license to operate is concerned; and (d)
among the stockholders, partners, or associates themselves. 29
In the present case, petitioners Cacho and North Star allege that
respondent Balagtas, as petitioner North Star's Executive Vice President, was
its corporate officer. On the other hand, while respondent Balagtas admits to
have occupied said position, she argues she was Executive Vice
President merely by name and she did not discharge any of the
responsibilities lodged in a corporate officer.
Given the parties' conflicting views, We must now determine whether
or not the Executive Vice President position is a corporate office so as to
establish the intra-corporate relationship between the parties.
In Easycall Communications Phils., Inc. v. King, 30 the Court ruled that a
corporate office is created by the charter of the corporation and the officer
is elected thereto by the directors or stockholders. In other words, one shall
be considered a corporate officer only if two conditions are met, viz.: (1) the
position occupied was created by charter/by-laws, and (2) the officer
was elected (or appointed) by the corporation's board of directors to
occupy said position.
1. The Executive Vice President
position is one of the corporate
offices provided in petitioner
North Star's By-laws
The rule is that corporate officers are those officers of a corporation
who are given that character either by the Corporation Code or by
the corporation's by-laws. 31
Section 25 of the Corporation Code 32 explicitly provides for the election
of the corporation's president, treasurer, secretary, and such other officers
as may be provided for in the by-laws. In interpreting this provision, the
Court has ruled that if the position is other than the corporate president,
treasurer, or secretary, it must be expressly mentioned in the by-laws in
order to be considered as a corporate office. 33
In this regard, petitioner North Star's by-laws 34 provides the following:
ARTICLE IV
OFFICERS
Section 1. Election/Appointment. — Immediately after their
election, the Board of Directors shall formally organize by electing the
Chairman, the President, one or more Vice-President (sic), the
Treasurer, and the Secretary, at said meeting.
The Board may, from time to time, appoint such other officers as
it may determine to be necessary or proper. ATICcS

Any two (2) or more positions may be held concurrently by the

same person, except that no one shall act as President and Treasurer
or Secretary at the same time.
Clearly, there may be one or more vice president positions in
petitioner North Star and, by virtue of its by-laws, all such positions shall be
corporate offices.
Consequently, the next question that begs to be asked is whether or
not the phrase "one or more vice president" in the above-cited provision
of the by-laws includes the Executive Vice President position held by
respondent Balagtas.
In ruling that respondent Balagtas was not a corporate officer of
petitioner North Star, the Court of Appeals pointed out that the NLRC should
not have assumed that the "Vice President" position is the same as
the "Executive Vice President" position that Balagtas admittedly occupied. In
other words, that the exact and complete name of the position must appear
in the by-laws, otherwise it is an ordinary office whose occupant shall be
regarded as a regular employee rather than a corporate officer.
The appellate court's interpretation of the phrase "one or more vice
president" unduly restricts one of petitioner North Star's inherent corporate
powers, viz.: to adopt its own by-laws, provided that it is not contrary to law,
morals, or public policy 35 for its internal affairs, to regulate the conduct and
prescribe the rights and duties of its members towards itself and among
themselves in reference to the management of its affairs. 36
The use of the phrase "one or more" in relation to the establishment of
vice president positions without particular exception indicates an intention to
give petitioner North Star's Board ample freedom to make several vice-
president positions available as it may deem fit and in consonance with sound
business practice.
 To require that particular designation/variation of each vice-president
(i.e., executive vice president) be specified and enumerated is to invalidate
the by-laws' true intention and to encroach upon petitioner North Star's
inherent right and authority to adopt its own set of rules and regulations to
govern its internal affairs. Whether the creation of several vice-president
positions in a company is reasonable is a question of policy that courts of law
should not interfere with. Where the reasonableness of a by-law is a mere
matter of judgment, and one upon which reasonable minds must necessarily
differ, a court would not be warranted in substituting its judgment instead of
the judgment of those who are authorized to make by-laws and who have
exercised their authority. 37
Thus, by name, the Executive Vice President position is embraced by
the phrase "one or more vice president" in North Star's by-laws.
2. Respondent Balagtas was
appointed by the Board as
petitioner North Star's
Executive Vice President
While a corporate office is created by an express provision either in
the Corporation Code or the By-laws, what makes one a corporate officer is
his election or appointment thereto by the board of directors. Thus, there
must be documentary evidence to prove that the person alleged to be a
corporate officer was appointed by action or with approval of the board. 38
In the present case, petitioners Cacho and North Star assert that
respondent Balagtas was elected as Executive Vice President by the Board
as evidenced by the Secretary's Certificate dated April 22, 2003, which
provides:
I, MOLINA A. CABA, of legal age, Filipino citizen, x x x after
being duly sworn to in accordance with law, depose and state: That —

1. I am the duly appointed Corporate Secretary of North Star

International Travel, Inc. x x x.

2. As such Corporate Secretary of the Corporation, I hereby

certify that at the Regular/Special meeting of the Board of
Directors and Stockholders of the Corporation which was
held on March 31, 2003 during which meeting a quorum
was present and majority of the stockholders were in
attendance, the following resolutions were unanimously
passed and adopted:

"RESOLVED, AS IT IS HEREBY RESOLVED, that during a

meeting of the Board of Directors held last March 31,
 2003, the following members of the Board were elected
to the corporate position opposite their names:"

NAME POSITION

NORMA D. CACHO Chairman

VIRGINIA D. Executive Vice

BALAGTAS President 39

  (Emphasis supplied)

On the other hand, respondent Balagtas assails the validity of the

above-cited Secretary's Certificate for being forged and fabricated. However,
aside from these bare allegations, the NLRC observed that she did not
present other competent proof to support her claim. To the contrary,
respondent Balagtas even admitted that she was elected by the Board as
petitioner North Star's Executive Vice President and argued that she could not
be removed as such without another valid board resolution to that effect. To
support this claim, respondent Balagtas submitted the very same Secretary's
Certificate as an attachment to her Position Paper before the Labor
Arbiter. 40 That she is now casting doubt over a document she herself has
previously relied on belies her own claim that the Secretary's Certificate is a
fake.
Thus, the above-cited Secretary's Certificate overcomes respondent
Balagtas's contention that she was merely the Executive Vice President by
name and was never empowered to exercise the functions of a corporate
officer. Notably, she did not offer any proof to show that her duties, functions,
and compensation were all determined by petitioner Cacho as petitioner North
Star's President.
In any case, that the Executive Vice President's duties and
responsibilities are determined by the President instead of the Board is
irrelevant. In determining whether a position is a corporate office, the board of
directors' appointment or election thereto is controlling. Article IV, Section 4 of
North Star's By-laws provides:
Section 4. The Vice-President(s). — If one or more Vice-
Presidents are appointed, he/they shall have such powers and shall
perform such duties as may from time to time be assigned to
him/them by the Board of Directors or by the President. [Emphasis
supplied.]  TIADCc

When Article IV, Section 4 is read together with Section 1 thereof, it is

clear that while petitioner North Star may have one or more vice presidents
and the President is authorized to determine each one's scope of work, their
appointment or election still devolves upon the Board.
At this point, it is best to emphasize that the manner of creation (i.e.,
under the express provisions of the Corporation Code or by-laws) and
the manner by which it is filled (i.e., by election or appointment of the board
of directors) are sufficient in vesting a position the character of a corporate
office.
Respondent Balagtas also denies her status as one of petitioner North
Star's corporate officers because she was not listed as such in petitioner
North Star's 2003 General Information Sheet (GIS).
This is of no moment.
The GIS neither governs nor establishes whether or not a position
is an ordinary or corporate office. At best, if one is listed in the GIS as an
officer of a corporation, his/her position as indicated therein could only be
deemed a regular office, and not a corporate office as it is defined under
the Corporation Code. 41
Based on the above discussion, as Executive Vice President,
respondent Balagtas was one of petitioner North Star's corporate officers.
Thus, there is an intra-corporate relationship existing between the parties.
B. Nature of the Controversy Test

The existence of an intra-corporate controversy does not wholly rely on

the relationship of the parties. The incidents of their relationship must also be
considered. Thus, under the nature of the controversy test, the disagreement
must not only be rooted in the existence of an intra-corporate relationship, but
must as well pertain to the enforcement of the parties' correlative rights and
obligations under the Corporation Code and the internal and intra-corporate
regulatory rules of the corporation. If the relationship and its incidents are
merely incidental to the controversy or if there will still be conflict even if the
relationship does not exist, then no intra-corporate controversy exists. 42
Verily, in a long line of cases, 43 the Court consistently ruled that a
corporate officer's dismissal is always a corporate act, or an intra-corporate
controversy which arises between a stockholder and a corporation. However,
a closer look at these cases will reveal that the intra-corporate nature of the
disputes therein did not hinge solely on the fact that the subject of the
dismissal was a corporate officer.
In Philippine School of Business Administration v. Leano, 44 the
complainant questioned the validity of his dismissal after his position was
declared vacant and he was not re-elected thereto. The cases of Fortune
Cement Corporation v. National Labor Relations Commission 45 and Locsin v.
Nissan Lease Phils., Inc. 46 also share similar factual milieu.
On the other hand, the complainant in Espino v. National Labor
Relations Commission 47 also contested the failure of the board of directors to
re-elect him as a corporate officer. The Court found that the board of directors
deferred his re-election in light of previous administrative charges filed against
the complainant. Later on, the board of directors deemed him resigned from
service and his position was subsequently abolished.
Finally, in Pearson and George, (S.E. Asia), Inc. v. National Labor
Relations Commission, 48 the complainant lost his corporate office primarily
because he was not re-elected as a member of the corporation's board of
directors. The Court found that the corporate office in question required the
occupant to be at the same time a director. Thus, he should lose his position
as a corporate officer because he ceased to be a director for any reason (e.g.,
he was not re-elected as such), such loss is not dismissal but failure to qualify
or to maintain a prerequisite for that position.
The dismissals in these cases were all considered intra-corporate
controversies not only because the complainants were corporate officers, but
also, and more importantly, because they were not re-elected to their
respective corporate offices and, thus, terminated from the corporation. "The
matter of whom to elect is a prerogative that belongs to the Board, and
involves the exercise of deliberate choice and the faculty of discriminative
selection. Generally speaking, the relationship of a person to a corporation,
whether as officer or as agent or employee, is not determined by the nature of
the services performed, but by the incidents of the relationship as they
actually exist." 49
In other words, the dismissal must relate to any of the circumstances
and incidents surrounding the parties' intra-corporate relationship. To be
considered an intra-corporate controversy, the dismissal of a corporate officer
must have something to do with the duties and responsibilities attached to
his/her corporate office or performed in his/her official capacity. 50
In respondent Balagtas's Position Paper filed before the Labor Arbiter
she alleged as follows: (a) petitioner Cacho informed her, through a letter, that
she had been preventively suspended by the Board; (b) she opposed the
suspension, was unduly prevented from re-assuming her position
as Executive Vice President, 51 and thereafter constructively dismissed;
(c) the Board did not authorize either her suspension and removal from
office; and (d) as a result of her illegal dismissal, she is entitled to
separation pay in lieu of her reinstatement to her previous positions,
plus back wages, allowances, and other benefits. 52
 The foregoing allegations mainly relate to incidents involving her
capacity as Executive Vice President, a position above-declared as a
corporate office, viz.: first, respondent Balagtas's claim of dismissal without
prior authority from the Board reveals her understanding that the appointment
and removal of a corporate officer like the Executive Vice President could only
be had through an official act by the Board. And, second, she sought
separation pay in lieu of reinstatement to her former positions, one of which
was as Executive Vice President. Even her prayer for full back wages,
allowances, commissions, and other monetary benefits all relate to her
corporate office. 53
On the other hand, petitioners Cacho and North Star terminated
respondent Balagtas for the following reasons: (a) for allegedly appropriating
company funds for her personal gain; (b) for abandonment of work; (c)
violation of a lawful order of the corporation; and (d) loss of trust and
confidence. 54 In their Position Paper, petitioners Cacho and North Star
described in detail the latter's fund disbursement process, 55 emphasizing
respondent Balagtas's role as the one who approves payment vouchers and
the signatory on issued checks — responsibilities specifically devolved
upon her as the vice president. And as the vice president, respondent
Balagtas actively participated in the whole process, if not controlled it
altogether. As a result, petitioners Cacho and North Star accused respondent
Balagtas of gravely abusing the confidence the Board has reposed in
her as vice president and misappropriating company funds for her own
personal gain. AIDSTE

From these, it is clear that the termination complained of is intimately

and inevitably linked to respondent Balagtas's role as petitioner North
Star's Executive Vice President: first, the alleged misappropriations were
committed by respondent Balagtas in her capacity as vice president, one of
the officers responsible for approving the disbursements and signing the
checks. And, second, these alleged misappropriations breached petitioners
Cacho's and North Star's trust and confidence specifically reposed in
respondent Balagtas as vice president.
That all these incidents are adjuncts of her corporate office lead the
Court to conclude that respondent Balagtas's dismissal is an intra-corporate
controversy, not a mere labor dispute.
Petitioners Cacho and North Star not
estopped from questioning
jurisdiction

Respondent Balagtas insists that petitioners belatedly raised the issue

of the Labor Arbiter's lack of jurisdiction before the NLRC. Relying on Tijam v.
 Sibonghanoy, 56 she avers that petitioners, after actively participating in the
proceedings before the Labor Arbiter and obtaining an unfavorable judgment,
are barred by laches from attacking the latter's jurisdiction.
We disagree with respondent Balagtas.
The Court has already held that the ruling in Tijam v.
Sibonghanoy remains only as an exception to the general rule. Estoppel by
laches will only bar a litigant from raising the issue of lack of jurisdiction in
exceptional cases similar to the factual milieu of Tijam v. Sibonghanoy. To
recall, the Court in Tijam v. Sibonghanoy ruled that the plea of lack of
jurisdiction may no longer be raised for being barred by laches because it was
raised for the first time in a motion to dismiss filed almost 15 years after the
questioned ruling had been rendered. 57
These exceptional circumstances are not present in this case. Thus, the
general rule must apply: that the issue of jurisdiction may be raised at any
stage of the proceedings, even on appeal, and is not lost by waiver or by
estoppel. In Espino v. National Labor Relations Commission, 58 We ruled:
The principle of estoppel cannot be invoked to prevent this Court from
taking up the question, which has been apparent on the face of the
pleadings since the start of the litigation before the Labor Arbiter. In the
case of Dy v. NLRC, supra, the Court, citing the case of Calimlim v.
Ramirez, reiterated that the decision of a tribunal not vested with
appropriate jurisdiction is null and void. Again, the Court in Southeast
Asian Fisheries Development Center-Aquaculture Department v.
NLRC restated the rule that the invocation of estoppel with respect
to the issue of jurisdiction is unavailing because estoppel does
not apply to confer jurisdiction upon a tribunal that has none over
the cause of action. The instant case does not provide an exception
to the said rule. 59 (Emphasis supplied)
All told, the issue in the present case is an intra-corporate controversy,
a matter outside the Labor Arbiter's jurisdiction.
WHEREFORE, the petition is hereby GRANTED. The Decision dated
November 9, 2011 and Resolution dated August 6, 2012 of the Court of
Appeals in CA-G.R. SP No. 111637 are SET ASIDE. NLRC-NCR Case No.
04-04736-04 is dismissed for lack of jurisdiction, without prejudice to the filing
of an appropriate case before the proper tribunal.
SO ORDERED.
|||  (Cacho v. Balagtas, G.R. No. 202974, [February 7, 2018])
 G.R. No. 152611. August 5, 2003.]

LAND BANK OF THE PHILIPPINES, petitioner, vs. SEVERINO

LISTANA, SR., respondent.

This is a petition for review of the decision of the Court of Appeals in CA-
G.R. SP No. 65276 dated December 11, 2001, 1 which annulled the Orders dated
January 29, 2001 and April 2, 2001 of the Regional Trial Court of Sorsogon,
Sorsogon, Branch 51. 2
Respondent Severino Listana is the owner of a parcel of land containing
an area of 246.0561 hectares, located in Inlagadian, Casiguran, Sorsogon,
covered by Transfer Certificate of Title No. T-20193. He voluntarily offered to sell
the said land to the government, through the Department of Agrarian Reform
(DAR), 3 under Section 20 of R.A. 6657, also known as the Comprehensive
Agrarian Reform Law of 1988 (CARL). The DAR valued the property at
P5,871,689.03, which was however rejected by the respondent. Hence, the
Department of Agrarian Reform Adjudication Board (DARAB) of Sorsogon
commenced summary administrative proceedings to determine the just
compensation of the land.
On October 14, 1998, the DARAB rendered a Decision, the dispositive
portion of which reads as follows:
WHEREFORE, taking into consideration the foregoing
computation, the prior valuation made by the Land Bank of the
Philippines is hereby set aside and a new valuation in the amount of
TEN MILLION NINE HUNDRED FIFTY SIX THOUSAND NINE
HUNDRED SIXTY THREE PESOS AND 25 CENTAVOS
(P10,956,963.25) for the acquired area of 240.9066 hectares. The Land
Bank of the Philippines is hereby ordered to pay the same to the
landowner in the manner provided for by law.
SO ORDERED. 4
Thereafter, a Writ of Execution was issued by the PARAD directing the
manager of Land Bank to pay the respondent the aforesaid amount as just
compensation in the manner provided by law. 5
On September 2, 1999, respondent filed a Motion for Contempt with the
PARAD, alleging that petitioner Land Bank failed to comply with the Writ of
Execution issued on June 18, 1999. He argued that such failure of the petitioner
to comply with the writ of execution constitutes contempt of the DARAB.
Meanwhile, on September 6, 1999, petitioner Land Bank filed a petition
with the Regional Trial Court of Sorsogon, Branch 52, sitting as a Special
Agrarian Court (SAC), for the determination of just compensation, as provided for
in Section 16 (f) of the CARL. 6
On August 20, 2000, the PARAD issued an Order granting the Motion for
Contempt, as follows:
WHEREFORE, premises considered, the motion for contempt is
hereby GRANTED, thus ALEX A. LORAYES, as Manager of respondent
LAND BANK, is cited for indirect contempt and hereby ordered to be
imprisoned until he complies with the Decision of the case dated October
14, 1998.
SO ORDERED. 7
Petitioner Land Bank filed a Motion for Reconsideration of the aforequoted
Order, 8 which was however denied by the PARAD on September 20,
2000. 9 Thus, petitioner filed a Notice of Appeal with the PARAD, manifesting its
intention to appeal the decision to the DARAB Central, pursuant to Rule XI,
Section 3 of the 1994 DARAB New Rules of Procedure. 10
On the other hand, the Special Agrarian Court dismissed the petition for
the determination of just compensation filed by petitioner Land Bank in an Order
dated October 25, 2000. Petitioner's Motion for Reconsideration of said dismissal
was likewise denied.  STcAIa

In a Resolution dated November 27, 2000, PARAD Capellan denied due

course to petitioner's Notice of Appeal and ordered the issuance of an Alias Writ
of Execution for the payment of the adjudged amount of just compensation to
respondent. 11 On January 3, 2001, he directed the issuance of an arrest order
against Manager Alex A. Lorayes. 12
Petitioner Land Bank filed a petition for injunction before the Regional Trial
Court of Sorsogon, Sorsogon, with application for the issuance of a writ of
preliminary injunction to restrain PARAD Capellan from issuing the order of
arrest. 13 The case was raffled to Branch 51 of said court. On January 29, 2001,
the trial court issued an Order, the dispositive portion of which reads:
WHEREFORE, premises considered, the respondent Provincial
Adjudicator of the DARAB or anyone acting in its stead is enjoined as it
is hereby enjoined from enforcing its order of arrest against Mr. Alex A.
Lorayes pending the final termination of the case before RTC Branch 52,
Sorsogon upon the posting of a cash bond by the Land Bank.
SO ORDERED. 14
 Respondent filed a Motion for Reconsideration of the trial court's order,
which was denied in an Order dated April 2, 2001. 15
Thus, respondent filed a special civil action for certiorari with the Court of
Appeals, 16 docketed as CA-G.R. SP No. 65276. On December 11, 2001, the
Court of Appeals rendered the assailed decision which nullified the Orders of the
Regional Trial Court of Sorsogon, Sorsogon, Branch 51.
Hence, the instant petition for review on the following issues:
I. WHETHER OR NOT THE CA DEPARTED FROM THE ACCEPTED
COURSE OF JUDICIAL PROCEEDINGS IN ENTERTAINING
THE RESPONDENT'S SPECIAL CIVIL ACTION FOR
CERTIORARI TO QUESTION THE FINAL ORDER OF THE RTC
WHICH, HOWEVER, WAS SUBJECT TO APPEAL UNDER THE
1997 RULES OF CIVIL PROCEDURE.
II. WHETHER OR NOT THE CA DECIDED IN A WAY NOT IN ACCORD
WITH LAW AND SUBSTANTIAL JUSTICE, IN ANNULLING AND
SETTING ASIDE THE RTC FINAL ORDER OF INJUNCTION,
CONSIDERING THAT:
A. THE PARAD DID NOT ACQUIRE COMPETENT
JURISDICTION OVER THE CONTEMPT PROCEEDINGS
INASMUCH AS IT WAS INITIATED BY MERE MOTION
FOR CONTEMPT AND NOT BY VERIFIED PETITION, IN
VIOLATION OF SECTION 2, RULE XI OF THE NEW
DARAB RULES OF PROCEDURE AND OF RULE 71 OF
THE REVISED RULES OF COURT.
B. THE PARAD CONTEMPT ORDER CANNOT BE
CONSIDERED FINAL AND EXECUTORY, BECAUSE
THE PARAD ITSELF DISALLOWED THE PETITIONER'S
APPEAL TO THE DARAB CENTRAL OFFICE, IN
DISREGARD OF THE BASIC RULE THAT THE
APPELLATE TRIBUNAL DETERMINES THE MERITS OF
THE APPEAL.
C. THE PARAD ORDER OF ARREST AGAINST LBP MANAGER
ALEX LORAYES WAS IN GROSS AND PATENT
VIOLATION OF HIS PERSONAL, CONSTITUTIONAL
AND CIVIL RIGHTS AGAINST UNJUST ARREST AND
IMPRISONMENT, INASMUCH AS, UNDER THE 1987
CONSTITUTION, ONLY JUDGES CAN ISSUE
WARRANTS OF ARREST AGAINST CITIZENS, AND THE
PROPER SUBJECT OF THE CONTEMPT PROCEEDING
WAS THE PETITIONER ITSELF AND NOT THE LBP
MANAGER, AND YET THE CONTEMPT ORDER WAS
AGAINST THE LBP MANAGER.
 D. THE PARAD ORDER OF CONTEMPT WAS PATENTLY
NULL AND VOID, AS IT ATTEMPTED TO ENFORCE
COMPLIANCE WITH THE PARAD DECISION THAT WAS
ADMITTEDLY NOT FINAL AND EXECUTORY, AS THE
MATTER OF JUST COMPENSATION BEFORE THE
SPECIAL AGRARIAN COURT WAS ON APPEAL WITH
THE COURT OF APPEALS. 17
As regards the first issue, petitioner submits that the special civil action for
certiorari filed by respondent before the Court of Appeals to nullify the injunction
issued by the trial court was improper, considering that the preliminary injunction
issued by the trial court was a final order which is appealable to the Court of
Appeals via a notice of appeal. 18
Petitioner's submission is untenable. Generally, injunction is a preservative
remedy for the protection of one's substantive right or interest. It is not a cause of
action in itself but merely a provisional remedy, an adjunct to a main suit. Thus, it
has been held that an order granting a writ of preliminary injunction is an
interlocutory order. As distinguished from a final order which disposes of the
subject matter in its entirety or terminates a particular proceeding or action,
leaving nothing else to be done but to enforce by execution what has been
determined by the court, an interlocutory order does not dispose of a case
completely, but leaves something more to be adjudicated upon. 19
Clearly, the grant of a writ of preliminary injunction is in the nature of an
interlocutory order, hence, unappealable. Therefore, respondent's special civil
action for certiorari before the Court of Appeals was the correct remedy under the
circumstances. Certiorari is available where there is no appeal, or any plain,
speedy, and adequate remedy in the ordinary course of law. 20
The order granting a writ of preliminary injunction is an
interlocutory order; as such, it cannot by itself be subject of an appeal or
a petition for review on certiorari. The proper remedy of a party
aggrieved by such an order is to bring an ordinary appeal from an
adverse judgment in the main case, citing therein the grounds for
assailing the interlocutory order. However, the party concerned may file
a petition for certiorari where the assailed order is patently erroneous
and appeal would not afford adequate and expeditious relief. 21
On the substantive issue of whether the order for the arrest of petitioner's
manager, Mr. Alex Lorayes by the PARAD, was valid, Rule XVIII of the 2003
DARAB Rules reads, in pertinent part:
SECTION 2. Indirect Contempt. — The Board or any of its
members or its Adjudicator may also cite and punish any person for
indirect contempt on any of the grounds and in the manner prescribed
under Rule 71 of the Revised Rules of Court.
 In this connection, Rule 71, Section 4 of the 1997 Rules of Civil Procedure,
which deals with the commencement of indirect contempt proceedings, provides:
Sec. 4. How proceedings commenced. — Proceedings for indirect
contempt may be initiated motu proprio by the court against which the
contempt was committed by an order or any other formal charge
requiring the respondent to show cause why he should not be punished
for contempt.
In all other cases, charges for indirect contempt shall be
commenced by a verified petition with supporting particulars and certified
true copies of documents or papers involved therein, and upon full
compliance with the requirements for filing initiatory pleadings for civil
actions in the court concerned. If the contempt charges arose out of or
are related to a principal action pending in the court, the petition for
contempt shall allege that fact but said petition shall be docketed, heard
and decided separately, unless the court in its discretion orders the
consolidation of the contempt charge and the principal action for joint
hearing and decision. ITECSH

xxx xxx xxx

The requirement of a verified petition is mandatory. Justice Florenz D.
Regalado, Vice-Chairman of the Revision of the Rules of Court Committee that
drafted the 1997 Rules of Civil Procedure explains this requirement:
1. This new provision clarifies with a regulatory norm the proper
procedure for commencing contempt proceedings. While such
proceeding has been classified as a special civil action under the former
Rules, the heterogeneous practice, tolerated by the courts, has been for
any party to file a mere motion without paying any docket or lawful fees
therefor and without complying with the requirements for initiatory
pleadings, which is now required in the second paragraph of this
amended section.
xxx xxx xxx
Henceforth, except for indirect contempt proceedings
initiated motu proprio by order of or a formal charge by the offended
court, all charges shall be commenced by a verified petition with full
compliance with the requirements therefor and shall be disposed of in
accordance with the second paragraph of this section. 22
Therefore, there are only two ways a person can be charged with indirect
contempt, namely, (1) through a verified petition; and (2) by order or formal
charge initiated by the court motu proprio.
In the case at bar, neither of these modes was adopted in charging Mr.
Lorayes with indirect contempt.
 More specifically, Rule 71, Section 12 of the 1997 Rules of Civil
Procedure, referring to indirect contempt against quasi-judicial entities, provides:
Sec. 12. Contempt against quasi-judicial entities. — Unless
otherwise provided by law, this Rule shall apply to contempt committed
against persons, entities, bodies or agencies exercising quasi-judicial
functions, or shall have suppletory effect to such rules as they may have
adopted pursuant to authority granted to them by law to punish for
contempt. The Regional Trial Court of the place wherein the contempt
has been committed shall have jurisdiction over such charges as may be
filed therefore. (emphasis supplied)
The foregoing amended provision puts to rest once and for all the
questions regarding the applicability of these rules to quasi-judicial bodies, to wit:
1. This new section was necessitated by the holdings that the
former Rule 71 applied only to superior and inferior courts and did not
comprehend contempt committed against administrative or quasi judicial
officials or bodies, unless said contempt is clearly considered and
expressly defined as contempt of court, as is done in the second
paragraph of Sec. 580, Revised Administrative Code. The provision
referred to contemplates the situation where a person, without lawful
excuse, fails to appear, make oath, give testimony or produce
documents when required to do so by the official or body exercising such
powers. For such violation, said person shall be subject to discipline, as
in the case of contempt of court, upon application of the official or body
with the Regional Trial Court for the corresponding
sanctions. 23 (emphasis in the original)
Evidently, quasi-judicial agencies that have the power to cite persons for
indirect contempt pursuant to Rule 71 of the Rules of Court can only do so by
initiating them in the proper Regional Trial Court. It is not within their jurisdiction
and competence to decide the indirect contempt cases. These matters are still
within the province of the Regional Trial Courts. In the present case, the indirect
contempt charge was filed, not with the Regional Trial Court, but with the
PARAD, and it was the PARAD that cited Mr. Lorayes with indirect contempt.
Hence, the contempt proceedings initiated through an unverified "Motion
for Contempt" filed by the respondent with the PARAD were invalid for the
following reasons: 24 First, the Rules of Court clearly require the filing of a verified
petition with the Regional Trial Court, which was not complied with in this case.
The charge was not initiated by the PARAD motu proprio; rather, it was by a
motion filed by respondent. Second, neither the PARAD nor the DARAB have
jurisdiction to decide the contempt charge filed by the respondent. The issuance
of a warrant of arrest was beyond the power of the PARAD and the DARAB.
Consequently, all the proceedings that stemmed from respondent's "Motion for
Contempt," specifically the Orders of the PARAD dated August 20, 2000 and
January 3, 2001 for the arrest of Alex A. Lorayes, are null and void.
WHEREFORE, in view of the foregoing, the petition for review is
GRANTED. The Decision of the Court of Appeals in CA-G.R. SP No. 65276,
dated December 11, 2001, is REVERSED and SET ASIDE. The Order of the
Regional Trial Court of Sorsogon, Sorsogon, Branch 51, dated January 29, 2001,
which enjoined the Provincial Adjudicator of the DARAB or anyone acting in its
stead from enforcing its order of arrest against Mr. Alex A. Lorayes pending the
final termination of the case before Regional Trial Court of Sorsogon, Sorsogon,
Branch 52, is REINSTATED.
SO ORDERED.
 (Land Bank of the Phils. v. Listana, Sr., G.R. No. 152611, [August 5, 2003], 455
|||

PHIL 750-761)

G.R. No. 176085. February 8, 2012.]

FEDERICO S. ROBOSA, ROLANDO E. PANDY, NOEL D.

ROXAS, ALEXANDER ANGELES, VERONICA GUTIERREZ,
FERNANDO EMBAT, and NANETTE H. PINTO, petitioners, vs.
NATIONAL LABOR RELATIONS COMMISSION (First Division),
CHEMO-TECHNISCHE MANUFACTURING, INC. and its
responsible officials led by FRANKLIN R. DE LUZURIAGA, and
PROCTER & GAMBLE PHILIPPINES, INC., respondents.

DECISION

BRION, J  :
p

We resolve the petition for review on Certiorari 1 seeking the reversal of

the resolutions of the Court of Appeals (CA) rendered on February 24,
2006 2 and December 14, 2006 3 in CA-G.R. SP No. 80436.

Factual Background

Federico S. Robosa, Rolando E. Pandy, Noel D. Roxas, Alexander

Angeles, Veronica Gutierrez, Fernando Embat and Nanette H.
Pinto (petitioners) were rank-and-file employees of respondent Chemo-
Technische Manufacturing, Inc. (CTMI), the manufacturer and distributor of
"Wella" products. They were officers and members of the CTMI Employees
Union-DFA (union). Respondent Procter and Gamble Philippines, Inc. (P &
GPI) acquired all the interests, franchises and goodwill of CTMI during the
pendency of the dispute.
Sometime in the first semester of 1991, the union filed a petition for
certification election at CTMI. On June 10, 1991, Med-Arbiter Rasidali Abdullah
of the Office of the Department of Labor and Employment in the National Capital
Region (DOLE-NCR) granted the petition. The DOLE-NCR conducted a consent
election on July 5, 1991, but the union failed to garner the votes required to be
certified as the exclusive bargaining agent of the company.
On July 15, 1991, CTMI, through its President and General Manager
Franklin R. de Luzuriaga, issued a memorandum 4 announcing that effective that
day: (1) all sales territories were demobilized; (2) all vehicles assigned to sales
representatives should be returned to the company and would be sold; (3) sales
representatives would continue to service their customers through public
transportation and would be given transportation allowance; (4) deliveries of
customers' orders would be undertaken by the warehouses; and (5) revolving
funds for ex-truck selling held by sales representatives should be surrendered to
the cashier (for Metro Manila) or to the supervisor (for Visayas and Mindanao),
and truck stocks should immediately be surrendered to the warehouse.  SHTcDE

On the same day, CTMI issued another memorandum 5 informing the

company's sales representatives and sales drivers of the new system in the
Salon Business Group's selling operations.
The union asked for the withdrawal and deferment of CTMI's directives,
branding them as union busting acts constituting unfair labor practice. CTMI
ignored the request. Instead, it issued on July 23, 1991 a notice of termination of
employment to the sales drivers, due to the abolition of the sales driver
positions. 6
On August 1, 1991, the union and its affected members filed a complaint
for illegal dismissal and unfair labor practice, with a claim for damages, against
CTMI, De Luzuriaga and other CTMI officers. The union also moved for the
issuance of a writ of preliminary injunction and/or temporary restraining order
(TRO).

The Compulsory Arbitration Proceedings

The labor arbiter handling the case denied the union's motion for a stay
order on the ground that the issues raised by the petitioners can best be
ventilated during the trial on the merits of the case. This prompted the union to
file on August 16, 1991 with the National Labor Relations Commission (NLRC), a
petition for the issuance of a preliminary mandatory injunction and/or TRO. 7
On August 23, 1991, the NLRC issued a TRO. 8 It directed CTMI, De
Luzuriaga and other company executives to (1) cease and desist from dismissing
any member of the union and from implementing the July 23, 1991 memorandum
terminating the services of the sales drivers, and to immediately reinstate them if
the dismissals have been effected; (2) cease and desist from implementing the
July 15, 1991 memorandum grounding the sales personnel; and (3) restore
the status quo ante prior to the formation of the union and the conduct of the
consent election.
Allegedly, the respondents did not comply with the NLRC's August 23,
1991 resolution. They instead moved to dissolve the TRO and opposed the
union's petition for preliminary injunction.
On September 12, 1991, the NLRC upgraded the TRO to a writ of
preliminary injunction. 9 The respondents moved for reconsideration. The union
opposed the motion and urgently moved to cite the responsible CTMI officers in
contempt of court.
On August 25, 1993, the NLRC denied the respondents' motion for
reconsideration and directed Labor Arbiter Cristeta Tamayo to hear the motion
for contempt. In reaction, the respondents questioned the NLRC orders before
this Court through a petition for certiorari and prohibition with preliminary
injunction. The Court dismissed the petition for being premature. It also denied
the respondents' motion for reconsideration, as well as a second motion for
reconsideration, with finality. This notwithstanding, the respondents allegedly
refused to obey the NLRC directives. The respondents' defiance, according to
the petitioners, resulted in the loss of their employment.
Meanwhile, the NLRC heard the contempt charge. On October 31, 2000, it
issued a resolution 10 dismissing the charge. It ordered the labor arbiter to
proceed hearing the main case on the merits.
The petitioners moved for, but failed to secure, a reconsideration from the
NLRC on the dismissal of the contempt charge. They then sought relief from the
CA by way of a petition for certiorari under Rule 65.

The CA Decision

The CA saw no need to dwell on the issues raised by the petitioners as the
question it deemed appropriate for resolution is whether the NLRC's dismissal of
the contempt charge against the respondents may be the proper subject of an
appeal. It opined that the dismissal is not subject to review by an appellate court.
Accordingly, the CA Special Sixth Division dismissed the petition in its resolution
of February 24, 2006. 11
The CA considered the prayer of P & GPI to be dropped as party-
respondent moot and academic.  AcSCaI

The petitioners sought a reconsideration, but the CA denied the motion in

its resolution of December 14, 2006. 12 Hence, the present Rule 45 petition.

The Petition

The petitioners charge the CA with grave abuse of discretion in upholding

the NLRC resolutions, despite the reversible errors the labor tribunal committed
in dismissing the contempt charge against the respondents. They contend that
the respondents were guilty of contempt for their failure (1) to observe strictly the
NLRC status quo order; and (2) to reinstate the dismissed petitioners and to pay
them their lost wages, sales commissions, per diems, allowances and other
employee benefits. They also claim that the NLRC, in effect, overturned this
Court's affirmation of the TRO and of the preliminary injunction.
The petitioners assail the CA's reliance on the Court's ruling that a
contempt charge partakes of a criminal proceeding where an acquittal is not
subject to appeal. They argue that the facts obtaining in the present case are
different from the facts of the cases where the Court's ruling was made. They
further argue that by the nature of this case, the Labor Code and its
implementing rules and regulations should apply, but in any event, the appellate
court is not prevented from reviewing the factual basis of the acquittal of the
respondents from the contempt charges.
The petitioners lament that the NLRC, in issuing the challenged
resolutions, had unconstitutionally applied the law. They maintain that not only
did the NLRC unconscionably delay the disposition of the case for more than
twelve (12) years; it also rendered an unjust, unkind and dubious judgment. They
bewail that "[f]or some strange reason, the respondent NLRC made a queer
[somersault] from its earlier rulings which favor the petitioners." 13

The Case for the Respondents

Franklin K. De Luzuriaga

De Luzuriaga filed a Comment 14 on May 17, 2007 and a Memorandum on

December 4, 2008, 15 praying for a dismissal of the petition.
De Luzuriaga argues that the CA committed no error when it dismissed the
petition for certiorari since the dismissal of the contempt charge against the
respondents amounted to an acquittal where review by an appellate court will not
lie. In any event, he submits, the respondents were charged with indirect
contempt which may be initiated only in the appropriate regional trial court,
pursuant to Section 12, Rule 71 of the Rules of Court. He posits that the NLRC
has no jurisdiction over an indirect contempt charge. He thus argues that the
petitioners improperly brought the contempt charge before the NLRC.
Additionally, De Luzuriaga points out that the petition raises only questions
of facts which, procedurally, is not allowed in a petition for review on certiorari.
Be this as it may, he submits that pursuant to Philippine Long Distance
Telephone Company, Inc. v. Tiamson, 16 factual findings of labor officials, who
are deemed to have acquired expertise in matters within their respective
jurisdictions, are generally accorded not only respect but even finality. He
stresses that the CA committed no reversible error in not reviewing the NLRC's
factual findings.
Further, De Luzuriaga contends that the petitioners' verification and
certification against forum shopping is defective because it was only Robosa and
Pandy who executed the document. There was no indication that they were
authorized by Roxas, Angeles, Gutierrez, Embat and Pinto to execute the
required verification and certification. 
TSacAE

Lastly, De Luzuriaga maintains that the petitioners are guilty of forum

shopping as the reliefs prayed for in the petition before the CA, as well as in the
present petition, are the same reliefs that the petitioners may be entitled to in the
complaint before the labor arbiter. 17

P & GPI

As it did with the CA when it was asked to comment on the petitioners'

motion for reconsideration, 18 P & GPI prays in its Comment 19 and
Memorandum 20 that it be dropped as a party-respondent, and that it be excused
from further participating in the proceedings. It argues that inasmuch as the
NLRC resolved the contempt charge on the merits, an appeal from its dismissal
through a petition for certiorari is barred. Especially in its case, the dismissal of
the petition for certiorari is correct because it was never made a party to the
contempt proceedings and, thus, it was never afforded the opportunity to be
heard. It adds that it is an entity separate from CTMI. It submits that it cannot be
made to assume any or all of CTMI's liabilities, absent an agreement to that
effect but even if it may be liable, the present proceedings are not the proper
venue to determine its liability, if any.
On December 16, 2008, the petitioners filed a Memorandum 21 raising
essentially the same issues and arguments laid down in the petition.

The Court's Ruling

 Issues

The parties' submissions raise the following issues:

(1) whether the NLRC has contempt powers;
(2) whether the dismissal of a contempt charge is appealable; and
(3) whether the NLRC committed grave abuse of discretion in
dismissing the contempt charge against the respondents.
On the first issue, we stress that under Article 218 22 of the Labor Code,the
NLRC (and the labor arbiters) may hold any offending party in contempt, directly
or indirectly, and impose appropriate penalties in accordance with law. The
penalty for direct contempt consists of either imprisonment or fine, the degree or
amount depends on whether the contempt is against the Commission or the
labor arbiter. The Labor Code, however, requires the labor arbiter or the
Commission to deal with indirect contempt in the manner prescribed under Rule
71 of the Rules of Court. 23
Rule 71 of the Rules of Court does not require the labor arbiter or the
NLRC to initiate indirect contempt proceedings before the trial court. This mode
is to be observed only when there is no law granting them contempt
powers. 24 As is clear under Article 218 (d) of the Labor Code,the labor arbiter or
the Commission is empowered or has jurisdiction to hold the offending party or
parties in direct or indirect contempt. The petitioners, therefore, have not
improperly brought the indirect contempt charges against the respondents before
the NLRC.  ESHcTD

The second issue pertains to the nature of contempt proceedings,

especially with respect to the remedy available to the party adjudged to have
committed indirect contempt or has been absolved of indirect contempt charges.
In this regard, Section 11, Rule 71 of the Rules of Court states that the judgment
or final order of a court in a case of indirect contempt may be appealed to the
proper court as in a criminal case. This is not the point at issue, however, in this
petition. It is rather the question of whether the dismissal of a contempt charge,
as in the present case, is appealable. The CA held that the NLRC's dismissal of
the contempt charges against the respondents amounts to an acquittal in a
criminal case and is not subject to appeal.
The CA ruling is grounded on prevailing jurisprudence.
In Yasay, Jr. v. Recto, 25 the Court declared:
A distinction is made between a civil and [a] criminal contempt.
Civil contempt is the failure to do something ordered by a court to be
done for the benefit of a party. A criminal contempt is any conduct
directed against the authority or dignity of the court. 26
 The Court further explained in Remman Enterprises, Inc. v. Court of
Appeals 27 and People v. Godoy 28 the character of contempt proceedings, thus
—
The real character of the proceedings in contempt cases is to be
determined by the relief sought or by the dominant purpose. The
proceedings are to be regarded as criminal when the purpose is
primarily punishment and civil when the purpose is primarily
compensatory or remedial.
Still further, the Court held in Santiago v. Anunciacion, Jr. 29 that:
But whether the first or the second, contempt is still a criminal
proceeding in which acquittal, for instance, is a bar to a second
prosecution. The distinction is for the purpose only of determining the
character of punishment to be administered.
In the earlier case of The Insurance Commissioner v. Globe
Assurance Co., Inc., 30 the Court dismissed the appeal from the ruling of the
lower court denying a petition to punish the respondent therein from contempt for
lack of evidence. The Court said in that case:
It is not the sole reason for dismissing this appeal. In the leading
case of In re Mison, Jr. v. Subido, it was stressed by Justice J.B.L.
Reyes as ponente, that the contempt proceeding far from being a civil
action is "of a criminal nature and of summary character in which the
court exercises but limited jurisdiction." It was then explicitly held:
"Hence, as in criminal proceedings, an appeal would not lie from the
order of dismissal of, or an exoneration from, a charge of contempt of
court." [footnote omitted] 
cTEICD

Is the NLRC's dismissal of the contempt charges against the

respondents beyond review by this Court? On this important question, we
note that the petitioners, in assailing the CA main decision, claim that the
appellate court committed grave abuse of discretion in not ruling on the dismissal
by the NLRC of the contempt charges. 31 They also charge the NLRC of having
gravely abused its discretion and having committed reversible errors in:
(1) setting aside its earlier resolutions and orders, including the writ of
preliminary injunction it issued, with its dismissal of the petition to cite the
respondents in contempt of court;
(2) overturning this Court's resolutions upholding the TRO and the writ of
preliminary injunction;
(3) failing to impose administrative fines upon the respondents for violation
of the TRO and the writ of preliminary injunction; and
 (4) failing to order the reinstatement of the dismissed petitioners and the
payment of their accrued wages and other benefits.
In view of the grave abuse of discretion allegation in this case, we deem it
necessary to look into the NLRC's dismissal of the contempt charges against the
respondents. As the charges were rooted into the respondents' alleged non-
compliance with the NLRC directives contained in the TRO 32 and the writ of
preliminary injunction, 33 we first inquire into what really happened to these
directives.
The assailed NLRC resolution of October 31, 2000 34 gave us the following
account on the matter —
On the first directive, . . . We find that there was no violation of the
said order. A perusal of the records would show that in compliance with
the temporary restraining order (TRO), respondents reinstated back to
work the sales drivers who complained of illegal dismissal
(Memorandum of Respondents, page 4).
Petitioners' allegation that there was only payroll reinstatement
does not make the respondents guilty of contempt of court. Even if the
drivers were just in the garage doing nothing, the same does not make
respondents guilty of contempt nor does it make them violators of the
injunction order. What is important is that they were reinstated and
receiving their salaries.
As for petitioners Danilo Real, Roberto Sedano and Rolando
Manalo, they have resigned from their jobs and were paid their
separation pay . . . (Exhibits "6," "6-A," "7," "7-A," "8," "8-A,"
Respondents' Memorandum dated August 12, 1996). The issue of
whether they were illegally dismissed should be threshed out before the
Labor Arbiter in whose sala the case of unfair labor practice and illegal
dismissal were (sic) filed. Records also show that petitioner Antonio
Desquitado during the pendency of the case executed an affidavit of
desistance asking that he be dropped as party complainant in as much
as he has already accepted separation benefits totaling to P63,087.33.
With respect to the second directive ordering respondents to
cease and desist from implementing the memoranda dated July 15,
1991 designed to ground sales personnel who are members of the
union, respondents alleged that they can no longer be restrained or
enjoined and that the status quo can no longer be restored, for
implementation of the memorandum was already consummated or was a
fait accompli. . . . 
CaSHAc

All sales vehicles were ordered to be turned over to management

and the same were already sold[.] . . . [I]t would be hard to undo the
sales transactions, the same being valid and binding. The memorandum
of July 15, 1991 authorized still all sales representatives to continue
 servicing their customers using public transportation and a transportation
allowance would be issued.
xxx xxx xxx
The third directive of the Commission is to preserve the "status
quo ante" between the parties.
Records reveal that WELLA AG of Germany terminated its
Licensing Agreement with respondent company effective December 31,
1991 (Exhibit "11," Respondents' Memorandum).
On January 31, 1992, individual petitioners together with the other
employees were terminated . . . . In fact, this event resulted to the
closure of the respondent company. The manufacturing and marketing
operations ceased. This is evidenced by the testimony of Rosalito del
Rosario and her affidavit (Exh. "9," memorandum of Respondents) as
well as Employer's Monthly Report on Employees
Termination/dismissals/suspension . . . (Exhibits "12-A" to "12-F," ibid.)
as well as the report that there is a permanent shutdown/total closure of
all units of operations in the establishment (Ibid.). A letter was likewise
sent to the Department of Labor and Employment (Exh. "12," Ibid.) in
compliance with Article 283 of the Labor Code,serving notice that it will
cease business operations effective January 31, 1992.
The petitioners strongly dispute the above account. They maintain that the
NLRC failed to consider the following:  SEcITC

1.CTMI violated the status quo ante order when it did not restore to their
former work assignments the dismissed sales drivers. They lament that their
being "garaged" deprived them of benefits, and they were subjected to ridicule
and psychological abuse. They assail the NLRC for considering the payroll
reinstatement of the drivers as compliance with its stay order.
They also bewail the NLRC's recognition of the resignation of Danilo Real,
Roberto Sedano, Rolando Manalo and Antonio Desquitado as they were just
compelled by economic necessity to resign from their employment. The
quitclaims they executed were contrary to public policy and should not bar them
from claiming the full measure of their rights, including their counsel who was
unduly deprived of his right to collect attorney's fees.
2.It was error for the NLRC to rule that the memorandum, grounding the
sales drivers, could no longer be restrained or enjoined because all sales
vehicles were already sold. No substantial evidence was presented by the
respondents to prove their allegation, but even if there was a valid sale of the
vehicles, it did not relieve the respondents of responsibility under the stay order.
3.The alleged termination of the licensing agreement between CTMI and
WELLA AG of Germany, which allegedly resulted in the closure of CTMI's
manufacturing and marketing operations, occurred after the NLRC's issuance of
the injunctive reliefs. CTMI failed to present substantial evidence to support its
contention that it folded up its operations when the licensing agreement was
terminated. Even assuming that there was a valid closure of CTMI's business
operations, they should have been paid their lost wages, allowances, incentives,
sales commissions, per diems and other employee benefits from August 23,
1991 up to the date of the alleged termination of CTMI's marketing operations.
Did the NLRC commit grave abuse of discretion in dismissing the
contempt charges against the respondents? An act of a court or tribunal may
only be considered as committed in grave abuse of discretion when it was
performed in a capricious or whimsical exercise of judgment which is equivalent
to lack of jurisdiction. The abuse of discretion must be so patent and gross as to
amount to an evasion of a positive duty enjoined by law, or to act at all in
contemplation of law, as where the power is exercised in an arbitrary and
despotic manner by reason of passion or personal hostility. 35
The petitioners insist that the respondents violated the NLRC directives,
especially the status quo ante order, for their failure to reinstate the dismissed
petitioners and to pay them their benefits. In light of the facts of the case as
drawn above, we cannot see how the status quo ante or the employer-employee
situation before the formation of the union and the conduct of the consent
election can be maintained. As the NLRC explained, CTMI closed its
manufacturing and marketing operations after the termination of its licensing
agreement with WELLA AG of Germany. In fact, the closure resulted in the
termination of CTMI's remaining employees on January 31, 1992, aside from the
sales drivers who were earlier dismissed but reinstated in the payroll, in
compliance with the NLRC injunction. The petitioners' termination of employment,
as well as all of their money claims, was the subject of the illegal dismissal and
unfair labor practice complaint before the labor arbiter. The latter was ordered by
the NLRC on October 31, 2000 to proceed hearing the case. 36 The NLRC thus
subsumed all other issues into the main illegal dismissal and unfair labor practice
case pending with the labor arbiter. On this point, the NLRC declared:
Note that when the injunction order was issued, WELLA AG of
Germany was still under licensing agreement with respondent
company. However, the situation has changed when WELLA AG of
Germany terminated its licensing agreement with the respondent,
causing the latter to close its business. 
CIcEHS

Respondents could no longer be ordered to restore the status

quo as far as the individual petitioners are concerned as these matters
regarding the termination of the employees are now pending litigation
with the Arbitration Branch of the Commission. To resolve the incident
now regarding the closure of the respondent company and the matters
alleged by petitioners such as the creations of three (3) new corporations
 . . . as successor-corporations are matters best left to the Labor Arbiter
hearing the merits of the unfair labor practice and illegal dismissal
cases. 37
We find no grave abuse of discretion in the assailed NLRC ruling. It
rightly avoided delving into issues which would clearly be in excess of its
jurisdiction for they are issues involving the merits of the case which are by law
within the original and exclusive jurisdiction of the labor arbiter. 38 To be sure,
whether payroll reinstatement of some of the petitioners is proper; whether the
resignation of some of them was compelled by dire economic necessity; whether
the petitioners are entitled to their money claims; and whether quitclaims are
contrary to law or public policy are issues that should be heard by the labor
arbiter in the first instance. The NLRC can inquire into them only on appeal after
the merits of the case shall have been adjudicated by the labor arbiter.
The NLRC correctly dismissed the contempt charges against the
respondents. The CA likewise committed no grave abuse of discretion in not
disturbing the NLRC resolution.
In light of the above discussion, we find no need to dwell into the other
issues the parties raised.  SATDHE

WHEREFORE, premises considered, we hereby DENY the petition for lack

of merit and AFFIRM the assailed resolutions of the Court of Appeals.
SO ORDERED.
 (Robosa v. National Labor Relations Commission, G.R. No. 176085, [February
|||

8, 2012], 681 PHIL 446-462)

G.R. No. 230682. November 29, 2017]

JOLO'S KIDDIE CARTS/FUN4KIDS/MARLO U.

CABILI, petitioners, vs. EVELYN A. CABALLA and ANTHONY
M. BAUTISTA, respondents.

DECISION

PERLAS-BERNABE, J  : p

Assailed in this petition for review on certiorari 1 are the Resolutions

dated July 28, 2016 2 and February 22, 2017 3 of the Court of Appeals (CA) in
 CA-G.R. SP No. 146460 which dismissed the petition for certiorari 4 filed by
petitioners Jolo's Kiddie Carts/Fun4Kids/Marlo U. Cabili (petitioners), due to a
technical ground, i.e., non-filing of a motion for reconsideration before filing a
petition for certiorari. 
cSEDTC

The Facts

The instant case stemmed from a complaint 5 for illegal dismissal,

underpayment of salaries/wages and 13th month pay, non-payment of
overtime pay, holiday pay, and separation pay, damages, and attorney's fees
filed by Evelyn A. Caballa (Caballa), Anthony M. Bautista (Bautista;
collectively, respondents), and one Jocelyn 6 S. Colisao (Colisao) against
petitioners before the National Labor Relations Commission (NLRC).
Respondents and Colisao alleged that petitioners hired them as staff
members in the latter's business; Caballa and Bautista were assigned to man
petitioners' stalls in SM Bacoor and SM Rosario in Cavite, respectively, while
Colisao was assigned in several SM branches, the most recent of which was
in SM North EDSA. 7 They were paid a daily salary that reached P330.00 for a
six (6)-day work week from 9:45 in the morning until 9:00 o'clock in the
evening. 8 They claimed that they were never paid the monetary value of their
unused service incentive leaves, 13th month pay, overtime pay, and premium
pay for work during holidays; and that when petitioners found out that they
inquired from the Department of Labor and Employment about the prevailing
minimum wage rates, they were prohibited from reporting to their work
assignment without any justification. 9
For their part, 10 petitioners denied dismissing respondents and Colisao,
and maintained that they were the ones who abandoned their work. 11 They
likewise maintained that they paid respondents and Colisao their wages and
other benefits in accordance with the law and that their money claims were
bereft of factual and legal bases. 12

The Labor Arbiter's (LA) Ruling

In a Decision 13 dated November 27, 2015, the LA dismissed the case

insofar as Colisao is concerned for failure to prosecute. 14 However, the LA
ruled in favor of respondents, and accordingly, ordered petitioners to solidarily
pay them the following, plus attorney's fees equivalent to ten percent (10%) of
the total monetary awards:
  Separatio Backwage Wage 13th Moral Exemplar Total
n Pay s Differentia month damages y
 l pay damages
Caballa 60,580.00 109,870.80 75,156.12 10,608.0 10,000.0 5,000.00 P271,214.92
0 0
Bautist 60,580.00 112,294.00 74,480.12 10,608.0 10,000.0 5,000.00 272,962.12
a 0 0
              ––––––––––––
–
              544,177.04
        Plus 10% Attorney's Fees 54,417.70
          ––––––––––––
–
        GRAND TOTAL P598,594.74 1
5

The LA found that respondents' adequate substantiation of their claim

that they were no longer given any work assignment and were not allowed to
go anywhere near their respective workstations, coupled with petitioners'
failure to prove abandonment, justifies the finding that respondents were
indeed dismissed without just cause nor due process. 16
Aggrieved, petitioners appealed 17 to the NLRC.

The NLRC Ruling

In a Decision 18 dated April 28, 2016, the NLRC modified the LA ruling,

finding no illegal dismissal nor abandonment of work. Accordingly, the NLRC
ordered petitioners to reinstate respondents to their former or substantially
equivalent positions without loss of seniority rights and privileges; deleted the
awards for payment of backwages, separation pay, and moral and exemplary
damages; and affirmed the rest of the awards. 19 For this purpose, the NLRC
attached a Computation of Monetary Award 20 detailing the monetary awards
due to respondents, as follows: (a) for Caballa, P15,623.00 as holiday pay,
P109,870.80 as wage differential, and P75,156.12 as 13th month pay; (b) for
Bautista, P15,623.00 as holiday pay, P112,294.00 as wage differential, and
P74,480.12 as 13th month pay; and (c) attorney's fees amounting to ten
percent (10%) of the total monetary value awarded. 21
Anent the procedural matters raised by petitioners, the NLRC ruled
that: (a) petitioners waived the issue of improper venue when they failed to
raise the same before the filing of position papers; and (b) respondents
substantially complied with the requirement of verifying their position papers,
and thus, the same is not fatal to their complaint. 22 As to the merits, while the
NLRC agreed with the LA's finding that there was no abandonment on the
part of respondents, the latter were unable to adduce any proof that
petitioners indeed committed any overt or positive act operative of their
dismissal. 23 In view of the finding that there was neither dismissal on the part
of petitioners nor abandonment on the part of respondents, the NLRC ordered
the latter's reinstatement but without backwages. Finally, the NLRC held that
respondents should be entitled to their holiday pay as it is a statutory benefit
which payment petitioners failed to prove. 24
Dissatisfied, petitioners directly filed a petition for certiorari 25 before the
CA, without moving for reconsideration before the NLRC.  SDAaTC

The CA Ruling

In a Resolution 26 dated July 28, 2016, the CA denied the petition due

to petitioners' failure to file a motion for reconsideration before the NLRC prior
to the filing of a petition for certiorari before the CA. It held that the prior filing
of such motion before the lower tribunal is an indispensable requisite in
elevating the case to the CA via certiorari, and that petitioners' failure to do so
resulted in the NLRC ruling attaining finality. 27
Petitioners moved for reconsideration, 28 but the same was denied in a
Resolution 29 dated February 22, 2017; hence, this petition. 30

The Issue Before the Court

The issues for the Court's resolution are whether or not the CA was
correct in: (a) dismissing the petition for certiorari before it due to petitioners'
non-filing of a prior motion for reconsideration before the NLRC;
and (b) effectively affirming the NLRC ruling, which not only increased
respondents' awards of wage differential and 13th month pay, but also
awarded an additional monetary award as holiday pay.

The Court's Ruling

The petition is partly meritorious.

I.
 As a rule, the filing of a motion for reconsideration is a condition sine
qua non to the filing of a petition for certiorari. 31 The rationale for this
requirement is that "the law intends to afford the tribunal, board or office an
opportunity to rectify the errors and mistakes it may have lapsed into before
resort to the courts of justice can be had." 32 Notably, however, there are
several recognized exceptions to the rule, one of which is when the order is a
patent nullity. 33
In this case, records show that the LA ruled in favor of respondents,
and accordingly, ordered petitioners to pay them the following monetary
awards:
  Separatio Backwage Wage 13th Moral Exemplar Total
n Pay s Differentia month damages y
l pay damages
Caballa 60,580.00 109,870.80 75,156.12 10,608.0 10,000.0 5,000.00 P271,214.9
0 0 2
Bautist 60,580.00 112,294.00 74,480.12 10,608.0 10,000.0 5,000.00 272,962.12
a 0 0
              ––––––––––
–
              544,177.04
        Plus 10% Attorney's Fees 54,417.70
          ––––––––––
–
        GRAND TOTAL P598,594.7
4

Upon petitioners' appeal to the NLRC, the LA ruling was modified,

deleting the awards for separation pay, backwages, moral damages, and
exemplary damages, while affirming the awards for wage differential and 13th
month pay. In the Computation of Monetary Award 34 attached to the NLRC
ruling — which according to the NLRC itself, shall form part of its
decision 35 — it was indicated that Caballa's awards for wage differential and
13th month pay are in the amounts of P109,870.80 and P75,156.12,
respectively; while the awards in Bautista's favor were pegged at P112,294.00
and P74,480.12, respectively. However, a simple counterchecking of the
NLRC's computation with the LA ruling readily reveals that: (a) the amounts of
P109,870.80 and P112,294.00 clearly pertain to the awards of backwages,
which were already deleted in the NLRC ruling; (b) the amounts of
P75,156.12 and P74,480.12 pertain to the awards of wage differential;
and (c) the amount of P10,608.00 which pertain to the awards of 13th month
pay for both respondents, were no longer reflected in the NLRC computation.
While this is obviously just an oversight on the part of the NLRC, it is not
without any implications as such oversight resulted in an unwarranted
increase in the monetary awards due to respondents. Clearly, such an
increase is a patent nullity as it is bereft of any factual and/or legal basis.
Verily, the CA erred in dismissing the petition for certiorari filed before it
based on the aforesaid technical ground, as petitioners were justified in
pursuing a direct recourse to the CA even without first moving for
reconsideration before the NLRC. In such instance, court procedure dictates
that the case be remanded to the CA for a resolution on the merits. However,
when there is already enough basis on which a proper evaluation of the merits
may be had, as in this case, the Court may dispense with the time-consuming
procedure of remand in order to prevent further delays in the disposition of the
case and to better serve the ends of justice. 36 In view of the foregoing — as
well as the fact that petitioners pray for a resolution on the merits 37 — the
Court finds it appropriate to exhaustively resolve the instant case.

II.

It must be stressed that to justify the grant of the extraordinary remedy

of certiorari, petitioners must satisfactorily show that the court or quasi-judicial
authority gravely abused the discretion conferred upon it. Grave abuse of
discretion connotes judgment exercised in a capricious and whimsical manner
that is tantamount to lack of jurisdiction. To be considered "grave," discretion
must be exercised in a despotic manner by reason of passion or personal
hostility, and must be so patent and gross as to amount to an evasion of
positive duty or to a virtual refusal to perform the duty enjoined by or to act at
all in contemplation of law. 38
In labor cases, grave abuse of discretion may be ascribed to the NLRC
when its findings and conclusions are not supported by substantial evidence,
which refers to that amount of relevant evidence that a reasonable mind might
accept as adequate to justify a conclusion. Thus, if the NLRC's ruling has
basis in the evidence and the applicable law and jurisprudence, then no grave
abuse of discretion exists and the CA should so declare and, accordingly,
dismiss the petition. 39
Guided by the foregoing considerations and as will be explained
hereunder, the Court finds that the NLRC did not gravely abuse its discretion
in ruling that: (a) petitioners are barred from raising improper venue and that
the verification requirement in respondents' position paper was substantially
complied with; and (b) respondents were neither dismissed by petitioners nor
considered to have abandoned their jobs. However and as already discussed,
the NLRC committed grave abuse of discretion amounting to lack or excess of
jurisdiction when it awarded respondents increased monetary benefits without
any factual and/or legal bases. acEHCD

III.

Anent the first procedural issue, petitioners insist that since

respondents worked in Cavite, they should have filed their complaint before
the Regional Arbitration Branch IV of the NLRC and not in Manila, pursuant to
Section 1, Rule IV of the 2011 NLRC Rules of Procedure. As such, the LA in
Manila where the complaint was filed had no jurisdiction to rule on the
same. 40 However, such insistence is misplaced as the aforesaid provision of
the 2011 Rules of Procedure clearly speaks of venue and not jurisdiction.
Moreover, paragraph (c) of the same provision explicitly provides that "[w]hen
venue is not objected to before the first scheduled mandatory conference,
such issue shall be deemed waived." Here, the NLRC aptly pointed out that
petitioners only raised improper venue for the first time in their position
paper, 41 and as such, they are deemed to have waived the same.
In this relation, Article 224 (formerly Article 217) 42 of the Labor Code,
as amended, clearly provides that the LAs shall have exclusive and original
jurisdiction to hear and decide, inter alia, termination disputes and money
claims arising from employer-employee relations, as in this case. As such, the
LA clearly had jurisdiction to resolve respondents' complaint.
Another procedural issue raised by petitioners is that respondents
signed the Verification and Affidavit of Non-Forum Shopping attached to their
Position Paper a day earlier than the date such pleading was filed by their
counsel. In this regard, petitioners assert that such is a fatal infirmity that
necessitates the dismissal of respondents' complaint. 43 However, the NLRC
correctly ruled that respondents' substantial compliance with the requirement,
coupled with their meritorious claims against petitioners, necessitates
dispensation with the strict compliance with the rules on verification and
certification against forum shopping in order to better serve the ends of
justice. In Fernandez v. Villegas, 44 the Court held:
The Court laid down the following guidelines with respect to
non-compliance with the requirements on or submission of a defective
verification and certification against forum shopping, viz.:
1) A distinction must be made between non-compliance with the
requirement on or submission of defective verification, and non-
compliance with the requirement on or submission of defective
certification against forum shopping.
 2) As to verification, non-compliance therewith or a defect
therein does not necessarily render the pleading fatally defective.
The court may order its submission or correction or act on the
pleading if the attending circumstances are such that strict
compliance with the Rule may be dispensed with in order that the
ends of justice may be served thereby.
3) Verification is deemed substantially complied with when one
who has ample knowledge to swear to the truth of the allegations in the
complaint or petition signs the verification, and when matters alleged in
the petition have been made in good faith or are true and correct.
4) As to certification against forum shopping, non-
compliance therewith or a defect therein, unlike in verification, is
generally not curable by its subsequent submission or correction
thereof, unless there is a need to relax the Rule on the ground of
"substantial compliance" or presence of "special circumstances
or compelling reasons."
5) The certification against forum shopping must be signed by
all the plaintiffs or petitioners in a case; otherwise, those who did not
sign will be dropped as parties to the case. Under reasonable or
justifiable circumstances, however, as when all the plaintiffs or
petitioners share a common interest and involve a common cause of
action or defense, the signature of only one of them in the certification
against forum shopping substantially complies with the Rule.
6) Finally, the certification against forum shopping must be
executed by the party-pleader, not by his counsel. If, however, for
reasonable or justifiable reasons, the party-pleader is unable to sign,
he must execute a Special Power of Attorney designating his counsel
of record to sign on his behalf.
xxx xxx xxx
Besides, it is settled that the verification of a pleading is only
a formal, not a jurisdictional requirement intended to secure the
assurance that the matters alleged in a pleading are true and
correct. Therefore, the courts may simply order the correction of
the pleadings or act on them and waive strict compliance with the
rules, as in this case.
xxx xxx xxx
Similar to the rules on verification, the rules on forum
shopping are designed to promote and facilitate the orderly
administration of justice; hence, it should not be interpreted with
such absolute literalness as to subvert its own ultimate and
legitimate objectives. The requirement of strict compliance with
the provisions on certification against forum shopping merely
underscores its mandatory nature to the effect that the
 certification cannot altogether be dispensed with or its
requirements completely disregarded. It does not prohibit
substantial compliance with the rules under justifiable
circumstances, as also in this case. 45 (Emphases and underscoring
supplied)

IV.

In Claudia's Kitchen, Inc. v. Tanguin, 46 the Court was faced with a

situation where, on the one hand, the employee claimed she was illegally
dismissed by her employer; on the other, the employer denied ever dismissing
such employee and even accused the latter of abandoning her job, as in this
case. In resolving the matter, the Court extensively discussed:
In cases of illegal dismissal, the employer bears the burden of
proof to prove that the termination was for a valid or authorized
cause. But before the employer must bear the burden of proving
that the dismissal was legal, the employees must first establish
by substantial evidence that indeed they were dismissed. If there
is no dismissal, then there can be no question as to the legality or
illegality thereof. In Machica v. Roosevelt Services Center, Inc., the
Court enunciated:
The rule is that one who alleges a fact has the
burden of proving it; thus, petitioners were burdened
to prove their allegation that respondents dismissed
them from their employment. It must be stressed that
the evidence to prove this fact must be clear, positive and
convincing. The rule that the employer bears the burden
of proof in illegal dismissal cases finds no application
here because the respondents deny having dismissed
the petitioners. 
SDHTEC

xxx xxx xxx

The Court further agrees with the findings of the LA, the NLRC[,]
and the CA that Tanguin was not guilty of abandonment. Tan Brothers
Corporation of Basilan City v. Escudero extensively discussed
abandonment in labor cases:
As defined under established jurisprudence,
abandonment is the deliberate and unjustified refusal of
an employee to resume his employment. It constitutes
neglect of duty and is a just cause for termination of
employment under paragraph (b) of Article 282 [now
Article 296] of the Labor Code. To constitute
abandonment, however, there must be a clear and
deliberate intent to discontinue one's employment
 without any intention of returning. In this regard, two
elements must concur: (1) failure to report for work
or absence without valid or justifiable reason; and
(2) a clear intention to sever the employer-employee
relationship, with the second element as the more
determinative factor and being manifested by some
overt acts. Otherwise stated, absence must be
accompanied by overt acts unerringly pointing to the fact
that the employee simply does not want to work
anymore. It has been ruled that the employer has the
burden of proof to show a deliberate and unjustified
refusal of the employee to resume his employment
without any intention of returning. 47 (Emphases and
underscoring supplied)
As aptly ruled by the NLRC, respondents failed to prove their allegation
that petitioners dismissed them from work, as there was no indication as to
how the latter prevented them from reporting to their work stations; or that the
petitioners made any overt act that would suggest that they indeed terminated
respondents' employment. 48 In the same vein, petitioners failed to prove that
respondents committed unequivocal acts that would clearly constitute intent to
abandon their employment. It may even be said that respondents' failure to
report for work may have been a direct result of their belief, albeit misplaced,
that they had already been dismissed by petitioners. Such mistaken belief on
the part of the employee should not lead to a drastic conclusion that he has
chosen to abandon his work. 49 More importantly, respondents' filing of a
complaint for illegal dismissal negates any intention on their part to sever their
employment relations with petitioners. 50 To reiterate, abandonment of
position is a matter of intention and cannot be lightly inferred, much less
legally presumed, from certain equivocal acts. 51
In light of the finding that respondents neither abandoned their
employment nor were illegally dismissed by petitioners, it is only proper for the
former to report back to work and for the latter to reinstate them to their former
positions or a substantially-equivalent one in their stead. In this regard,
jurisprudence provides that in instances where there was neither dismissal by
the employer nor abandonment by the employee, the proper remedy is to
reinstate the employee to his former position but without the award of
backwages. 52
As for respondents' money claims for holiday pay, wage differential, and
13th month pay, the NLRC properly observed that petitioners failed to show
that payment has been made. As such, they must be held liable for the same.
It is well-settled that "with respect to labor cases, the burden of proving
payment of monetary claims rests on the employer, the rationale being that
the pertinent personnel files, payrolls, records, remittances and other similar
documents — which will show that overtime, differentials, service incentive
leave and other claims of workers have been paid — are not in the
possession of the worker but in the custody and absolute control of the
employer." 53 However and as already adverted to earlier, the awards of wage
differential and 13th month pay due to respondents must be adjusted to
properly reflect the computation made by the LA, in that: (a) Caballa is entitled
to wage differential and 13th month pay in the amounts of P75,156.12 and
P10,608.00, respectively; while (b) Bautista's entitlement to such claims are in
the amounts of P74,480.12 and P10,608.00, respectively.
In the same manner, the NLRC correctly awarded attorney's fees to
respondents, in light of Article 111 (a) of the Labor Code which states that:
"[i]n cases of unlawful withholding of wages, the culpable party may be
assessed attorney's fees equivalent to ten percent (10%) of the amount of
wages recovered," as in this case.  AScHCD

Finally, all monetary awards due to respondents shall earn legal interest
at the rate of six percent (6%) per annum from the finality of this Decision until
fully paid, pursuant to prevailing jurisprudence. 54
WHEREFORE, the petition is PARTLY GRANTED. The Resolutions
dated July 28, 2016 and February 22, 2017 of the Court of Appeals in CA-
G.R. SP No. 146460 are hereby SET ASIDE. Accordingly, the Decision dated
April 28, 2016 of the National Labor Relations Commission
is AFFIRMED with MODIFICATION, ordering petitioners Jolo's Kiddie
Carts/Fun4Kids/Marlo U. Cabili to pay:
a) Respondent Evelyn A. Caballa the amounts of P15,623.00 as holiday
pay, P75,156.12 as wage differential, and P10,608.00 as 13th
month pay, plus attorney's fees amounting to ten percent (10%)
of the aforesaid monetary awards. Further, said amounts shall
then earn legal interest at the rate of six percent (6%) per annum
from the finality of the Decision until fully paid; and
b) Respondent Anthony M. Bautista the amounts of P15,623.00 as
holiday pay, P74,480.12 as wage differential, and P10,608.00 as
13th month pay, plus attorney's fees amounting to ten percent
(10%) of the aforesaid monetary awards. Further, said amounts
shall then earn legal interest at the rate of six percent (6%) per
annum from the finality of the Decision until fully paid.
Finally, the Temporary Restraining Order dated May 26, 2017 issued in
relation to this case is hereby LIFTED. The Decision dated April 28, 2016 of
the National Labor Relations Commission in NLRC NCR Case No. 03-03168-
15 (NLRC LAC No. 02-000701-16), as modified, shall be implemented in
accordance with this Decision.
 SO ORDERED.
|||  (Jolo's Kiddie Carts v. Caballa, G.R. No. 230682, [November 29, 2017])

G.R. No. 178379. August 22, 2017.]

CRISPIN S. FRONDOZO, * DANILO M. PEREZ, JOSE A. ZAFRA,

ARTURO B. VITO, CESAR S. CRUZ, NAZARIO C. DELA CRUZ,
and LUISITO R. DILOY, petitioners, vs. MANILA ELECTRIC
COMPANY, respondent.

DECISION

CARPIO, J  : p

The Case
Before the Court is a petition for review on certiorari 1 assailing the 6
March 2007 Decision 2 and the 14 June 2007 Resolution 3 of the Court of
Appeals in CA-G.R. SP No. 95747. The Court of Appeals affirmed the 28
February 2006 Resolution 4 and the 26 May 2006 Resolution 5 of the National
Labor Relations Commission (NLRC) which granted the prayer for preliminary
injunction of respondent Manila Electric Company (MERALCO) and denied
therein petitioners' motion for reconsideration. 
HTcADC

The Antecedent Facts

The case originated from a Notice of Strike (first strike) filed on 16 May
1991 by the MERALCO Employees and Workers Association (MEWA),
composed of MERALCO's rank-and-file employees, on the ground of Unfair
Labor Practice (ULP). Conciliation conferences conducted by the National
Conciliation and Mediation Board (NCMB) failed to settle the dispute and
resulted to a strike staged by MEWA on 6 June 1991. In an Order dated 6
June 1991, 6 then Acting Secretary Nieves R. Confesor of the Department of
Labor and Employment (DOLE) certified the labor dispute to the NLRC for
compulsory arbitration, ordered all the striking workers to return to work, and
directed MERALCO to accept the striking workers back to work under the
same terms and conditions existing prior to the work stoppage.
On 26 July 1991, MERALCO terminated the services of Crispin S.
Frondozo (Frondozo), Danilo M. Perez (Perez), Jose A. Zafra (Zafra), Arturo
B. Vito (Vito), 7 Cesar S. Cruz (Cruz), Nazario C. dela Cruz (N. dela Cruz),
Luisito R. Diloy (Diloy), and Danilo D. Dizon (Dizon) for having committed
unlawful acts and violence during the strike.
On 25 July 1991, MEWA filed a second Notice of Strike (second strike)
on the ground of discrimination and union busting that resulted to the
dismissal from employment of 25 union officers and workers. Then DOLE
Secretary Ruben D. Torres issued an Order dated 8 August 1991 8 that
certified the issues raised in the second strike to the NLRC for consolidation
with the first strike and strictly enjoined any strike or lockout pending
resolution of the labor dispute. The Order also directed MERALCO to suspend
the effects of termination of the employees and re-admit the employees under
the same terms and conditions without loss of seniority rights.
The labor dispute resulted to the filing of two complaints for illegal
dismissal:
(1) NLRC NCR Case No. 00-08-04146-92 filed by Dizon, Diloy, Patricio
Maniacop, Wilfredo Lagason, Venancio Arguzon, Jr., Rogelio
Antonio, Lauro Garcia, Alfredo Badilla, Jr., and Reynaldo Javier;
and
(2) NLRC NCR Case No. 00-12-06878-92 filed by MEWA, Reynaldo M.
Caberte (Caberte), Alfredo dela Cruz (A. dela Cruz), Nataner F.
Pingol (Pingol), Vincent G. Rallos, Enrique T. Barrientos
(Barrientos), Melchor E. Banaga (Banaga), Zafra, Perez, Vito, N.
dela Cruz, Cruz, and Frondozo.
The NLRC consolidated the two illegal dismissal cases with NLRC NCR
CC No. 000021-91 (In the Matter of the Labor Dispute at the Manila Electric
Company) and NLRC NCR Case No. 00-05-03381-93 (MEWA v. MERALCO).
On 23 January 1998, the NLRC's First Division rendered a Decision, 9 the
dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered:
1. denying the motion for reconsideration of Patricio Maniacop, et al.
[the nine (9) quitclaiming complainants] in NLRC Case No. 00-08-
04146-92;
2. upholding Meralco's dismissal of Jose A. Zafra, Alfredo dela Cruz,
Reynaldo M. Caberte, Nataner F. Pingol, Vincent G. Rallos, Enrique
Barrientos, Danilo M. Perez, Arturo B. Vito, Nazario C. dela Cruz,
Melchor E. Banaga, Cesar S. Cruz, and Crispin S. Frondozo in view of
the illegal acts they committed during the subject strike;
3. directing complainants Danilo Dizon and Luisito Diloy as well as
respondent Meralco to submit a memorandum of arguments relative to
NLRC NCR Case No. 00-08-04146-92; and
 4. directing MEWA and Meralco to submit memorandum of arguments
in support of their respective position in NLRC NCR CC No. 000021-
91.
Labor Arbiter Adolfo C. Babiano is directed to continue handling
this case and to submit periodic report[s] thereon.
SO ORDERED. 10
However, in a Decision promulgated on 14 December 2001, 11 the
NLRC First Division modified the 23 January 1998 Decision and ruled:
WHEREFORE, premises considered, the Decision of January
23, 1998 is hereby MODIFIED:  aScITE

1. Declaring the illegality of the strike of June 6-8, 1991 on the basis of
the uncontested facts and allegations of the respondent;
2. As a matter of consequence, the officers and members who
participated therein and who committed the illegal acts perforce are
hereby deemed to have lost their employment status;
3. The dismissal of complainants Jose Zafra, Vicente G. Rallos,
Enrique T. Barrientos, Reynaldo M. Caberte, Cesar S. Cruz, Nazario
C. dela Cruz, Arturo B. Vito, Melchor E. Banaga, Alfredo dela Cruz,
Nataner F. Pingol, Danilo M. Perez, and Crispin S. Frondozo [is]
hereby declared unjustified, their participation in the commission of the
prohibited and illegal acts not having been proved;
4. Accordingly, respondent is hereby ordered to reinstate the twelve
(12) complainants, without however, payment of backwages,
complainants themselves having admitted participation in the strike.
SO ORDERED. 12
In an Order dated 29 May 2002, 13 the NLRC ruled on the motions for
reconsideration filed by MERALCO, Dizon and Diloy, and the 12 respondents
in NLRC NCR Case No. 00-12-06878-92, as follows:
WHEREFORE, premises considered, the Decision appealed
from is, as it is hereby MODIFIED: ordering respondent MANILA
ELECTRIC COMPANY to reinstate to their former or equivalent
positions DANILO DIZON and LUISITO DILOY, without loss of
seniority rights and payment of backwages computed from the time of
their dismissal.
The rest of the decretal portion of the Decision of December 14,
2001 stays.
SO ORDERED. 14
From the 14 December 2001 Decision and 29 May 2002 Order of the
NLRC, two petitions for certiorari were filed before the Court of Appeals:
 1. CA-G.R. SP No. 72480 filed by MERALCO; and
2. CA-G.R. SP No. 72509 filed by Frondozo, Barrientos, Pingol,
Caberte, Zafra, Perez, Cruz, A. dela Cruz, and Banaga.
MERALCO moved for the consolidation of the two cases but the motion
was denied.
On 31 July 2002, the NLRC issued an Entry of Judgment 15 stating that
the 29 May 2002 NLRC Order became final and executory on 19 July 2002.
On 3 October 2002, Labor Arbiter Veneranda C. Guerrero (Labor Arbiter
Guerrero) issued a Writ of Execution 16 directing the reinstatement of the
14 17 respondents. In a Manifestation dated 24 January 2003, 18 MERALCO
informed the NLRC of the payroll reinstatement of the 14 respondents.
On 30 May 2003, the Court of Appeals' Special Second Division
promulgated its Decision in CA-G.R. SP No. 72480 19 in favor of MERALCO.
The Court of Appeals found that the strike of 6-8 June 1991 was illegal
because it occurred despite an assumption order by the DOLE Secretary and
because of the commission of illegal acts marred with violence and coercion.
The dispositive portion of the Decision reads:
WHEREFORE, premises considered, petition is hereby granted.
The decision of the Labor Arbiter dated 16 January 1998 and ruling of
the NLRC dated 23 January 1998 are reinstated. Private respondents
Jose Zafra, Vincent G. Rallos, Enrique T. Barrientos, Reynaldo M.
Caberte, Cesar S. Cruz, Nazario C. [d]ela Cruz, Arturo B. Vito, Melchor
E. Banaga, Alfredo dela Cruz, Nataner F. Pingol, Danilo M. Perez,
Crispin S. Frondozo, Danilo Dizon and Luisito Diloy are dismissed from
service.
SO ORDERED. 20
In view of the 30 May 2003 Decision of the Court of Appeals' Special
Second Division dismissing the 14 respondents from the service, MERALCO
stopped their payroll reinstatement.
On 11 June 2003, Labor Arbiter Guerrero approved the computation of
backwages and ordered the issuance of a Writ of Execution for the
satisfaction of the judgment award. MERALCO filed a Manifestation calling
the attention of Labor Arbiter Guerrero to the 30 May 2003 Decision of the
Court of Appeals' Special Second Division in CA-G.R. SP No. 72480. In an
Order dated 7 October 2003, Labor Arbiter Guerrero ruled that the Court of
Appeals' 30 May 2003 Decision had not attained finality and as such,
respondents should be reinstated from the time they were removed from the
payroll until their actual/payroll reinstatement based on their latest salary prior
to their dismissal. An Alias Writ of Execution 21 was issued on 10 October
2003 for the satisfaction of the judgment award which resulted to the
garnishment of MERALCO's funds deposited with Equitable-PCI Bank.
Dizon, Diloy, and the other respondents filed their respective motions
for reconsideration in CA-G.R. SP No. 72480, which the Court of Appeals'
(Former) Special Second Division denied in its 18 December 2003 Resolution.
On 27 January 2004, the Court of Appeals' Fourteenth Division
promulgated its Decision in CA-G.R. SP No. 72509 22 as follows:
WHEREFORE, in view of the foregoing, the petition is
PARTIALLY GIVEN DUE COURSE. The assailed Decision of
December 14, 2001 and the Order of May 29, 2002 of public
respondent National Labor Relations Commission are hereby
MODIFIED in that respondent MERALCO is ordered to pay the
petitioners full backwages computed from July 26, 1991, when they
were illegally dismissed, up to the date of their actual reinstatement in
the service. 
HEITAD

SO ORDERED. 23
MERALCO filed a motion for reconsideration but it was denied in the
Resolution of 17 August 2004.
The respondents moved for the issuance of an Alias Writ of Execution
for the satisfaction of their accrued wages arising from the recall of their
payroll reinstatement. On 10 June 2004, Labor Arbiter Guerrero granted the
motion. On 14 June 2004, a Second Alias Writ of Execution 24 was issued
directing the Sheriff to cause the reinstatement of the respondents and to
collect the amount of P2,851,453 representing backwages from 14 December
2001 to 15 January 2003 and from 1 June 2003 to 1 June 2004. 25 MERALCO
filed a motion to quash the Second Alias Writ of Execution but it was denied
on 2 July 2004. On 20 July 2004, the Sheriff reported that the amount of
P2,879,967.53 garnished funds had been delivered to and deposited with the
NLRC Cashier for the satisfaction of the monetary award. 26 However, the
reinstatement portion of the judgment remained unimplemented due to the
failure of MERALCO to reinstate the respondents.
On 6 February 2004, Dizon and Diloy filed a petition before this Court
assailing the 30 May 2003 Decision and 18 December 2003 Resolution of the
Court of Appeals' Special Second Division in CA-G.R. SP No. 72480. The
case was docketed as G.R. No. 161159.
On 12 February 2004, Frondozo, Barrientos, Pingol, Caberte, Perez,
Cruz, A. dela Cruz, and Banaga filed a petition before this Court assailing the
same 30 May 2003 Decision and 18 December 2003 Resolution of the Court
of Appeals' Special Second Division in CA-G.R. SP No. 72480. The case was
docketed as G.R. No. 161311.
 On 11 October 2004, MERALCO filed a petition before this Court
questioning the 27 January 2004 and 17 August 2004 Decision of the Court of
Appeals' Fourteenth Division promulgated in CA-G.R. SP No. 72509. The
case was docketed as G.R. No. 164998.
In a Resolution dated 23 February 2004, 27 this Court's Third Division
denied the petition in G.R. No. 161159 on the ground that the petitioners
failed to show that a reversible error had been committed by the Court of
Appeals in rendering its Decision.
In a Resolution dated 3 March 2004, the Court's Second Division
referred G.R. No. 161311 for consolidation with G.R. No. 161159. 28
In a Resolution dated 24 May 2004, 29 the Court's Third Division denied
with finality the petitioners' motion for reconsideration of the 23 February 2004
Resolution denying the petition in G.R. No. 161159 on the ground that no
substantial arguments were raised to warrant a reconsideration of the Court's
Resolution. In the same Resolution, the Court denied the petition in G.R. No.
161311 for failure of petitioners therein to show that a reversible error had
been committed by the appellate court.
Petitioners in G.R. No. 161311 filed a motion for reconsideration of the
24 May 2004 Resolution denying their petition. In its 28 July 2004
Resolution, 30 the Court's Third Division denied the motion with finality as no
substantial arguments were raised to warrant a reconsideration of the
Resolution.
The 23 February 2004 Resolution became final and executory on 15
July 2004. 31 The 24 May 2004 Resolution became final and executory on 2
September 2004. 32
In a Resolution dated 15 June 2005, 33 the Court's First Division denied
the petition in G.R. No. 164998 for MERALCO's failure to file a reply,
amounting to failure to prosecute. MERALCO filed a motion for
reconsideration but it was denied in the Resolution of 22 August 2005. The 15
June 2005 Resolution became final and executory on 4 October 2005. 34
Meanwhile, MERALCO filed two motions before the NLRC: (1) a motion
for reconsideration and/or appeal filed on 5 July 2004 assailing the 10 June
2004 Order of Labor Arbiter Guerrero granting the issuance of the Second
Alias Writ of Execution and directing the payment of backwages of
P2,851,453 to respondents and ordering their reinstatement actually or in the
payroll, which was accompanied by a bond equivalent to the amount of the
accrued backwages; and (2) an urgent motion for the issuance of a temporary
restraining order and/or preliminary injunction filed on 13 July 2004 directed
against the Second Alias Writ of Execution pending the resolution of its first
motion.
 The Resolutions of the NLRC
In a Resolution dated 28 February 2006, 35 the NLRC granted the
prayer for preliminary injunction of MERALCO. The NLRC considered the
difficulty in proceeding with the execution given the conflicting decisions of the
Court of Appeals' Special Second Division in CA-G.R. SP No. 72480 and the
Court of Appeals' Fourteenth Division in CA-G.R. SP No. 72509 that were
also passed upon by this Court, respectively, in G.R. Nos. 161159 and
161311 and in G.R. No. 164998. The NLRC ruled:
At the outset, it must be stated that while this Commission has
broad powers within its sphere of jurisdiction, it cannot encroach on
judicial power which is the exclusive domain of the courts. The Court of
Appeals has two contrasting rulings, one upholding the legality of
complainants' dismissal, and the other declaring such dismissal illegal.
This Commission has no power to overrule what has been decided by
the courts. This is especially true with respect to judgments that have
become final and executory not only at the level of the Court of
Appeals, but also of the Supreme Court.
Indeed, there is an insurmountable obstacle in the execution of
the decision favoring complainants. If We let execution proceed, We
will disregard the Court of Appeals' ruling in the MERALCO petition. On
the other hand, We cannot declare complainants to have been legally
dismissed as this will contravene the Court of Appeals' ruling in the
Frondozo petition.
Confronted with this dilemma, and in deference to the exercise
of the judicial power as the courts may find appropriate, this
Commission has no recourse but to enjoin all proceedings until the
parties would have exhausted all available judicial remedies toward the
possible reconciliation of the contrasting decisions.
WHEREFORE, there being no speedy or adequate remedy in
the ordinary course of law, MERALCO's prayer for preliminary
injunction is GRANTED. All proceedings with this Commission as well
as with the Labor Arbiter are hereby enjoined and suspended until
further orders from the appropriate court. 
ATICcS

SO ORDERED. 36
Two sets of respondents filed their respective motions for
reconsideration. In its Resolution promulgated on 26 May 2006, 37 the NLRC
denied the motions.
Frondozo, Perez, Zafra, Vito, Cruz, N. dela Cruz, and Diloy filed a
petition for certiorari before the Court of Appeals assailing the 28 February
2006 and 26 May 2006 Resolutions of the NLRC.
The Decision of the Court of Appeals
 In its 6 March 2007 Decision, the Court of Appeals affirmed the 28
February 2006 and 26 May 2006 Resolutions of the NLRC. According to the
Court of Appeals, MERALCO's recourse was due to the two separate petitions
before it (CA-G.R. SP No. 72480 and CA-G.R. SP No. 72509) that resulted in
two contradictory rulings on the matter of petitioners' dismissal. The Court of
Appeals acknowledged that the execution of a final judgment is a matter of
right on the part of the prevailing party and is mandatory and ministerial on the
part of the court or tribunal issuing the judgment. However, the Court of
Appeals stated that a suspension or refusal of execution of judgment or order
on equitable grounds can be justified when there are facts or events
transpiring after the judgment or order had become final and executory, thus
materially affecting the judgment obligation.
The Court of Appeals stated:
In the case at bar, finality of the CA Decision in SP No. 72480
on May 24, 2004, is a supervening event which transpired after the CA
Decision in SP 72509 (which was in favor of petitioners) had become
final and executory, and which decision directly contradicts the ruling in
the said case. It may also be noted that the Resolution of the Supreme
Court's Third Division in G.R. No. 161311 categorically declared that
the petition filed by herein petitioners is being denied for their failure to
show that a reversible error has been committed by the appellate court
in rendering the decision in CA-G.R. SP No. 72480. Hence, with the
denial with finality of the petition for review in G.R. No. 161159
(161311) the CA Decision in SP 72480 upholding the dismissal of
petitioners has clearly become a legal obstacle to the enforcement of
the final and executory decision in SP 72509 which in effect declared
petitioners to have been illegally dismissed and upheld their right to
back wages computed from December 14, 2001 and up to the date of
their actual reinstatement.
In fine, no grave abuse of discretion was committed by the
NLRC in granting preliminary injunction to private respondent
MERALCO and enjoining or suspending all proceedings for the
implementation of the 2nd alias writ of execution earlier issued by
Labor Arbiter Guerrero with respect to the back wages/monetary award
and reinstatement of petitioners pursuant to the May 29, 2002 Decision
of the NLRC as affirmed/modified by the CA Decision in SP No. 72509.
As to the contention of petitioners that the NLRC should have
instead proceeded to reconcile or harmonize the conflicting decisions
rendered by the two (2) divisions of the Court, We find the same
untenable and runs against established principles of immutability of
final judgments in this jurisdiction. In fact, nothing is more settled in law
than that once a judgment attains finality it thereby becomes
immutable and unalterable. It may no longer be modified in any
respect, even if modification is meant to correct what is perceived to be
 an erroneous conclusion of fact or law, and regardless of whether the
modification is attempted to be made by the court rendering it or by the
highest court of the land.
We cannot but concur with the NLRC's pronouncement that
MERALCO has no speedy and adequate remedy in the ordinary
course of law for the preservation of its rights and interests, at least
insofar only and solely as to avoid the injurious consequences of
the 2nd alias writ of execution relative to the reinstatement aspect of
the final decision in CA-G.R. No. SP 72509. 38
The dispositive portion of the Court of Appeals' Decision reads:
WHEREFORE, premises considered, the present petition is
hereby DENIED DUE COURSE and accordingly DISMISSED for lack
of merit. The challenged Resolutions dated February 28, 2006 and
May 26, 2006 of the National Labor Relations Commission are hereby
AFFIRMED.
No pronouncement as to costs.
SO ORDERED. 39 (Italicization in the original)
The petitioners in CA-G.R. SP No. 95747 filed a motion for
reconsideration. In its 14 June 2007 Resolution, the Court of Appeals denied
the motion for lack of merit.
Hence, the petition for review filed before this Court by Frondozo,
Perez, Zafra, Vito, Cruz, N. dela Cruz, and Diloy. 40
Petitioners alleged that the Court of Appeals committed grave abuse of
discretion in upholding the 28 February 2006 and 26 May 2006 Resolutions of
the NLRC, in not passing upon the issues of reinstatement and release of the
garnished amount against MERALCO, and in ruling that the Decision in CA-
G.R. SP No. 72480 is considered a bar in the implementation of the Decision
in CA-G.R. SP No. 72509.
The Issue
Whether the Court of Appeals committed a reversible error in upholding
the NLRC in issuing the writ of preliminary injunction prayed for by
MERALCO.
The Ruling of this Court
The petition has no merit.
The Court of Appeals cited the 2005 Revised Rules of Procedure of the
NLRC which provides that "[u]pon issuance of the entry of judgment, the
Commission, motu proprio or upon motion by the proper party, may cause the
execution of the judgment in the certified case." According to the Court of
Appeals, the 2005 Revised Rules of Procedure of the NLRC did not make a
distinction between decisions or resolutions decided by the Labor Arbiter and
those decided by the Commission in certified cases when an order of
reinstatement is involved. Thus, even when the employer had perfected an
appeal, the Labor Arbiter must issue a writ of execution for actual or payroll
reinstatement of the employees illegally dismissed from the service. The
Court of Appeals also cited Article 223 of the Labor Code which provides that
the reinstatement aspect of the Labor Arbiter's Decision is immediately
executory.
In this case, the applicable rule is Article 263 of the Labor Code and the
NLRC Manual on Execution of Judgment, as amended by Resolution No. 02-
02, series of 2002. Section 1, Rule III of the NLRC Manual on Execution of
Judgment provides:  TIADCc

Section 1. Execution Upon Final Judgment or Order. Execution

shall issue only upon a judgment or order that finally disposes of an
action or proceeding, except in specific instances where the law
provides for execution pending appeal.
Article 263 (i) of the Labor Code, on the other hand, provides:
(i) The Secretary of Labor and Employment, the Commission or the
voluntary arbitrator shall decide or resolve the dispute within thirty (30)
calendar days from the date of the assumption of jurisdiction or the
certification or submission of the dispute, as the case may be. The
decision of the President, the Secretary of Labor and Employment, the
Commission or the voluntary arbitrator shall be final and executory ten
(10) calendar days after receipt thereof by the parties.
A judicial review of the decisions of the NLRC may be filed before the Court of
Appeals via a petition for certiorari under Rule 65 of the Rules of Court but the
petition shall not stay the execution of the assailed decision unless a
restraining order is issued by the Court of Appeals. 41
In this case, the NLRC issued an Entry of Judgment stating that the 29
May 2002 NLRC Order became final and executory on 19 June 2002; a Writ
of Execution was issued; and MERALCO complied with the payroll
reinstatement of petitioners. However, with the promulgation of the 30 May
2003 Decision of the Court of Appeals' Special Second Division, finding that
the 6-8 June 1991 strike was illegal, illegal acts marred with violence and
coercion were committed, and dismissing petitioners from the service,
MERALCO stopped the payroll reinstatement. This prompted petitioners to
move for the issuance of an Alias Writ of Execution for the satisfaction of their
accrued wages arising from the recall of their payroll reinstatement which
Labor Arbiter Guerrero granted on 10 June 2004. Later, a second Alias Writ of
Execution was issued.
 As both the NLRC and the Court of Appeals stated, they were
confronted with two contradictory Decisions of two different Divisions of the
Court of Appeals. The petitions questioning these two Decisions of the Court
of Appeals were both denied by this Court and the denial attained finality. The
Court of Appeals sustained the NLRC that the 30 May 2003 Decision of the
Court of Appeals' Special Second Division is a subsequent development that
justified the suspension of the Alias Writs of Execution.
There are instances when writs of execution may be assailed. They are:
(1) the writ of execution varies the judgment;
(2) there has been a change in the situation of the parties making
execution inequitable or unjust;
(3) execution is sought to be enforced against property exempt from
execution;
(4) it appears that the controversy has been submitted to the judgment
of the court;
(5) the terms of the judgment are not clear enough and there remains
room for interpretation thereof; or
(6) it appears that the writ of execution has been improvidently issued,
or that it is defective in substance, or issued against the wrong party,
or that the judgment debt has been paid or otherwise satisfied, or the
writ was issued without authority. 42
The situation in this case is analogous to a change in the situation of
the parties making execution unjust or inequitable. MERALCO's refusal to
reinstate petitioners and to pay their backwages is justified by the 30 May
2003 Decision in CA-G.R. SP No. 72480. On the other hand, petitioners'
insistence on the execution of judgment is anchored on the 27 January 2004
Decision of the Court of Appeals' Fourteenth Division in CA-G.R. SP No.
72509. Given this situation, we see no reversible error on the part of the Court
of Appeals in holding that the NLRC did not commit grave abuse of discretion
in suspending the proceedings. Grave abuse of discretion implies that the
respondent court or tribunal acted in a capricious, whimsical, arbitrary or
despotic manner in the exercise of its jurisdiction as to be equivalent to lack of
jurisdiction. 43 Thus, this Court declared:
The term "grave abuse of discretion" has a specific meaning. An
act of a court or tribunal can only be considered as with grave abuse of
discretion when such act is done in a "capricious or whimsical exercise
of judgment as is equivalent to lack of jurisdiction." The abuse of
discretion must be so patent and gross as to amount to an "evasion of
a positive duty or to a virtual refusal to perform a duty enjoined by law,
or to act at all in contemplation of law, as where the power is exercised
in an arbitrary and despotic manner by reason of passion and hostility."
 Furthermore, the use of a petition for certiorari is restricted only to
"truly extraordinary cases wherein the act of the lower court or quasi-
judicial body is wholly void." From the foregoing definition, it is clear
that the special civil action of certiorari under Rule 65 can only strike
an act down for having been done with grave abuse of discretion if the
petitioner could manifestly show that such act was patent and gross. x
x x. 44
Clearly, the NLRC did not act in a capricious, whimsical, arbitrary, or
despotic manner. It suspended the proceedings because it cannot revise or
modify the conflicting Decisions of the Court of Appeals.
However, we need to resolve the issue on the conflicting Decisions in
order to put an end to this litigation.
The Court of Appeals stated that "the finality of the CA Decision in SP
No. 72480 on May 24, 2004, is a supervening event which transpired after the
CA Decision in SP No. 72509 (which was in favor of petitioners) had become
final and executory." 45 This is not accurate. The Decision in CA-G.R. SP No.
72480 was promulgated on 30 May 2003. The Decision in CA-G.R. SP No.
72509 was promulgated on 27 January 2004. Even when the cases were
elevated to this Court, G.R. No. 161159 and G.R. No. 161311 were resolved
first before G.R. No. 164998. The Court's 23 February 2004 Resolution and
the 24 May 2004 Resolution, both favoring MERALCO, became final and
executory on 15 July 2004 and 2 September 2004, respectively, while the
Resolution of 15 June 2005 which denied MERALCO's petition for review
became final and executory on 4 October 2005, over a year after the final
resolutions in G.R. Nos. 161159 and 161311.  AIDSTE

Further, contrary to the finding of the Court of Appeals that CA-G.R. SP

Nos. 72480 and 72509 attained finality without this Court actually passing
upon the merits of the illegal dismissal aspect, this Court actually ruled on the
merits of CA-G.R. SP No. 72480. The Court's Third Division denied the
petition in G.R. No. 161159 in its 23 February 2004 Resolution on the ground
that the petitioners failed to show that a reversible error had been committed
by the Court of Appeals in rendering its Decision in CA-G.R. SP No. 72480.
The Court's Third Division also denied the petition in G.R. No. 161311 in its 24
May 2004 Resolution for failure of the petitioners to show that a reversible
error had been committed by the appellate court in the same case, CA-G.R.
SP No. 72480.
In Agoy v. Araneta Center, Inc., 46 this Court explained that "[w]hen the
Court does not find any reversible error in the decision of the CA and denies
the petition, there is no need for the Court to fully explain its denial, since it
already means that it agrees with and adopts the findings and conclusions of
the CA. The decision sought to be reviewed and set aside is correct." Hence,
 the Court's Third Division adopted the findings and conclusions reached by
the Court of Appeals in CA-G.R. SP No. 72480 which dismissed petitioners
from the service. The finality of the denial of the petitions in G.R. Nos. 161159
and 161311 should be given greater weight than the denial of the petition in
G.R. No. 164998 on technicality. It can also be interpreted that, in effect, the
finality of the denial of the petitions in G.R. Nos. 161159 and 161311 also
removed the jurisdiction of the Court's First Division and bound it to the final
resolution in G.R. Nos. 161159 and 161311. The Court's First Division denied
MERALCO's petition for failure to prosecute only on 15 June 2005, long after
the denial of the petitions in G.R. Nos. 161159 and 161311 became final and
executory on 15 July 2004 and 2 September 2004, respectively.
WHEREFORE, we DENY the petition. We REMAND this case to the
National Labor Relations Commission for the execution of the 23 February
2004 and the 24 May 2004 Resolutions of this Court's Third Division in G.R.
Nos. 161159 and 161311 in accordance with this Decision.
SO ORDERED.
|||  (Frondozo v. Manila Electric Co., G.R. No. 178379, [August 22, 2017])

G.R. Nos. 191288 & 191304. February 29, 2012.]

MANILA ELECTRIC COMPANY, petitioner, vs. JAN CARLO

GALA, respondent.

DECISION

BRION, J  : p

We resolve the petition for review on certiorari, 1 seeking to annul the

decision 2 dated August 25, 2009 and the resolution 3 dated February 10, 2010 of
the Court of Appeals (CA) rendered in CA-G.R. SP Nos. 105943 and 106021.

The Antecedents

The facts are summarized below.

 On March 2, 2006, respondent Jan Carlo Gala commenced employment
with the petitioner Meralco Electric Company (Meralco) as a probationary
lineman. He was assigned at Meralco's Valenzuela Sector. He initially served as
member of the crew of Meralco's Truck No. 1823 supervised by Foreman Narciso
Matis. After one month, he joined the crew of Truck No. 1837 under the
supervision of Foreman Raymundo Zuñiga, Sr.
On July 27, 2006, barely four months on the job, Gala was dismissed for
alleged complicity in pilferages of Meralco's electrical supplies, particularly, for
the incident which took place on May 25, 2006. On that day, Gala and other
Meralco workers were instructed to replace a worn-out electrical pole at the
Pacheco Subdivision in Valenzuela City. Gala and the other linemen were
directed to join Truck No. 1891, under the supervision of Foreman Nemecio
Hipolito.
When they arrived at the worksite, Gala and the other workers saw that
Truck No. 1837, supervised by Zuñiga, was already there. The linemen of Truck
No. 1837 were already at work. Gala and the other members of the crew of Truck
No. 1891 were instructed to help in the digging of a hole for the pole to be
installed.
While the Meralco crew was at work, one Noberto "Bing" Llanes, a non-
Meralco employee, arrived. He appeared to be known to the Meralco foremen as
they were seen conversing with him. Llanes boarded the trucks, without being
stopped, and took out what were later found as electrical supplies. Aside from
Gala, the foremen and the other linemen who were at the worksite when the
pilferage happened were later charged with misconduct and dishonesty for their
involvement in the incident. 
CITDES

Unknown to Gala and the rest of the crew, a Meralco surveillance task
force was monitoring their activities and recording everything with a Sony video
camera. The task force was composed of Joseph Aguilar, Ariel Dola and
Frederick Riano.
Meralco called for an investigation of the incident and asked Gala to
explain. Gala denied involvement in the pilferage, contending that even if his
superiors might have committed a wrongdoing, he had no participation in what
they did. He claimed that: (1) he was at some distance away from the trucks
when the pilferage happened; (2) he did not have an inkling that an illegal activity
was taking place since his supervisors were conversing with Llanes, giving him
the impression that they knew him; (3) he did not call the attention of his
superiors because he was not in a position to do so as he was a mere lineman;
and (4) he was just following instructions in connection with his work and had no
control in the disposition of company supplies and materials. He maintained that
his mere presence at the scene of the incident was not sufficient to hold him
liable as a conspirator.
Despite Gala's explanation, Meralco proceeded with the investigation and
eventually terminated his employment on July 27, 2006. 4 Gala responded by
filing an illegal dismissal complaint against Meralco. 5

The Compulsory Arbitration Rulings

In a decision dated September 7, 2007, 6 Labor Arbiter Teresita D.

Castillon-Lora dismissed the complaint for lack of merit. She held that Gala's
participation in the pilferage of Meralco's property rendered him unqualified to
become a regular employee.
Gala appealed to the National Labor Relations Commission (NLRC). In its
decision of May 2, 2008, 7 the NLRC reversed the labor arbiter's ruling. It found
that Gala had been illegally dismissed, since there was "no concrete showing of
complicity with the alleged misconduct/dishonesty[.]" 8 The NLRC, however, ruled
out Gala's reinstatement, stating that his tenure lasted only up to the end of his
probationary period. It awarded him backwages and attorney's fees.
Both parties moved for partial reconsideration; Gala, on the ground that he
should have been reinstated with full backwages, damages and interests; and
Meralco, on the ground that the NLRC erred in finding that Gala had been
illegally dismissed. The NLRC denied the motions. Relying on the same grounds,
Gala and Meralco elevated the case to the CA through a petition
for certiorari under Rule 65 of the Rules of Court.

The CA Decision

In its decision of August 25, 2009, 9 the CA denied Meralco's petition for

lack of merit and partially granted Gala's petition. It concurred with the NLRC that
Gala had been illegally dismissed, a ruling that was supported by the evidence. It
opined that nothing in the records show Gala's knowledge of or complicity in the
pilferage. It found insufficient the joint affidavit 10 of the members of Meralco's
task force testifying that Gala and two other linemen knew Llanes.
The CA modified the NLRC decision of May 2, 2008 11 and ordered Gala's
reinstatement with full backwages and other benefits. The CA also denied
Meralco's motion for reconsideration. Hence, the present petition for review
on certiorari. 12 
TIHDAa

The Petition
 The petition is anchored on the ground that the CA seriously erred and
gravely abused its discretion in —
1. ruling that Gala was illegally dismissed; and
2. directing Gala's reinstatement despite his probationary status.
Meralco faults the CA for not giving credit to its witnesses Aguilar, Dola
and Riano, and instead treated their joint affidavit (Samasamang Sinumpaang
Salaysay) as inconclusive to establish Gala's participation in the pilferage of
company property on May 25, 2006. It submits that the affidavit of the three
Meralco employees disproves the CA's findings, considering that their statements
were based on their first-hand account of the incident during their day-long
surveillance on May 25, 2006. It points out that the three Meralco employees
categorically stated that all of the company's foremen and linemen present at that
time, including Gala, had knowledge of the pilferage that was happening at the
time. According to Aguilar, Dola and Riano, the trucks' crew, including Gala, was
familiar with Llanes who acted as if his presence — particularly, that of freely
collecting materials and supplies — was a regular occurrence during their
operations.
Meralco maintains that Gala himself admitted in his own testimony 13 that
he had been familiar with Llanes even before the May 25, 2006 incident where
he saw Zuñiga, the foreman of Truck No. 1837, conversing with Llanes. Meralco
submits that Gala's admission, instead of demonstrating "his feigned
innocence," 14 even highlights his guilt, especially considering that by design, his
misfeasance assisted Llanes in pilfering company property; Gala neither
intervened to stop Llanes, nor did he report the incident to the Meralco
management.
Meralco posits that because of his undeniable knowledge of, if not
participation in, the pilferage activities done by their group, the company was well
within its right in terminating his employment as a probationary employee for his
failure to meet the basic standards for his regularization. The standards, it points
out, were duly explained to him and outlined in his probationary employment
contract. For this reason and due to the expiration of Gala's probationary
employment, the CA should not have ordered his reinstatement with full
backwages.
Finally, Meralco argues that even if Gala was illegally dismissed, he was
entitled to just his backwages for the unexpired portion of his employment
contract with the company.

Gala's Case
 By way of his Comment (to the Petition) dated September 2, 2010, 15 Gala
asks for a denial of the petition because of (1) serious and fatal infirmities in the
petition; (2) unreliable statements of Meralco's witnesses; and (3) clear lack of
basis to support the termination of his employment.
Gala contends, in regard to the alleged procedural defects of the petition,
that the "Verification and Certification," "Secretary's Certificate" and "Affidavit of
Service" do not contain the details of the Community or Residence Tax
Certificates of the affiants, in violation of Section 6 of Commonwealth Act No. 465
(an Act to Impose a Residence Tax). Additionally, the lawyers who signed the
petition failed to indicate their updated Mandatory Continuing Legal
Education (MCLE) certificate numbers, in violation of the rules.
With respect to the merits of the case, Gala bewails Meralco's reliance on
the joint affidavit 16 of Aguilar, Dola and Riano not only because it was presented
for the first time on appeal to the CA, but also because it was a mere
afterthought. He explains that Aguilar and Dola were the very same persons who
executed a much earlier sworn statement or transcription dated July 7, 2006.
This earlier statement did not even mention Gala, but the later joint affidavit
"splashes GALA's name in a desperate attempt to link him to an imagined
wrongdoing." 17  AEDCHc

Zeroing in on what he believes as lack of credibility of Meralco's evidence,

Gala posits that there is clear lack of basis for the termination of his employment.
Thus, he wonders why Meralco did not present as evidence the video footage of
the entire incident which it claims exists. He suspects that the footage was
adverse to Meralco's position in the case.
Gala adds that the allegations of a "reported pilferage" or "rampant theft or
pilferage" committed prior to May 25, 2006 by his superiors were not established,
for even the labor arbiter did not make a finding on the foremen's involvement in
the incident. He stresses that the same is true in his case as there is no proof of
his participation in the pilferage.
Gala further submits that even if he saw Llanes on May 25, 2006 at about
the time of the occurrence of the pilferage near or around the Meralco trucks, he
was not aware that a wrongdoing was being committed or was about to be
committed. He points out at that precise time, his superiors were much nearer to
the trucks than he as he was among the crew digging a hole. He presumed at the
time that his own superiors, being the more senior employees, could be trusted
to protect company property.
Finally, Gala posits that his reinstatement with full backwages is but a
consequence of the illegality of his dismissal. He argues that even if he was on
probation, he is entitled to security of tenure. Citing Philippine Manpower
Services, Inc. v. NLRC, 18 he claims that in the absence of any justification for the
termination of his probationary employment, he is entitled to continued
employment even beyond the probationary period.  DETACa

The Court's Ruling

The procedural issue

Gala would want the petition to be dismissed outright on procedural

grounds, claiming that the "Verification and Certification," "Secretary's Certificate"
and "Affidavit of Service" accompanying the petition do not contain the details of
the Community Tax Certificates of the affiants, and that the lawyers who signed
the petition failed to indicate their updated MCLE certificate numbers, in violation
of existing rules.
We stress at this point that it is the spirit and intention of labor legislation
that the NLRC and the labor arbiters shall use every reasonable means to
ascertain the facts in each case speedily and objectively, without regard to
technicalities of law or procedure, provided due process is duly observed. 19 In
keeping with this policy and in the interest of substantial justice, we deem it
proper to give due course to the petition, especially in view of the conflict
between the findings of the labor arbiter, on the one hand, and the NLRC and the
CA, on the other. As we said in S.S. Ventures International, Inc. v. S.S. Ventures
Labor Union, 20 "the application of technical rules of procedure in labor cases
may be relaxed to serve the demands of substantial justice."

The substantive aspect of the case

We find merit in the petition.

Contrary to the conclusions of the CA and the NLRC, there is substantial
evidence supporting Meralco's position that Gala had become unfit to continue
his employment with the company. Gala was found, after an administrative
investigation, to have failed to meet the standards expected of him to become a
regular employee and this failure was mainly due to his "undeniable knowledge, if
not participation, in the pilferage activities done by their group, all to the prejudice
of the Company's interests." 21
Gala insists that he cannot be sanctioned for the theft of company property
on May 25, 2006. He maintains that he had no direct participation in the incident
and that he was not aware that an illegal activity was going on as he was at
some distance from the trucks when the alleged theft was being committed. He
adds that he did not call the attention of the foremen because he was a mere
lineman and he was focused on what he was doing at the time. He argues that in
any event, his mere presence in the area was not enough to make him a
conspirator in the commission of the pilferage.
 Gala misses the point. He forgets that as a probationary employee, his
overall job performance and his behavior were being monitored and measured in
accordance with the standards (i.e., the terms and conditions) laid down in his
probationary employment agreement. 22 Under paragraph 8 of the agreement, he
was subject to strict compliance with, and non-violation of the Company Code on
Employee Discipline, Safety Code, rules and regulations and existing policies.
Par. 10 required him to observe at all times the highest degree of transparency,
selflessness and integrity in the performance of his duties and responsibilities,
free from any form of conflict or contradicting with his own personal interest. 
TDAHCS

The evidence on record established Gala's presence in the worksite where

the pilferage of company property happened. It also established that it was not
only on May 25, 2006 that Llanes, the pilferer, had been seen during a Meralco
operation. He had been previously noticed by Meralco employees, including Gala
(based on his admission), 23 in past operations. If Gala had seen Llanes in earlier
projects or operations of the company, it is incredulous for him to say that he did
not know why Llanes was there or what Zuñiga and Llanes were talking about.
To our mind, the Meralco crew (the foremen and the linemen) allowed or could
have even asked Llanes to be there during their operations for one and only
purpose — to serve as their conduit for pilfered company supplies to be sold to
ready buyers outside Meralco worksites.
The familiarity of the Meralco crew with Llanes, a non-Meralco employee
who had been present in Meralco field operations, does not contradict at all but
rather support the Meralco submission that there had been "reported pilferage" or
"rampant theft," by the crew, of company property even before May 25, 2006.
Gala downplays this particular point with the argument that the labor arbiter
made no such finding as she merely assumed it to be a fact, 24 her only "basis"
being the statement that "may natanggap na balita na ang mga crew na ito ay
palagiang hindi nagsasauli ng mga electric facilities na kanilang ginagamit o
pinapalitan bagkus ito ay ibinenta palabas."  25 Gala impugns the statement as
hearsay. He also wonders why Meralco's supposed "video footage" of the
incident on May 25, 2006 was never presented in evidence.
The established fact that Llanes, a non-Meralco employee, was often seen
during company operations, conversing with the foremen, for reason or reasons
connected with the ongoing company operations, gives rise to the question: what
was he doing there? Apparently, he had been visiting Meralco worksites, at least
in the Valenzuela Sector, not simply to socialize, but to do something else. As
testified to by witnesses, he was picking up unused supplies and materials that
were not returned to the company. From these factual premises, it is not hard to
conclude that this activity was for the mutual pecuniary benefit of himself and the
crew who tolerated the practice. For one working at the scene who had seen or
who had shown familiarity with Llanes (a non-Meralco employee), not to have
known the reason for his presence is to disregard the obvious, or at least the
very suspicious.
We consider, too, and we find credible the company submission that the
Meralco crew who worked at the Pacheco Subdivision in Valenzuela City on May
25, 2006 had not been returning unused supplies and materials, to the prejudice
of the company. From all these, the allegedly hearsay evidence that is not
competent in judicial proceedings (as noted above), takes on special meaning
and relevance.
With respect to the video footage of the May 25, 2006 incident, Gala
himself admitted that he viewed the tape during the administrative investigation,
particularly in connection with the accusation against him that he allowed
Llanes (binatilyong may kapansanan sa bibig) to board the Meralco
trucks. 26 The choice of evidence belongs to a party and the mere fact that the
video was shown to Gala indicates that the video was not an evidence that
Meralco was trying to suppress. Gala could have, if he had wanted to, served a
subpoena for the production of the video footage as evidence. The fact that he
did not does not strengthen his case nor weaken the case of Meralco.
On the whole, the totality of the circumstances obtaining in the case
convinces us that Gala could not but have knowledge of the pilferage of company
electrical supplies on May 25, 2006; he was complicit in its commission, if not by
direct participation, certainly, by his inaction while it was being perpetrated and
by not reporting the incident to company authorities. Thus, we find substantial
evidence to support the conclusion that Gala does not deserve to remain in
Meralco's employ as a regular employee. He violated his probationary
employment agreement, especially the requirement for him "to observe at all
times the highest degree of transparency, selflessness and integrity in the
performance of their duties and responsibilities[.]" 27 He failed to qualify as a
regular employee. 28
For ignoring the evidence in this case, the NLRC committed grave abuse
of discretion and, in sustaining the NLRC, the CA committed a reversible error.
WHEREFORE, premises considered, the petition is GRANTED. The
assailed decision and resolution of the Court of Appeals are SET ASIDE. The
complaint is DISMISSED for lack of merit.  DcCEHI

SO ORDERED.
 (Manila Electric Co. v. Gala, G.R. Nos. 191288 & 191304, [February 29, 2012],
|||

683 PHIL 356-368)

G.R. No. 155844. July 14, 2008.]

 NATIONWIDE SECURITY AND ALLIED SERVICES,
INC., petitioner, vs. THE COURT OF APPEALS, NATIONAL
LABOR RELATIONS COMMISSION and JOSEPH DIMPAZ,
HIPOLITO LOPEZ, EDWARD ODATO, FELICISIMO PABON and
JOHNNY AGBAY, respondents.

RESOLUTION

QUISUMBING, J  : p

This petition for certiorari seeks the reversal and setting aside of the

Decision 1 dated January 31, 2002 and the Resolution 2 dated September 12,
2002 of the Court of Appeals in CA-G.R. SP No. 65465. The appellate court
had affirmed the January 30, 2001 3 and April 20, 2001 Resolutions of the
National Labor Relations Commission (NLRC).
The factual antecedents of this case are as follows.
Labor Arbiter Manuel M. Manansala found petitioner Nationwide
Security and Allied Services, Inc., a security agency, not liable for illegal
dismissal in NLRC NCR 00-01-00833-96 and 00-02-01129-96 involving eight
security guards who were employees of the petitioner. However, the Labor
Arbiter directed the petitioner to pay the aforementioned security guards
P81,750.00 in separation pay, P8,700.00 in unpaid salaries, P93,795.68 for
underpayment and 10% attorney's fees based on the total monetary award. 4
Dissatisfied with the decision, petitioner appealed to the NLRC which
dismissed its appeal for two reasons — first, for having been filed beyond the
reglementary period within which to perfect the appeal and second, for filing
an insufficient appeal bond. It disposed as follows:
WHEREFORE, in the light of the foregoing, it is hereby ordered
that:
1. the instant appeal be considered DISMISSED; and,
2. the Decision appealed from be deemed FINAL and
EXECUTORY.  aCIHcD

SO ORDERED. 5
Its motion for reconsideration having been denied, petitioner then
appealed to the Court of Appeals to have the appeal resolved on the merits
rather than on pure technicalities in the interest of due process.
 The Court of Appeals dismissed the case, holding that in a special
action for certiorari, the burden is on petitioner to prove not merely reversible
error, but grave abuse of discretion amounting to lack of or excess of
jurisdiction on the part of public respondent NLRC. The dispositive portion of
its decision states:
WHEREFORE, in view of the foregoing, the petition is hereby
DISMISSED. The questioned Resolutions dated 30 January 2001 and
20 April 2001 of the National Labor Relations Commission are
accordingly AFFIRMED.
SO ORDERED. 6
The Court of Appeals likewise denied the petitioner's motion for
reconsideration. 7 Hence, this petition which raises the following issues:
I.
WHETHER OR NOT TECHNICALITIES IN LABOR CASES
MUST PREVAIL OVER THE SPIRIT AND INTENTION OF THE
LABOR CODE UNDER ARTICLE 221 THEREOF WHICH STATES:
"In any proceeding before the Commission or any of the
Labor Arbiters, the rules of evidence prevailing in courts of Law or
equity shall not be controlling and it is the spirit and [i]ntention
of this Code that the Commission and its members and
Labor Arbiters shall use every and all reasonable means to
ascertain the facts in each case speedily and objectively and
without [regard] to technicalities of law or procedure, all [i]n
the interest of due process." Emphasis added.
II.
WHETHER OR NOT THE DOCTRINE IN THE CASE OF STAR
ANGEL HANDICRAFT vs. NLRC, et al., 236 SCRA 580
AND ROSEWOOD PROCESSING, INC. VS. NLRC, G.R. [No.]
116476, May 21, 1998 FINDS APPLICATION IN THE INSTANT CASE
[;] 
TSacAE

III.
WHETHER OR NOT SEPARATION PAY IS JUSTIFIED AS
AWARD IN CASES WHERE THE EMPLOYEE IS TERMINATED DUE
TO CONTRACT EXPIRATION AS IN THE INSTANT CASE; AND
IV.
WHETHER OR NOT THE REQUIREMENT ON
CERTIFICATION AGAINST FORUM SHOPPING WHICH WAS
RAISED BEFORE THE NLRC IS ENFORCEABLE IN THE INSTANT
CASE. 8
 Petitioner contends that the Court of Appeals erred when it dismissed
its case based on technicalities while the private respondents contend that the
appeal to the NLRC had not been perfected, since the appeal was filed
outside the reglementary period, and the bond was insufficient. 9  AECacT

After considering all the circumstances in this case and the submission
by the parties, we are in agreement that the petition lacks merit.
At the outset it must be pointed out here that the petition
for certiorari filed with the Court by petitioner under Rule 65 of the Rules of
Court is inappropriate. The proper remedy is a petition for review under Rule
45 purely on questions of law. There being a remedy of appeal via petition for
review under Rule 45 of the Rules of Court available to the petitioner, the filing
of a petition for certiorari under Rule 65 is improper.
But even if we bend our Rules to allow the present petition
for certiorari, still it will not prosper because we do not find any grave abuse of
discretion amounting to lack of or excess of jurisdiction on the part of the
Court of Appeals when it dismissed the petition of the security agency. We
must stress that under Rule 65, the abuse of discretion must be so patent and
gross as to amount to an evasion of positive duty or to a virtual refusal to
perform a duty enjoined by law, or to act at all in contemplation of law, as
where the power is exercised in an arbitrary and despotic manner by reason
of passion or personal hostility. 10 No such abuse of discretion happened
here. The assailed decision by the Court of Appeals was certainly not
capricious nor arbitrary, nor was it a whimsical exercise of judgment
amounting to a lack of jurisdiction. 11 TIEHDC

The Labor Code provides as follows:

ART. 223. Appeal. — Decisions, awards, or orders of the Labor
Arbiter are final and executory unless appealed to the Commission by
any or both parties within ten (10) calendar days from receipt of such
decisions, awards, or orders. Such appeal may be entertained only on
any of the following grounds:
(a) If there is prima facie evidence of abuse of discretion on the
part of the Labor Arbiter;
(b) If the decision, order or award was secured through fraud or
coercion, including graft and corruption;
(c) If made purely on questions of law, and
(d) If serious errors in the findings of facts are raised which
would cause grave or irreparable damage or injury to the appellant.
In case of a judgment involving a monetary award, an appeal by
the employer may be perfected only upon the posting of a cash or
surety bond issued by a reputable bonding company duly accredited
 by the Commission in the amount equivalent to the monetary award in
the judgment appealed from.
xxx xxx xxx
The New Rules of Procedure of the NLRC states:
Section 1. Periods of appeal. — Decisions, resolutions or
orders of the Labor Arbiter shall be final and executory unless
appealed to the Commission by any or both parties within ten (10)
calendar days from receipt thereof; and in case of decisions,
resolutions or orders of the Regional Director of the Department of
Labor and Employment pursuant to Article 129 of the Labor Code,
within five (5) calendar days from receipt thereof. If the 10th or 5th day,
as the case may be, falls on a Saturday, Sunday or holiday, the last
day to perfect the appeal shall be the first working day following such
Saturday, Sunday or holiday.
No motion or request for extension of the period within which to
perfect an appeal shall be allowed.
In the instant case, both the NLRC and the Court of Appeals found that
petitioner received the decision of the Labor Arbiter on July 16, 1999. This
factual finding is supported by sufficient evidence, 12 and we take it as binding
on us. Petitioner then simultaneously filed its "Appeal Memorandum", "Notice
of Appeal" and "Motion to Reduce Bond", by registered mail on July 29, 1999,
under Registry Receipt No. 003098. 13 These were received by the NLRC on
July 30, 1999. 14 The appeal to the NLRC should have been perfected, as
provided by its Rules, within a period of 10 days from receipt by petitioner of
the decision on July 16, 1999. Clearly, the filing of the appeal — three days
after July 26, 1999 — was already beyond the reglementary period and in
violation of the NLRC Rules and the pertinent Article on Appeal in the Labor
Code.  CHDAEc

Failure to perfect an appeal renders the decision final and

executory. 15 The right to appeal is a statutory right and one who seeks to
avail of the right must comply with the statute or the rules. The rules,
particularly the requirements for perfecting an appeal within the reglementary
period specified in the law, must be strictly followed as they are considered
indispensable interdictions against needless delays and for the orderly
discharge of judicial business. 16 It is only in highly meritorious cases that this
Court will opt not to strictly apply the rules and thus prevent a grave injustice
from being done. 17 The exception does not obtain here. Thus, we are in
agreement that the decision of the Labor Arbiter already became final and
executory because petitioner failed to file the appeal within 10 calendar days
from receipt of the decision.
 Clearly, the NLRC committed no grave abuse of discretion in dismissing
the appeal before it. It follows that the Court of Appeals, too, did not err, nor
gravely abuse its discretion, in sustaining the NLRC Order, by dismissing the
petition for certiorari before it. Hence, with the primordial issue resolved, we
find no need to tarry on the other issues raised by petitioner.
WHEREFORE, the Decision dated January 31, 2002 and the
Resolution dated September 12, 2002 of the Court of Appeals in CA-G.R. SP
No. 65465 are AFFIRMED. Costs against petitioner.
SO ORDERED.
 (Nationwide Security and Allied Services, Inc. v. Court of Appeals, G.R. No.
|||

155844 (Resolution), [July 14, 2008], 580 PHIL 135-143)

G.R. No. 190724. March 12, 2014.]

DIAMOND TAXI and/or BRYAN ONG, petitioners, vs. FELIPE

LLAMAS, JR., respondent.

DECISION

BRION, J  : p

In this petition for review on certiorari, 1 we resolve the challenge to the

August 13, 2008 decision 2 and the November 27, 2009 resolution 3 of the Court
of Appeals (CA) in CA-G.R. CEB-S.P. No. 02623. This CA decision reversed and
set aside the May 30, 2006 resolution 4 of the National Labor Relations
Commission (NLRC) in NLRC Case No. V-000294-06 (RAB VII-07-1574-05) that
dismissed respondent Felipe Llamas, Jr.'s appeal for non-perfection.

The Factual Antecedents

Llamas worked as a taxi driver for petitioner Diamond Taxi, owned and
operated by petitioner Bryan Ong. On July 18, 2005, Llamas filed before the
Labor Arbiter (LA) a complaint for illegal dismissal against the petitioners.
In their position paper, the petitioners denied dismissing Llamas. They
claimed that Llamas had been absent without official leave for several days,
beginning July 14, 2005 until August 1, 2005. The petitioners submitted a copy of
the attendance logbook to prove that Llamas had been absent on these cited
dates. They also pointed out that Llamas committed several traffic violations in
the years 2000-2005 and that they had issued him several memoranda for acts
of insubordination and refusal to heed management instructions. They argued
that these acts — traffic violations, insubordination and refusal to heed
management instructions — constitute grounds for the termination of Llamas'
employment.
Llamas failed to seasonably file his position paper. 
IDaEHC

On November 29, 2005, the LA rendered a decision 5 dismissing Llamas'

complaint for lack of merit. The LA held that Llamas was not dismissed, legally or
illegally. Rather, the LA declared that Llamas left his job and had been absent for
several days without leave.
Llamas received a copy of this LA decision on January 5, 2006.
Meanwhile, he filed his position paper 6 on December 20, 2005.
In his position paper, Llamas claimed that he failed to seasonably file his
position paper because his previous counsel, despite his repeated pleas, had
continuously deferred compliance with the LA's orders for its submission. Hence,
he was forced to secure the services of another counsel on December 19, 2005
in order to comply with the LA's directive.
On the merits of his complaint, Llamas alleged that he had a
misunderstanding with Aljuver Ong, Bryan's brother and operations manager of
Diamond Taxi, on July 13, 2005 (July 13, 2005 incident). When he reported for
work on July 14, 2005, Bryan refused to give him the key to his assigned taxi cab
unless he would sign a prepared resignation letter. He did not sign the
resignation letter. He reported for work again on July 15 and 16, 2005, but Bryan
insisted that he sign the resignation letter prior to the release of the key to his
assigned taxi cab. Thus, he filed the illegal dismissal complaint.
On January 16, 2006, Llamas filed before the LA a motion for
reconsideration of its November 29, 2005 decision. The LA treated Llamas'
motion as an appeal per Section 15, Rule V of the 2005 Revised Rules of
Procedure of the NLRC (2005 NLRC Rules) (the governing NLRC Rules of
Procedure at the time Llamas filed his complaint before the LA).
In its May 30, 2006 resolution, 7 the NLRC dismissed for non-perfection
Llamas' motion for reconsideration treated as an appeal. The NLRC pointed out
that Llamas failed to attach the required certification of non-forum shopping per
Section 4, Rule VI of the 2005 NLRC Rules.
Llamas moved to reconsider the May 30, 2006 NLRC resolution; he
attached the required certification of non-forum shopping.
 When the NLRC denied his motion for reconsideration 8 in its August 31,
2006 resolution, 9 Llamas filed before the CA a petition for certiorari. 10

The CA's ruling

In its August 13, 2008 decision, 11 the CA reversed and set aside the
assailed NLRC resolution. Citing jurisprudence, the CA pointed out that non-
compliance with the requirement on the filing of a certificate of non-forum
shopping, while mandatory, may nonetheless be excused upon showing of
manifest equitable grounds proving substantial compliance. Additionally, in order
to determine if cogent reasons exist to suspend the rules of procedure, the court
must first examine the substantive aspect of the case.
The CA pointed out that the petitioners failed to prove overt acts showing
Llamas' clear intention to abandon his job. On the contrary, the petitioners placed
Llamas in a situation where he was forced to quit as his continued employment
has been rendered impossible, unreasonable or unlikely, i.e., making him sign a
resignation letter as a precondition for giving him the key to his assigned taxi cab.
To the CA, the petitioners' act amounted to constructive dismissal. The CA
additionally noted that Llamas immediately filed the illegal dismissal case that
proved his desire to return to work and negates the charge of abandonment.
Further, the CA brushed aside the petitioners' claim that Llamas committed
several infractions that warranted his dismissal. The CA declared that the
petitioners should have charged Llamas for these infractions to give the latter an
opportunity to explain his side. As matters then stood, they did not charge him for
these infractions; hence, the petitioners could not have successfully used these
as supporting grounds to justify Llamas' dismissal on the ground of
abandonment.
As the CA found equitable grounds to take exception from the rule on
certificate of non-forum shopping, it declared that the NLRC had acted with grave
abuse of discretion when it dismissed Llamas' appeal purely on a technicality. To
the CA, the NLRC should have considered as substantially compliant with this
rule Llamas' subsequent submission of the required certificate with his motion for
reconsideration (of the NLRC's May 30, 2006 resolution).
Accordingly, the CA ordered the petitioners to pay Llamas separation pay,
full backwages and other benefits due the latter from the time of the dismissal up
to the finality of the decision. The CA awarded separation pay in lieu of
reinstatement because of the resulting strained work relationship between
Llamas and Bryan following the altercation between the former and the latter's
brother.
 The petitioners filed the present petition after the CA denied their motion
for reconsideration 12 in the CA's November 27, 2009 resolution. 13  HICcSA

The Petition

The petitioners argue that the CA erred when it encroached on the NLRC's
exclusive jurisdiction to review the merits of the LA's decision. To the petitioners,
the CA should have limited its action in determining whether grave abuse of
discretion attended the NLRC's dismissal of Llamas' appeal; finding that it did,
the CA should have remanded the case to the NLRC for further proceedings.
Moreover, the petitioners point out that the NLRC did not gravely abuse its
discretion when it rejected Llamas' appeal. They argue that the NLRC's action
conformed with its rules and with this Court's decisions that upheld the dismissal
of an appeal for failure to file a certificate of non-forum shopping.
Directly addressing the CA's findings on the dismissal issue, the petitioners
argue that they did not constructively dismiss Llamas. They maintain that Llamas
no longer reported for work because of the several liabilities he incurred that
would certainly have, in any case, warranted his dismissal.

The Case for the Respondent

Llamas argues in his comment 14 that the CA correctly found that the

NLRC acted with grave abuse of discretion when it maintained its dismissal of his
appeal despite his subsequent filing of the certificate of non-forum shopping.
Quoting the CA's ruling, Llamas argues that the NLRC should have given due
course to his appeal to avoid miscarriage of substantial justice.
On the issue of dismissal, Llamas argues that the CA correctly reversed
the LA's ruling that found him not dismissed, legally or illegally. Relying on the
CA's ruling, Llamas points out that the petitioners bore the burden of proving the
abandonment charge. In this case, the petitioners failed to discharge their
burden; hence, his dismissal was illegal.

The Court's Ruling

We do not find the petition meritorious.

Preliminary considerations:
factual-issue-bar-rule

In this Rule 45 petition for review on certiorari, we review the legal errors
that the CA may have committed in the assailed decision, in contrast with the
review for jurisdictional error undertaken in an original certiorari action. In
reviewing the Legal correctness of the CA decision in a labor case made under
Rule 65 of the Rules of Court, we examine the CA decision in the context that it
determined the presence or the absence of grave abuse of discretion in the
NLRC decision before it and not on the basis of whether the NLRC decision, on
the merits of the case, was correct. In other words, we have to be keenly aware
that the CA undertook a Rule 65 review, not a review on appeal, of the
challenged NLRC decision. In question form, the question that we ask is: Did the
CA correctly determine whether the NLRC committed grave abuse of discretion
in ruling on the case? 15
In addition, the Court's jurisdiction in a Rule 45 petition for review
on certiorari is limited to resolving only questions of law. A question of law arises
when the doubt or controversy concerns the correct application of law or
jurisprudence to a certain set of facts. In contrast, a question of fact exists when
the doubt or controversy concerns the truth or falsehood of facts. 16
As presented by the petitioners, the petition before us involves mixed
questions of fact and law, with the core issue being one of fact. Whether the CA,
in ruling on the labor case before it under an original certiorari action, can make
its own factual determination requires the consideration and application of law
and jurisprudence; it is essentially a question of law that a Rule 45 petition
properly addresses.
In the context of this case, however, this legal issue is inextricably linked
with and cannot be resolved without the definitive resolution of the core factual
issue — whether Llamas abandoned his work or had been constructively
dismissed. As a proscribed question of fact, we generally cannot address this
issue, except to the extent necessary to determine whether the CA correctly
found that the NLRC acted with grave abuse of discretion in dismissing Llamas'
appeal on purely technical grounds.  HcTEaA

For raising mixed questions of fact and law, we deny the petition outright.
Even if this error were to be disregarded, however, we would still deny the
petition as we find the CA legally correct in reversing the NLRC's resolution on
the ground of grave abuse of discretion.

The CA has ample authority to make its

own factual determination

We agree that remanding the case to the NLRC for factual determination
and decision of the case on the merits would have been, ordinarily, a prudent
approach. Nevertheless, the CA's action on this case was not procedurally wrong
and was not without legal and jurisprudential basis.
 In this jurisdiction, courts generally accord great respect and finality to
factual findings of administrative agencies, i.e., labor tribunals, in the exercise of
their quasi-judicial function. 17 These findings, however, are not infallible. This
doctrine espousing comity to administrative findings of facts cannot preclude the
courts from reviewing and, when proper, disregarding these findings of facts
when shown that the administrative body committed grave abuse of discretion by
capriciously, whimsically or arbitrarily disregarding evidence or circumstances of
considerable importance that are crucial or decisive of the controversy. 18
Hence, in labor cases elevated to it via petition for certiorari, the CA can
grant this prerogative writ when it finds that the NLRC acted with grave abuse of
discretion in arriving at its factual conclusions. To make this finding, the CA
necessarily has to view the evidence if only to determine if the NLRC ruling had
basis in evidence. It is in the sense and manner that the CA, in a Rule
65 certiorari petition before it, had to determine whether grave abuse of
discretion on factual issues attended the NLRC's dismissal of Llamas' appeal.
Accordingly, we do not find erroneous the course that the CA took in resolving
Llamas' certiorari petition. The CA may resolve factual issues by express legal
mandate and pursuant to its equity jurisdiction.

The NLRC committed grave abuse of

discretion in dismissing Llamas' appeal on
mere technicality

Article 223 (now Article 229) 19 of the Labor Code states that decisions (or
awards or orders) of the LA shall become final and executory unless appealed to
the NLRC within ten (10) calendar days from receipt of the decision. Consistent
with Article 223, Section 1, Rule VI of the 2005 NLRC Rules also provides for a
ten (10)-day period for appealing the LA's decision. Under Section 4 (a), Rule
VI 20 of the 2005 NLRC Rules, the appeal shall be in the form of a verified
memorandum of appeal and accompanied by proof of payment of the appeal fee,
posting of cash or surety bond (when necessary), certificate of non-forum
shopping, and proof of service upon the other parties. Failure of the appealing
party to comply with any or all of these requisites within the reglementary period
will render the LA's decision final and executory.
Indisputably, Llamas did not file a memorandum of appeal from the LA's
decision. Instead, he filed, within the ten (10)-day appeal period, a motion for
reconsideration. Under Section 15, Rule V of the 2005 NLRC Rules, motions for
reconsideration from the LA's decision are not allowed; they may, however, be
treated as an appeal provided they comply with the requirements for perfecting
an appeal. The NLRC dismissed Llamas' motion for reconsideration treated as
an appeal for failure to attach the required certificate of non-forum shopping per
Section 4 (a), Rule VI of the 2005 NLRC Rules.
 The requirement for a sworn certification of non-forum shopping was
prescribed by the Court under Revised Circular 28-91, 21 as amended
by Administrative Circular No. 04-94, 22 to prohibit and penalize the evils of forum
shopping. Revised Circular 28-91, as amended by Administrative Circular No.
04-94, requires a sworn certificate of non-forum shopping to be filed with every
petition, complaint, application or other initiatory pleading filed before the Court,
the CA, or the different divisions thereof, or any other court, tribunal or
agency. HIaTCc

Ordinarily, the infirmity in Llamas' appeal would have been fatal and would
have justified an end to the case. A careful consideration of the circumstances of
the case, however, convinces us that the NLRC should, indeed, have given due
course to Llamas' appeal despite the initial absence of the required certificate.
We note that in his motion for reconsideration of the NLRC's May 30, 2006
resolution, Llamas attached the required certificate of non-forum shopping.
Moreover, Llamas adequately explained, in his motion for reconsideration,
the inadvertence and presented a clear justifiable ground to warrant the
relaxation of the rules. To recall, Llamas was able to file his position paper,
through his new counsel, only on December 20, 2005. He hired the new counsel
on December 19, 2005 after several repeated, albeit failed, pleas to his former
counsel to submit, on or before October 25, 2005 per the LA's order, the required
position paper. On November 29, 2005, however, the LA rendered a decision
that Llamas and his new counsel learned and received a copy of only on January
5, 2006. Evidently, the LA's findings and conclusions were premised solely on the
petitioners' pleadings and evidence. And, while not the fault of the LA, Llamas,
nevertheless, did not have a meaningful opportunity to present his case, refute
the contents and allegations in the petitioners' position paper and submit
controverting evidence.
Faced with these circumstances, i.e., Llamas' subsequent compliance with
the certification-against-forum-shopping requirement; the utter negligence and
inattention of Llamas' former counsel to his pleas and cause, and his vigilance in
immediately securing the services of a new counsel; Llamas' filing of his position
paper before he learned and received a copy of the LA's decision; the absence of
a meaningful opportunity for Llamas to present his case before the LA; and the
clear merits of his case (that our subsequent discussion will show), the NLRC
should have relaxed the application of procedural rules in the broader interests of
substantial justice. Indeed, while the requirement as to the certificate of non-
forum shopping is mandatory, this requirement should not, however, be
interpreted too literally and thus defeat the objective of preventing the
undesirable practice of forum-shopping. 23
Under Article 221 (now Article 227) 24 of the Labor Code, "the Commission
and its members and the Labor Arbiters shall use every and all reasonable
means to ascertain the facts in each case speedily and objectively and without
regard to technicalities of law or procedure, all in the interest of due
process." 25 Consistently, we have emphasized that "rules of procedure are mere
tools designed to facilitate the attainment of justice. A strict and rigid application
which would result in technicalities that tend to frustrate rather than promote
substantial justice should not be allowed . . . . No procedural rule is sacrosanct if
such shall result in subverting justice." 26 Ultimately, what should guide judicial
action is that a party is given the fullest opportunity to establish the merits of his
action or defense rather than for him to lose life, honor, or property on mere
technicalities. 27
Then, too, we should remember that "the dismissal of an employee's
appeal on purely technical ground is inconsistent with the constitutional mandate
on protection to labor." 28 Under the Constitution 29 and the Labor Code, 30 the
State is bound to protect labor and assure the rights of workers to security of
tenure — tenurial security being a preferred constitutional right that, under these
fundamental guidelines, technical infirmities in labor pleadings cannot defeat. 31
In this case, Llamas' action against the petitioners concerned his job, his
security of tenure. This is a property right of which he could not and should not
be deprived of without due process. 32 But, more importantly, it is a right that
assumes a preferred position in our legal hierarchy. 33
Under these considerations, we agree that the NLRC committed grave
abuse of discretion when, in dismissing Llamas' appeal, it allowed purely
technical infirmities to defeat Llamas' tenurial security without full opportunity to
establish his case's merits.

Llamas did not abandon his work; he was

constructively dismissed

"Abandonment is the deliberate and unjustified refusal of an employee to

resume his employment." 34 It is a form of neglect of duty that constitutes just
cause for the employer to dismiss the employee. 35
To constitute abandonment of work, two elements must concur: "(1) . . .
the employee must have failed to report for work or must have been absent
without valid or justifiable reason; and (2) . . . there must have been a clear
intention [on the part of the employee] to sever the employer-employee
relationship manifested by some overt act." 36 The employee's absence must be
accompanied by overt acts that unerringly point to the employee's clear intention
to sever the employment relationship. 37 And, to successfully invoke
abandonment, whether as a ground for dismissing an employee or as a defense,
the employer bears the burden of proving the employee's unjustified refusal to
resume his employment. 38 Mere absence of the employee is not enough. 39  TADcCS
 Guided by these parameters, we agree that the petitioners unerringly failed
to prove the alleged abandonment. They did not present proof of some overt act
of Llamas that clearly and unequivocally shows his intention to abandon his job.
We note that, aside from their bare allegation, the only evidence that the
petitioners submitted to prove abandonment were the photocopy of their
attendance logbook and the July 15, 2005 memorandum 40 that they served on
Llamas regarding the July 13, 2005 incident. These pieces of evidence, even
when considered collectively, indeed failed to prove the clear and unequivocal
intention, on Llamas' part, that the law requires to deem as abandonment
Llamas' absence from work. Quite the contrary, the petitioners' July 15, 2005
memorandum, in fact, supports, if not strengthens, Llamas' version of the events
that led to his filing of the complaint, i.e., that as a result of the July 13, 2005
incident, the petitioners refused to give him the key to his assigned taxi cab
unless he would sign the resignation letter.
Moreover, and as the CA pointed out, Llamas lost no time in filing the
illegal dismissal case against them. To recall, he filed the complaint on July 18,
2005 or only two days from the third time he was refused access to his assigned
taxi cab on July 16, 2005. Clearly, Llamas could not be deemed to have
abandoned his work for, as we have previously held, the immediate filing by the
employee of an illegal dismissal complaint is proof enough of his intention to
return to work and negates the employer's charge of abandonment. 41 To
reiterate and emphasize, abandonment is a matter of intention that cannot lightly
be presumed from certain equivocal acts of the employee. 42
The CA, therefore, correctly regarded Llamas as constructively dismissed
for the petitioners' failure to prove the alleged just cause — abandonment — for
his dismissal. Constructive dismissal exists when there is cessation of work
because continued employment is rendered impossible, unreasonable or
unlikely. Constructive dismissal is a dismissal in disguise or an act amounting to
dismissal but made to appear as if it were not. In constructive dismissal cases,
the employer is, concededly, charged with the burden of proving that its conduct
and action were for valid and legitimate grounds. 43 The petitioners' persistent
refusal to give Llamas the key to his assigned taxi cab, on the condition that he
should first sign the resignation letter, rendered, without doubt, his continued
employment impossible, unreasonable and unlikely; it, thus, constituted
constructive dismissal.
In sum, the CA correctly found equitable grounds to warrant relaxation of
the rule on perfection of appeal (filing of the certificate of non-forum shopping) as
there was patently absent sufficient proof for the charge of abandonment.
Accordingly, we find the CA legally correct in reversing and setting aside the
NLRC's resolution rendered in grave abuse of discretion.
 WHEREFORE, in light of these considerations, we hereby DENY the
petition. We AFFIRM the decision dated August 13, 2008 and the resolution
dated November 27, 2009 of the Court of Appeals in CA-G.R. CEB-S.P. No.
02623.
SO ORDERED.
 (Diamond Taxi v. Llamas, Jr., G.R. No. 190724, [March 12, 2014], 729 PHIL
|||

364-383)

[G.R. No. 180147. January 14, 2015.]

SARA LEE PHILIPPINES, INC., petitioner, vs. EMILINDA D.

MACATLANG, ET AL., 1 respondents.

[G.R. No. 180148. January 14, 2015.]

ARIS PHILIPPINES, INC., petitioner, vs. EMILINDA D.

MACATLANG, ET AL., respondents.

[G.R. No. 180149. January 14, 2015.]

SARA LEE CORPORATION, petitioner, vs. EMILINDA D.

MACATLANG, ET AL., respondents.

[G.R. No. 180150. January 14, 2015.]

CESAR C. CRUZ, petitioner, vs. EMILINDA D. MACATLANG, ET

AL., respondents.

[G.R. No. 180319. January 14, 2015.]

FASHION ACCESSORIES PHILS., INC., petitioner, vs.

EMILINDA D. MACATLANG, ET AL., respondents.

[G.R. No. 180685. January 14, 2015.]

 EMILINDA D. MACATLANG, ET AL., petitioner, vs. NLRC, ARIS
PHILIPPINES, INC., FASHION ACCESSORIES PHILS., INC.,
SARA LEE CORPORATION, SARA LEE PHILIPPINES, INC.,
COLLIN BEAL and ATTY. CESAR C. CRUZ, respondents.

RESOLUTION

PEREZ, J  :p

This treats of the 1) Motion for Reconsideration with Urgent Petition for the
Court's Approval of the Pending "Motion for Leave of Court to File and Admit
Herein Statement and Confession of Judgment — to Buy Peace and/or Secure
against any Possible Contingent Liability by Sara Lee Corporation" filed by Sara
Lee Philippines, Inc. (SLPI), Aris Philippines, Inc. (Aris), Sara Lee Corporation
(SLC) and Cesar C. Cruz, 2) Motion for Reconsideration filed by Fashion
Accessories Phils., Inc. (FAPI), and 3) Manifestation of Conformity to the Motion
for Leave of Court to File and Admit Confession of Judgment — to Buy Peace
and/or to Secure against any Possible Contingent Liability by Petitioner SLC.
In the Decision dated 4 June 2014, this Court directed SLPI, Aris, SLC,
Cesar Cruz, and FAPI, collectively known as the Corporations, to post P725
Million, in cash or surety bond, within 10 days from the receipt of the Decision.
The Court further nullified the Resolution of the National Labor Relations
Commission (NLRC) dated 19 December 2006 for being premature.
The Motion for Reconsideration is anchored on the following grounds:
A. The Court failed to consider the "Motion for Leave of Court to
file and Admit Herein Statement and Confession of Judgment to Buy
Peace and/or to Secure Against any Possible Contingent Liability by
Petitioner Sara Lee Corporation" (hereafter the "compromise
agreement") filed by petitioner Sara Lee Corporation on June 23, 2014
before receipt of the Decision of June 04, 2014 on July 31, 2014 with the
conformity of the respondents in their "Manifestation and Conformity to
the Petitioners' Motion for Leave to File and Admit Statement of
Confession of Judgment" dated July 04, 2014 which could have
terminated the present cases and avoid delays with its remand for
further proceedings below.
B. The Court did not duly rule on the violations of the rights of due
process of Petitioner SLPI as shown by the following:
1. The Labor Arbiter has never acquired jurisdiction over
Petitioner SLPI which was never impleaded as a party respondent
 and was never validly served with summons which fact was
specifically mentioned in NLRC's Resolution of December 19,
2006; and
2. There is no employer-employee relationships between
Petitioner SLPI and the respondents.
C. The Court did not duly rule on the violations of the rights of due
process of Petitioner SLC because of the following:
1. The Labor Arbiter has never acquired jurisdiction over
Petitioner SLC which was never impleaded as a party respondent
and was never validly served with summons which fact was
specifically raised by the Court as an issue in page 12 of the
Decision of June 04, 2014 but remained unresolved; and
2. There is no employer-employee relationship between
Petitioner SLC and the respondents.
D. The Court did not duly rule on the violations of the rights of due
process of Petitioner Cesar C. Cruz as shown by the following:
1. The Labor Arbiter has never acquired jurisdiction over
Petitioner Cesar C. Cruz who was never impleaded as a party
respondent and was never validly served with summons; and  caSDCA

2. There is no employer-employee relationship between

petitioner Cesar C. Cruz and the respondents.
E. There was no legal impediment for the NLRC to issue its
Resolution of December 19, 2006 vacating the Labor Arbiter's Decision
and remanding the case to the Labor Arbiter for further proceeding as no
Temporary Restraining Order (TRO) or Writ of Preliminary Injunction
was issued by the Court of Appeals and the rule on judicial courtesy
remains the exception rather than the rule.
F. The Court did not duly rule on the applicability of the final and
executory Decision of Fullido, et al. v. Aris Philippines, Inc. and Cesar C.
Cruz (G.R. No. 185948) with respect to the present consolidated cases
considering the identical facts and issues involved plus the fact that the
Court in Fullido sustained the findings and decisions of three (3) other
tribunals, i.e., the Court of Appeals, the NLRC and the Labor Arbiter.
G. The Court failed to consider the prescription of the complaints
for money claims filed by the respondents against the Petitioners under
Article 291 of the Labor Code due to the lapse of three (3) years and
four (4) months when Petitioners were impleaded as respondents only
through the amendment of complaints by the complainants, the
respondents' herein.
 H. The Court also did not consider that the Complaints filed by the
respondents are barred by res judicata because of the final and
executory decision rendered by the Voluntary Arbitrator on the identical
facts and issues in the case filed by the labor union representing the
respondents against Petitioner API.
I. Contrary to the Decision of June 04, 2014, the Abelardo petition
(CA GR SP No. 95919, Pacita S. Abelardo v. NLRC, Aris, Philippines,
Inc.) was filed earlier than the Macatlang petition (CA GR SP No. 96363)
as shown by the lower docket number, thus, the Macatlang petition
should be the one dismissed for forum shopping.
J. In fixing the bond to PhP725 Million which is 25% of the
monetary award, the Court failed to consider the En Banc Decision
in McBurnie v. Ganzon, 707 SCRA 646, 693 (2013) which required only
the posting of a bond equivalent to ten percent (10%) of the monetary
award. 2
We briefly revisit the factual milieu of this case.
Aris permanently ceased operations on 9 October 1995 displacing 5,984
rank-and-file employees. On 26 October 1995, FAPI was incorporated prompting
former Aris employees to file a case for illegal dismissal on the allegations that
FAPI was a continuing business of Aris. SLC, SLP and Cesar Cruz were
impleaded as defendants being major stockholders of FAPI and officers of Aris,
respectively.
On 30 October 2004, the Labor Arbiter found the dismissal of 5,984 Aris
employees illegal and awarded them monetary benefits amounting to
P3,453,664,710.86. The judgment award is composed of separation pay of one
month for every year of service, backwages, moral and exemplary damages and
attorney's fees.
The Corporations filed a Notice of Appeal with Motion to Reduce Appeal
Bond. They posted a P4.5 Million bond. The NLRC granted the reduction of the
appeal bond and ordered the Corporations to post an additional P4.5 Million
bond.
The 5,984 former Aris employees, represented by Emilinda Macatlang
(Macatlang petition), filed a petition for review before the Court of Appeals
insisting that the appeal was not perfected due to failure of the Corporations to
post the correct amount of the bond which is equivalent to the judgment award.
While the case was pending before the appellate court, the NLRC
prematurely issued an order setting aside the decision of the Labor Arbiter for
being procedurally infirmed.
 The Court of Appeals, on 26 March 2007, ordered the Corporations to post
an additional appeal bond of P1 Billion.
In our Decision dated 4 June 2014, we modified the Court of Appeals'
Decision, to wit:
WHEREFORE, the Decision of the Court of Appeals in CA-G.R.
SP No. 96363 dated 26 March 2007 is MODIFIED. The Corporations are
directed to post P725 Million, in cash or surety bond, within TEN (10)
days from the receipt of this DECISION. The Resolution of the NLRC
dated 19 December 2006 is VACATED for being premature and the
NLRC is DIRECTED to act with dispatch to resolve the merits of the
case upon perfection of the appeal. 3
We also resolved the procedural issue of forum-shopping by holding that
the 411 petitioners of the Pacita Abelardo petition (Abelardo petition) are not
representative of the interest of all petitioners in Macatlang petition. The number
is barely sufficient to comprise the majority of petitioners in Macatlang petition
and it would be the height of injustice to dismiss the Macatlang petition which
evidently enjoys the support of an overwhelming majority due to the mistake
committed by petitioners in the Abelardo petition.
The Motion for Reconsideration has no merit.  EScHDA

The Corporations score this Court for failing to consider the ruling
in McBurnie v. Ganzon 4 which purportedly required only the posting of a bond
equivalent to 10% of the monetary award.
The Corporations gravely misappreciated the ruling in McBurnie. The 10%
requirement pertains to the reasonable amount which the NLRC would accept as
the minimum of the bond that should accompany the motion to reduce bond in
order to suspend the period to perfect an appeal under the NLRC rules. The 10%
is based on the judgment award and should in no case be construed as the
minimum amount of bond to be posted in order to perfect appeal. There is no
room for a different interpretation when McBurnie made it clear that the
percentage of bond set is provisional, thus:
The foregoing shall not be misconstrued to unduly hinder the
NLRC's exercise of its discretion, given that the percentage of bond that
is set by this guideline shall be merely provisional. The NLRC retains its
authority and duty to resolve the motion and determine the final amount
of bond that shall be posted by the appellant, still in accordance with the
standards of "meritorious grounds" and "reasonable amount." Should the
NLRC, after considering the motion's merit, determine that a greater
amount or the full amount of the bond needs to be posted by the
appellant, then the party shall comply accordingly. The appellant shall be
given a period of 10 days from notice of the NLRC order within which to
perfect the appeal by posting the required appeal bond.
 The Corporations argue that there was no legal impediment for the NLRC
to issue its 19 December 2006 Resolution vacating the Labor Arbiter's Decision
as no TRO or injunction was issued by the Court of Appeals. The Corporations
assert that the rule on judicial courtesy remains the exception rather than the
rule.
We do not agree. In the recent case of Trajano v. Uniwide Sales
Warehouse Club, 5 this Court gave a brief discourse on judicial courtesy, which
concept was first introduced in Eternal Gardens Memorial Park Corp. v. Court of
Appeals, 6 to wit:
. . . [t]he principle of judicial courtesy to justify the suspension of
the proceedings before the lower court even without an injunctive writ or
order from the higher court. In that case, we pronounced that "[d]ue
respect for the Supreme Court and practical and ethical considerations
should have prompted the appellate court to wait for the final
determination of the petition [for certiorari] before taking cognizance of
the case and trying to render moot exactly what was before this [C]ourt."
We subsequently reiterated the concept of judicial courtesy in Joy Mart
Consolidated Corp. v. Court of Appeals.
We, however, have qualified and limited the application of judicial
courtesy in Go v. Abrogar and Republic v. Sandiganbayan. In these
cases, we expressly delimited the application of judicial courtesy to
maintain the efficacy of Section 7, Rule 65 of the Rules of Court, and
held that the principle of judicial courtesy applies only "if there is a strong
probability that the issues before the higher court would be rendered
moot and moribund as a result of the continuation of the proceedings in
the lower court." Through these cases, we clarified that the principle of
judicial courtesy remains to be the exception rather than the rule. 7
The Corporations' argument is specious. Judicial courtesy indeed applies if
there is a strong probability that the issues before the higher court would be
rendered moot as a result of the continuation of the proceedings in the lower
court. This is the exception contemplated in the aforesaid ruling and it obtains in
this case. The 19 December 2006 ruling of the NLRC would moot the appeal filed
before the higher courts because the issue involves the appeal bond which is an
indispensable requirement to the perfection of the appeal before the NLRC.
Unless this issue is resolved, the NLRC should be precluded from ruling on the
merits on the case. This is the essence of judicial courtesy.
The other grounds raised by the Corporations in this Motion for
Reconsideration such as the denial of due process due to invalid service of
summons on SLPI, SLC and Cesar Cruz; prescription, res judicata, and the
applicability of the Fulido case 8 with the instant case were all raised and
resolved by the Labor Arbiter in favor of former Aris employees in its Decision
dated 30 October 2004. That same decision was appealed by the Corporations
before the NLRC. The perfection of said appeal through the posting of a partial
bond was put into question and that is precisely the main issue brought before
the appellate court and before us.
By urging this Court to make a definitive ruling on these issues petitioners
would have us rule on the merits, which at this point this Court cannot do as the
labor proceedings remain incomplete. If at all, the stage that has been passed is
the proceedings before the Labor Arbiter. And, without the NLRC stage, the
Labor Arbiter's decision is final and executory. It is obvious that petitioners do not
want either of the two options now open to them: a) allow the finality of the
adverse judgment in the amount of P3,453,664,710.86, or b) file the P750 Million
bond for the review by the NLRC of the P3,453,664,710.86 decision of the Labor
Arbiter. They would want their liability finally reduced to just half of the amount of
the required appeal bond, or P350 million. The injustice to the employees is
patent.
Now we proceed to tackle the Motion filed by the parties to Admit
Confession of Judgment.
The Corporations entered into a compromise with some of the former Aris
employees which they designate as Confession of Judgment. The Corporations
reason that a resort to judgment by confession is the acceptable alternative to a
compromise agreement because of the impossibility to obtain the consent to a
compromise of all the 5,984 complainants.
A confession of judgment is an acknowledgment that a debt is justly due
and cuts off all defenses and right of appeal. It is used as a shortcut to a
judgment in a case where the defendant concedes liability. It is seen as the
written authority of the debtor and a direction for entry of judgment against the
debtor. 9
The Corporations cite the case of Republic of the Philippines v. Bisaya
Land Transportation Co. 10 to outline the distinction between a compromise
agreement/judgment on consent and a confession of judgment/judgment by
confession, thus:
. . . a motion for judgment on consent is not to be equated with a
judgment by confession. The former is one the provisions and terms of
which are settled and a agreed upon by the parties to the action, and
which is entered in the record by the consent and sanction of the court,
Hence, there must be an unqualified agreement among the parties to be
bound by the judgment on consent before said judgment may be
entered. The court does not have the power to supply terms, provisions,
or essential details not previously agreed to by the parties . . . . On the
other hand, a judgment by confession is not a plea but an affirmative and
voluntary act of the defendant himself. Here, the court exercises a
 certain amount of supervision over the entry of judgment, as well as
equitable jurisdiction over their subsequent status. 11
In the same breadth, the Corporations also acknowledge that a
compromise agreement and a judgment by confession stand upon the same
footing in that both may not be executed by counsel without knowledge and
authority of the client. If we were to rely on the Corporations' submission that all
5,984 complainants' SPAs could not be obtained, then the Confession of
Judgment is void.
Even if we dismiss the Corporations' choice of designation as pure
semantics and consider the agreement they entered into with the complainants
as a form of a compromise agreement, we still could not approve the same.
We elucidate.
A compromise is a contract whereby the parties, by making reciprocal
concessions, avoid a litigation or put an end to one already commenced. It is an
agreement between two or more persons, who, for preventing or putting an end
to a lawsuit, adjust their difficulties by mutual consent in the manner which they
agree on, and which everyone of them prefers to the hope of gaining, balanced
by the danger of losing. 12 dctai

A compromise must not be contrary to law, morals, good customs and

public policy; and must have been freely and intelligently executed by and
between the parties. 13
Article 273 of the Labor Code of the Philippines authorizes compromise
agreements voluntarily agreed upon by the parties, in conformity with the basic
policy of the State "to promote and emphasize the primacy of free collective
bargaining and negotiations, including voluntary arbitration, mediation and
conciliation, as modes of settling labor or industrial disputes." 14 "The provision
reads:"
ART. 227. Compromise Agreements. — Any compromise
settlement, including those involving labor standard laws, voluntarily
agreed upon by the parties with the assistance of the Bureau or the
regional office of the Department of Labor, shall be final and binding
upon the parties. The National Labor Relations Commission or any court
shall not assume jurisdiction over issues involved therein except in case
of noncompliance thereof or if there is prima facie evidence that the
settlement was obtained through fraud, misrepresentation, or coercion.
A compromise agreement is valid as long as the consideration is
reasonable and the employee signed the waiver voluntarily, with a full
understanding of what he was entering into. 15
 The compromise agreement which the Corporations deem as Confession
of Judgment is reproduced in full below:
CONFESSION OF JUDGMENT
The undersigned counsel, by virtue of the special authority
granted by HILLSHIRE earlier attached as Annex "B" and made an
integral part hereof seeks the approval of this Honorable Court of this
Judgment by Confession under the following terms and conditions, to
wit:
1. HILLSHIRE will pay to the 5,984 respondents (complainants)
the total amount of THREE HUNDRED FORTY TWO MILLION TWO
HUNDRED EIGHTY-FOUR THOUSAND AND EIGHT HUNDRED
PESOS (PhP342,284,800.00) or at FIFTY SEVEN THOUSAND TWO
HUNDRED PESOS (PhP57,200.00) for each respondent (complainant)
inclusive of the attorney's fees of EIGHT THOUSAND FIVE HUNDRED
EIGHTY PESOS (PhP8,580.00) which each respondent (complainant)
will actually pay to their counsel of record as the total consideration for
the dismissal with prejudice of all the pending cases before this
Honorable Court and all the cases pending before the National Labor
Relations Commission against all the petitioners.
2. The above agreed amount of THREE HUNDRED FORTY TWO
MILLION TWO HUNDRED EIGHTY-FOUR THOUSAND AND EIGHT
HUNDRED PESOS (PhP342,284,800.00) shall be distributed as follows:
2.1 FORTY EIGHT THOUSAND SIX [HUNDRED]
TWENTY PESOS (PhP48,620.00) to each respondent
(complainant), and
2.2 EIGHT THOUSAND FIVE HUNDRED EIGHTY PESOS
(PhP8,580.00) to the lawyer of each respondent (complainant) by
virtue of the Special Power of Attorney given by each respondent
(complainant) to lead Emilinda D. Macatlang who gave SPA to
Atty. Alex Tan.
3. HILLSHIRE will deposit the amount of THREE HUNDRED
FORTY TWO MILLION TWO HUNDRED EIGHTY-FOUR THOUSAND
AND EIGHT HUNDRED PESOS (PhP342,284,800.00) with a local bank
duly licensed by the Bangko Sentral ng Pilipinas (BSP) within sixty (60)
days from the date of the issuance of a Certificate of Finality and/or
Entry of Judgment of the Decision of this Honorable Court on this
Confession of Judgment.
4. The amount of FORTY EIGHT THOUSAND SIX HUNDRED
TWENTY PESOS (PhP48,620.00) shall be paid directly to each
respondent (complainant) and the corresponding attorney's fees of
EIGHT THOUSAND FIVE HUNDRED EIGHTY PESOS (PhP8,580.00)
shall be paid to their lawyers (duly authorized by an SPA) by the bank
through a manager's check.
5. The total deposit of THREE HUNDRED FORTY TWO MILLION
TWO HUNDRED EIGHTY FOUR THOUSAND EIGHT HUNDRED
PESOS (PhP342,284,800.00) must be claimed by the respondents
(complainants) from the depository bank within two (2) years from the
date of the Certificate of Finality or Entry of Judgment issued by this
Honorable Court.
6. Any balance of the deposited amount which remains unclaimed
by the respondents (complainants) within the two (2) year period referred
to above shall automatically revert and be returned to and may be
withdrawn by HILLSHIRE and/or its attorney-in-fact, without the
necessity of any prior Order or permission from this Honorable Court.
7. Thereafter, upon expiration of the two (2) year period referred
to above, HILLSHIRE's obligation to make any payment to the
respondents (Complainants) shall ipso facto cease, expire and terminate
and the judgment by confession shall be considered satisfied, fulfilled
and terminated. DaEcTC

8. The bank to which the amount of the confessed judgment

(PhP342,284,800.00) is deposited shall be authorized by HILLSHIRE
through the undersigned attorney to pay to individual respondents
(complainants) listed in the original Decision dated October 30, 2004 of
the Labor Arbiter and/or their lawyers the above agreed amounts subject
to the following conditions:
8.1 Complainants shall personally claim the payment to
them from the bank upon presentation of any recognized
government ID's such as Driver's License, Senior Citizen's Card,
Voter's ID, SSS ID, Unified Multipurpose Identification Card,
Postal ID, Passport, or Certification Under Oath by the Barangay
Chairman as to the identity of the respondent (complainant), or
8.2 By the duly authorized representative of respondent
(complainant) evidenced by a duly notarized Special Power of
Attorney in case the respondent (complainant) cannot personally
claim his/her payment due to sickness or physical disability.
9. The lead complainant, Ms. Emilinda D. Macatlang, and Atty.
Alex Tan shall take adequate steps to inform all the respondents
(complainants) by personal notice or media announcement of this
confession of judgment upon receipt of the Decision of this Honorable
Court.
10. All fully paid respondents (complainants) shall execute a
Waiver, Release and Quitclaim.
 11. Upon the approval of this Confession of Judgment by this
Honorable Court, all cases pending before this Honorable Court and the
NLRC shall automatically be considered dismissed, terminated and of no
force and effect.
Petitioners invite the attention of this Honorable Court that the
above monetary consideration for both the respondents (complainants)
and their counsel under the above terms and conditions have been
agreed upon with Atty. Alex Tan before the filing of this confession of
judgment.
To reiterate, this confession of judgment is made by HILLSHIRE
for the purpose of buying peace and/or to secure to the said petitioner
and the other Petitioners against any possible contingent liability which
may accrue to them as a consequence of their having been made
Respondents in the Complaints filed by the Complainants before the
NLRC. 16
A review of the compromise agreement shows a gross disparity between
the amount offered by the Corporations compared to the judgment award. The
judgment award is P3,453,664,710.86 or each employee is slated to receive
P577,149.85. On the other hand, the P342,284,800.00 compromise is to be
distributed among 5,984 employees which would translate to only P57,200.00
per employee. From this amount, P8,580.00 as attorney's fees will be deducted,
leaving each employee with a measly P48,620.00. In fact, the compromised
amount roughly comprises only 10% of the judgment award.
In our Decision, the appeal bond was set at P725 Million after taking into
consideration the interests of all parties. To reiterate, the underlying purpose of
the appeal bond is to ensure that the employer has properties on which he or she
can execute upon in the event of a final, providential award. Thus, non-payment
or woefully insufficient payment of the appeal bond by the employer frustrates
these ends. 17 As a matter of fact, the appeal bond is valid and effective from the
date of posting until the case is terminated or the award is satisfied. 18 Our
Decision highlights the importance of an appeal bond such that said amount
should be the base amount for negotiation between the parties. As it is, the
P342,284,800.00 compromise is still measly compared to the P725 Million bond
we set in this case, as it only accounts to approximately 50% of the reduced
appeal bond.
In Arellano v. Powertech Corporation, 19 we voided the P150,000.00
compromise for the P2.5 Million judgment on appeal to the NLRC. We note that
the compromise is a mere 6% of the contingent sum that may be received by
petitioners and the minuscule amount is certainly questionable because it does
not represent a true and fair amount which a reasonable agent may bargain for
his principal. 20
 In Mindoro Lumber and Hardware v. Bacay, 21 we found that the private
respondents' individual claims, ranging from P6,744.20 to P242,626.90, are
grossly disproportionate to what each of them actually received under the Sama-
samang Salaysay sa Pag-uurong ng Sakdal. The amount of the settlement is
indubitably unconscionable; hence, ineffective to bar the workers from claiming
the full measure of their legal rights. 22
The complainants filed a motion for reconsideration asking this Court to
modify its Decision on the ground that the parties have entered into a
compromise agreement. The complainants justified their acquiescence to the
compromise on the possibility that it will take another decade before the case
may be resolved and attained finality. We beg to disagree.
In our Decision, we have already directed the NLRC to act with dispatch in
resolving the merits of the case upon receipt of the cash or surety bond in the
amount of P725 Million within 10 days from receipt of the Decision. If indeed the
parties want an immediate and expeditious resolution of the case, then the NLRC
should be unhindered with technicalities to dispose of the case.
Accepting an outrageously low amount of consideration as compromise
defeats the complainants' legitimate claim.
In Unicane Workers Union-CLUP v. NLRC, 23 we held the P100,000.00
amount in the quitclaim is unconscionable because the complainants had been
awarded by the labor arbiter more than P2 million. It should have been aware
that had petitioners pursued their case, they would have been assured of getting
said amount, since, absent a perfected appeal, complainants were already
entitled to said amount by virtue of a final judgment. We proceeded to state that:
Not all quitclaims are per se invalid as against public policy. But,
where there is clear proof that the waiver was wrangled from an
unsuspecting or gullible person, or the terms of settlement are
unconscionable on its face, then the law will step in to annul the
questionable transaction. 24
In fine, we will not hesitate to strike down a compromise agreement which
is unconscionable and against public policy.
WHEREFORE, the Court DENIES petitioners' Motion for Reconsideration
and Motion for Leave of Court to File and Admit Herein Statement and
Confession of Judgment; and the respondents' Partial Motion for Reconsideration
for their lack of merit. The directive in the Decision dated 4 June 2014 to the
National Labor Relations Commission to act with dispatch to resolve the merits of
the case upon perfection of the appeal is hereby REITERATED.
SO ORDERED.
 (Sara Lee Phils., Inc. v. Macatlang, G.R. Nos. 180147, 180148, 180149 ,
|||

180150, 180319 & 180685 (Resolution), [January 14, 2015], 750 PHIL 646-663)

G.R. No. 207286. July 29, 2015.]

DELA ROSA LINER, INC. AND/OR ROSAURO DELA ROSA, SR.

AND NORA DELA ROSA, petitioners, vs. CALIXTO B. BORELA
AND ESTELO A. AMARILLE, respondents.

DECISION

BRION, J  :p

Before us is Dela Rosa Liner, et al.'s petition for review

on certiorari 1 which seeks to annul the March 8, 2013 decision 2 and May 21,
2013 resolution 3 of the Court of Appeals in CA-G.R. SP No. 128188.
The Antecedents
The facts as set out in the CA decision are summarized below.
On September 23, 2011, respondents Calixto Borela, bus driver, and
Estelo Amarille, conductor, filed separate complaints 4 (later consolidated)
against petitioners Dela Rosa Liner, Inc., a public transport company,
Rosauro Dela Rosa, Sr., and Nora Dela Rosa, for underpayment/non-
payment of salaries, holiday pay, overtime pay, service incentive leave pay,
13th month pay, sick leave and vacation leave, night shift differential, illegal
deductions, and violation of Wage Order Nos. 13, 14, 15 and 16.
In a motion dated October 26, 2011, the petitioners asked the labor
arbiter to dismiss the case for forum shopping. They alleged that on
September 28, 2011, the CA 13th Division disposed of a similar case between
the parties (CA-G.R. SP No. 118038) after they entered into a compromise
agreement 5 which covered all claims and causes of action they had against
each other in relation to the respondents' employment.
The respondents opposed the motion, contending that the causes of
action in the present case are different from the causes of action settled in the
case the petitioners cited.
The Rulings on Compulsory Arbitration
 Labor Arbiter (LA) Danna A. Castillon, in an order 6 dated November
24, 2011, upheld the petitioners' position and dismissed the complaint on
grounds of forum shopping. Respondents appealed the LA's ruling. On July
31, 2012, the National Labor Relations Commission (NLRC) 1st Division
granted the appeal, 7 reversed LA Castillon's dismissal order, and reinstated
the complaint.
The NLRC held that the respondents could not have committed forum
shopping as there was no identity of causes of action between the two cases.
The first complaint, the NLRC pointed out, charged the petitioners
with illegal dismissal and unfair labor practice; while the second
complaint was based on the petitioners' alleged nonpayment/underpayment
of their salaries and monetary benefits, and violation of several wage orders.
The petitioners moved for reconsideration, but the NLRC denied their
motion, prompting them to file with the CA a petition for certiorari, for alleged
grave abuse of discretion by the NLRC in: (1) holding that the respondents did
not commit forum shopping when they filed the second complaint; and (2)
disregarding respondents' quitclaim in relation to the compromise agreement
in the first complaint.
The CA Decision
In its decision under review, the CA 15th Division denied the petition; it
found no grave abuse of discretion in the NLRC ruling that the respondents
did not commit forum shopping when they filed their second complaint. The
NLRC likewise held that neither was the case barred by res judicata arising
from the CA judgment in the first case.
The appeals court explained that the first case involved the issues of
whether respondents had been illegally dismissed and whether petitioners
should be liable for unfair labor practice. The labor arbiter 8 dismissed the first
complaint for lack of merit in his decision of November 6, 2008.  HSAcaE

On the respondents' appeal against the LA ruling in this first case, the
NLRC 6th Division rendered a decision on March 25, 2010, reversing the
dismissal of the complaint. It awarded respondents back wages (P442,550.00
for Borela and P215,775.00 for Amarille), damages (P10,000.00 each in moral
and exemplary damages for Borela), and moral and exemplary damages
(P25,000.00 each for Amarille), plus 10% attorney's fees for each of them. 9
On the petitioners' motion for reconsideration of the NLRC ruling in the
first complaint, however, the NLRC vacated its decision, and in its resolution
of September 30, 2010, issued a new ruling that followed the LA's ruling, with
modification. It awarded the respondents financial assistance of P10,000.00
each, in consideration of their long years of service to the company.
 The respondents sought relief from the CA through a petition
for certiorari (CA-G.R. SP No. 118038). Thereafter, the parties settled the
case (involving the first complaint) amicably through the compromise
agreement 10 adverted to earlier. Under the terms of this agreement, "(t)he
parties has (sic) agreed to terminate the case now pending before the Court
of Appeals and that both parties further agree that no further action based on
the same grounds be brought against each other, and this Agreement applies
to all claims and damages or losses either party may have against each other
whether those damages or losses are known or unknown, foreseen or
unforeseen."
Based on this agreement, Borela and Amarille received from
respondents P350,000.00 and P150,000.00, respectively, and executed a
quitclaim. Consequently, the CA 13th Division rendered judgment in
accordance with the compromise agreement and ordered an entry of
judgment which was issued on September 28, 2011. In this manner, the
parties resolved the first case.
To go back to the present case CA-G.R. SP No. 128188, which arose
from the second complaint the respondents subsequently filed), the CA 15th
Division upheld the NLRC's (1st Division) decision and ruled out the presence
of forum shopping and res judicata as bars to the respondents' subsequent
money claims against the petitioners. The petitioners moved for
reconsideration, but the CA denied the motion in its resolution of May 21,
2013.
The Petition
The petitioners now ask the Court to nullify the CA judgment in CA-G.R.
SP No. 128188 (arising from the second complaint), contending that the
appellate court erred in upholding the NLRC ruling that there was no forum
shopping nor res judicata that would bar the second complaint. They submit
that "private respondents should be penalized and be dealt with more
severely, knowing fully well that the same action had been settled and they
both received a considerable amount for the settlement. 11
The Respondents' Position
In their Comment 12 filed on September 4, 2013, the respondents pray
for the denial of the petition for having been filed out of time and for lack of
merit.
They argue that the petition should not prosper as it was belatedly filed.
They claim that according to the petitioners' counsel herself, her law firm
received a copy of the CA resolution of May 21, 2013, denying their motion for
reconsideration on May 28, 2013, and giving them until June 12, 2013, to file
the petition. The petition, they point out, was notarized only on June 13, 2013,
which means that it was filed only on that day, or beyond the 15-day filing
period.
On the substantive aspect of the case, respondents contend that their
second complaint involved two causes of action: (1) their claim for sick leave,
vacation leave, and 13th-month pay under the collective bargaining
agreement of the company; and (2) the petitioners' noncompliance with wage
orders since the year 2000 until the present.
They quote the NLRC's (1st Division) decision of July 31,
2012, 13 almost in its entirety, to support their position that they did not commit
forum shopping in the filing of the second complaint and that they should be
heard on their money claims against the petitioners.  HESIcT

The Court's Ruling

The procedural issue
We find the petition for review on certiorari timely filed pursuant to
Rule 45, Section 2 of the Rules of Court. 14
The last day for filing of the petition, as respondents claim, fell on June
12, 2013, Independence Day, a legal holiday. In Reiner Pacific International
Shipping, et al. v. Captain Francisco B. Guevarra, et al., 15 the Court
explained that under Section 1, Rule 22 of the Rules of Court, as clarified
by A.M. 00-2-14 SC (in relation to the filing of pleadings in courts), when the
last day on which a pleading is due falls on a Saturday, Sunday, or a legal
holiday, the filing of the pleading on the next working day is deemed on time.
The filing of the petition therefore on June 13, 2013, a working day, fully
complied with the rules.
The merits of the case
The CA 15th Division committed no reversible error when it affirmed the
NLRC ruling that the second complaint is not barred by the rule on forum
shopping nor by the principle of res judicata. In other words, no grave abuse
of discretion could be attributed to the NLRC when it reinstated the second
complaint.
Contrary to the petitioners' submission, respondents' second complaint
(CA-G.R. SP No. 128188), a money claim, is not a "similar case" to the first
complaint (CA-G.R. SP No. 118038). Thus, the filing of the second complaint
did not constitute forum shopping and the judgment in the first case is not
a res judicata ruling that bars the second complaint.
As the CA aptly cited, the elements of forum shopping are: (1) identity
of parties; (2) identity of rights asserted and relief prayed for, the relief being
founded on the same facts; and (3) identity of the two preceding particulars
such that any judgment rendered in the other action will, regardless of which
party is successful, amount to res judicata in the action under
consideration. 16
We concur with the CA that forum shopping and res judicata are not
applicable in the present case. There is no identity of rights asserted and
reliefs prayed for, and the judgment rendered in the previous action will not
amount to res judicata in the action now under consideration.
There is also no identity of causes of action in the first complaint and in
the second complaint. In Yap v. Chua, 17 we held that the test to determine
whether causes of action are identical is to ascertain whether the same
evidence would support both actions, or whether there is an identity in the
facts essential to the maintenance of the two actions. If the same facts or
evidence would support both actions, then they are considered the same; a
judgment in the first case would be a bar to the subsequent action.
Under the circumstances of the case before us, sufficient basis exists
for the NLRC's and CA's conclusions that there is no identity of causes of
action between the respondents' two complaints against the petitioners. The
first complaint involved illegal dismissal/suspension, unfair labor practice with
prayer for damages and attorney's fees; while the second complaint (the
subject of the present appeal) involves claims for labor standards benefits —
the petitioners' alleged violation of Wage Orders Nos. 13, 14, 15 and 16;
nonpayment of respondents' sick and vacation leave pays, 13th-month pay,
service incentive leave benefit, overtime pay, and night shift differential.
As the CA correctly held, the same facts or evidence would not support
both actions. To put it simply, the facts or the evidence that would determine
whether respondents were illegally dismissed, illegally suspended, or had
been the subject of an unfair labor practice act by the petitioners are not the
same facts or evidence that would support the charge of non-compliance with
labor standards benefits and several wage orders. We thus cannot find a
basis for petitioners' claim that "the same action had been settled . . . ." 18
Neither are we persuaded by petitioners' argument that "The
Compromise Agreement covered all claims and causes of action that the
parties may have against each other in relation to the private respondents'
employment." 19 The compromise agreement had been concluded to
terminate the illegal dismissal and unfair labor case then pending before the
CA. While the parties agreed that no further action shall be brought by the
parties against each other, they pointedly stated that they referred to
actions on the same grounds. The phrase same grounds can only refer to
the grounds raised in the first complaint and not to any other grounds.
We likewise cannot accept the compromise agreement's application "to
all claims and damages or losses either party may have against each
other whether those damages or losses are known or unknown,
foreseen or unforeseen." 20
This coverage is too sweeping and effectively excludes any claims by
the respondents against the petitioners, including those that by law and
jurisprudence cannot be waived without appropriate consideration such as
nonpayment or underpayment of overtime pay and wages.  caITAC

In Pampanga Sugar Development, Co., Inc. v. Court of Industrial

Relations, et al., 21 the Court reminded the parties that while rights may be
waived, the waiver must not be contrary to law, public policy, morals, or good
customs; or prejudicial to a third person with a right recognized by law. 22 In
labor law, respondents' claim for 13th-month pay, overtime pay, and statutory
wages (under Wages Orders 13, 14, 15 and 16), among others, cannot simply
be generally waived as they are granted for workers' protection and welfare; it
takes more than a general waiver to give up workers' rights to these legal
entitlements.
Lastly, the petitioners' insinuation, that the respondents are not and
should not be entitled to anything more, because they had already "received a
considerable amount for the settlement" 23 (P350,000.00 for Borela and
P150,000.00 for Amarille), should be placed and understood in its proper
context.
We note that in the illegal dismissal case where the compromise
agreement took place, the NLRC 6th Division (acting on the appeal from the
LA's ruling) awarded Borela P442,550.00 in backwages; P20,000.00 in moral
and exemplary damages, plus 10% attorney's fees; and to Amarille
P215,775.00 in back wages and P50,000.00 in moral and exemplary
damages, plus 10% attorney's fees. 24
Although the NLRC reconsidered these awards and eventually granted
financial assistance of P10,000.00 each to Borela and Amarille, 25 it is
reasonable to regard the amounts they received as a fair compromise in the
settlement of the first complaint in relation with the initial NLRC award,
indicated above, before its reconsideration. To be sure, the
parties, especially the respondents, could not have considered the
P10,000.00 financial assistance or their labor standards claims, particularly
the alleged violation of the wage orders, as a factor in their effort to settle the
case amicably. The compromise agreement, it should be emphasized, was
executed on September 8, 2011, 26 while the labor standards complaint was
filed only on September 23, 2011. 27
For the reasons discussed above, we find the petition without merit.
 WHEREFORE, premises considered, the petition for review
on certiorari is DISMISSED for lack of merit. The assailed decision and
resolution of the Court of Appeals are AFFIRMED.
SO ORDERED.
|||  (Dela Rosa Liner, Inc. v. Borela, G.R. No. 207286, [July 29, 2015])

G.R. No. 203943. August 30, 2017.]

MAGSAYSAY MARITIME CORPORATION/EDUARDO MANESE

and PRINCESS CRUISE LINES, LTD., petitioners, vs. CYNTHIA
DE JESUS, respondent.

DECISION

LEONEN, J  : p

A conditional settlement of a judgment award may be treated as a

compromise agreement and a judgment on the merits of the case if it turns
out to be highly prejudicial to one of the parties.
This resolves the Petition for Review on Certiorari  1 filed by Magsaysay
Maritime Corporation, Eduardo Manese, 2 and Princess Cruise Lines, Limited
(petitioners) assailing the August 17, 2012 Decision 3 and October 19, 2012
Resolution 4 of the Court of Appeals in CA-G.R. SP No. 119393. The assailed
Court of Appeals Decision upheld the November 24, 2010 Decision 5 and
February 28, 2011 Resolution 6 of the National Labor Relations Commission
in NLRC NCR LAC No. 08-000481-09 (NLRC NCR No. (M) 09-13352-08).
On February 28, 2006, Magsaysay Maritime Corporation (Magsaysay),
the local manning agent of Princess Cruise Lines, Limited, hired Bernardine
De Jesus (Bernardine) as an Accommodation Supervisor for the cruise ship
Regal Princess. Based on the contract of employment 7 that he signed,
Bernardine was to receive a basic monthly wage of US$388.00 for a period of
10 months.  AIDSTE

On March 9, 2006, Bernardine boarded Regal Princess and he

eventually disembarked 10 months later, or on January 16, 2007, after his
contract of employment ended. 8
 Bernardine was soon diagnosed with Aortic Aneurysm and on March
15, 2007, he had a coronary angiography. On March 21, 2007, he underwent
a Left Axillofemoral Bypass. 9 He died on March 26, 2007. 10
On September 24, 2008, respondent Cynthia De Jesus (Cynthia),
Bernardine's widow, filed a complaint 11 against Magsaysay for "payment of
death benefits, medical expenses, sickness allowance, damages, and
attorney's fees." 12 Cynthia and Magsaysay were unable to amicably settle the
case; hence, they were directed to submit their respective position papers. 13
On June 30, 2009, the Labor Arbiter granted Cynthia's complaint and
directed Magsaysay to pay her claims for death benefits, additional benefits,
burial expenses, and attorney's fees. 14
The Labor Arbiter ruled that it was highly improbable that Bernardine
developed a cardio-vascular disease which would lead to his death merely
two (2) months after his repatriation. 15
The Labor Arbiter held that Cynthia sufficiently established that her
husband suffered chest pains while he was still aboard the Regal Princess.
She claimed that he had reported his condition but he was not provided with
medical attention. Furthermore, he had also asked for medical attention upon
his repatriation, but his request was once again denied. 16 The dispositive
portion of the Labor Arbiter Decision read:
WHEREFORE, foregoing premises considered, judgment is
hereby rendered finding respondents liable to pay, jointly and
severally, complainant's claims for death benefits under the POEA
Standard Employment Contract, amounting to US$50,000.00 and
additional benefits amounting to US$21,000.00 for complainant's three
(3) minor children, in Philippine currency at the prevailing rate of
exchange at the time of payment; US$1,000.00 representing burial
expenses; and attorney's fees of ten percent (10%) of the total
monetary award.
All other claims are denied.
SO ORDERED. 17
On November 24, 2010, the National Labor Relations
Commission 18 denied Magsaysay's appeal.
The National Labor Relations Commission upheld the Labor Arbiter's
finding that Bernardine's cardio-vascular disease was work-related. 19
The National Labor Relations Commission also noted that while the
general rule in compensability of death is that a seafarer's death must have
occurred during the term of the employment contract, an exception to this rule
is when a seafarer contracted an illness while under the contract and this
illness caused his death: 20
 In such case, even if the seaman died after the term of the contract, his
beneficiaries are entitled to death compensation and benefits. Thus,
[w]here a seaman contracts an illness during the term of his
employment and such illness causes the death of the seaman even
after the term of his contract, the beneficiaries of the seaman are
entitled, as a matter of right, to death compensation and benefits. 21
As for Bernardine's failure to submit himself to a post-employment
medical examination, the National Labor Relations Commission remarked that
this Court had already ruled that it could be dispensed with. Furthermore, the
National Labor Relations Commission pointed out that the failure to undergo a
post-employment medical examination within three (3) days from repatriation
leads to the forfeiture of medical benefits and sickness allowance, not death
benefits. 22 The dispositive portion of the National Labor Relations
Commission Decision read:
WHEREFORE, the Decision of the labor arbiter a quo dated
June 30, 2009 rendered in NLRC NCR Case No. (M) 09-13352-08 is
hereby AFFIRMED in toto.
SO ORDERED. 23 (Emphasis in the original)
On May 13, 2011, Magsaysay filed a Petition for Certiorari  24 before the
Court of Appeals.
On June 30, 2011, Magsaysay paid Cynthia P3,370,514.40 as
conditional satisfaction of the judgment award against it and without prejudice
to its Petition for Certiorari pending before the Court of Appeals. 25
On July 1, 2011, in light of the conditional settlement between the
parties, the Labor Arbiter considered the case closed and terminated but
without prejudice to Magsaysay's pending petition before the Court of
Appeals. 26
On August 17, 2012, the Court of Appeals 27 dismissed the petition for
being moot and academic. 28 On October 19, 2012, the Court of
Appeals 29 denied Magsaysay's motion for reconsideration. 30
On December 19, 2012, petitioners filed their Petition for Review
on Certiorari 31 where they continue to assert that the Court of Appeals erred
in dismissing their Petition for Certiorari for being moot and academic.
Petitioners emphasize that Leonis Navigation v. Villamater  32 stated that if the
Court of Appeals grants a petition for certiorari, the assailed decision of the
National Labor Relations Commission will become void ab initio and will never
attain finality. 33
Petitioners maintain that Leonis ruled that even if the employer
voluntarily pays the judgment award, the seafarer's beneficiary is estopped
from claiming that the controversy has ended with the Labor Arbiter's Order
closing and terminating the case. This is because the beneficiary
acknowledged that the payment received "was without prejudice to the final
outcome of the petition for certiorari pending before the [Court of Appeals]." 34
Furthermore, petitioners claim that Bernardine's death was not
compensable under the Philippine Overseas Employment Agency Standard
Employment Contract (POEA-SEC) because he died after his contract of
employment was terminated. 35 Petitioners put forth that "[f]rom then on,
petitioners' responsibilities and obligations to the deceased seafarer had
ceased." 36
Petitioners also highlight that Bernardine was not repatriated due to
illness but because of the completion of his contract. 37 Additionally,
Bernardine failed to submit himself to a post-employment medical
examination within three (3) days from his repatriation, as required by
the POEA-SEC. Thus, petitioners claim that there was no basis for the death
benefits claimed by Cynthia. Petitioners point out that Bernardine did not
complain of any illness during the de-briefing session conducted before his
repatriation. 38
Nonetheless, even if Bernardine complied with the rule on post-
employment medical examination, petitioners contend that Aortic Aneurysm,
which caused Bernardine's death, was not a compensable occupational
disease under the POEA-SEC. They aver that it cannot be presumed that the
cause of his death was work-related. They posit that respondent utterly failed
to substantiate her claim that her husband's death was work-related. 39
On February 13, 2013, this Court required respondent Cynthia to
comment on the Petition for Review. 40
On May 3, 2013, respondent filed her Comment 41 where she stresses
that the ruling in Career Philippines Ship Management, Inc. v. Madjus 42 is
applicable to her case since both cases pertain to voluntary satisfaction of
claims for death benefits. 43 Furthermore, just like in Career Philippines, by
accepting the monetary award from petitioners, respondent will no longer
have any available remedy against them, while petitioners are still free to
pursue any of the remedies available to them. 44
Respondent also argues that the issues raised before this Court are the
same factual issues already threshed out before the Court of Appeals and the
National Labor Relations Commission. Respondent contends that the findings
of the administrative tribunals are supported by substantial evidence; hence,
they should be accorded great weight and respect by this Court. 45
Respondent denies that her husband failed to comply with the three (3)-
day reporting requirement and claims that her husband even asked to be
provided with medical attention upon his repatriation, but his request was
denied:
The petitioners merely told him to take a rest and after that, he
will be re-deployed again. Seaman De Jesus could not have
immediately filed a disability claim (as suggested by petitioners)
because he was not yet examined by a doctor due to the refusal of
petitioners to provide post-employment medical attention. He was also
hoping that his condition would improve after taking a rest, as
suggested by petitioners.
However, his condition did not improve until he suffered aortic
aneurism on March 14, 2007. 46 (Emphasis in the original)
On August 12, 2013, this Court required petitioners to reply to the
Comment. 47
On November 4, 2013, petitioners filed their Reply 48 where they deny
respondent's allegation that they voluntarily offered to pay the full judgment
award. They claim that they even opposed respondent's Motion for the
Issuance of a Writ of Execution and were just forced to pay the judgment
award since their petition before the Court of Appeals did not stay the
judgment award. 49
Petitioners reiterate that the Court of Appeals erred in dismissing the
petition on the ground that the payment of the judgment award rendered the
petition moot and academic because the payment made to respondent was
without prejudice to the then pending petition before the Court of Appeals. 50
Petitioners argue that the labor tribunals committed grave abuse of
discretion in awarding death benefits to Cynthia and her three (3) minor
children considering that Bernardine's death was not compensable under
the POEA-SEC and that respondent failed to prove her claims of
compensability with substantial evidence. 51
The parties filed their respective memoranda on February 12,
2014 52 and March 24, 2014, 53 in compliance with this Court's December 2,
2013 Resolution. 54
This Court resolves the following issues:
First, whether or not the payment of money judgment has rendered the
Petition for Certiorari before the Court of Appeals moot and academic; and
Second, whether or not the award of death benefits was issued with
grave abuse of discretion.
The petition is devoid of merit.
I
 Petitioners cite Leonis Navigation v. Villamater 55 to support their claim
that their payment of the judgment award did not render the Petition
for Certiorari before the Court of Appeals moot and
academic. Leonis stated:  EcTCAD

Simply put, the execution of the final and executory decision or

resolution of the NLRC shall proceed despite the pendency of a
petition for certiorari, unless it is restrained by the proper court. In the
present case, petitioners already paid Villamater's widow, Sonia, the
amount of [P]3,649,800.00, representing the total and permanent
disability award plus attorney's fees, pursuant to the Writ of Execution
issued by the Labor Arbiter. Thereafter, an Order was issued declaring
the case as "closed and terminated." However, although there was no
motion for reconsideration of this last Order, Sonia was, nonetheless,
estopped from claiming that the controversy had already reached its
end with the issuance of the Order closing and terminating the case.
This is because the Acknowledgment Receipt she signed when she
received petitioners' payment was without prejudice to the final
outcome of the petition for certiorari pending before the CA. 56
Respondent, in turn, cites Career Philippines Ship Management, Inc. v.
Madjus 57 to substantiate her claim that the Conditional Satisfaction of
Judgment Award was akin to an amicable settlement, rendering the Petition
for Certiorari before the Court of Appeals moot and
academic. Career Philippines stated:
As for the "Conditional Satisfaction of Judgment," the Court
holds that it is valid, hence, the "conditional" settlement of the
judgment award insofar as it operates as a final satisfaction thereof to
render the case moot and academic.
xxx xxx xxx
Finally, the Affidavit of Claimant attached to the "Conditional
Satisfaction of Judgment" states:
xxx xxx xxx
5. That I understand that the payment of the judgment
award of US$66,000.00 or its peso equivalent of
PhP2,932,974.00 includes all my past, present and
future expenses and claims, and all kinds of benefits
due to me under the POEA employment contract and
all collective bargaining agreements and all labor
laws and regulations, civil law or any other law
whatsoever and all damages, pains and sufferings in
connection with my claim.
6. That I have no further claims whatsoever in any theory
of law against the Owners of MV "Tama Star" because of
 the payment made to me. That I certify and warrant that I
will not file any complaint or prosecute any suit of
action in the Philippines, Panama, Japan or any
country against the shipowners and/or released
parties herein after receiving the payment of
US$66,000.00 or its peso equivalent of PhP2,932,974.00
(emphasis and underscoring supplied)
In effect, while petitioner had the luxury of having other
remedies available to it such as its petition for certiorari pending before
the appellate court, and an eventual appeal to this Court, respondent,
on the other hand, could no longer pursue other claims, including for
interests that may accrue during the pendency of the
case. 58 (Emphasis in the original)
Philippine Transmarine Carriers, Inc. v. Legaspi 59 clarified that this
Court ruled against the employer in Career Philippines not because the
parties entered into a conditional settlement but because the conditional
satisfaction of judgment was "highly prejudicial to the employee." 60
The agreement stated that the payment of the monetary award was
without prejudice to the right of the employer to file a petition
for certiorari and appeal, while the employee agreed that she would no
longer file any complaint or prosecute any suit of action against the
employer after receiving the payment. 61
Equitable considerations were the underlying basis for the ruling
in Career Philippines  62 and this was accentuated in Philippine Transmarine
Carriers, Inc. v. Pelagio, 63 which summarized the ruling in Philippine
Transmarine Carriers, Inc. v. Legaspi as follows:
Ultimately, in Philippine Transmarine, the Court ruled that since
the agreement in that case was fair to the parties in that it provided
available remedies to both parties, the certiorari petition was not
rendered moot despite the employer's satisfaction of the judgment
award, as the respondent had obliged himself to return the payment if
the petition would be granted. 64
In the instant case, the parties entered into a compromise agreement
when they executed a Conditional Satisfaction of Judgment Award. 65
Article 2028 of the Civil Code defines a compromise agreement as "a
contract whereby the parties, by making reciprocal concessions, avoid a
litigation or put an end to one already commenced." Parties freely enter into a
compromise agreement, making it a judgment on the merits of the case with
the effect of res judicata upon them. 66
While the general rule is that a valid compromise agreement has the
power to render a pending case moot and academic, being a contract, the
parties may opt to modify the legal effects of their compromise agreement to
prevent the pending case from becoming moot. 67
In the Conditional Satisfaction of Judgment Award, 68 respondent
acknowledged receiving the sum of P3,370,514.40 from petitioners as
conditional payment of the judgment award. Both parties agreed that the
payment of the judgment award was without prejudice to the
pending certiorari proceedings before the Court of Appeals and was only
made to prevent the imminent execution being undertaken by respondent and
the National Labor Relations Commission. Finally, in the event the judgment
award of the labor tribunals is reversed by the Court of Appeals or by this
Court, respondent agreed to return whatever she would have received back to
petitioners and in the same vein, if the Court of Appeals or this Court affirms
the decisions of the labor tribunals, petitioners shall pay respondent the
balance of the judgment award without need of demand. 69
Respondent, for herself and for her three (3) minor children with
Bernardine, then signed a Receipt of Payment 70 where she reiterated the
undertakings she took in the Conditional Satisfaction of Judgement Award.
However, in the Affidavit of Heirship, 71 respondent was prohibited from
seeking further redress against petitioners, making the compromise
agreement ultimately prejudicial to respondent:  HSAcaE

I, CYNTHIA P. DE JESUS, with residence at 157 Isarog St., La

Loma, Quezon City, Philippines, after being duly sworn, depose and
say:
xxx xxx xxx
[7.] That I understand that the payment of the judgment award
of US$79,200.00 or its peso equivalent plus
of Php3,370,514.40 includes all my past, present and future expenses
and claims, and all kinds of benefits due to me under the POEA
employment contract and all collective bargaining agreements and all
labor laws and regulations, civil law or any other law whatsoever and
all damages, pains and sufferings in connection with my claim;
[8.] That I have no further claims whatsoever in any theory of
law against the Owners of "REGAL PRINCESS" because of the
payment made to me. That I certify and warrant that I will not file any
complaint or prosecute any suit or action in the Philippines, United
States of America, Liberia, Kuwait, Panama, United Kingdom or any
other country against the shipowners and/or the released
parties herein after receiving the payment of US$79,200.00 or its peso
equivalent of Php3,370,514.40[.] 72 (Emphasis supplied)
This prohibition on the part of respondent to pursue any of the available
legal remedies should the Court of Appeals or this Court reverse the judgment
award of the labor tribunals or prosecute any other suit or action in another
country puts the seafarer's beneficiaries at a grave disadvantage.
Thus, Career Philippines is applicable and the Court of Appeals did not err in
treating the conditional settlement as an amicable settlement, effectively
rendering the Petition for Certiorari moot and academic.
II
Despite our previous disquisition, this Court will still take up the second
issue brought before it for resolution.
Madridejos v. NYK-Fil Ship Management, Inc. 73 discussed that
generally, this Court limits itself to questions of law in a Rule 45 petition:
As a rule, we only examine questions of law in a Rule 45
petition. Thus, "we do not re-examine conflicting evidence, re-evaluate
the credibility of witnesses, or substitute the findings of fact of the
[National Labor Relations Commission], an administrative body that
has expertise in its specialized field." Similarly, we do not replace our
"own judgment for that of the tribunal in determining where the weight
of evidence lies or what evidence is credible." The factual findings of
the National Labor Relations Commission, when confirmed by the
Court of Appeals, are usually "conclusive on this Court." 74
This Court sees no reason to depart from this rule.
Section 20 (A) of the POEA-SEC requires that for a seafarer to be
entitled to death benefits, he must have suffered a work-related death during
the term of his contract. This provision reads:
SECTION 20. COMPENSATION AND BENEFITS. —
A. COMPENSATION AND BENEFITS FOR DEATH
1. In case of work-related death of the seafarer, during the term of
his contract the employer shall pay his beneficiaries the
Philippine Currency equivalent to the amount of Fifty
Thousand US dollars (US$50,000) and an additional
amount of Seven Thousand US dollars (US$7,000) to each
child under the age of twenty-one (21) but not exceeding
four (4) children, at the exchange rate prevailing during the
time of payment.
xxx xxx xxx
4. The other liabilities of the employer when the seafarer dies as a
result of work-related injury or illness during the term of
employment are as follows:
a. The employer shall pay the deceased's beneficiary all
outstanding obligations due the seafarer under this
Contract.
 b. The employer shall transport the remains and personal
effects of the seafarer to the Philippines at
employer's expense except if the death occurred in
a port where local government laws or regulations
do not permit the transport of such remains. In case
death occurs at sea, the disposition of the remains
shall be handled or dealt with in accordance with the
master's best judgment. In all cases, the
employer/master shall communicate with the
manning agency to advise for disposition of
seafarer's remains.
c. The employer shall pay the beneficiaries of the seafarer
the Philippines [sic] currency equivalent to the
amount of One Thousand US dollars (US$1,000) for
burial expenses at the exchange rate prevailing
during the time of payment.
However, Section 32-A of the POEA-SEC acknowledges the possibility
of "compensation for the death of the seafarer occurring after the employment
contract on account of a work-related illness" 75 as long as the following
conditions are met:
(1) The seafarer's work must involve the risks described herein;
(2) The disease was contracted as a result of the seafarer's exposure to
the described risks;
(3) The disease was contracted within a period of exposure and under
such other factors necessary to contract it;
(4) There was no notorious negligence on the part of the seafarer. 76
Furthermore, a cardio-vascular disease may be considered
occupational under Section 32-A (11) if any of the established conditions are
met: 
AcICHD

The following diseases are considered as occupational when

contracted under working conditions involving the risks described
herein:
xxx xxx xxx
11. Cardio-Vascular Diseases. Any of the following conditions
must be met:
a. If the heart disease was known to have been present
during employment, there must be proof that an
acute exacerbation was clearly precipitated by the
unusual strain by reasons of the nature of his work.
b. The strain of work that brings about an acute attack
must be sufficient severity and must be followed
 within 24 hours by the clinical signs of a cardiac
insult to constitute causal relationship.
c. If a person who was apparently asymptomatic before
being subjected to strain at work showed signs and
symptoms of cardiac injury during the performance
of his work and such symptoms and signs persisted,
it is reasonable to claim a causal relationship. 77
In fulfilling these requisites, respondent must present no less than
substantial evidence. Substantial evidence is defined as "such amount of
relevant evidence which a reasonable mind might accept as adequate to
justify a conclusion." 78
Both labor tribunals found that Bernardine first experienced chest pains
while he was still onboard the cruise ship, i.e., during the term of his
employment contract. It was likewise established that while Bernardine
requested medical attention when he started to feel ill and upon his
repatriation, his requests were repeatedly ignored. The Labor Arbiter held:
Complainant has clearly established that her husband's
condition was suffered while he was on board the vessel and during
the term of his employment contract with the respondents. Strict rules
of evidence are not applicable in claims for compensation and disability
benefits. Against the self-serving denials of the respondents,
complainant has shown that her husband, prior to his death, suffered
chest pains while on board and reported his condition but he was not
allowed to seek medical attention. When he was repatriated, he asked
the respondents anew for medical check up but his request was again
denied. Having substantially established that the causative
circumstances leading to her husband's death had transpired during
his employment. We find that complainant is entitled to the death
compensation and other benefits under the POEA Standard Contract.
Probability and not the ultimate degree of certainty is the test of proof
in compensation proceedings[.] 79
While the National Labor Relations Commission opined:
Evidently, the disease which led to the death of Bernardine de
Jesus is work-related, and in this regard, We believe that complainant-
appellee presented sufficient evidence to show the nature of the
maritime employment of her late husband, as well as the disease he
suffered from and its causal relationship to his maritime
employment. 80
The findings of the labor tribunals correspond with the unassailed fact
that Bernardine died from a cardio-vascular disease merely two (2) months
after his repatriation. This Court concurs with the Labor Arbiter's observation
that it was improbable for Bernardine to have developed and died from a
 cardio-vascular disease within the two (2) short months following his
repatriation:
Seaman de Jesus died just over two (2) months from his
repatriation. It is quite improbable for him to develop cardio-vascular
disease which caused his death during that short span of time. Medical
studies cited on record recognize the fact that it is medically impossible
to acquire cardiovascular illnesses merely days or weeks prior to one's
death. . .
It is therefore evident that the illness which caused Seaman de
Jesus' death occurred during the term of his employment contract,
though it may not have fully manifested at once. The fact that the
seaman's work exposed him to different climates and unpredictable
weather also helped trigger the onset of his disease. There is therefore
a reasonable connection between the conditions of employment and
work actually performed by the deceased seafarer and his illness. 81
Being factual in nature, this Court sees no reason to disturb the findings
of the labor tribunals as it has usually given deference to the findings of fact of
administrative agencies which have acquired expertise in their specific
jurisdiction. Their factual findings are generally binding upon this Court,
absent a showing a grave abuse of discretion. 82
WHEREFORE, this Court resolves to deny the Petition. The assailed
Court of Appeals Decision dated August 17, 2012 and Resolution dated
October 19, 2012 in CA-G.R. SP No. 119393 are hereby AFFIRMED.
SO ORDERED.  TAIaH

|||  (Magsaysay Maritime Corp. v. De Jesus, G.R. No. 203943, [August 30, 2017])

G.R. No. 168501. January 31, 2011.]

ISLRIZ TRADING/VICTOR HUGO LU, petitioner, vs. EFREN

CAPADA, LAURO LICUP, NORBERTO NIGOS, RONNIE ABEL,
GODOFREDO MAGNAYE, ARNEL SIBERRE, EDMUNDO
CAPADA, NOMERLITO MAGNAYE and ALBERTO DELA
VEGA, respondents.

DECISION
DEL CASTILLO, J  : p

We reiterate in this petition the settled view that employees are entitled
to their accrued salaries during the period between the Labor Arbiter's order of
reinstatement pending appeal and the resolution of the National Labor
Relations Commission (NLRC) overturning that of the Labor Arbiter.
Otherwise stated, even if the order of reinstatement of the Labor Arbiter is
reversed on appeal, the employer is still obliged to reinstate and pay the
wages of the employee during the period of appeal until reversal by a higher
court or tribunal. In this case, respondents are entitled to their accrued
salaries from the time petitioner received a copy of the Decision of the Labor
Arbiter declaring respondents' termination illegal and ordering their
reinstatement up to the date of the NLRC resolution overturning that of the
Labor Arbiter.
This Petition for Review on Certiorari assails the Decision 1 dated
March 18, 2005 of the Court of Appeals (CA) in CA-G.R. SP No. 84744 which
dismissed the petition for certiorari before it, as well as the Resolution 2 dated
June 16, 2005 which denied the motion for reconsideration thereto.

Factual Antecedents

Respondents Efren Capada, Lauro Licup, Norberto Nigos and

Godofredo Magnaye were drivers while respondents Ronnie Abel, Arnel
Siberre, Edmundo Capada, Nomerlito Magnaye and Alberto Dela Vega were
helpers of Islriz Trading, a gravel and sand business owned and operated by
petitioner Victor Hugo Lu. Claiming that they were illegally dismissed,
respondents filed a Complaint 3 for illegal dismissal and non-payment of
overtime pay, holiday pay, rest day pay, allowances and separation pay
against petitioner on August 9, 2000 before the Labor Arbiter. On his part,
petitioner imputed abandonment of work against respondents.

Proceedings before the Labor Arbiter and the NLRC

On December 21, 2001, Labor Arbiter Waldo Emerson R. Gan (Gan)

rendered a Decision 4 in this wise:
WHEREFORE, premises considered, judgment is hereby
rendered as follows:
1. Declaring respondent ISLRIZ TRADING guilty of illegal
dismissal.
2. Ordering respondent to reinstate complainants to their former
positions without loss of seniority rights and the payment of
full backwages from date of dismissal to actual
 reinstatement which are computed as follows: (As of date
of decision); 
HcACST

1. EFREN CAPADA P102,400.00 (6,400.00X16)

2. LAURO LICUP 87,040.00 (5,440.00X16)
3. NORBERTO NIGOS 87,040.00 (5,440.00X16)
4. RONNIE ABEL 76,800.00 (4,800.00X16)
5. GODOFREDO MAGNAYE 102,400.00 (6,400.00X16)
6. ARNEL SIBERRE 51,200.00 (3,200.00X16)
7. EDMUNDO CAPADA 76,800.00 (4,800.00X16)
8. NOMERLITO MAGNAYE 76,800.00 (4,800.00X16)
9. ALBERTO DELA VEGA 51,200.00 (3,200.00X16)

3. Ordering respondent to pay complainants 10% of the total

monetary award as attorney's fees.
All other claims are dismissed for lack of merit.
SO ORDERED. 5
Aggrieved, petitioner appealed 6 to the NLRC which granted the appeal.
The NLRC set aside the Decision of Labor Arbiter Gan in a Resolution 7 dated
September 5, 2002. Finding that respondents' failure to continue working for
petitioner was neither caused by termination nor abandonment of work, the
NLRC ordered respondents' reinstatement but without backwages. The
dispositive portion of said Resolution reads as follows:
WHEREFORE, premises considered, the appeal is GRANTED
and the Decision dated 21 December 2001 is hereby ordered SET
ASIDE.
A New Decision is hereby rendered finding that the failure to work
of complainants-appellees is neither occasioned by termination (n)or
abandonment of work, hence, respondents-appellants shall reinstate
complainants-appellees to their former positions without backwages
within ten (10) days from receipt of this Resolution.
SO ORDERED. 8

Respondents filed a Motion for Reconsideration 9 thereto but same was

likewise denied in a Resolution 10 dated November 18, 2002. This became
final and executory on December 7, 2002. 11

On December 9, 2003, however, respondents filed with the Labor

Arbiter an Ex-Parte Motion to Set Case for Conference with Motion. 12 They
averred therein that since the Decision of Labor Arbiter Gan ordered their
reinstatement, a Writ of Execution 13 dated April 22, 2002 was already issued
for the enforcement of its reinstatement aspect as same is immediately
executory even pending appeal. But this notwithstanding and despite the
issuance and subsequent finality of the NLRC Resolution which likewise
ordered respondents' reinstatement, petitioner still refused to reinstate them.
Thus, respondents prayed that in view of the orders of reinstatement, a
computation of the award of backwages be made and that an Alias Writ of
Execution for its enforcement be issued.
The case was then set for pre-execution conference on January 29,
February 24 and March 5, 2004. Both parties appeared thereat but failed to
come to terms on the issue of the monetary award. Hence, the office of the
Labor Arbiter through Fiscal Examiner II Ma. Irene T. Trinchera (Fiscal
Examiner Trinchera) issued an undated Computation 14 of respondents'
accrued salaries from January 1, 2002 to January 30, 2004 or for a total of
24.97 months in the amount of P1,110,665.60 computed as follows:
1. Efren Capada P6,400.00 x 24.97 months P159,808.00
2. Lauro Licup P5,440.00 x 24.97 months P135,836.80
3. Norberto Nigos P5,440.00 x 24.97 months P135,836.80
4. Ronnie Abel P4,800.00 x 24.97 months P119,856.00
5. Godofredo Magnaye P6,400.00 x 24.97 months P159,808.00
6. Arnel Siberre P3,200.00 x 24.97 months P79,904.00
7. Edmundo Capada P4,800.00 x 24.97 months P119,856.00
8. Nomerlito Magnaye P4,800.00 x 24.97 months P119,856.00
9. Alberto de la Vega P3,200.00 x 24.97 months P79,904.00
      ———————
  Total   P1,110,665.60
      ==========

Petitioner questioned this computation in his Motion/Manifestation 15 claiming

that said computation was without any factual or legal basis considering that
Labor Arbiter Gan's Decision had already been reversed and set aside by the
NLRC and that therefore there should be no monetary award.  cTESIa

Nevertheless, Labor Arbiter Danna M. Castillon (Castillon) still issued a

Writ of Execution 16 dated March 9, 2004 to enforce the monetary award in
accordance with the abovementioned computation. Accordingly, the Sheriff
issued a Notice of Sale/Levy on Execution of Personal Property 17 by virtue of
which petitioner's properties were levied and set for auction sale on March 29,
2004. In an effort to forestall this impending execution, petitioner then filed a
Motion to Quash Writ of Execution with Prayer to Hold in Abeyance of Auction
Sale 18 and a Supplemental Motion to Quash/Stop Auction Sale. 19 He also
served upon the Sheriff a letter of protest. 20 All of these protest actions
proved futile as the Sheriff later submitted his Report dated March 30, 2004
informing the Labor Arbiter that he had levied some of petitioner's personal
properties and sold them in an auction sale where respondents were the only
bidders. After each of the respondents entered a bid equal to their individual
shares in the judgment award, the levied properties were awarded to them.
Later, respondents claimed that although petitioner's levied properties
were already awarded to them, they could not take full control, ownership and
possession of said properties because petitioner had allegedly padlocked the
premises where the properties were situated. Hence, they asked Labor Arbiter
Castillon to issue a break-open order. 21 For his part and in a last ditch effort
to nullify the writ of execution, petitioner filed a Motion to Quash Writ of
Execution, Notice of Sale/Levy on Execution of Personal Property and Auction
Sale on Additional Grounds. 22 He reiterated that since the NLRC Resolution
which reversed the Decision of the Labor Arbiter ordered respondents'
reinstatement without payment of backwages or other monetary award, only
the execution of reinstatement sans any backwages or monetary award
should be enforced. It is his position that the Writ of Execution dated March 9,
2004 ordering the Sheriff to collect respondents' accrued salaries of
P1,110,665.60 plus P1,096.00 execution fees or the total amount of
P1,111,761.60, in effect illegally amended the said NLRC Resolution; hence,
said writ of execution is null and void. And, as the writ is null and void, it
follows that the Labor Arbiter cannot issue a break-open order. In sum,
petitioner prayed that the Writ of Execution be quashed and all proceedings
subsequent to it be declared null and void and that respondents' Urgent
Motion for Issuance of Break Open Order be denied for lack of merit.
Both motions were resolved in an Order 23 dated June 3, 2004. Labor
Arbiter Castillon explained therein that the monetary award subject of the
questioned Writ of Execution refers to respondents' accrued salaries by
reason of the reinstatement order of Labor Arbiter Gan which is self-executory
pursuant to Article 223 24 of the Labor Code.The Order cited Roquero v.
Philippine Airlines, Inc., 25 where this Court ruled that employees are still
entitled to their accrued salaries even if the order of reinstatement has been
reversed on appeal. As to the application for break open order, Labor Arbiter
Castillon relied on the Sheriff's report that there is imminent danger that
petitioner's properties sold at the public auction might be transferred or
removed, as in fact four of said properties were already transferred. Thus, she
 deemed it necessary to grant respondents' request for a break open order to
gain access to petitioner's premises. The dispositive portion of said Order
reads:  
WHEREFORE, premises considered, the Motion to Quash Writ of
Execution [and] Notice of Sale/Levy on Execution Sale filed by the
respondent(s) [are] hereby DENIED. In view of the refusal of the
respondents' entry to its premises, Deputy Sheriff S. Diega of this Office
is hereby ordered to break-open the entrance of the premises of
respondent wherein the properties are located.
For this purpose, he may secure the assistance of the local police
officer having jurisdiction over the locality where the said properties are
located.
SO ORDERED. 26
Undeterred, petitioner brought the matter to the CA through a Petition
for Certiorari.

Proceedings before the Court of Appeals

Before the CA, petitioner imputed grave abuse of discretion amounting

to lack or excess of jurisdiction upon Labor Arbiter Castillon for issuing the
questioned Writ of Execution and the Order dated June 3, 2004. He
maintained that since the December 21, 2001 Decision of Labor Arbiter Gan
has already been reversed and set aside by the September 5, 2002
Resolution of the NLRC, the Writ of Execution issued by Labor Arbiter
Castillon should have confined itself to the said NLRC Resolution which
ordered respondents' reinstatement without backwages. Hence, when Labor
Arbiter Castillon issued the writ commanding the Sheriff to satisfy the
monetary award in the amount of P1,111,761.60, she acted with grave abuse
of discretion amounting to lack or excess of jurisdiction. For the same reason,
her issuance of the Order dated June 3, 2004 denying petitioner's Motion to
Quash Writ of Execution with Prayer to Hold in Abeyance Auction Sale and
granting respondents' Urgent Motion for Issuance of Break Open Order is
likewise tainted with grave abuse of discretion. Aside from these, petitioner
also questioned the conduct of the auction sale. He likewise claimed that he
was denied due process because he was not given the opportunity to file a
motion for reconsideration of the Order denying his Motion to Quash Writ of
Execution considering that a break-open order was also made in the same
Order. For their part, respondents posited that since they have already
disposed of petitioner's levied properties, the petition has already become
moot.
 In a Decision 27 dated March 18, 2005, the CA quoted the June 3, 2004
Order of Labor Arbiter Castillon and agreed with her ratiocination that
pursuant to Article 223 of the Labor Code,what is sought to be enforced by
the subject Writ of Execution is the accrued salaries owing to respondents by
reason of the reinstatement order of Labor Arbiter Gan. The CA also found as
unmeritorious the issues raised by petitioner with regard to the conduct of the
auction sale. Moreover, it did not give weight to petitioner's claim of lack of
due process considering that a motion for reconsideration of a Writ of
Execution is not an available remedy. Thus, the CA dismissed the petition.
Petitioner's Motion for Reconsideration 28 suffered the same fate as it was
also denied in a Resolution 29 dated June 16, 2005.  TCaSAH

Hence, petitioner is now before this Court through this Petition for
Review on Certiorari where he presents the following issues:
1. Whether the provision of Article 223 of the Labor Code is applicable to
this case . . . .
2. Whether . . . the Decision dated March 18, 2005 and the Resolution
dated June 16, 2005 of the Court of Appeals are contrary to law
and jurisprudence[.]
3. Whether . . . the award of accrued salaries has legal and factual
bases[.] 30

The Parties' Arguments

Petitioner contends that the assailed Decision and Resolution of the CA

are contrary to law and jurisprudence. This is because in upholding the
issuance of the questioned Writ of Execution for the enforcement of
respondents' accrued salaries, said Decision and Resolution, in effect, altered
the NLRC Resolution which only decreed respondents' reinstatement without
backwages. Moreover, he posits that Article 223 of the Labor Code only
applies when an employee has been illegally dismissed from work. And since
in this case the NLRC ruled that respondents' failure to continue working for
petitioner was not occasioned by termination, there is no illegal dismissal to
speak of, hence, said provision of the Labor Code does not apply. Lastly,
petitioner claims that the computation of respondents' accrued salaries in the
total amount of P1,110,665.60 has no legal and factual bases since as
repeatedly pointed out by him, the NLRC Resolution reversing the Labor
Arbiter's Decision has already ordered respondents' reinstatement without
backwages after it found that there was no illegal termination.
Respondents, on the other hand, maintain that the CA did not err in
applying Article 223 of the Labor Code to the instant case. They thus contend
that the computation of their accrued salaries covering the period during
which they were supposed to have been reinstated or from January 1, 2002 to
January 30, 2004, should be upheld since same merely applied Article 223. In
sum, respondents believe that the assailed Decision and Resolution of the CA
are in accord with law and jurisprudence.

Our Ruling

The petition is not meritorious.

The core issue to be resolved in this case is similar to the one
determined in Garcia v. Philippine Airlines Inc., 31 that is, whether
respondents may collect their wages during the period between the Labor
Arbiter's order of reinstatement pending appeal and the NLRC Resolution
overturning that of the Labor Arbiter.
In order to provide a thorough discussion of the present case, an
overview of Garcia is proper.
In Garcia, petitioners therein were dismissed by Philippine Airlines, Inc.,
(PAL) after they were allegedly caught in the act of sniffing shabu during a
raid at the PAL Technical Center's Toolroom Section. They thus filed a
complaint for illegal dismissal. In the meantime, PAL was placed under an
interim rehabilitation receivership because it was then suffering from severe
financial losses. Thereafter, the Labor Arbiter ruled in petitioners' favor and
ordered PAL to immediately comply with the reinstatement aspect of the
decision. PAL appealed to the NLRC. The NLRC reversed the Labor Arbiter's
Decision and dismissed petitioners' complaint for lack of merit. As petitioners'
Motion for Reconsideration thereto was likewise denied, the NLRC issued an
Entry of Judgment. Notably, PAL's Interim Rehabilitation Receiver was
replaced by a Permanent Rehabilitation Receiver during the pendency of its
appeal with the NLRC. A writ of execution with respect to the reinstatement
aspect of the Labor Arbiter's Decision was then issued and pursuant thereto,
a Notice of Garnishment was likewise issued. To stop this, PAL filed an
Urgent Petition for Injunction with the NLRC. While the NLRC suspended and
referred the action to the rehabilitation receiver, it however, likewise affirmed
the validity of the writ so that PAL appealed to the CA. Fortunately for PAL,
the CA nullified the assailed NLRC Resolutions on the grounds that (1) a
subsequent finding of a valid dismissal removes the basis for the
reinstatement aspect of a labor arbiter's decision and, (2) the impossibility to
comply with the reinstatement order due to corporate rehabilitation justifies
PAL's failure to exercise the options under Article 223 of the Labor
Code.When the case reached this Court, we partially granted the petition in a
Decision dated August 29, 2007 and effectively reinstated the NLRC
Resolutions insofar as it suspended the proceedings. But as PAL later
manifested that the rehabilitation proceedings have already been terminated,
the court proceeded to determine the remaining issue, which is, as earlier
stated, whether petitioners therein may collect their wages during the period
between the Labor Arbiter's order of reinstatement pending appeal and the
NLRC Resolution overturning that of the Labor Arbiter.
In resolving the case, the Court examined its conflicting rulings with
respect to the application of paragraph 3 of Article 223 of the Labor Code,viz.:
At the core of the seeming divergence is the application of
paragraph 3 of Article 223 of the Labor Code which reads:  TcCSIa

'In any event, the decision of the Labor Arbiter reinstating a

dismissed or separated employee, insofar as the  reinstatement
aspect is concerned, shall immediately be executory, pending
appeal. The employee shall either be admitted back to work
under the same terms and conditions prevailing prior to his
dismissal or separation or, at the option of the employer, merely
reinstated in the payroll. The posting of a bond by the employer
shall not stay the execution for reinstatement provided herein.'
The view as maintained in a number of cases is that:
'. . . [E]ven if the order of reinstatement of the Labor
Arbiter is reversed on appeal, it is obligatory on the part of
the employer to reinstate and pay the wages of the dismissed
employee during the period of appeal until reversal by the
higher court. On the other hand, if the employee has been
reinstated during the appeal period and such reinstatement order
is reversed with finality, the employee is not  required to reimburse
whatever salary he received for he is entitled to such, more so if
he actually rendered services during the period.
In other words, a dismissed employee whose case was favorably
decided by the Labor Arbiter is entitled to receive wages pending appeal
upon reinstatement, which is immediately executory. Unless there is a
restraining order, it is ministerial upon the Labor Arbiter to implement the
order of reinstatement and it is mandatory on the employer to comply
therewith.
The opposite view is articulated in Genuino which states:
'If the decision of the labor arbiter is later reversed on
appeal upon the finding that the ground for dismissal is valid,
then the employer has the right to require the dismissed
employee on payroll reinstatement  to refund the salaries
s/he received while the case was pending appeal, or it can be
deducted from the accrued benefits that the dismissed employee
was entitled to receive from his/her employer under existing laws,
collective bargaining agreement provisions, and company
practices. However, if the employee was reinstated to work during
 the pendency of the appeal, then the employee is entitled to the
compensation received for actual services rendered without need
of refund.  
xxx xxx xxx'
It has thus been advanced that there is no point in releasing the
wages to petitioners since their dismissal was found to be valid, and to
do so would constitute unjust enrichment." (Emphasis, italics and
underscoring in the original; citations omitted.) 32
The Court then stressed that as opposed to the
abovementioned Genuino v. National Labor Relations Commission, 33 the
social justice principles of labor law outweigh or render inapplicable the civil
law doctrine of unjust enrichment. It then went on to examine the precarious
implication of the "refund doctrine" as enunciated in Genuino, thus:
[T]he "refund doctrine" easily demonstrates how a favorable
decision by the Labor Arbiter could harm, more than help, a dismissed
employee. The employee, to make both ends meet, would necessarily
have to use up the salaries received during the pendency of the appeal,
only to end up having to refund the sum in case of a final unfavorable
decision. It is mirage of a stop-gap leading the employee to a risky cliff of
insolvency.
Advisably, the sum is better left unspent. It becomes more logical
and practical for the employee to refuse payroll reinstatement and simply
find work elsewhere in the interim, if any is available. Notably, the option
of payroll reinstatement belongs to the employer, even if the employee is
able and raring to return to work. Prior to Genuino, it is unthinkable for
one to refuse payroll reinstatement. In the face of the grim possibilities,
the rise of concerned employees declining payroll reinstatement is on
the horizon.
Further, the Genuino ruling not only disregards the social justice
principles behind the rule, but also institutes a scheme unduly favorable
to management. Under such scheme, the salaries dispensed pendente
lite merely serve as a bond posted in installment by the employer. For in
the event of a reversal of the Labor Arbiter's decision ordering
reinstatement, the employer gets back the same amount without having
to spend ordinarily for bond premiums. This circumvents, if not directly
contradicts, the proscription that the "posting of a bond [even a cash
bond] by the employer shall not stay the execution for reinstatement.
[Underscoring in the original] 34
In view of this, the Court held this stance in Genuino as a stray posture
and realigned the proper course of the prevailing doctrine on reinstatement
pending appeal vis-à-vis the effect of a reversal on appeal, that is, even if the
order of reinstatement of the Labor Arbiter is reversed on appeal, it is
obligatory on the part of the employer to reinstate and pay the wages of
the dismissed employee during the period of appeal until reversal by the
higher court or tribunal. It likewise settled the view that the Labor Arbiter's
order of reinstatement is immediately executory and the employer has to
either re-admit them to work under the same terms and conditions
prevailing prior to their dismissal, or to reinstate them in the payroll, and
that failing to exercise the options in the alternative, employer must pay
the employee's salaries.  caCTHI

The discussion, however, did not stop there. The court went on to
declare that after the Labor Arbiter's decision is reversed by a higher
tribunal, the employee may be barred from collecting the accrued
wages, if it is shown that the delay in enforcing the reinstatement
pending appeal was without fault on the part of the employer. It then
provided for the two-fold test in determining whether an employee is barred
from recovering his accrued wages, to wit: (1) there must be actual delay or
that the order of reinstatement pending appeal was not executed prior to its
reversal; and (2) the delay must not be due to the employer's unjustified act or
omission. If the delay is due to the employer's unjustified refusal, the employer
may still be required to pay the salaries notwithstanding the reversal of the
Labor Arbiter's Decision. In Garcia, after it had been established that there
was clearly a delay in the execution of the reinstatement order, the court
proceeded to ascertain whether same was due to PAL's unjustified act or
omission. In so doing, it upheld the CA's finding that the peculiar predicament
of a corporate rehabilitation rendered it impossible for PAL, under the
circumstances, to exercise its option under Article 223 of the Labor Code.The
suspension of claims dictated by rehabilitation procedure therefore constitutes
a justification for PAL's failure to exercise the alternative options of actual
reinstatement or payroll reinstatement. Because of this, the Court held that
PAL's obligation to pay the salaries pending appeal, as the normal effect of
the non-exercise of the options, did not attach. Simply put, petitioners cannot
anymore collect their accrued salaries during the period between the Labor
Arbiter's order of reinstatement pending appeal and the NLRC Resolution
overturning that of the Labor Arbiter because PAL's failure to actually reinstate
them or effect payroll reinstatement was justified by the latter's situation of
being under corporate rehabilitation.

Application of the Two-Fold Test to the

present case

As previously mentioned, the vital question that needs to be answered

in the case at bar is: Can respondents collect their accrued salaries for the
period between the Labor Arbiter's order of reinstatement pending appeal and
the NLRC Resolution overturning that of the Labor Arbiter? If in the
affirmative, the assailed CA Decision and Resolution which affirmed the June
3, 2004 Order of Labor Arbiter Castillon denying the Motion to Quash Writ of
Execution and ordering the break-open of petitioner's premises as well as the
issuance of the subject Writ of Execution itself, have to be upheld. Otherwise,
they need to be set aside as what petitioner would want us to do.
To come up with the answer to said question, we shall apply the two-
fold test used in Garcia.
Was there an actual delay or was the order of reinstatement pending
appeal executed prior to its reversal? As can be recalled, Labor Arbiter Gan
issued his Decision ordering respondents' reinstatement on December 21,
2001, copy of which was allegedly received by petitioner on February 21,
2002. 35 On March 4, 2002, petitioner appealed said decision to the NLRC. A
few days later or on March 11, 2002, respondents filed an Ex-Parte Motion for
Issuance of Writ of Execution relative to the implementation of the
reinstatement aspect of the decision. 36 On April 22, 2002, a Writ of Execution
was issued by Labor Arbiter Gan. However, until the issuance of the
September 5, 2002 NLRC Resolution overturning Labor Arbiter Gan's
Decision, petitioner still failed to reinstate respondents or effect payroll
reinstatement in accordance with Article 223 of the Labor Code.This was what
actually prompted respondents to file an Ex-Parte Motion to Set Case for
Conference with Motion wherein they also prayed for the issuance of a
computation of the award of backwages and Alias Writ of Execution for its
enforcement. It cannot therefore be denied that there was an actual delay in
the execution of the reinstatement aspect of the Decision of Labor Arbiter Gan
prior to the issuance of the NLRC Resolution overturning the same.
Now, the next question is: Was the delay not due to the employer's
unjustified act or omission? Unlike in Garcia where PAL, as the employer,
was then under corporate rehabilitation, Islriz Trading here did not undergo
rehabilitation or was under any analogous situation which would justify
petitioner's non-exercise of the options provided under Article 223 of
the Labor Code.Notably, what petitioner gave as reason in not immediately
effecting reinstatement after he was served with the Writ of Execution dated
April 22, 2002 was that he would first refer the matter to his counsel as he
could not effectively act on the order of execution without the latter's
advice. 37 He gave his word that upon conferment with his lawyer, he will
inform the Office of the Labor Arbiter of his action on the writ. Petitioner,
however, without any satisfactory reason, failed to fulfill this promise and
respondents remained to be not reinstated until the NLRC resolved
petitioner's appeal. Evidently, the delay in the execution of respondents'
reinstatement was due to petitioner's unjustified refusal to effect the same.
 Hence, the conclusion is that respondents have the right to collect their
accrued salaries during the period between the Labor Arbiter's Decision
ordering their reinstatement pending appeal and the NLRC Resolution
overturning the same because petitioner's failure to reinstate them either
actually or through payroll was due to petitioner's unjustified refusal to effect
reinstatement. In order to enforce this, Labor Arbiter Castillon thus correctly
issued the Writ of Execution dated March 9, 2004 as well as the Order dated
June 3, 2004 denying petitioner's Motion to Quash Writ of Execution and
granting respondents' Urgent Motion for Issuance of Break-Open Order.
Consequently, we find no error on the part of the CA in upholding these
issuances and in dismissing the petition for certiorari before it. 
AcICTS

Having settled this, we find it unnecessary to discuss further the issues

raised by petitioner except the one with respect to the computation of
respondents' accrued salaries.

Correctness of the Computation of

Respondents' Accrued Salaries

Petitioner contends that respondents' accrued salaries in the total amount

of P1,110,665.60 have no factual and legal bases. This is because of his
obstinate belief that the NLRC's reversal of Labor Arbiter Gan's Decision has
effectively removed the basis for such award.
Although we do not agree with petitioner's line of reasoning, we, however,
find incorrect the computation made by Fiscal Examiner Trinchera.
In Kimberly Clark (Phils.), Inc. v. Facundo, 38 we held that:
[T]he Labor Arbiter's order of reinstatement was immediately
executory. After receipt of the Labor Arbiter's decision ordering private
respondents' reinstatement, petitioner has to either re-admit them to
work under the same terms and conditions prevailing prior to their
dismissal, or to reinstate them in the payroll. Failing to exercise the
options in the alternative, petitioner must pay private respondents'
salaries which automatically accrued from notice of the Labor
Arbiter's order of reinstatement until its ultimate reversal of the
NLRC. 
xxx xxx xxx
. . . [S]ince private respondent's reinstatement pending
appeal was effective only until its reversal by the NLRC on April 28,
1999, they are no longer entitled to salaries from May 1, 1999 to March
15, 2001, as ordered by the Labor Arbiter. (Emphasis supplied)
To clarify, respondents are entitled to their accrued salaries only from
the time petitioner received a copy of Labor Arbiter Gan's Decision declaring
respondents' termination illegal and ordering their reinstatement up to the date
of the NLRC Resolution overturning that of the Labor Arbiter. This is because
it is only during said period that respondents are deemed to have been
illegally dismissed and are entitled to reinstatement pursuant to Labor Arbiter
Gan's Decision which was the one in effect at that time. Beyond that period,
the NLRC Resolution declaring that there was no illegal dismissal is already
the one prevailing. From such point, respondents' salaries did not accrue not
only because there is no more illegal dismissal to speak of but also because
respondents have not yet been actually reinstated and have not rendered
services to petitioner.
Fiscal Examiner Trinchera's computation of respondents' accrued
salaries covered the period January 1, 2002 to January 30, 2004. As there
was no showing when petitioner actually received a copy of Labor Arbiter
Gan's decision except for petitioner's self-serving claim that he received the
same on February 21, 2002, 39 we are at a loss as to how Fiscal Examiner
Trinchera came up with January 1, 2002 as the reckoning point for computing
respondents' accrued wages. We likewise wonder why it covered the period
up to January 30, 2004 when on September 5, 2002, the NLRC already
promulgated its Resolution reversing that of the Labor Arbiter. Hence, we
deem it proper to remand the records of this case to the Labor Arbiter for the
correct computation of respondents' accrued wages which shall commence
from petitioner's date of receipt of the Labor Arbiter's Decision ordering
reinstatement up to the date of the NLRC Resolution reversing the same.
Considering, however, that petitioner's levied properties have already been
awarded to respondents and as alleged by the latter, have also already been
sold to third persons, respondents are ordered to make the proper restitution
to petitioner for whatever excess amount received by them based on the
correct computation.
As a final note, since it appears that petitioner still failed to reinstate
respondents pursuant to the final and executory Resolution of the NLRC,
respondents' proper recourse now is to move for the execution of the same. It
is worthy to note that Labor Arbiter Castillon stated in her questioned Order of
June 3, 2004 that the Writ of Execution she issued is for the sole purpose of
enforcing the wages accruing to respondents by reason of Labor Arbiter Gan's
order of reinstatement. Indeed, the last paragraph of said writ provides only
for the enforcement of said monetary award and nothing on
reinstatement, viz.: 
EcDSHT

NOW THEREFORE, you are commanded to proceed to the

premises of respondents Islriz Trading/Victor Hugo C. Lu located at
Brgy. Luciano Trece Martires[,] Cavite City or wherever it may be found
to collect the amount of One Million One Hundred Eleven Thousand
Seven Hundred Sixty One pesos & 60/100 (P1,111,761.60) inclusive [of]
 P1,096.00 as execution fees and turn over the said amount to the NLRC
Cashier for further disposition. In case you fail to collect the said amount
in cash, you are directed to cause the satisfaction of the same out of
respondents' chattels, movable/immovable properties not exempt from
execution. You are directed to return these Writ One Hundred Eighty
(180) days from receipt hereof, together with the report of compliance.
SO ORDERED. 40
WHEREFORE, the Petition for Review on Certiorari is DENIED. The
assailed March 18, 2005 Decision and June 16, 2005 Resolution of the Court
of Appeals in CA-G.R. SP No. 84744 are AFFIRMED. The records of this
case are ordered REMANDED to the Office of the Labor Arbiter for the correct
computation of respondents' accrued salaries covering the date of petitioner's
receipt of the December 21, 2001 Decision of the Labor Arbiter up to the
issuance of the NLRC Resolution on September 5, 2002. Respondents are
ordered to make the proper restitution to petitioner for whatever excess
amount which may be determined to have been received by them based on
the correct computation.
SO ORDERED.
 (Islriz Trading/Victor Hugo Lu v. Capada, G.R. No. 168501, [January 31, 2011],
|||

656 PHIL 9-29)

G.R. No. 196830. February 29, 2012.]

CESAR V. GARCIA, CARLOS RAZON, ALBERTO DE GUZMAN,

TOMAS RAZON, OMER E. PALO, RIZALDE VALENCIA, ALLAN
BASA, JESSIE GARCIA, JUANITO PARAS, ALEJANDRO
ORAG, ROMMEL PANGAN, RUEL SOLIMAN, and CENEN
CANLAPAN, represented by CESAR V.
GARCIA, petitioners, vs. KJ COMMERCIAL and REYNALDO
QUE, respondents.

DECISION

CARPIO, J  : p

The Case
 This is a petition 1 for review on certiorari under Rule 45 of the Rules of
Court. The petition challenges the 29 April 2011 Decision 2 of the Court of
Appeals in CA-G.R. SP No. 115851, affirming the 8 February 3 and 25
June 4 2010 Resolutions of the National Labor Relations Commission (NLRC) in
NLRC-LAC-No. 12-004061-08. The NLRC set aside the 30 October 2008
Decision 5 of the Labor Arbiter in NLRC Case No. RAB-III-02-9779-06.

The Facts

Respondent KJ Commercial is a sole proprietorship. It owns trucks and

engages in the business of distributing cement products. On different dates, KJ
Commercial employed as truck drivers and truck helpers petitioners Cesar V.
Garcia, Carlos Razon, Alberto De Guzman, Tomas Razon, Omer E. Palo,
Rizalde Valencia, Allan Basa, Jessie Garcia, Juanito Paras, Alejandro Orag,
Rommel Pangan, Ruel Soliman, and Cenen Canlapan (petitioners).
On 2 January 2006, petitioners demanded for a P40 daily salary increase.
To pressure KJ Commercial to grant their demand, they stopped working and
abandoned their trucks at the Northern Cement Plant Station in Sison,
Pangasinan. They also blocked other workers from reporting to work.
On 3 February 2006, petitioners filed with the Labor Arbiter a
complaint 6 for illegal dismissal, underpayment of salary and non-payment of
service incentive leave and thirteenth month pay.

The Labor Arbiter's Ruling

In his 30 October 2008 Decision, the Labor Arbiter held that KJ

Commercial illegally dismissed petitioners. The Labor Arbiter held:
After a careful examination and evaluation of the facts and
evidences adduced by both parties, we find valid and cogent reasons to
declare that these complainants were illegally dismissed from their work
to be entitled to their separation in lieu of reinstatement equivalent to
their salary for one (1) month for every year of service and backwages
from the time that they were terminated on January 2, 2006 up to the
date of this Decision. 
CETIDH

We carefully examined the defense set up by the respondents

that these complainants were not terminated from their employment but
were the one [sic] who abandoned their work by staging strike and
refused to perform their work as drivers of the trucks owned by the
respondents on January 2, 2006, vis-á-vis, he [sic] allegations and
claims of the complainants that when they asked for an increase of their
salary for P40.00, they were illegally dismissed from their employment
without due process, and we gave more credence and value to the
 allegations of the complainants that they were illegally dismissed from
their employment without due process and did not abandoned [sic] their
work as the respondents wanted to project. We examined the narration
of facts of the respondents in their Position Paper and Supplemental
Position Paper and we concluded that these complainants were actually
terminated on January 2, 2006 and did not abandoned [sic] their jobs as
claimed by the respondents when the respondents, in their Position
Paper, admitted that their cement plant was shutdown on January 3,
2006 and when it resumed its operation on January 7, 2006, they
ordered the other drivers to get the trucks in order that the hauling of the
cements will not incur further delay and that their business will not be
prejudiced.
Granting for the sake of discussion that indeed these
complainants abandoned their work on January 2, 2006, why then that
[sic] the cement plant was shutdown on January 3, 2006 and resumed
operation on January 7, 2006, when there are fifty (50) drivers of the
respondents and only thirteen (13) of them were allegedly stopped from
working. Further, if these complainants actually abandoned their work,
as claimed by the respondents, they miserably failed to show by
substantial evidence that these complainants deliberately and
unjustifiably refused to resume their employment.
xxx xxx xxx
The acts of these complainants in filing this instant case a month
after they were terminated from their work is more than sufficient
evidence to prove and show that they do not have the intention of
abandoning their work. While we acknowledged the offer of the
respondents for these complainants to return back to work during the
mandatory conference, the fact that these complainants were illegally
terminated and prevented from performing their work as truck drivers of
the respondents and that there was no compliance with the substantive
and procedural due process of terminating an employee, their
subsequent offer to return to work will not cure the defect that there was
already illegal dismissal committed against these complainants. 7
KJ Commercial appealed to the NLRC. It filed before the NLRC a motion to
reduce bond and posted a P50,000 cash bond.

The NLRC's Ruling

In its 9 March 2009 Decision, 8 the NLRC dismissed the appeal. The NLRC
held:
Filed with respondents-appellants' Appeal Memorandum is a
Motion to Reduce Appeal Bond and a cash bond of P50,000.00 only. . . .
 We find no merit on [sic] the respondents-appellants' Motion. It
must be stressed that under Section 6, Rule VI of the 2005 Revised
Rules of this Commission, a motion to reduce bond shall only be
entertained when the following requisites concur:
1. The motion is founded on meritorious ground; and
2. A bond of reasonable amount in relation to the monetary award
is posted.
We note that while respondents-appellants claim that they could
not possibly produce enough cash for the required appeal bond, they are
unwilling to at least put up a property to secure a surety bond.
Understandably, no surety agency would normally accept a surety
obligation involving a substantial amount without a guarantee that it
would be indemnified in case the surety bond posted is forfeited in favor
of a judgment creditor. Respondents-appellants' insinuation that no
surety company can finish the processing of a surety bond in ten days
time is not worthy of belief as it is contrary to ordinary business
experience. What is obvious is that respondents-appellants are not
willing to accept the usual conditions of a surety agreement that is why
no surety bond could be processed. The reduction of the required bond
is not a matter of right o[n] the part of the movant but lies within the
sound discretion of the NLRC upon showing of meritorious grounds . . . .
In this case, we find that the instant motion is not founded on a
meritorious ground. . . . Moreover, we note that the P50,000.00 cash
bond posted by respondents-appellants which represents less than two
(2) percent of the monetary award is dismally disproportionate to the
monetary award of P2,612,930.00 and that the amount of bond posted
by respondents-appellants is not reasonable in relation to the monetary
award. . . . A motion to reduce bond that does not satisfy the conditions
required under NLRC Rules shall not stop the running of the period to
perfect an appeal . . . . 
acHTIC

Conversely, respondents-appellants failed to perfect an appeal for

failure to post the required bond. 9
KJ Commercial filed a motion 10 for reconsideration and posted a
P2,562,930 surety bond. In its 8 February 2010 Resolution, the NLRC granted
the motion and set aside the Labor Arbiter's 30 October 2008 Decision. The
NLRC held:
. . . [T]his Commission opts to resolve and grant the Motion for
Reconsideration filed by respondent-appellant seeking for
reconsideration of Our Decision promulgated on March 9, 2009
dismissing the Appeal for non-perfection, there being an honest effort by
the appellants to comply with putting up the full amount of the required
appeal bond. Moreover, considering the merit of the appeal, by granting
the motion for reconsideration, the paramount interest of justice is better
served in the resolution of this case.
xxx xxx xxx
Going over the record of the case, this Commission noted that in
respondents' Supplemental Position Paper, in denying complainants'
imputation of illegal dismissal, respondents categorically alleged ". .[.]
that complainants were not illegally dismissed but on January 2, 2006,
they abandoned their work by means of [']work stoppage['] or they
engaged in an [']illegal strike['] when they demanded for a higher rate . .
[.] that while their respective assigned trucks were all in the cement plant
ready to be loaded, complainants paralyzed respondents' hauling or
trucking operation by staging a work stoppage at the premises of KJ
Commercial compound by further blocking their co-drivers not to report
for work." We have observed that despite these damaging allegations,
complainants never bothered to dispute nor contradicted these material
allegations. Complainants' silence on these material allegations
consequently lends support to respondents-appellants['] contention that
complainants were never dismissed at all but had stopped driving the
hauler truck assigned to each of them when their demand for salary
increase in the amount they wish was not granted by respondents-
appellants.
Moreover, contrary to the findings of the Labor Arbiter, the
purported shutdown of the cement plant being cited by the Labor
Arbiter a quo as the principal cause of complainants' purported dismissal
cannot be attributed to respondents because it was never established by
evidence that respondents were the owner [sic] of the cement plant
where complainants as truck drivers were hauling cargoes of cement
with trucks owned by respondents whose business is confined to that of
a cement distributor and cargo truck hauler. Based on the undisputed
account of respondents-appellants, it appears that the cement plant was
compelled to shut down because the hauling or trucking operation was
paralyzed due to complainants' resort to work stoppage by refusing to
drive their hauler trucks despite the order of the management for them to
get the trucks which blockaded the cement plant.
Furthermore, a perusal of the complainants' position paper and
amended position paper failed to allege the overt acts showing how they
were in fact dismissed on 02 January 2006. The complainants had not
even alleged that they were specifically told that they were dismissed
after they demanded for a salary increase or any statement to that effect.
Neither had they alleged that they were prevented from reporting for
work. This only shows there was never a dismissal to begin with.
xxx xxx xxx
 We cannot affirm the Labor Arbiter's conclusions absent showing
a fact of termination or circumstances under which the dismissal was
effected. Though only substantial evidence is required in proceedings
before the Labor Arbiter to support a litigant's claim, the same still
requires evidence separate and different, and something which supports
the allegations affirmatively made. The complainants' claim that they
were dismissed on 02 January 2006, absent proof thereof or any
supporting evidence thereto is at best self serving. 11  ASHICc

Petitioners filed a motion for reconsideration. In its 25 June 2010

Resolution, the NLRC denied the motion for lack of merit. The NLRC held:
We stress that it is within the power and discretion of this
Commission to grant or deny a motion to reduce appeal bond. Having
earlier denied the motion to reduce bond of the respondents-appellants,
this Commission is not precluded from reconsidering its earlier Decision
on second look when it finds meritorious ground to serve the ends of
justice. Settled is the norm in the matter of appeal bonds that letter-
perfect rules must yield to the broader interest of substantial justice . . . .
In this case, the Decision of the Labor Arbiter had not really become final
and executory as respondents timely filed a Memorandum of Appeal with
a Motion to Reduce Appeal Bond and a partial appeal bond. Although
the respondents['] appeal was dismissed, in the earlier decision, the
same Decision was later reconsidered on considerations that the Labor
Arbiter committed palpable errors in his findings and the monetary
awards to the appellees are secured by a partial bond and then later, by
an appeal bond for the full amount of the monetary awards. 12
Petitioners filed with the Court of Appeals a petition 13 for certiorari under
Rule 65 of the Rules of Court.

The Court of Appeals' Ruling

In its 29 April 2011 Decision, the Court of Appeals dismissed the petition
and affirmed the NLRC's 8 February and 25 June 2010 Resolutions. The Court of
Appeals held:
After scrupulously examining the contrasting positions of the
parties, and the conflicting decisions of the labor tribunals, We find the
records of the case bereft of evidence to substantiate the conclusions
reached by the Labor Arbiter that petitioners were illegally dismissed
from employment.  HAaScT

While petitioners vehemently argue that they were unlawfully

separated from work, records are devoid of evidence to show the fact of
dismissal. Neither was there any evidence offered by petitioners to prove
that they were no longer allowed to perform their duties as truck drivers
or they were prevented from entering KJ Commercial's premises, except
 for their empty and general allegations that they were illegally dismissed
from employment. Such bare and sweeping statement contains nothing
but empty imputation of a fact that could hardly be given any evidentiary
weight by this Court. At the very least, petitioners should have detailed
or elaborated the circumstances surrounding their dismissal or
substantiate their claims by submitting evidence to butress such
contention. Without a doubt, petitioners' allegation of illegal dismissal
has no leg to stand on. Accordingly, they should not expect this Court to
swallow their asseveration hook, line and sinker in the absence of
supporting proof. Allegation that one was illegally dismissed from work is
not a magic word that once invoked will automatically sway this Court to
rule in favor of the party invoking it. There must first be substantial
evidence to prove that indeed there was illegal dismissal before the
employer bears the burden to prove the contrary. 14
Hence, the present petition.

The Issue

Petitioners raise as issue that the Labor Arbiter's 30 October 2008

Decision became final and executory; thus, the NLRC's 8 February and 25 June
2010 Resolutions and the Court of Appeals' 29 April 2011 Decision are void for
lack of jurisdiction. Petitioners claim that KJ Commercial failed to perfect an
appeal since the motion to reduce bond did not stop the running of the period to
appeal.

The Court's Ruling

The petition is unmeritorious.

When petitioners filed with the Court of Appeals a petition for certiorari,
they did not raise as issue that the Labor Arbiter's 30 October 2008 Decision had
become final and executory. They enumerated the issues in their petition:
GROUNDS FOR THE PETITION
I.
THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION
TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION WHEN IT
REVERSED THE DECISION OF THE LABOR ARBITER A QUO AND
PRONOUNCED THAT THE PETITIONERS WERE NOT ILLEGALLY
DISMISSED DESPITE CLEAR AND SUBSTANTIAL EVIDENCE ON
THE RECORDS SHOWING THAT COMPLAINANTS WERE REGULAR
EMPLOYEES TO BE ENTITLED TO SECURITY OF TENURE AND
WERE ILLEGALLY DISMISSED FROM THEIR EMPLOYMENT.  ACaDTH

II.
 THE NLRC HAS COMMITTED GRAVE ABUSE OF DISCRETION
TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION WHEN IT
GIVE [sic] MUCH WEIGHT TO PRIVATE RESPONDENTS[']
BASELESS ALLEGATIONS IN ITS [sic] MOTION FOR
RECONSIDERATION WHEN IT [sic] ALLEGED THAT COMPLAINANTS
HAD ABANDONED THEIR WORK BY MEANS OF "WORK
STOPPAGE" OR THEY ENGAGED IN AN "ILLEGAL STRIKE" WHEN
THEY DEMANDED FOR A HIGHER RATE.
III.
THE NLRC GRAVELY ERRED TANTAMOUNT TO LACK OR EXCESS
OF JURISDICTION WHEN IT CONCLUDED THAT "COMPLAINANTS
PARALYZED HAULING OR TRUCKING OPERATION BY STAGING A
WORK STOPPAGE AT THE PREMISES OF KJ COMMERCIAL
COMPOUND BY FURTHER BLOCKING THEIR CO-DRIVERS NOT TO
REPORT FOR WORK" WITHOUT A SINGLE EVIDENCE TO
SUPPORT SUCH ALLEGATIONS OF PRIVATE RESPONDENTS.
IV.
THE NLRC GRAVELY ERRED WHEN IT CONCLUDED THAT THE
PRINCIPAL CAUSE OF COMPLAINANTS' DISMISSAL WAS DUE TO
THE PURPORTED SHUTDOWN OF THE CEMENT PLANT CITED BY
THE LABOR ARBITER IN HIS DECISION. 15
Accordingly, the Court of Appeals limited itself to the resolution of the
enumerated issues. In its 29 April 2011 Decision, the Court of Appeals held:
Hence, petitioners seek recourse before this Court via this
Petition for Certiorari challenging the NLRC Resolutions and raising the
following issues:
I.
THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION
TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION
WHEN IT REVERSED THE DECISION OF THE LABOR
ARBITER A QUO AND PRONOUNCED THAT PETITIONERS
WERE NOT ILLEGALLY DISMISSED DESPITE CLEAR AND
SUBSTANTIAL EVIDENCE ON THE RECORDS SHOWING
THAT PETITIONERS WERE REGULAR EMPLOYEES TO BE
ENTITLED TO SECURITY OF TENURE AND WERE ILLEGALLY
DISMISSED FROM THEIR EMPLOYMENT.
II.
THE NLRC HAS COMMITTED GRAVE ABUSE OF DISCRETION
TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION
WHEN IT GAVE MUCH WEIGHT TO PRIVATE RESPONDENTS
BASELESS ALLEGATIONS IN ITS [sic] MOTION FOR
 RECONSIDERATION WHEN IT [sic] ALLEGED THAT
PETITIONERS HAD ABANDONED THEIR WORK BY MEANS
OF "WORK STOPPAGE" OR THEY ENGAGED IN AN "ILLEGAL
STRIKE" WHEN THEY DEMANDED FOR A HIGHER RATE.
III.
THE NLRC GRAVELY ERRED WHEN IT CONCLUDED THAT
"PETITIONERS PARALYZED HAULING AND TRUCKING
OPERATION BY STAGING A WORK STOPPAGE AT THE
PREMISES OF KJ COMMERCIAL COMPOUND BY FURTHER
BLOCKING THEIR CO-DRIVERS NOT TO REPORT FOR
WORK" WITHOUT A SINGLE EVIDENCE TO SUPPORT SUCH
ALLEGATIONS OF PRIVATE RESPONDENTS.
IV.
THE NLRC GRAVELY ERRED WHEN IT CONCLUDED THAT
THE PRINCIPAL CAUSE OF PETITIONERS' DISMISSAL WAS
DUE TO THE PURPORTED SHUTDOWN OF THE CEMENT
PLANT CITED BY THE LABOR ARBITER IN HIS DECISION. 16
Petitioners cannot, for the first time, raise as issue in their petition filed with
this Court that the Labor Arbiter's 30 October 2008 Decision had become final
and executory. Points of law, theories and arguments not raised before the Court
of Appeals will not be considered by this Court. Otherwise, KJ Commercial will be
denied its right to due process. In Tolosa v. National Labor Relations
Commission, 17 the Court held:  DCcAIS

Petitioner contends that the labor arbiter's monetary award has

already reached finality, since private respondents were not able to file a
timely appeal before the NLRC.
This argument cannot be passed upon in this appeal,
because it was not raised in the tribunals a quo. Well-settled is the
rule that issues not raised below cannot be raised for the first time
on appeal. Thus, points of law, theories, and arguments not
brought to the attention of the Court of Appeals need not — and
ordinarily will not — be considered by this Court. Petitioner's
allegation cannot be accepted by this Court on its face; to do so
would be tantamount to a denial of respondent's right to due
process.
Furthermore, whether respondents were able to appeal on time is
a question of fact that cannot be entertained in a petition for review
under Rule 45 of the Rules of Court. In general, the jurisdiction of this
Court in cases brought before it from the Court of Appeals is limited to a
review of errors of law allegedly committed by the court a
quo. 18 (Emphasis supplied)
 KJ Commercial's filing of a motion to reduce bond and delayed posting of
the P2,562,930 surety bond did not render the Labor Arbiter's 30 October 2008
Decision final and executory. The Rules of Procedure of the NLRC allows the
filing of a motion to reduce bond subject to two conditions: (1) there is meritorious
ground, and (2) a bond in a reasonable amount is posted. Section 6 of Article VI
states:
No motion to reduce bond shall be entertained except on
meritorious grounds and upon the posting of a bond in a reasonable
amount in relation to the monetary award.
The mere filing of the motion to reduce bond without compliance
with the requisites in the preceding paragraph shall not stop the running
of the period to perfect an appeal.
The filing of a motion to reduce bond and compliance with the two
conditions stop the running of the period to perfect an appeal. In McBurnie v.
Ganzon, 19 the Court held:
. . . [T]he bond may be reduced upon motion by the employer, this
is subject to the conditions that (1) the motion to reduce the bond shall
be based on meritorious grounds; and (2) a reasonable amount in
relation to the monetary award is posted by the appellant, otherwise the
filing of the motion to reduce bond shall not stop the running of the
period to perfect an appeal. 20
The NLRC has full discretion to grant or deny the motion to reduce
bond, 21 and it may rule on the motion beyond the 10-day period within which to
perfect an appeal. Obviously, at the time of the filing of the motion to reduce
bond and posting of a bond in a reasonable amount, there is no assurance
whether the appellant's motion is indeed based on "meritorious ground" and
whether the bond he or she posted is of a "reasonable amount." Thus, the
appellant always runs the risk of failing to perfect an appeal.
Section 2, Article I of the Rules of Procedure of the NLRC states that,
"These Rules shall be liberally construed to carry out the objectives of the
Constitution, the Labor Code of the Philippines and other relevant legislations,
and to assist the parties in obtaining just, expeditious and inexpensive resolution
and settlement of labor disputes." In order to give full effect to the provisions on
motion to reduce bond, the appellant must be allowed to wait for the ruling of the
NLRC on the motion even beyond the 10-day period to perfect an appeal. If the
NLRC grants the motion and rules that there is indeed meritorious ground and
that the amount of the bond posted is reasonable, then the appeal is perfected. If
the NLRC denies the motion, the appellant may still file a motion for
reconsideration as provided under Section 15, Rule VII of the Rules. If the NLRC
grants the motion for reconsideration and rules that there is indeed meritorious
ground and that the amount of the bond posted is reasonable, then the appeal is
perfected. If the NLRC denies the motion, then the decision of the labor arbiter
becomes final and executory.
In the present case, KJ Commercial filed a motion to reduce bond and
posted a P50,000 cash bond. When the NLRC denied its motion, KJ Commercial
filed a motion for reconsideration and posted the full P2,562,930 surety bond.
The NLRC then granted the motion for reconsideration.  HTDCAS

In any case, the rule that the filing of a motion to reduce bond shall not
stop the running of the period to perfect an appeal is not absolute. The Court
may relax the rule. In Intertranz Container Lines, Inc. v. Bautista, 22 the Court
held:
Jurisprudence tells us that in labor cases, an appeal from a
decision involving a monetary award may be perfected only upon the
posting of a cash or surety bond. The Court, however, has relaxed this
requirement under certain exceptional circumstances in order to resolve
controversies on their merits. These circumstances include: (1)
fundamental consideration of substantial justice; (2) prevention of
miscarriage of justice or of unjust enrichment; and (3) special
circumstances of the case combined with its legal merits, and the
amount and the issue involved. 23
In Rosewood Processing, Inc. v. NLRC, 24 the Court held:
The perfection of an appeal within the reglementary period and in
the manner prescribed by law is jurisdictional, and noncompliance with
such legal requirement is fatal and effectively renders the judgment final
and executory. The Labor Code provides:
ART. 223. Appeal. — Decisions, awards or orders of the
Labor Arbiter are final and executory unless appealed to the
Commission by any or both parties within ten (10) calendar days
from receipt of such decisions, awards, or orders.
In case of a judgment involving a monetary award, an
appeal by the employer may be perfected only upon the posting
of a cash or surety bond issued by a reputable bonding company
duly accredited by the Commission in the amount equivalent to
the monetary award in the judgment appealed from.
Indisputable is the legal doctrine that the appeal of a decision
involving a monetary award in labor cases may be perfected "only upon
the posting of a cash or surety bond." The lawmakers intended the
posting of the bond to be an indispensable requirement to perfect an
employer's appeal.
However, in a number of cases, this Court has relaxed this
requirement in order to bring about the immediate and appropriate
resolution of controversies on the merits. Some of these cases include:
 "(a) counsel's reliance on the footnote of the notice of the decision of the
labor arbiter that the aggrieved party may appeal within ten (10) working
days; (b) fundamental consideration of substantial justice; (c) prevention
of miscarriage of justice or of unjust enrichment, as where the tardy
appeal is from a decision granting separation pay which was already
granted in an earlier final decision; and (d) special circumstances of the
case combined with its legal merits or the amount and the issue
involved."
In Quiambao vs. National Labor Relations Commission, this Court
ruled that a relaxation of the appeal bond requirement could be justified
by substantial compliance with the rule.
In Globe General Services and Security Agency vs. National
Labor Relations Commission, the Court observed that the NLRC, in
actual practice, allows the reduction of the appeal bond upon motion of
the appellant and on meritorious grounds; hence, petitioners in that case
should have filed a motion to reduce the bond within the reglementary
period for appeal.
That is the exact situation in the case at bar. Here, petitioner
claims to have received the labor arbiter's Decision on April 6, 1993. On
April 16, 1993, it filed, together with its memorandum on appeal and
notice of appeal, a motion to reduce the appeal bond accompanied by a
surety bond for fifty thousand pesos issued by Prudential Guarantee and
Assurance, Inc. Ignoring petitioner's motion (to reduce bond),
Respondent Commission rendered its assailed Resolution dismissing
the appeal due to the late filing of the appeal bond.
The solicitor general argues for the affirmation of the assailed
Resolution for the sole reason that the appeal bond, even if it was filed
on time, was defective, as it was not in an amount "equivalent to the
monetary award in the judgment appealed from." The Court disagrees.
We hold that petitioner's motion to reduce the bond is a
substantial compliance with the Labor Code. This holding is consistent
with the norm that letter-perfect rules must yield to the broader interest of
substantial justice. 25 
CADHcI

In Ong v. Court of Appeals, 26 the Court held that the bond requirement on

appeals may be relaxed when there is substantial compliance with the Rules of
Procedure of the NLRC or when the appellant shows willingness to post a partial
bond. The Court held that, "While the bond requirement on appeals involving
monetary awards has been relaxed in certain cases, this can only be done where
there was substantial compliance of the Rules or where the appellants, at the
very least, exhibited willingness to pay by posting a partial bond." 27
In the present case, KJ Commercial showed willingness to post a partial
bond. In fact, it posted a P50,000 cash bond. In Ong, the Court held that,
"Petitioner in the said case substantially complied with the rules by posting a
partial surety bond of fifty thousand pesos issued by Prudential Guarantee and
Assurance, Inc., while his motion to reduce appeal bond was pending before the
NLRC." 28
Aside from posting a partial bond, KJ Commercial immediately posted the
full amount of the bond when it filed its motion for reconsideration of the NLRC's
9 March 2009 Decision. In Dr. Postigo v. Philippine Tuberculosis Society,
Inc., 29 the Court held:
. . . [T]he respondent immediately submitted a supersedeas bond
with its motion for reconsideration of the NLRC resolution dismissing its
appeal. In Ong v. Court of Appeals, we ruled that the aggrieved party
may file the appeal bond within the ten-day reglementary period
following the receipt of the resolution of the NLRC to forestall the finality
of such resolution. Hence, while the appeal of a decision involving a
monetary award in labor cases may be perfected only upon the posting
of a cash or surety bond and the posting of the bond is an indispensable
requirement to perfect such an appeal, a relaxation of the appeal bond
requirement could be justified by substantial compliance with the rule. 30
WHEREFORE, the Court DENIES the petition and AFFIRMSthe 29 April
2011 Decision of the Court of Appeals in CA-G.R. SP No. 115851.
SO ORDERED.
 (Garcia v. KJ Commercial, G.R. No. 196830, [February 29, 2012], 683 PHIL
|||

376-393)

G.R. No. 152494. September 22, 2004.]

MARIANO ONG, doing business under the name and style

MILESTONE METAL MANUFACTURING, petitioner, vs. THE
COURT OF APPEALS, CONRADO DABAC, BERNABE
TAYACTAC, MANUEL ABEJUELLA, LOLITO ABELONG,
RONNIE HERRERO, APOLLO PAMIAS, JAIME ONGUTAN,
NOEL ATENDIDO, CARLOS TABBAL, JOEL ATENDIDO,
BIENVENIDO EBBER, RENATO ABEJUELLA, LEONILO
ATENDIDO, JR., LODULADO FAA and JAIME
LOZADA, respondents.

DECISION
YNARES-SANTIAGO, J  : p

This is a petition for review on certiorari assailing the decision 1 of the

Court of Appeals in CA-G.R. SP No. 62129, dated October 10, 2001, which
dismissed the petition for certiorari for lack of merit, as well as the
resolution, 2 dated March 7, 2002, denying the motion for reconsideration.
Petitioner is the sole proprietor of Milestone Metal Manufacturing
(Milestone), which manufactures, among others, wearing apparels, belts, and
umbrellas. 3 Sometime in May 1998, the business suffered very low sales and
productivity because of the economic crisis in the country. Hence, it adopted a
rotation scheme by reducing the workdays of its employees to three days a week
or less for an indefinite period. 4
On separate dates, the 15 respondents filed before the National Labor
Relations Commission (NLRC) complaints for illegal dismissal, underpayment of
wages, non-payment of overtime pay, holiday pay, service incentive leave pay,
13th month pay, damages, and attorney's fees against petitioner. These were
consolidated and assigned to Labor Arbiter Manuel Manasala.
Petitioner claimed that 9 of the 15 respondents were not employees of
Milestone but of Protone Industrial Corporation which, however, stopped its
operation due to business losses. Further, he claims that respondents Manuel
Abuela, Lolita Abelong, Ronnie Herrero, Carlos Tabbal, Conrado Dabac, and
Lodualdo Faa were not dismissed from employment; rather, they refused to work
after the rotation scheme was adopted. Anent their monetary claims, petitioner
presented documents showing that he paid respondents' minimum wage, 13th
month pay, holiday pay, and contributions to the SSS, Medicare, and Pag-Ibig
Funds. 5
On November 25, 1999, the Labor Arbiter rendered a decision awarding to
the respondents the aggregate amount of P1,111,200.40 representing their wage
differential, holiday pay, service incentive leave pay and 13th month pay, plus
10% thereof as attorney's fees. Further, petitioner was ordered to pay the
respondents separation pay equivalent to 1/2 month salary for every year of
service due to the indefiniteness of the rotation scheme and strained relations
caused by the filing of the complaints. 6
Petitioner filed with the NLRC a notice of appeal with a memorandum of
appeal and paid the docket fees therefor. However, instead of posting the
required cash or surety bond, he filed a motion to reduce the appeal bond. The
NLRC, in a resolution dated April 28, 2000, denied the motion to reduce bond
and dismissed the appeal for failure to post cash or surety bond within the
reglementary period. 7 Petitioner's motion for reconsideration was likewise
denied. 8
 Petitioner filed a petition for certiorari with the Court of Appeals alleging
that the NLRC acted with grave abuse of discretion in dismissing the appeal for
non-perfection of appeal although a motion to reduce appeal bond was
seasonably filed. However, the petition was dismissed and thereafter the motion
for reconsideration was likewise dismissed for lack of merit. 9
Hence, this petition for review on the following assignment of errors:
I.
PUBLIC RESPONDENT COURT OF APPEALS COMMITTED
SERIOUS ERROR AND GRAVE ABUSE OF DISCRETION IN
AFFIRMING THE DECISION OF THE NLRC DISMISSING THE
APPEAL OF PETITIONERS (sic) FOR NON-PERFECTION WHEN A
MOTION TO REDUCE APPEAL BOND WAS SEASONABLY FILED
WHICH IS ALLOWED BY THE RULES OF PROCEDURE OF THE
NLRC.  TaISDA

II.
PUBLIC RESPONDENT COURT OF APPEALS COMMITTED
SERIOUS ERROR AND GRAVE ABUSE OF DISCRETION IN
AFFIRMING THE DISMISSAL BY NLRC OF PETITIONER'S APPEAL
AND IN EFFECT UPHOLDING THE ERRONEOUS DECISION OF THE
LABOR ARBITER AWARDING SEPARATION PAY TO PRIVATE
RESPONDENTS DESPITE THE FINDING THAT THERE WAS NO
ILLEGAL DISMISSAL MADE BY MILESTONE.
III.
PUBLIC RESPONDENT COURT OF APPEALS COMMITTED
SERIOUS ERROR IN AFFIRMING THE NLRC'S DISMISSAL OF
PETITIONER'S APPEAL AND IN EFFECT UPHOLDING THE
ERRONEOUS DECISION OF THE LABOR ARBITER THAT
PETITIONER MILESTONE HAS VIOLATED THE MINIMUM WAGE
LAW AND THAT PRIVATE RESPONDENTS WERE UNDERPAID.
IV.
PUBLIC RESPONDENT COURT OF APPEALS COMMITTED
SERIOUS ERROR IN AFFIRMING THE NLRC'S DISMISSAL OF
PETITIONER'S APPEAL AND IN EFFECT UPHOLDING THE
ERRONEOUS DECISION OF THE LABOR ARBITER THAT
PETITIONER MILESTONE HAS NOT PAID PRIVATE RESPONDENTS
THEIR SERVICE INCENTIVE LEAVE PAY, 13TH MONTH PAY, AND
HOLIDAY PAY.
V.
PUBLIC RESPONDENT COURT OF APPEALS COMMITTED
SERIOUS ERROR IN AFFIRMING THE NLRC'S DISMISSAL OF
 PETITIONER'S APPEAL AND IN EFFECT UPHOLDING THE
ERRONEOUS DECISION OF THE LABOR ARBITER THAT THE
EVIDENCE SUBMITTED BY PRIVATE RESPONDENTS IN SUPPORT
OF THEIR CLAIMS ARE NOT SELF-SERVING, IRRELEVANT AND
IMMATERIAL TO THE FACTS AND LAW IN ISSUE IN THIS CASE. 10
The petition lacks merit.
Time and again it has been held that the right to appeal is not a natural
right or a part of due process, it is merely a statutory privilege, and may be
exercised only in the manner and in accordance with the provisions of law. The
party who seeks to avail of the same must comply with the requirements of the
rules. Failing to do so, the right to appeal is lost. 11
Article 223 of the Labor Code, as amended, sets forth the rules on appeal
from the Labor Arbiter's monetary award:
ART. 223. Appeal. — Decisions, awards, or orders of the Labor
Arbiter are final and executory unless appealed to the Commission by
any or both parties within ten (10) calendar days from receipt of such
decisions, awards, or orders . . .
xxx xxx xxx
In case of a judgment involving a monetary award, an appeal by
the employer may be perfected only upon the posting of a cash or surety
bond issued by a reputable bonding company duly accredited by the
Commission in the amount equivalent to the monetary award in the
judgment appealed from. (Emphasis ours)
The pertinent provisions of Rule VI of the New Rules of Procedure of the
NLRC, 12 which were in effect when petitioner filed his appeal, provide:
Section 1. Periods of Appeal. — Decisions, awards or orders of
the Labor Arbiter and the POEA Administrator shall be final and
executory unless appealed to the Commission by any or both parties
within ten (10) calendar days from receipt of such decisions, awards or
orders of the Labor Arbiter . . .
xxx xxx xxx
Section 3. Requisites for Perfection of Appeal. — (a) The appeal
shall be filed within the reglementary period as provided in Section 1 of
this Rule; shall be under oath with proof of payment of the required
appeal fee and the posting of a cash or surety bond as provided in
Section 5 of this Rule; shall be accompanied by a memorandum of
appeal which shall state the grounds relied upon and the arguments in
support thereof; the relief prayed for; and a statement of the date when
the appellant received the appealed decision, order or award and proof
of service on the other party of such appeal.
 A mere notice of appeal without complying with the other requisite
aforestated shall not stop the running of the period for perfecting an
appeal.
xxx xxx xxx
Section 6. Bond. — In case the decision of the Labor Arbiter, the
Regional Director or his duly authorized Hearing Officer involves a
monetary award, an appeal by the employer shall be perfected only
upon the posting of a cash or surety bond, which shall be in effect until
final disposition of the case, issued by a reputable bonding company
duly accredited by the Commission or the Supreme Court in an amount
equivalent to the monetary award, exclusive of damages and attorney's
fees. ACIDSc

The employer, his counsel, as well as the bonding company, shall

submit a joint declaration under oath attesting that the surety bond
posted is genuine.
The Commission may, in justifiable cases and upon Motion of the
Appellant, reduce the amount of the bond. The filing of the motion to
reduce bond shall not stop the running of the period to perfect appeal.
(Emphasis ours)
In the case at bar, petitioner received the decision of the Labor Arbiter on
January 6, 2000. He filed his notice of appeal with memorandum of appeal and
paid the corresponding appeal fees on January 17, 2000, the last day of filing the
appeal. However, in lieu of the required cash or surety bond, he filed a motion to
reduce bond alleging that the amount of P1,427,802,04 as bond is "unjustified
and prohibitive" and prayed that the same be reduced to a "reasonable level."
The NLRC denied the motion and consequently dismissed the appeal for non-
perfection. Petitioner now contends that he was deprived of the chance to post
bond because the NLRC took 102 days to decide his motion.
Petitioner's argument is unavailing.
While, Section 6, Rule VI of the NLRC's New Rules of Procedure allows
the Commission to reduce the amount of the bond, the exercise of the authority
is not a matter of right on the part of the movant but lies within the sound
discretion of the NLRC upon showing of meritorious grounds. 13 Petitioner's
motion reads:
1. The appeal bond which respondents-appellants will post in this case is
P1,427,802.04. They are precisely questioning this amount as
being unjustified and prohibitive under the premises.
2. The amount of this appeal bond must be reduced to a reasonable
level by this Honorable Office.
 WHEREFORE, in view thereof, it is respectfully prayed of this
Honorable Office that the appeal bond of P1,427,802.04 be reduced. 14
 
After careful scrutiny of the motion to reduce appeal bond, we agree with
the Court of Appeals that the NLRC did not act with grave abuse of discretion
when it denied petitioner's motion for the same failed to either elucidate why the
amount of the bond was "unjustified and prohibitive" or to indicate what would be
a "reasonable level." 15
In Calabash Garments, Inc. v. NLRC, 16 it was held that "a substantial
monetary award, even if it runs into millions, does not necessarily give the
employer-appellant a "meritorious case" and does not automatically warrant a
reduction of the appeal bond."
Even granting arguendo that petitioner has meritorious grounds to reduce
the appeal bond, the result would have been the same since he failed to post
cash or surety bond within the prescribed period.
The above-cited provisions explicitly provide that an appeal from the Labor
Arbiter to the NLRC must be perfected within ten calendar days from receipt of
such decisions, awards or orders of the Labor Arbiter. In a judgment involving a
monetary award, the appeal shall be perfected only upon (1) proof of payment of
the required appeal fee; (2) posting of a cash or surety bond issued by a
reputable bonding company; and (3) filing of a memorandum of appeal. A mere
notice of appeal without complying with the other requisites mentioned shall not
stop the running of the period for perfection of appeal. 17 The posting of cash or
surety bond is not only mandatory but jurisdictional as well, and non-compliance
therewith is fatal and has the effect of rendering the judgment final and
executory. 18 This requirement is intended to discourage employers from using
the appeal to delay, or even evade, their obligation to satisfy their employee's just
and lawful claims. 19
The intention of the lawmakers to make the bond an indispensable
requisite for the perfection of an appeal by the employer is underscored by the
provision that an appeal by the employer may be perfected only upon the posting
of a cash or surety bond. The word "only" makes it perfectly clear that the
lawmakers intended the posting of a cash or surety bond by the employer to be
the exclusive means by which an employer's appeal may be perfected. 20
The fact that the NLRC took 102 days to resolve the motion will not help
petitioner's case. The NLRC Rules clearly provide that "the filing of the motion to
reduce bond shall not stop the running of the period to perfect appeal." Petitioner
should have seasonably filed the appeal bond within the ten-day reglementary
period following the receipt of the order, resolution or decision of the NLRC to
forestall the finality of such order, resolution or decision. In the alternative, he
should have paid only a moderate and reasonable sum for the premium, as was
held in Biogenerics Marketing and Research Corporation v. NLRC, 21 to wit:
. . . The mandatory filing of a bond for the perfection of an appeal
is evident from the aforequoted provision that the appeal may be
perfected only upon the posting of cash or surety bond. It is not an
excuse that the over P2 million award is too much for a small business
enterprise, like the petitioner company, to shoulder. The law does not
require its outright payment, but only the posting of a bond to ensure
that the award will be eventually paid should the appeal fail. What
petitioners have to pay is a moderate and reasonable sum for the
premium for such bond. (Emphasis ours)
While the bond requirement on appeals involving monetary awards has
been relaxed in certain cases, this can only be done where there was substantial
compliance of the Rules or where the appellants, at the very least, exhibited
willingness to pay by posting a partial bond. 22 Petitioner's reliance on the case
of Rosewood Processing, Inc. v. NLRC  23  is misplaced. Petitioner in the said
case substantially complied with the rules by posting a partial surety bond of fifty
thousand pesos issued by Prudential Guarantee and Assurance, Inc. while his
motion to reduce appeal bond was pending before the NLRC.  AEDHST

In the case at bar, petitioner did not post a full or partial appeal bond within
the prescribed period, thus, no appeal was perfected from the decision of the
Labor Arbiter. For this reason, the decision sought to be appealed to the NLRC
had become final and executory and therefore immutable. Clearly, then, the
NLRC has no authority to entertain the appeal, much less to reverse the decision
of the Labor Arbiter. Any amendment or alteration made which substantially
affects the final and executory judgment is null and void for lack of jurisdiction,
including the entire proceeding held for that purpose. 24
WHEREFORE, in view of the foregoing, the petition is DENIED. The
assailed decision of the Court of Appeals in CA-G.R. SP No. 62129, dated
October 10, 2001, dismissing the petition for certiorari for lack of merit, is
AFFIRMED.
No pronouncement as to costs.
SO ORDERED.
 (Ong v. Court of Appeals, G.R. No. 152494, [September 22, 2004], 482 PHIL
|||

170-182)
 G.R. Nos. 116476-84. May 21, 1998.]

ROSEWOOD PROCESSING, INC., petitioner, vs. NATIONAL

LABOR RELATIONS COMMISSION, NAPOLEON C. MAMON,
ARSENIO GAZZINGAN, ROMEO C. VELASCO, ARMANDO L.
BALLON, VICTOR E. ALDEZA, JOSE L. CABRERA, VETERANS
PHILIPPINE SCOUT SECURITY AGENCY, and/or ENGR.
SERGIO JAMILA IV, respondents.

Puruggunan, Chato, Tan & Geronimo for petitioner.

Ramon F. Ishiwata for private respondent.

SYNOPSIS

In a labor case filed by private respondents security guards against

Veteran's Philippine Scout Security Agency and/or Sergio Jamila IV, the Labor
Arbiter held petitioner, impleaded as third party respondent, jointly and severally
liable with the security agency as complainants' indirect employer for payment of
wage differential, limited back wages and separation pay in the total amount of
P789,154.39. On April 16, 1993, Petitioner filed, together with its memorandum
on appeal and notice of appeal, a motion to reduce the appeal bond
accompanied by a surety bond in the amount of P50,000.00 contending that it
received a copy of the decision on April 6, 1993. Petitioner's appeal was,
however, dismissed by the NLRC for failure to file the appeal bond within the
reglementary period. Its subsequent motion for reconsideration was denied,
hence this recourse.
The Supreme Court held that although an appeal from a decision involving
a monetary award in labor cases may be perfected "only upon the posting of a
cash or surety bond," however, this has been relaxed in order to bring about the
immediate and appropriate resolution of controversies on the merits; that
petitioner's motion to reduce bond is a substantial compliance with the Labor
Code; that notwithstanding the service contract between petitioner and the
security agency, the former is still solidarily liable to the employees who were not
privy to said contract pursuant to Articles 107 and 109 of the Labor Code; that
the indirect employer's liability to the contractor's employees extends only to the
period during which they were working for the petitioner, and the fact that they
were reassigned to another principal necessarily ends such responsibility; and
that the solidary liability for payment of back wages and separation pay cannot
be assumed by the indirect employer where there is no evidence to show that the
indirect employer participated in the employee's illegal dismissal.
 SYLLABUS

1.LABOR AND SOCIAL LEGISLATION; LABOR DISPUTES; APPEALS;

PERFECTION THEREOF WITHIN THE REGLEMENTARY PERIOD AND IN
THE MANNER PRESCRIBED BY LAW, JURISDICTIONAL. — The perfection of
an appeal within the reglementary period in the manner prescribed by law is
jurisdictional, and noncompliance with such legal requirement is fatal and
effectively renders the judgment final and executory.  CTSDAI

2.ID.; ID.; ID.; GENERALLY, APPEAL OF DECISION INVOLVING

MONETARY AWARD PERFECTED ONLY UPON POSTING OF BOND. —
Indisputable is the legal doctrine that the appeal of a decision involving a
monetary award in labor cases may be perfected "only upon the posting or surety
bond." The lawmakers intended the posting of the bond to be an indispensable
requirement to perfect an employer's appeal.
3.ID.; ID.; ID.; ID.; EXCEPTIONS. — However, in a number of cases, this
Court has relaxed this requirement in order to bring about the immediate and
appropriate resolution of controversies on the merits. Some of these cases
include: "(a) counsel's reliance on the footnote of the notice of the decision of the
labor arbiter that the aggrieved party may appeal . . . within ten (10) working
days; (b) fundamental consideration of substantial justice; (c) prevention of
miscarriage of justice or of unjust enrichment, as where the tardy appeal is from
a decision granting separation pay which was already granted in an earlier final
decision; and (d) special circumstances of the case combined with its legal merits
or the amount and the issue involved."
4.ID.; ID.; MOTION TO REDUCE BOND, A SUBSTANTIAL
COMPLIANCE; CASE AT BAR. — Here, petitioner claims to have received the
Labor Arbiter's Decision on April 6, 1993. On April 16, 1993, it filed, together with
its memorandum on appeal and notice of appeal, a motion to reduce the appeal
bond accompanied by a surety bond for fifty thousand pesos issued by
Prudential Guarantee and Assurance, Inc. Ignoring petitioner's motion (to reduce
bond), Respondent Commission rendered its assailed Resolution dismissing the
appeal due to the late filing of the appeal bond. The solicitor general argues for
the affirmation of the assailed Resolution for the sole reason that the appeal
bond, even if it was filed on time, was defective, as it was not in an amount
"equivalent to the monetary award in the judgment appealed from." The Court
disagrees. We hold that petitioner's motion to reduce the bond is a substantial
compliance with the Labor Code. This holding is consistent with the norm that
letter-perfect rules must yield to the broader interest of substantial justice. 
STHAaD

5.ID.; ID.; DECISIONS IN LABOR CASES MUST BE MADE TO REST ON

INFORMED JUDGMENT RATHER THAN RIGID RULES. — Where a decision
may be made to rest on informed judgment rather than rigid rules, the equities of
the case must be accorded their due weight because labor determinations should
not only be "secundum rationem but also secundum caritatem."
6.REMEDIAL LAW; SPECIAL CIVIL ACTIONS; CERTIORARI; GRAVE
ABUSE OF DISCRETION; MANIFEST WHERE THE NLRC PREEMPTORILY
DISMISSED APPEAL AND IGNORED THE MOTION TO REDUCE APPEAL
BOND. — A judicious reading of the memorandum of appeal would have made it
evident to Respondent Commission that the recourse was meritorious.
Respondent Commission acted with grave abuse of discretion in peremptorily
dismissing the appeal without passing upon — in fact, ignoring — the motion to
reduce the appeal bond. We repeat: Considering the clear merits which
appear, res ipsa loquitur, in the appeal from the labor arbiter's Decision, and the
petitioner's substantial compliance with rules governing appeals, we hold that the
NLRC gravely abused its discretion in dismissing said appeal and in failing to
pass upon the grounds alleged in the Motion for Reconsideration.  AISHcD

7.LABOR AND SOCIAL LEGISLATION; LABOR STANDARDS ARE

CONSIDERED WRITTEN IN EVERY CONTRACT OF EMPLOYMENT;
LEGISLATIVE WAGE INCREASES ARE DEEMED AMENDMENTS TO
CONTRACTS. — Legally untenable, however, is the contention that petitioner is
not liable for any wage differential for the reason that it paid the employees in
accordance with the contract for security services which it had entered into with
the security agency. Notwithstanding the service contract between the petitioner
and the security agency, the former is still solidarily liable to the employees, who
were not privy to said contract, pursuant to the aforecited provisions of the Code.
Labor standard legislations are enacted to alleviate the plight of workers whose
wages barely meet the spiraling costs of their basic needs. They are considered
written in every contract, and stipulations in violation thereof are considered not
written. Similarly, legislated wage increases are deemed amendments to the
contract. Thus, employers cannot hide behind their contracts in order to evade
their or their contractors' or subcontractors' liability for noncompliance with the
statutory minimum wage.
8.ID.; PAYMENT OF WAGES; JOINT AND SEVERAL LIABILITY OF
EMPLOYER OR PRINCIPAL FOR WAGES OF EMPLOYEE; RATIONALE
BEHIND. — The joint and several liability of the employer or principal was
enacted to ensure compliance with the provisions of the Code, principally those
on statutory minimum wage. The contractor or subcontractor is made liable by
virtue of his or her status as a direct employer, and the principal as the indirect
employer of the contractor's employees. This liability facilitates, if not guarantees,
payment of the workers' compensation, thus, giving the workers ample protection
as mandated by the 1987 Constitution. This is not unduly burdensome to the
employer. Should the indirect employer be constrained to pay the workers, it can
recover whatever amount it had paid in accordance with the terms of the service
contract between itself and the contractor.  DCcHIS

9.ID.; ID.; CONTRACTOR OR SUBCONTRACTOR; INDIRECT

EMPLOYER NOT LIABLE FOR WAGE DIFFERENTIALS INCURRED WHILE
SECURITY GUARDS WERE ASSIGNED TO OTHER COMPANIES. — Fairness
likewise dictates that the petitioner should not, however, be held liable for wage
differentials incurred while the complainants were assigned to other companies.
Under these cited provisions of the Labor Code, should the contractor fail to pay
the wages of its employees in accordance with law, the indirect employer (the
petitioner in this case), is jointly and severally liable with the contractor, but such
responsibility should be understood to be limited to the extent of the work
performed under the contract, in the same manner and extent that he is liable to
the employees directly employed by him. This liability of petitioner covers the
payment of the workers' performance of any work, task, job or project. So long as
the work, task, job or project has been performed for petitioner's benefit or on its
behalf, the liability accrues for such period even if, later on, the employees are
eventually transferred or reassigned elsewhere.
10.ID.; ID.; SOLIDARY LIABILITY FOR PAYMENT OF BACKWAGES
AND SEPARATION PAY LIMITED TO EXTENT OF WORK PERFORMED
UNDER THE CONTRACT. — The solidary liability for payment of back wages
and separation pay is limited, under Article 106, "to the extent of the work
performed under the contract"; under Article 107, to "the performance of any
work, task, job or project"; and under Article 109, to "the extent of their civil
liability under this Chapter [on payment of wages]." These provisions cannot
apply to petitioner, considering that the complainants were no longer working for
or assigned to it when they were illegally dismissed. Furthermore, an order to pay
back wages and separation pay is invested with a punitive character, such that
an indirect employer should not be made liable without a finding that it had
committed or conspired in the illegal dismissal.

DECISION

PANGANIBAN, J  : p

Under the Labor Code, an employer is solidarily liable for legal wages due
security guards for the period of time they were assigned to it by its contracted
security agency. However, in the absence of proof that the employer itself
committed the acts constitutive of illegal dismissal or conspired with the security
agency in the performance of such acts, the employer shall not be liable for back
wages and/or separation pay arising as a consequence of such unlawful
termination. LLjur

The Case

These are the legal principles on which this Court bases its resolution of
this special civil action for certiorari, seeking the nullification of the April 28, 1994
Resolution and the July 12, 1994 Order of the National Labor Relations
Commission, which dismissed petitioner's appeal from the labor arbiter's.
Decision and denied its Motion for Reconsideration, respectively, in NLRC NCR
Case Nos. 00-05-02834-91, 00-08-04630-91, 00-07-03966-91, 00-09-05617-91,
00-07-03967-91, 00-07-04455-91, 00-08-05030-91, 00-11-06389-91, and 00-03-
01642-92.
On May 13, 1991, a complaint for illegal dismissal; underpayment of
wages; and for nonpayment of overtime pay, legal holiday pay, premium pay for
holiday and rest day, thirteenth month pay, cash bond deposit, unpaid wages and
damages was filed against Veterans Philippine Scout Security Agency and/or
Sergio Jamila IV (collectively referred to as the "security agency," for brevity).
Thereafter, petitioner was impleaded as a third-party respondent by the security
agency. In due course, Labor Arbiter Ricardo C. Nora rendered a consolidated
Decision dated March 26, 1993, which disposed as follows: 1
"IN VIEW OF ALL THE FOREGOING, respondents Veterans
Philippine Scout Security Agency, Sergio Jamila IV, and third-party
respondent Rosewood Processing, Inc. are hereby ordered to pay jointly
and severally complainants the following amounts, to wit:
1. Napoleon Mamon P126,411.10
2. Arsenio Gazzingan 128,639.71
3. Rodolfo Velasco 147,114.43
4. Armando Ballon 116,894.70
5. Jose L. Cabrera 133,047.81
6. Victor Aldeza 137,046,64

    ––––––––––

  TOTAL P789,154.39

    =========

representing their monetary benefits in the amount of SEVEN

HUNDRED EIGHTY NINE THOUSAND ONE HUNDRED FIFTY FOUR
PESOS AND 39/100 CENTAVOS (P789,154.39).
 Respondents are likewise ordered to pay attorney's fees in the
amount of P78,915.43 within ten (10) days from receipt of this Decision.
All other issues are hereby [d]ismissed for failure of the
complainants to fully substantiate their claims."
The appeal filed by petitioner was dismissed by the National Labor
Relations Commission 2 in its Resolution promulgated April 28, 1994, for failure
of the petitioner to file the required appeal bond within the reglementary
period. 3 Pertinent portions of the challenged Resolution are herewith quoted:
"It appears on record that [petitioner] received their copy of the
[labor arbiter's] decision on April 2, 1993 and subsequently filed a 'Notice
of Appeal with Memorandum of Appeal' on April 26, 1993, in violation of
Rule VI, Section 1, 3, and 6 of the 1990 New Rules of Procedure of the
NLRC . . .
xxx xxx xxx
Clearly, the appeal filed by the [petitioners] on April 12, 1993 was
not perfected within the reglementary period, and the decision dated
March 26, 1993 became final and executory as of April 23, 1993.
WHEREFORE, the appeal is hereby DISMISSED."
In its motion for reconsideration, petitioner contended that it received a
copy of the labor arbiter's Decision only on April 6, 1993, and that it filed on April
16, 1993 within the prescribed time a Notice of Appeal with a Memorandum on
Appeal, a Motion to Reduce Appeal Bond and a surety bond issued by Prudential
Guarantee and Assurance, Inc. in the amount of P50,000. 4 Though not opposed
by the complainants and the security agency, the arguments stated in the motion
were not taken up by Respondent Commission. Reconsideration was
nonetheless denied by Respondent Commission in its Order of July 12, 1994,
quoted below: 5
"Section 14, Rule VII of the NLRC New Rules of Procedure allows
[u]s to entertain a motion for reconsideration only on 'palpable or patent'
errors [w]e may have committed in [o]ur, disputed April 28, 1994
resolution.
There being no such assignment here, [petitioner's] motion for
reconsideration dated May 19, 1994 is hereby DENIED for lack of merit."
Hence, this recourse. 6
In a Resolution dated March 20, 1995, this Court issued a temporary
restraining order enjoining the respondents and their agents from implementing
and enforcing the assailed Resolution and Order until further notice. 7

The Facts
 Undisputed are the facts of this case, narrated by the labor arbiter as
follows: 
LLjur

"All the complainants were employed by the [security agency] as

security guards: Napoleon Mamon on October 7, 1989; Arsenio
Gazzingan on September 25, 1988; Rodolfo C. Velasco on January 5,
1987; Armando Ballon on June 28, 1990; Victor Aldeza on March 21,
1990; and Jose L. Cabrera [in] January 1988.
Napoleon Mamon started working for the [security agency] on
October 7, 1989 and was assigned as office guard for three (3) days
without any pay nor allowance as it was allegedly an on[-the-]job training
so there [was] no pay[.] On October 10, 1989, he was transferred to the
residence of Mr. Benito Ong with 12 hours duty a day receiving a salary
very much less than the minimum wage for eight (8) hours work until
February 3, 1990 when he received an order transferring him to
Rosewood Processing, Inc. effective that date . . . ; [a]t Rosewood
Processing, Inc., he was required to render also 12 hours duty every day
with a salary of P2,600.00/month. He was not given his pay for February
1 and 2 by the paymaster of [the, security agency] allegedly because the
payroll could not be located so after 3 to 4 times of going back and forth
to [the security agency's] office to get his salary[;] [after] . . . two (2) days
he gave up because he was already spending more than what he could
get thru transportation alone. On May 16, 1991, Rosewood Processing,
Inc. asked for the relief of Mamon and other guards at Rosewood
because they came to know that complainants filed a complaint for
underpayment on May 13, 1991 with the National Labor Relations
Commission[.] On May 18 to 19, 1991, [the security agency] assigned
him to their [m]ain [o]ffice. After that, complainant was floated until May
29, 1991 when he was assigned to Mead Johnson Philippines
Corporation. [A]t about a week later, [the security agency] received
summons on complainant's complaint for underpayment and he was
called to [the security agency's] office. When he reported, he was told to
sign a 'Quitclaim and Waiver['] by Lt. R. Rodriguez because according to
the latter, he [could] only get a measly sum from his complaint with the
NLRC and if he (complainant) [signed] the quitclaim and waiver he
[would] be retained at his present assignment which [was] giving quite a
good salary and other benefits but if he [did] not sign the quitclaim and
waiver, he [would] be relieved from his post and [would] no longer be
given any assignment. . . . He was given up to the end of July 1991 to
think it over. At the end of July 1991, h[e] was approached by the
Security in Charge A. Azuela and asked him to sign the quitclaim and
waiver and when he refused to sign, he was told that the following day
August 1, 1991, he [would have] no more assignment and should report
to their office. Thinking that it was only a joke, he reported the following
day to the detachment commander Mr. A. Yadao and he was told that
the main office . . . relieved him because he did not sign the quitclaim
and waiver. He reported to their office asking for an assignment but he
was told by R. Rodriguez that 'I no longer can be given an assignment
so I had better resign'. He went back several times to the office of the
[security agency] but every time the answer was the same[:] that he
better tender his resignation because he cannot be given any
assignment although respondent was recruiting new guards and posting
them.
Arsenio Gazzingan started to work for the [security agency] on
September 29, 1988. [Note: the introductory paragraph stated
September 25, 1988.] He was assigned to Purefoods Breeding Farm at
Calauan, Laguna and given a salary of P54.00 a day working eight (8)
hours. After three (3) months, he was given an examination and passed
the same. On December 26, 1988, he was given an increase and was
paid P64.00/day working eight (8) hours; [h]e remained at the same post
for 8 months and transferred to Purefoods Feed Mill at Sta. Rosa,
Laguna, with the same salary and the same tour of duty, 8 hours[.] After
four (4) months, he was transferred to Purefoods Grand Perry at Sta.
Rosa, Laguna, and after eleven (11) days on June 1989, he was
transferred to Rosewood Processing, Inc. at Meycauayan, Bulacan and
required to work for 12 hours at a salary of P94.00/day for one year. [In]
June 1990, he was assigned at Purefoods DELPAN [to] guard . . . a
barge loaded with corn and rendered 12 hours work/day with a salary of
only P148.00/day and after 24 days, he was floated for one month. He
reported to [the security agency's] office and was assigned to Purefoods
Breeder Farm in Canlubang rendering 8 hours work per day receiving
only P78.00/day. After 11 days, he asked to be transferred to Manila[.]
[B]ecause of the distance from his home . . . the transfer was approved
but instead of being transferred to Manila, he was assigned to Purefoods
B-F-4 in Batangas rendering 12 hours duty/day and receiving only
P148.00 per day until January 28, 1991[;] and again he requested for
transfer which was also approved by the [security agency's] office[,] but
since then he was told to come back again and again. [U]p to the
present he has not been given any assignment. Because of the fact that
his family [was] in danger of going hungry, he sought relief from the
NLRC-NCR-Arbitration Branch.
Rodolfo Velasco started working for the [security agency] on
January 5, 1987. He was assigned to PCI Bank Elcano, Tondo Branch,
as probationary, and [for] working 8 hours a day for 9 days he received
only P400.00. On January 16, 1987, he was assigned to [the security
agency's] headquarters up to January 31, 1987, working 12 hours a
day[; he] received only P650.00 for the 16 days. On September 1, 1988,
he was assigned to Imperial Synthetic Rubber Products rendering 12
hours duty per day until December 31, 1988 and was given a salary of
P1,600.00/month. He was later transferred to various posts like
Polypaper Products working 12 hours a day given a salary of P1,800.00
a month; Paramount Electrical, Inc. working 12 hours a day given
P1,100.00 for 15 days; Rosewood Processing, Inc., rendering 12 hours
duty per day receiving P2,200.00/month until May 16, 1991[;] Alen
Engineering rendering 12 hours duty/day receiving P1,100/month;
Purefoods Corporation on Delta II rendering 12 hours duty per day
received P4,200.00 a month. He was relieved on August 24 and his
salary for the period August 20 to 23 has not been paid by [the security
agency.] He was suspended for no cause at all.
Armando Ballon started as security guard with [the security
agency] July 1990 [Note: the introductory paragraph stated June 28,
1990] and was assigned to Purefoods Corporation in Marikina for five (5)
months and received a salary of P50.00 per day for 8 hours. He was
transferred to Rosewood Processing, Inc. on November 6, 1990
rendering 12 hours duty as [d]c [c]ommander and a salary of
P2,700.00/month including P200.00 officer's allowance until May 15,
1991. On May 16, 1991, he applied for sick leave on orders of his doctor
for 15 days but the HRM, Miss M. Andres[,] got angry and crumpled his
application for sick leave, that [was] why he was not able to forward it to
the SSS. After 15 days, he came back to the office of [the security
agency] asking for an assignment and he was told that he [was] already
terminated. Complainant found out that the reason why Miss Andres
crumpled his application for sick leave was because of the complaint he
previously filed and was dismissed for failure to appear. He then refiled
this case to seek redress from this Office.
Jose L. Cabrera started working for the [security agency] as
security guard January, 1988 and was assigned to Alencor Residence
rendering 12 hours duty per day and received a salary of P2,400.00 a
month for 3 months[.] [I]n May, 1988, he was transferred to E & L
Restaurant rendering 12 hours duty per day and receiv[ing] a salary of
P1,500.00 per month for 6 months[.] [I]n January, 1989, he was
transferred to Paramount rendering 12 hours duty per day receiving only
P1,800.00 per month for 6 months[.] [I]n July 1989, he was transferred to
Benito Ong['s] residence rendering 12 hours duty per day and receiving
a salary of P1,400.00 per month for 4 months[.] [I]n December, 1989, he
was transferred to Sea Trade International rendering . . . 12 hours duty
per day and receiving a salary of P1,900 per month for 6 months[.] [I]n
July, 1990, he was transferred to Holland Pacific & Paper Mills rendering
8 hours duty per day and receiving a salary of P2,400.00 per month until
September 1990[.] [In] October 1990, he was transferred to RMG
residence rendering 12 hours duty per day receiving a salary of
P2,200.00 per month for 3 months[.] [In] February 1991, he was
transferred to Purefoods Corporation at Mabini, Batangas rendering 12
hours duty per day with a salary of P3,600.00 per month for only one
month because he was hospitalized due to a stab wound inflicted by his
[d]etachment [c]ommander. When he was discharged from the hospital
 and after he was examined and declared 'fit to work' by the doctor, he
reported back to [the security agency's] office but was given the run-
around [and was told to] 'come back tomorrow[.]' [H]e [could] see that
[the agency was] posting new recruits. He then complained to this
Honorable Office to seek redress, hiring the services of a counsel.
Victor Aldeza started working for the [security agency] on March
21, 1990 and was assigned to Meridian Condominium, rendering 12
hours work per day and receiving a salary of P1,500.00 per month.
Although he knew that the salary was below minimum yet he persevered
because he had spent much to get this job and stayed on until October
15, 1990[.] On October 16, 1990, he was transferred to Rosewood
Processing, Inc., rendering 12 hours duty per day and receiving a salary
of P2,600.00 per month up to May 15, 1991[.] On the later part of May
1991, he was assigned to UPSSA (Sandoval Shipyard) rendering 12
hours duty per day receiving a salary of P3,200.00 per month. [Aldeza]
complained to [the security agency] about the salary but [the agency] did
not heed him; thus, he filed his complaint for underpayment[.] [The
agency] upon complainant's complaint for underpayment . . . , instead of
adjusting his salary to meet the minimum prescribed by law[,] relieved
him and left him floating[.] . . . When he complained of the treatment, he
was told to resign because he could no longer be given any assignment.
Because of this, complainant was forced to file another complaint for
illegal dismissal."

Labor Arbiter's Ruling

The labor arbiter noted the failure of the security agency to present
evidence to refute the complainants' allegation. Instead, it impleaded the
petitioner as third-party respondent, contending that its actions were primarily
caused by petitioner's noncompliance with its obligations under the contract for
security services, and the subsequent cancellation of the said contract.
The labor arbiter held petitioner jointly and severally liable with the security
agency as the complainants' indirect employer under Articles 106, 107 and 109
of the Labor Code, citing the case of Spartan Security & Detective Agency, Inc
vs. National Labor Relations Commission. 8
Although the security agency could lawfully place the complainants on
floating status for a period not exceeding six months, the act was "illegal"
because the former had issued a newspaper advertisement for new security
guards. Since the relation between the complainants and the agency was already
strained, the labor arbiter ordered the payment of separation pay in lieu of
reinstatement.
The award for wage differential, limited back wages and separation pay
contained the following details: LLjur
"1. Napoleon Mamon    
       

  Wage Differentials P45,959.02  

  Backwages 72,764.38  
  Separation Pay 7,687.70 P126,411.10

    –––––––––  
2. Arsenio-Gazzingan    
       

  Wage Differentials P24,855.76  

  Backwages 96,096.25  
  Separation Pay 7,687.70 P126,639.71

    –––––––––  
3. Rodolfo Velasco    
       

  Wage Differentials P66,393.58  

  Backwages 69,189.30  
  Separation Pay 11,531.55 P147,114.43

    –––––––––  
4. Armando Ballon    
       

  Wage Differentials P31,176.85  

  Backwages 81,874.00  
  Separation Pay 3,843.85 P116,894.70

    –––––––––  
5. Jose Cabrera    
       

  Wage Differentials P30,032.63  

  Backwages 91,483.63  
   Separation Pay 11,531.55 P133,047.81

    –––––––––  
6. Victor Aldeza    
       

  Wage Differentials P49,406.86  

  Backwages 83,795.93  
  Separation Pay 3,843.85 P137,046.64

    ––––––––– ––––––––––—

      P789,154.39"
      ==========

Ruling of Respondent Commission

As earlier stated, Respondent Commission dismissed petitioner's appeal,

because it was allegedly not perfected within the reglementary ten-day period.
Petitioner received a copy of the labor arbiter's Decision on April 2, 1993, and it
filed its Memorandum of Appeal on April 12, 1993. However, it submitted the
appeal bond on April 26, 1993, or twelve days after the expiration of the period
for appeal per Rule VI, Sections 1, 3 and 6 of the 1990 Rules of Procedure of the
National Labor Relations Commission. Thus, it ruled that the labor arbiter's
Decision became final and executory on April 13, 1993.
In the assailed Order, Respondent Commission denied reconsideration,
because petitioner allegedly failed to raise any palpable or patent error
committed by said commission.

Assignment of Errors

Petitioner imputes the following errors to Respondent Commission:

"Respondent NLRC committed grave abuse of discretion
amounting to lack of jurisdiction when it dismissed petitioner's appeal
despite the fact that the same was perfected within the reglementary
period provided by law.
Respondent NLRC committed grave abuse of discretion
amounting to lack of jurisdiction when it dismissed petitioner's appeal
despite the clearly meritorious grounds relied upon therein."
 Otherwise stated, the petition raises these two issues: first, whether the
appeal from the labor arbiter to the NLRC was perfected on time; and second,
whether petitioner is solidarily liable with the security agency for the payment of
back wages, wage differential and separation pay.

The Court's Ruling

The petition is impressed with some merit and deserves partial grant.
First Issue: Substantial Compliance with the
Appeal Bond Requirement
The perfection of an appeal within the reglementary period and in the
manner prescribed by law is jurisdictional, and noncompliance with such legal
requirement is fatal and effectively renders the judgment final and
executory. 9 The Labor Code provides:
"ART. 223.Appeal. — Decisions, awards or orders of the Labor
Arbiter are final and executory unless appealed to the Commission by
any or both parties within ten (10) calendar days from receipt of such
decisions, awards, or orders. . . .
xxx xxx xxx
In case of a judgment involving a monetary award, an appeal by
the employer may be perfected only upon the posting of a cash or surety
bond issued by a reputable bonding company duly accredited by the
Commission in the amount equivalent to the monetary award in the
judgment appealed from.
xxx xxx xxx"

Indisputable is the legal doctrine that the appeal of a decision involving a

monetary award in labor cases may be perfected "only upon the posting of a
cash or surety bond." 10 The lawmakers intended the posting of the bond to be
an indispensable requirement to perfect an employer's appeal. 11

However, in a number of cases, this Court has relaxed this requirement

in order to bring about the immediate and appropriate resolution of
controversies on the merits. 12 Some of these cases include: "(a) counsel's
reliance on the footnote of the notice of the decision of the labor arbiter that
the aggrieved party may appeal . . . within ten (10) working days; (b)
fundamental consideration of substantial justice; (c) prevention of miscarriage
of justice or of unjust enrichment, as where the tardy appeal is from a decision
granting separation pay which was already granted in an earlier final decision;
and (d) special circumstances of the case combined with its legal merits or the
amount and the issue involved." 13

In Quiambao vs. National Labor Relations Commission, 14 this Court

ruled that a relaxation of the appeal bond requirement could be justified by
substantial compliance with the rule.

In Globe General Services and Security Agency vs. National Labor

Relations Commission, 15 the Court observed that the NLRC, in actual
practice, allows the reduction of the appeal bond upon motion of the appellant
and on meritorious grounds; hence, petitioners in that case should have filed
a motion to reduce the bond within the reglementary period for appeal.

That is the exact situation in the case at bar. Here, petitioner claims to
have received the labor arbiter's Decision on April 6, 1993. 16 On April 16,
1993, it filed, together with its memorandum on appeal 17 and notice of
appeal, a motion to reduce the appeal bond 18 accompanied by a surety bond
for fifty thousand pesos issued by Prudential Guarantee and Assurance,
Inc. 19 Ignoring petitioner's motion (to reduce bond), Respondent Commission
rendered its assailed Resolution dismissing the appeal due to the late filing of
the appeal bond.

The solicitor general argues for the affirmation of the assailed Resolution
for the sole reason that the appeal bond, even if it was filed on time, was
defective, as it was not in an amount "equivalent to the monetary award in the
judgment appealed from." The Court disagrees.

We hold that petitioner's motion to reduce the bond is a substantial

compliance with the Labor Code. This holding is consistent with the norm that
letter-perfect rules must yield to the broader interest of substantial justice. 20

Where a decision may be made to rest on informed judgment rather than

rigid rules, the equities of the case must be accorded their due weight
because labor determinations should not only be "secundum rationem but
also secundum caritatem." 21 A judicious reading of the memorandum of
appeal would have made it evident to Respondent Commission that the
recourse was meritorious. Respondent Commission acted with grave abuse of
discretion in peremptorily dismissing the appeal without passing upon — in
fact, ignoring — the motion to reduce the appeal bond.

We repeat: Considering the clear merits which appear, res ipsa loquitur,

in the appeal from the labor arbiter's Decision, and the petitioner's substantial
compliance with rules governing appeals, we hold that the NLRC gravely
abused its discretion in dismissing said appeal and in failing to pass upon the
grounds alleged in the Motion for Reconsideration.

Second Issue: Liability of an Indirect Employer

The overriding premise in the labor arbiter's Decision holding the

security agency and the petitioner liable was that said parties offered no
evidence refuting or rebutting the complainants' computation of their monetary
claims. The arbiter ruled that petitioner was liable in solidum with the agency
for salary differentials based on Articles 106, 107 and 109 of the Labor Code
which hold an employer jointly and severally liable with its contractor or
subcontractor, as if it is the direct employer. We quote said provisions below:

"ART. 106.Contractor or subcontractor. — Whenever an employer

enters into a contract with another person for the performance of the
former's work, the employees of the contractor and of the latter's
subcontractor, if any, shall be paid in accordance with the provisions of
this Code.
In the event that the contractor or subcontractor fails to pay the
wages of his employees in accordance with this Code, the employer
shall be jointly and severally liable with his contractor or subcontractor to
such employees to the extent of the work performed under the contract,
in the same manner and extent that he is liable to employees directly
employed by him.
xxx xxx xxx
"ART. 107.Indirect employer. — The provisions of the
immediately preceding Article shall likewise apply to any person,
partnership, association or corporation which, not being an employer,
contracts with an independent contractor for the performance of any
work, task, job or project.
"ART. 109.Solidary liability. — The provisions of existing laws to
the contrary notwithstanding, every employer or indirect employer shall
be held responsible with his contractor or subcontractor for any violation
of any provision of this Code. For purposes of determining the extent of
their civil liability under this Chapter, they shall be considered as direct
employers."

Upon the other hand, back wages and separation pay were awarded

because the complainants were constructively and illegally dismissed by the
security agency, which placed them on floating status and at the same time
gave assignments to newly hired security guards. Noting that the relationship
between the security agency and the complainants was already strained, the
labor arbiter granted separation pay in lieu of reinstatement.

In its memorandum of appeal, petitioner controverts its liability for the

mentioned monetary awards on the following grounds: 22

"A.Complainant Jose Cabrera never rendered security services to

[petitioner] or was [n]ever assigned as security guard [for] the
latter's business establishment;
B.Complainants Napoleon Mamon, Arsenio Gazzingan, Rodolfo
Velasco, Armando Ballon and Victor Aldeza rendered security
services to [petitioner] for a fixed period and were thereafter
assigned to other entities or establishments or were floated or
recalled to the headquarters of Veterans; and,
C.The relationship between [petitioner] and Veterans was governed by a
Contract for Guard Services under which [petitioner] dutifully paid
a contract price of P3,500.00 a month for 12 hour duty per guard
and later increased to P4,250.00 a month for 12 hour duty per
guard which are within the prevailing rates in the industry and in
accordance with labor standard laws."

The first two grounds are meritorious. Legally untenable, however, is the
contention that petitioner is not liable for any wage differential for the reason
that it paid the employees in accordance with the contract for security services
which it had entered into with the security agency. Notwithstanding the service
contract between the petitioner and the security agency, the former is still
solidarily liable to the employees, who were not privy to said contract,
pursuant to the aforecited provisions of the Code. Labor standard legislations
are enacted to alleviate the plight of workers whose wages barely meet the
spiraling costs of their basic needs. They are considered written in every
contract, and stipulations in violation thereof are considered not written.
Similarly, legislated wage increases are deemed amendments to the contract.
Thus, employers cannot hide behind their contracts in order to evade their or
their contractors' or subcontractors' liability for noncompliance with the
statutory minimum wage.

The joint and several liability of the employer or principal was enacted to
ensure compliance with the provisions of the Code, principally those on
statutory minimum wage. The contractor or subcontractor is made liable by
virtue of his or her status as a direct employer, and the principal as the
indirect employer of the contractor's employees. This liability facilitates, if not
guarantees, payment of the workers' compensation, thus, giving the workers
ample protection as mandated by the 1987 Constitution. 23 This is not unduly
burdensome to the employer. Should the indirect employer be constrained to
pay the workers, it can recover whatever amount it had paid in accordance
with the terms of the service contract between itself and the contractor. 24

Withal, fairness likewise dictates that the petitioner should not, however,
be held liable for wage differentials incurred while the complainants were
assigned to other companies. Under these cited provisions of the Labor Code,
should the contractor fail to pay the wages of its employees in accordance
with law, the indirect employer (the petitioner in this case), is jointly and
severally liable with the contractor, but such responsibility should be
understood to be limited to the extent of the work performed under the
contract, in the same manner and extent that he is liable to the employees
directly employed by him. This liability of petitioner covers the payment of the
workers' performance of any work, task, job or project. So long as the work,
task, job or project has been performed for petitioner's benefit or on its behalf,
the liability accrues for such period even if, later on, the employees are
eventually transferred or reassigned elsewhere.

We repeat: The indirect employer's liability to the contractor's employees

extends only to the period during which they were working for the petitioner,
and the fact that they were reassigned to another principal necessarily ends
such responsibility. The principal is made liable to his indirect employees,
because it can protect itself from irresponsible contractors by withholding such
sums and paying them directly to the employees or by requiring a bond from
the contractor or subcontractor for this purpose.

Similarly, the solidary liability for payment of back wages and separation
pay is limited, under Article 106, "to the extent of the work performed under
the contract"; under Article 107, to "the performance of any work, task, job or
project"; and under Article 109, to "the extent of their civil liability under this
Chapter [on payment of wages]."

These provisions cannot apply to petitioner, considering that the

complainants were no longer working for or assigned to it when they were
illegally dismissed. Furthermore, an order to pay back wages and separation
pay is invested with a punitive character, such that an indirect employer
should not be made liable without a finding that it had committed or conspired
in the illegal dismissal. 
LLjur

The liability arising from an illegal dismissal is unlike an order to pay the
statutory minimum wage, because the workers' right to such wage is derived
from law. The proposition that payment of back wages and separation pay
should be covered by Article 109, which holds an indirect employer solidarily
responsible with his contractor or subcontractor for "any violation of any
provision of this Code," would have been tenable if there were proof — there
was none in this case — that the principal/employer had conspired with the
contractor in the acts giving rise to the illegal dismissal.

With the foregoing discussion in mind, we now take up in detail the

petitioner's liability to each of the complainants.

Case No. NCR-00-08-04630-91

Mamon worked for petitioner for a period of a little more than one year
beginning February 3, 1990 until May 16, 1991. Inasmuch as petitioner was
his indirect employer during such time, it should thus be severally liable for
wage differential from the time of his employment until his relief from duty. He
was relieved upon the request of petitioner, after it had learned of the
complaint for underpayment of wages filed by Mamon and several other
security guards.

However, this was not a dismissal from work because Mamon was still
working for the security agency and was immediately assigned, on May 29,
1991, to its other client, Mead Johnson Philippines. His dismissal came about
later, when he refused to sign a quitclaim and waiver in favor of the security
agency. Thus, he was illegally dismissed by the agency when he was no
longer employed by petitioner, which cannot thus be held liable for back
wages and separation pay in his case.

"Napoleon Mamon . . . received an order transferring him to

Rosewood Processing, Inc. effective . . . February 3, 1990; . . . On May
16, 1991, Rosewood Processing, Inc. asked for the relief of Mamon and
other guards at Rosewood because they came to know that
complainants filed a complaint for underpayment on May 13, 1991 with
the National Labor Relations Commission[.] . . . After that, complainant
was floated until May 29, 1991 when he was assigned to Mead Johnson
Philippines Corporation. . . . [A] week later, [the security agency]
received summons on complainant's complaint for underpayment and he
was called to [the security agency] office. When he reported, he was told
to sign a 'Quitclaim and Waiver['] by Lt. R. Rodriguez . . . and . . . if he
[did] not sign the quitclaim and waiver, he [would] be relieved from his
post and [would] no longer be given any assignment. . . At the end of
July 1991, he was approached by the Security in Charge, A. Azuela, . . .
[for him] to sign the quitclaim and waiver[,] and when he refused to sign,
he was told that . . . he ha[d] no more assignment and should report to
their office. . . [H]e reported the following day to the detachment
commander, Mr. A. Yadao and he was told that the main office ha[d]
relieved him . . . He reported to their office asking for an assignment but
 he was told by R. Rodriguez that 'I no longer can be given an
assignment so I had better resign'. He went back several times to the
office of the [security agency] but every time the answer was the same . .
. although respondent was recruiting new guards and posting them." 25

Case No. NCR-00-07-03966-91

Gazzingan was assigned to petitioner as a security guard for a period of

one year. For said period, petitioner is solidarily liable with the agency for
underpayment of wages based on Articles 106, 107 and 109 of the Code.
"Arsenio Gazzingan . . . after eleven (11) days on June 1989, . . .
was transferred to Rosewood Processing, Inc. . . [I]n June 1990, he was
assigned at Purefoods DELPAN . . . After 11 days, he asked to be
transferred to Manila because of the distance from his home and the
transfer was approved but instead of being transferred to Manila, he was
assigned to Purefoods B-F-4 in Batangas . . . again he requested for
transfer which was also approved by the [security agency] office but
since then he was told to come back again and again and up to the
present he has not been given any assignment. . . . " 26
His dismissal cannot be blamed on the petitioner. Like Mamon, Gazzingan
had already been assigned to another client of the agency when he was illegally
dismissed. Thus, Rosewood cannot be held liable, jointly and severally with the
agency, for back wages and separation pay.

Case No. NCR-00-07-03967-91

Rodolfo Velasco was assigned to petitioner from December 31, 1988 until
May 16, 1991. Thus, petitioner is solidarily liable for wage differentials during
such period. Petitioner is not, however, liable for back wages and separation pay,
because Velasco was no longer working for petitioner at the time of his illegal
dismissal.
"Rodolfo Velasco started working for the [security agency] on
January 5, 1987. . . [On] December 31, 1988 . . . he was . . . transferred
to various posts like . . . Rosewood Processing, Inc., . . . until May 16,
1991 . . . He was relieved on August 24 and his salary for the period
August 20 to 23 has not been paid by [the security agency]; [h]e was
suspended for no cause at all." 27

Case No. NCR-00-07-0445-91

Petitioner was the indirect employer of Ballon during the period beginning
November 6, 1990 until May 15, 1991; thus, it is liable for wage differentials for
said period. However, it is not liable for back wages and separation pay, as there
was no evidence presented to show that it participated in Ballon's illegal
dismissal.
". . . [H]e [Armando Ballon] was transferred to Rosewood
Processing, Inc. on November 6, 1990 rendering 12 hours duty as
[d]etachment [c]ommander and received a salary of P2,700.00/month
including P200.00 officer's allowance until May 15, 1991. On May 16,
1991, he applied for sick leave on orders of his doctor for 15 days but
the HRM, Miss M. Andres[,] got angry and crumpled his application for
sick leave that is why he was not able to forward it to the SSS. After 15
days, he came back to the office of [the security agency] asking for an
assignment and he was told that he [was] already terminated.
Complainant found out that the reason why Miss Andres crumpled his
application for sick leave was because of the complaint he previously
filed and was dismissed for failure to appear. He then refiled this case to
seek redress from this Office." 28

Case No. NCR-00-08-05030-91

Petitioner is liable for wage differentials in favor of Aldeza during the period
he worked with petitioner, that is, October 16, 1990 until May 15, 1991.
". . . On October 16, 1990, he [Aldeza] was transferred to
Rosewood Processing, Inc., . . . up to May 15, 1991[.] On the later part
of May 1991, he was assigned to UPSSA (Sandoval Shipyard) . . .
Complainant [sic] complained to [the security agency] about the salary
but [the security agency] did not heed him; thus, he filed his complaint
for underpayment[.] [The security agency] upon complainant's complaint
for underpayment reacted . . . , instead of adjusting his salary to meet
the minimum prescribed by law[,] relieved him and left him floating[;] and
when he complained of the treatment, he was told to resign because he
could no longer be given any assignment. Because of this, complainant
was forced to file another complaint for illegal dismissal." 29
The cause of Aldeza's illegal dismissal is imputable, not to petitioner, but
solely to the security agency. In Aldeza's case, the solidary liability for back
wages and separation pay arising from Articles 106, 107 and 109 of the Code
has no application.

Case No. NCR-00-09-05617-91

Cabrera was an employee of the security agency, but he never rendered

security services to petitioner. This fact is evident in the labor arbiter's findings:
"Jose L. Cabrera started working for the [security agency] as [a]
security guard on January, 1988 and was assigned to Alencor
Residence . . . [I]n May, 1988, he was transferred to E & L
 Restaurant . . . [.] [I]n January, 1989, he was transferred to Paramount . .
. [.] [I]n July 1989, he was transferred to Benito Ong['s] residence . . . [.]
[I]n December, 1989, he was transferred to Sea Trade International . . .
[.] [I]n July, 1990, he was transferred to Holland Pacific & Paper Mills . . .
[.] [I]n October 1990, he was transferred to RMG [R]esidence . . . [.] [I]n
February 1991, he was transferred to Purefoods Corporation at Mabini,
Batangas . . . When he was discharged from the hospital and after he
was examined and declared 'fit to work' by the doctor, he reported back
to [the security agency] office but was given the run-around [and was
told to] 'come back tomorrow[,]' although he [could] see that [it was)
posting new recruits. He then complained to this Honorable Office to
seek redress, hiring the services of a counsel." 30
Hence, petitioner is not liable to Cabrera for anything.
In all these cases, however, the liability of the security agency is without
question, as it did not appeal from the Decisions of the labor arbiter and
Respondent Commission.
WHEREFORE, the petition is partially GRANTED. The assailed Decision is
hereby MODIFIED, such that petitioner, with the security agency, is solidarily
liable to PAY the complainants only wage differentials during the period that the
complainants were actually under its employ, as above detailed. Petitioner is
EXONERATED from the payment of back wages and separation pay.
The temporary restraining order issued earlier is LIFTED, but the petitioner
is deemed liable only for the aforementioned wage differentials, which
Respondent Commission is required to RECOMPUTE within fifteen days from
the finality of this Decision. No costs.
SO ORDERED.  LLjur

 (Rosewood Processing, Inc. v. National Labor Relations Commission, G.R.

|||

Nos. 116476-84, [May 21, 1998], 352 PHIL 1013-1040)

G.R. No. 153859. December 11, 2003.]

FILIPINAS (Pre-fabricated Bldg.) SYSTEMS "FILSYSTEMS,"

INC. and FELIPE A. CRUZ, JR., petitioners, vs. NATIONAL
LABOR RELATIONS COMMISSION and CRESENCIANO
BEBANCO, JUANITO R. BENZON, REY NUALLA, BONIFACIO
TORRES, ERNESTO SINCONEQUE and EMILIO
ANEANO, respondents.
 (Filipinas Systems Inc. v. National Labor Relations Commission, G.R. No.
|||

153859, [December 11, 2003], 463 PHIL 797-813)

The facts reveal that a complaint for illegal dismissal and monetary claims
for service incentive leave, 13th month pay and night shift differential was filed by
respondents against petitioners before the National Labor Relations
Commission. 1 The complaint was assigned to Labor Arbiter Donato G. Quinto,
Jr. who ordered the parties to file their position paper. Respondents complied,
but not the petitioners despite several warnings and time extensions. The
inaction was construed as a waiver by petitioners of their right to present
evidence. 2
The Labor Arbiter decided the complaint on the merit and ruled in favor of
respondents. He sustained their claim of illegal dismissal as petitioners failed to
adduce contrary evidence. Petitioners were ordered to reinstate respondents.
The monetary claims of the respondents were likewise granted. 3
Petitioners appealed to the National Labor Relations Commission. For the
first time, they submitted evidence that respondents were project employees and
that their dismissal was due to the discontinuation of the Jaka Tower I project
where they were assigned. Respondents, however, assailed the jurisdiction of
the NLRC over the appeal for failure of the petitioners to file the appeal bond
within the ten (10)-day reglementary period. They further contended that it was
too late for petitioners to present evidence in the NLRC.
The NLRC nevertheless assumed jurisdiction over the appeal. Due to the
evidence presented by petitioners on the issue of illegal dismissal, it remanded
the case to the Labor Arbiter for further proceedings. 4 Respondents' motion for
reconsideration was denied. 5
Respondents then repaired to the Court of Appeals on a Petition
for Certiorari. The appellate court ruled that the NLRC did not have jurisdiction
over the appeal since the appeal bond of the petitioners was filed out of time. It
reinstated the decision of the Labor Arbiter. 6 Petitioners' motion for
reconsideration proved futile.
Hence this petition where petitioners raise the following issues:
1. Whether or not the Court of Appeals erred and committed
grave abuse of discretion in finding and ruling that the NLRC has not
acquired jurisdiction on the appeal of the petitioners for submitting an
appeal bond seven (7) days beyond the ten (10)-day reglamentary (sic)
period in perfecting an appeal;
 2. Whether or not the Court of Appeals erred and committed
grave abuse of discretion in finding and ruling that:
"The remand of the case to the Labor Arbiter due to the
conflicting claims of the parties, comes as a surprise to us. As a
quasi-judicial agency vested with jurisdiction to resolve labor
disputes, it is but natural for the NLRC to encounter conflicting
claims while discharging its mandate. To insist on a policy of
remanding a case to the Labor Arbiter each time conflicting claims
arise in a case would be an abdication of duty by the NLRC as
conflicts are inherent and integral in all disputes, whether labor or
otherwise.

xxx xxx xxx"

3. Whether or not the Court a quo erred and committed grave

abuse of discretion in giving due course to the private respondent's
petition for certiorari under Rule 65 of the 1997 Rules on Civil
Procedure; and in annulling and setting aside the Resolutions (of) the
NLRC, and reinstating the Decision of the Labor Arbiter ordering the
reinstatement of the private respondents, with full backwages, and
monetary awards for 13th month pay and Service Incentive Leave pay. 7
We affirm. The Labor Code provides a ten (10)-day period from receipt of
the decision of the Arbiter for the filing of an appeal together with an appeal bond
if the decision involves a monetary award in favor of the employees, viz:
ART. 223. Appeal. — Decisions, awards, or orders of the Labor
Arbiter are final and executory unless appealed to the Commission by
any or both parties within ten (10) calendar days from receipt of such
decisions, awards, or orders. . . .
In case of a judgment involving a monetary award, an appeal by
the employer may be perfected only upon the posting of a cash or
surety bond issued by a reputable bonding company duly accredited by
the Commission in the amount equivalent to the monetary award in the
judgment appealed from.
xxx xxx xxx. (italics supplied)
The NLRC Rules of Procedure 8 likewise require the appeal and the
appeal bond to be filed within the ten (10)-day reglementary period:
Section 1. Periods of Appeal. — Decisions, awards, or orders of
the Labor Arbiter and the POEA Administrator shall be final and
executory unless appealed to the Commission by any or both parties
within ten (10) calendar days from receipt of such decisions, awards, or
orders of the Labor Arbiter or of the Administrator, and in case of a
decision or of the Regional Director or his duly authorized Hearing
 Officer within five (5) calendar days from receipt of such decisions,
awards or orders. If the 10th or 5th day, as the case may be, falls on a
Saturday, Sunday or a holiday, the last day to perfect the appeal shall be
the next working day.
xxx xxx xxx
Section 3. Requisites for Perfection of Appeal. — (a) The appeal
shall be filed within the reglementary period as provided in Section 1 of
this Rule; shall be under oath with proof of payment of the required
appeal fee and the posting of a cash surety bond as provided in Section
5 of this Rule (which provides how much and where the appeal fee is to
be paid); shall be accompanied by a memorandum of appeal which shall
state the grounds relied upon and the arguments in support thereof; the
relief prayed for; and a statement of the date when the appellant
received the appealed decision, order or award and proof of service on
the other party of such appeal.
A mere notice of appeal without complying with the other requisite
aforestated shall not stop the running of the period for perfecting an
appeal.
xxx xxx xxx
Section 7. No Extension of Period. — No motion or request for
extension of the period within which to perfect an appeal shall be
allowed.
 
xxx xxx xxx
We have consistently ruled that payment of the appeal bond is a
jurisdictional requisite for the perfection of an appeal to the NLRC. 9 It is only in
rare instances that the court relaxes the rule upon a showing of substantial
compliance with it and to prevent patent injustice.
In the case at bar, petitioners alleged that they received a copy of the
Arbiter's decision on October 31, 1998. 10 Their memorandum of appeal was
dated November 9, 1998, but their appeal bond to stay execution of the decision
was executed only on November 17, 1998. 11 The records show no partial
payment of the bond was made during the reglementary period nor was there
any explanation for its late filing. Given these facts, the late filing of the bond
divested the NLRC of its jurisdiction to entertain petitioners' appeal.
Likewise, we cannot countenance the late submission of petitioners'
evidence with the NLRC. Petitioners should have adduced their evidence on the
issue of illegal dismissal before the Labor Arbiter. They failed to do so despite the
opportunities given to them by the Arbiter. It was only when an adverse decision
was rendered against them by the Arbiter that they offered to submit their
evidence before the NLRC refuting respondents' complaint of illegal dismissal.
Such a practice cannot be tolerated for it will defeat the speedy administration of
justice involving our poor workers. Moreover, it smacks of unfairness.  CAHaST

Yet, this is not all. Petitioners likewise ran roughshod of the procedural
rules of the appellate court. Respondents' comment alleges that the appellate
court already declared its judgment final and executory. An entry of judgment
was made after petitioners' motion for reconsideration of the appellate court's
decision was denied on October 31, 2001 and no petition was filed before this
Court. Atty. Rodolfo P. Orticio, however, moved for cancellation of the entry of
judgment on the ground that he is the new counsel of the petitioners and that he
received a copy of the denial of their motion for reconsideration only on June 19,
2002. He contended that his request for cancellation was filed within the
allowable period. In a resolution dated August 20, 2002 denying the request, the
Court of Appeals ruled that:
From the records, it appears that when the decision and
resolution denying the Motion for Reconsideration dated 31 October
2001 were received, Atty. Orticio was not yet the counsel for private
respondent. In fact, he filed his notice of appearance on 23 November
2001 after receipt on 9 November 2001 by private respondent's former
counsel, Atty. Louis Acosta, of the resolution denying the motion for
reconsideration. A judgment becomes final provided there was proper
service of notice thereof. In this case, the records clearly show there was
such proper service upon private respondent's former counsel, Atty.
Louis Acosta. Therefore, the decision of 2 April 2001 did become final
and executory, leaving us no more discretion to recall the entry of
judgment. 12

It is thus contended by respondents that the petition at bar should not be

allowed as the decision of the appellate court has already become final.

Again, we agree. Petitioners should have filed the present petition within
fifteen days under Rule 45 of the Rules of Court, viz:
SECTION 1.  Filing of petition with Supreme Court. — A party
desiring to appeal by certiorari from a judgment or final order or
resolution of the Court of Appeals, the Sandiganbayan, the Regional
Trial Court or other courts whenever authorized by law, may file with the
Supreme Court a verified petition for review on certiorari. The petition
shall raise only questions of law which must be distinctly set forth.
SECTION 2.  Time for filing. — The petition shall be filed within
fifteen (15) days from notice of the judgment or final order or resolution
appealed from, or of the denial of the petitioner's motion for new trial or
reconsideration filed in due time after notice of the judgment. . . . .
 Petitioners received a copy of the denial of their motion for reconsideration
of the Court of Appeals' decision on November 9, 2001. They filed an extension
of time to file the petition at bar on June 16, 2002, alleging that they have a new
counsel. We note, however, that petitioners obtained the services of present
counsel on November 23, 2001. Thus, there was ample time for their counsel to
appeal to this Court the adverse ruling of the appellate court. The appeal was not
seasonably made by said counsel and such procedural lapse is binding on
petitioners.
IN VIEW WHEREOF, the petition is dismissed. The decision of the Labor
Arbiter is reinstated with the modification that if reinstatement of respondents is
not feasible, they should be paid separation pay in accordance with law.
SO ORDERED.
 (Filipinas Systems Inc. v. National Labor Relations Commission, G.R. No.
|||

153859, [December 11, 2003], 463 PHIL 797-813)

G.R. No. 150147. January 20, 2004.]

LYDIA BUENAOBRA, JOSIELYN FIEL, MARGIE MADRID,

ROWENA MIRANDA, JUVY ENDAYA, JUDY CARONAN,
JOSEPHINE BARTOLOME, LITA MACALINAO, MARLITA
AMBIL, RIZA AMBIL, ANENCIA RECANA, LORENA REYES,
JULIO BALAGTAS, SALVACION FELISMENA, GINA SINLAO,
MARITA CHAVEZ, JIMENA DRADA, YOLANDA ROLDAN,
RAFAELA OLICIA, ANGELEO FUENTES, EUFROCINA
ALMERA, FELICISIMA DE GUZMAN, ADELINA CALIM,
SUSANITA SULAPAS, LOLITA MALICDEM, TERESITA
BORLAZA, ESTER OVERIO, IMELDA AGUIRRE, MARIBEL
BELTRAN, MYLENE TAMAYO, ANNIE GREGORIO, TERESA
CLARINO, TERESA VILLANUEVA, MARIETTA ARCAYA,
MILAGROS DAGDAGAN, PAULINO PREALDE, MONINA
VALLEJO, RITA MAGSINO, SOLIDAD LABAY, MARIA
BINARAO, MELCHORA DELA CRUZ, SUSAN BITAS, EMELY
CAYETANO, EMILY DELA CRUZ, ZENAIDA SALAS, BITUIN
VALDEZ, AFRICA GUEVARRA, NELIA MORALES, ELOISA
REYES, AIDA CAYETANO, BENITA CAMPOSANO, ADELIA
IGNACIO, NENITA SARCIA, VIOLETA RONCAL, DOROTEA
ALASKA, BLISELDA GALONGAN, SHIRLEY JOCSON,
MARITES VELOZ, ROGELIO CAPUZ, MARDIOLINA ALIOC,
MARIETTA MADRID, LOURDES MERCADO, ARACELLY
CERDENOLA, REMEDIOS TAGNONG, MARISSA SANTOS,
JOSEFINA CANALDA, ZENAIDA DAMANDANTE, CONCHITA
BELARMINO, MARIVIC TRINIDAD, MARGARITA GUMBAN,
ANGELES FERNANDEZ, MARIA BERNAL, MORALINDA
DUARTE, IMELDA TUNGOL, ALONA INNOCENCIO, MA.
TERESA CRUZ, ANALIZA GABRIEL, MELODIEN
CARANDANG, CRESENCIA ACEBO, MARILYN CASIM,
HERMINIA PINEDA, NORIE TORINO, ERLINDA TADEO,
CECILIA LLAVORE, ANA GINA GALMAN, IMELDA SALARDA,
LUISA SAROL, LOLITA MALICSE, AILEEN PAPANIO, EDITHA
GANAL, RESTIE VISTAL, LUCELYN QUISOY, ESTELA PABIO
BRIONES, AUREA TUBIS, SAMUEL MALICSE, AURORA
MISSION, ANALYN CALICA, LEILANI ALEJAGA, LILIA
BRIZUELA, ROSITA FACTOR, MERCEDES MENDOZA,
WARLITO COLOMA, PERLEEN MUI, JOSEPHINE BALDRES,
ELENA MAGDANGAL, IRMA BENGCO, CRISTITA GERALDEZ,
ROMEO PANDO, ESTRELLITA ZILMAR, ANGELITA SANDIG,
NENITA LARIOSA, MARITA PANTI, AURORA HERNANDEZ,
DINNA SILVA, EVANGELINE CASIM, LUISA SOLAYAO,
ANNABELLE SY, MARINA REBLENCA, MARITESS
GERANDOY, ELENA AGUDA, PERCY GARCIA, GERARDO
TAPIT, AMADOR HADE, MYRA BORJA, ELVIRA ALBAY,
LELIOSA MORANO, VERONICA GUINDAY, JULIETA
ALMAYDA, VILMA SALDO, MAY ANN REPAYO, GLENDA
SARAO, NELLY CARAGA, JOSEPHINE TAQUIQUI, TRINIDAD
BARROCA, DULCE ENDAYA, RIZA TADLIP, NENITA
LAGAMAYO, EUFRENCINA ROLDAN, ELENA VELASQUEZ,
MARIVIC DEPANTI, MONINA LOCSIN, ANA RAMOS, ANICIA
LEUTIEJA, JOSEFINA MANUEL, AMALIA DAEP, JULIE
MANGANAAN, ROWENA ANYAYA, LUNINGNING ANYAYA,
CARMENCITA ANYAYA, ROWENA FIEL, VENAMEL BEA, NIDA
PABLO, LOLITA BLANCO, ROSEMARIE MORALES,
NATIVIDAD CANETE, CORAZON GOROSPE, MADONNA
RAGONOT, GEMMA DACAL, and CLARITA
MENDOZA, petitioners, vs. LIM KING GUAN, JOHNNY LIM,
NGO CHAP, CRISTINA NGO, GILBERTO LIM, CHENG SEN
WANG, HUNG PANG CHING, CHEN HSIU TSUNG as corporate
officers of UNIX INTERNATIONAL EXPORT CORPORATION,
and CHEN HSIU TSUNG, LIM KING GUAN, HUNG PANG
CHING, WANG CHENG SEN, JOHNNY LIM, GILBERTO LIM,
NGO CHIAP, CRISTINA NGO, KATLEEN LIM, MARIE SOLEDAD
CLEMENTE, ROSALINA N. LO, KIM PO GONZALES, and
 AMELIA NGA as stockholders of record of UNIX
INTERNATIONAL EXPORT CORPORATION, and FUJI ZIPPER
MANUFACTURING CORPORATION, respondents.

DECISION

CORONA, J  : p

This is a petition for review seeking for the reversal of the decision 1 of the
Court of Appeals dated May 29, 2001, dismissing the petition for certiorari of
Lydia Buenaobra, et. al. and affirming the orders of the National Labor Relations
Commission (NLRC), Third Division, dated November 27, 1998 and February 15,
1999, which respectively directed private respondents to post a cash or surety
bond and dismissed petitioners' motion for reconsideration.
The facts follow.
Petitioners were employees of private respondent Unix International Export
Corporation (UNIX), a corporation engaged in the business of manufacturing
bags, wallets and the like.
Sometime in 1991 and 1992, petitioners filed several cases against UNIX
and its incorporators and officers for unfair labor practice, illegal
lockout/dismissal, underpayment of wages, holiday pay, proportionate 13th
month pay, unpaid wages, interest, moral and exemplary damages and
attorney's fees.
The cases were consolidated and tried jointly. On February 23, 1993, labor
arbiter Jose S. de Vera rendered a decision:
WHEREFORE, all the foregoing premises being considered,
judgment is hereby rendered ordering respondent Unix Export
Corporation to pay complainants, as follows:
1. P5,821,838.40 as backwages;
2. P1,484,912.00 as separation pay;
3. P527,748.00 as wage differentials;
4. P33,830.00 as regular holiday pair differentials; and
5. P365,551.95 as proportionate 13th month pay for 1990.
All other claims of the complainants are hereby dismissed for lack
of merit. Likewise, the complaint of Angelina Dimasin is dismissed with
prejudice.
 There being no appeal by respondents or petitioners, the decision of labor
arbiter de Vera eventually became final and executory. However, petitioners
complained that the decision could not be executed because UNIX allegedly
diverted, invested and transferred all its money, assets and properties to
respondent Fuji Zipper Manufacturing Corporation (FUJI) whose stockholders
and officers were also those of UNIX.
Thus, on March 25, 1997, petitioners filed another complaint against
respondents UNIX, its corporate officers and stockholders of record, and FUJI.
Petitioners mainly prayed that respondents UNIX and FUJI be held jointly and
severally held liable for the payment of the monetary awards ordered by labor
arbiter de Vera.
On May 31, 1998, labor arbiter Felipe Pati rendered a decision on the
second complaint:
WHEREFORE, judgment is hereby rendered piercing the veil of
corporate fiction of the two respondent sister corporations which by
virtue of this Decision are now considered as mere associations of
persons jointly and severally pay the subject amount of P8,233,880.30
out of the properties and unpaid subscription on subscribed Capital
Stock of the Board of Directors, Corporate Officers, Incorporators and
Stockholders of said respondent corporations, plus the amount of
P3,000,000.00 and P1,000,000.00 in the form of moral and exemplary
damages, respectively, as well as 10% attorney's fees from any
recoverable amounts.
Other claims are hereby dismissed for lack of merit.
On July 30, 1998, private respondents FUJI, its officers and stockholders
filed a memorandum on appeal and a motion to dispense with the posting of a
cash or surety appeal bond on the ground that they were not the employers of
petitioners. They alleged that they could not be held responsible for petitioners'
claims and to require them to post the bond would be unjust and unfair, and not
sanctioned by law.
On November 27, 1998, the NLRC, Third Division rendered the first
assailed order 2 :
PREMISES CONSIDERED, instant motion to exempt from filing
appeal bond is hereby DENIED for lack of merit. Respondents are
hereby directed to post cash or surety bond in the amount of
P8,233,880.30 within an unextendible period of ten (10) days upon
receipt. Otherwise the appeal shall be dismissed.
Petitioners moved for reconsideration of the said order, arguing that the
timely posting of an appeal bond is mandatory for the perfection of an appeal and
should be complied with.
 On February 15, 1999, the NLRC, Third Division rendered the second
assailed order:
WHEREFORE, premises considered, complainants' Motion for
Reconsideration is hereby DISMISSED for lack of merit. Respondents'
Supplemental Memorandum of Appeal is admitted. Respondents and
counsel are likewise hereby directed to submit a joint declaration under
oath within five (5) days upon receipt. Otherwise the appeal shall be
dismissed. caTESD

Petitioners filed a petition in the Court of Appeals imputing grave abuse of

discretion to the NLRC, Third Division when it allowed private respondents to
post the mandated cash or surety bond four months after the filing of their
memorandum on appeal.
On May 29, 2001, the Court of Appeals dismissed the petition for lack of
merit. Hence, this petition under Rule 45 of the Rules of Court, seeking to set
aside the decision of the Court of Appeals and praying that the orders dated
February 15, 1999 and November 27, 1998 of the NLRC, Third Division be set
aside for having been issued without or in excess of its jurisdiction and with grave
abuse of discretion.
The petition has no merit.
The provision of Article 223 of the Labor Code requiring the posting of
bond on appeals involving monetary awards must be given liberal interpretation
in line with the desired objective of resolving controversies on the merits. 3 If only
to achieve substantial justice, strict observance of the reglementary periods may
be relaxed if warranted. The NLRC, Third Division could not be said to have
abused its discretion in requiring the posting of bond after it denied private
respondents' motion to be exempted therefrom.
It is true that the perfection of an appeal in the manner and within the
period prescribed by law is not only mandatory but jurisdictional, and failure to
perfect an appeal has the effect of making the judgment final and executory.
However, technicality should not be allowed to stand in the way of equitably and
completely resolving the rights and obligations of the parties. 4 We have allowed
appeals from the decisions of the labor arbiter to the NLRC, even if filed beyond
the reglementary period, in the interest of justice. The facts and circumstances of
the instant case warrant liberality considering the amount involved and the fact
that petitioners already obtained a favorable judgment on February 23, 1993
against their employer UNIX.
In the same decision which has already become final and executory, labor
arbiter de Vera held:
 This Branch upholds and maintains in the absence of substantial
evidence to the contrary that both respondent corporations have
legitimate distinct and separate juridical personalities. Thus, respondent
Fuji Zipper Manufacturing, Inc. has been erroneously impleaded in this
case. 5
 
It is only fair and just that respondent FUJI be afforded the opportunity to
be heard on appeal before the NLRC, specially in the light of labor arbiter Pati's
later decision holding FUJI jointly and severally liable with UNIX in the payment
of the monetary awards adjudged by labor arbiter de Vera against UNIX.
In the absence of any showing that the NLRC committed grave abuse of
discretion, or otherwise acted without or in excess of jurisdiction, this Court is
bound by its findings. Furthermore, the Court of Appeals upheld the assailed
orders of the said Commission.
WHEREFORE, the petition is hereby DENIED.
SO ORDERED.
 (Buenaobra v. Lim King Guan, G.R. No. 150147, [January 20, 2004], 465 PHIL
|||

290-298)

G.R. No. 196047. January 15, 2014.]

LEPANTO CONSOLIDATED MINING

CORPORATION, petitioner, vs. BELIO ICAO, respondent.

DECISION

SERENO, C.J  : p

This Petition under Rule 45 of the Rules of Court seeks to annul and set

aside the Court of Appeals (CA) Decision dated 27 September 2010 and the
Resolution dated 11 March 2011 in CA-G.R. SP. No. 113095. 1 In the assailed
Decision and Resolution, the CA upheld the Order of the National Labor and
Relations Commission (NLRC) First Division dismissing petitioner's appeal for
allegedly failing to post an appeal bond as required by the Labor Code. Petitioner
had instead filed a motion to release the cash bond it posted in another NLRC
case which had been decided with finality in its favor with a view to applying the
bond to the appealed case before the NLRC First Division. Hence, the Court is
now asked to rule whether petitioner had complied with the appeal bond
requirement. If it had, its appeal before the NLRC First Division should be
reinstated.

THE FACTS

We quote the CA's narration of facts as follows:

The instant petition stemmed from a complaint for illegal dismissal
and damages filed by private respondent Belio C. Icao [Icao] against
petitioners Lepanto Consolidated Mining Company (LCMC) and its Chief
Executive Officer [CEO] Felipe U. Yap [Yap] before the Arbitration
Branch of the NLRC.
Private respondent essentially alleged in his complaint that he
was an employee of petitioner LCMC assigned as a lead miner in its
underground mine in Paco, Mankayan, Benguet. On January 4, 2008,
private respondent reported for the 1st shift of work (11:00 p.m. to 7:00
a.m.) and was assigned at 248-8M2, 750 Level of the mining area. At
their workplace, private respondent did some barring down, installed five
(5) rock bolt support, and drilled eight (8) blast holes for the mid-shift
blast. They then had their meal break. When they went back to their
workplace, they again barred down loose rocks and drilled eight (8) more
blast holes for the last round of blast. While waiting for the time to ignite
their round, one of his co-workers shouted to prepare the explosives for
blasting, prompting private respondent to run to the adjacent panels and
warn the other miners. Thereafter, he decided to take a bath and
proceeded at [sic] the bathing station where four (4) of his co-workers
were also present. Before he could join them, he heard a voice at his
back and saw Security Guard (SG) Larry Bulwayan instructing his
companion SG Dale Papsa-ao to frisk him. As private respondent was
removing his boots, SG Bulwayan forcibly pulled his skullguard from his
head causing it to fall down [sic] to the ground including its harness and
his detergent soap which was inserted in the skullguard harness. A few
minutes later, private respondent saw SG Bulwayan [pick] up a wrapped
object at the bathing station and gave it to his companion. SGs
Bulwayan and Papsa-ao invited the private respondent to go with them
at the investigation office to answer questions regarding the wrapped
object. He was then charged with "highgrading" or the act of concealing,
possessing or unauthorized extraction of highgrade material/ore without
proper authority. Private respondent vehemently denied the charge.
Consequently, he was dismissed from his work.
Private respondent claimed that his dismissal from work was
without just or authorized cause since petitioners failed to prove by
 ample and sufficient evidence that he stole gold bearing highgrade ores
from the company premises. If private respondent was really placing a
wrapped object inside his boots, he should have been sitting or bending
down to insert the same, instead of just standing on a muckpile as
alleged by petitioners. Moreover, it is beyond imagination that a person,
knowing fully well that he was being chased for allegedly placing
wrapped ore inside his boots, will transfer it to his skullguard. The
tendency in such situation is to throw the object away. As such, private
respondent prayed that petitioners be held liable for illegal dismissal, to
reinstate him to his former position without loss of seniority rights and
benefits, and to pay his full backwages, damages and attorney's fees.  ISCTcH

For their defense, petitioners averred that SG Bulwayan saw

private respondent standing on a muckpile and inserting a wrapped
object inside his right rubber boot. SG Bulwayan immediately ran
towards private respondent, but the latter ran away to escape. He tried
to chase private respondent but failed to capture him. Thereafter, while
SG Bulwayan was on his way to see his co-guard SG Papsa-ao, he saw
private respondent moving out of a stope. He then shouted at SG
Papsa-ao to intercept him. When private respondent was apprehended,
SG Bulwayan ordered him to remove his skullguard for inspection and
saw a wrapped object placed inside the helmet. SG Bulwayan grabbed
it, but the harness of the skullguard was also detached causing the
object to fall on the ground. Immediately, SG Bulwayan recovered and
inspected the same which turned out to be pieces of stone ores. Private
respondent and the stone ores were later turned over to the Mankayan
Philippine National Police where he was given a written notice of the
charge against him. On January 9, 2008, a hearing was held where
private respondent, together with the officers of his union as well as the
apprehending guards appeared. On February 4, 2008, private
respondent received a copy of the resolution of the company informing
him of his dismissal from employment due to breach of trust and
confidence and the act of highgrading. 2

THE LABOR ARBITER'S RULING THAT

PETITIONER LCMC IS LIABLE FOR ILLEGAL DISMISSAL

On 30 September 2008, the labor arbiter rendered a Decision holding

petitioner and its CEO liable for illegal dismissal and ordering them to pay
respondent Icao P345,879.45, representing his full backwages and separation
pay. 3 The alleged highgrading attributed by LCMC's security guards was found
to have been fabricated; consequently, there was no just cause for the dismissal
of respondent. The labor arbiter concluded that the claim of the security guards
that Icao had inserted ores in his boots while in a standing position was not in
accord with normal human physiological functioning. 4
 The labor arbiter also noted that it was inconsistent with normal human
behavior for a man, who knew that he was being chased for allegedly placing
wrapped ore inside his boots, to then transfer the ore to his skullguard, where it
could be found once he was apprehended. 5 To further support the improbability
of the allegation of highgrading, the labor arbiter noted that throughout the 21
years of service of Icao to LCMC, he had never been accused of or penalized for
highgrading or any other infraction involving moral turpitude — until this alleged
incident. 6

THE NLRC ORDER DISMISSING THE APPEAL

OF PETITIONER LCMC FOR FAILURE TO POST THE APPEAL BOND

On 8 December 2008, petitioner and its CEO filed an Appearance with

Memorandum of Appeal 7 before the NLRC. Instead of posting the required
appeal bond in the form of a cash bond or a surety bond in an amount equivalent
to the monetary award of P345,879.45 adjudged in favor of Icao, they filed a
Consolidated Motion for Release of Cash Bond and to Apply Bond Subject for
Release As Payment for Appeal Bond (Consolidated Motion). 8 They requested
therein that the NLRC release the cash bond of P401,610.84, which they had
posted in the separate case Dangiw Siggaao v. LCMC, 9 and apply that same
cash bond to their present appeal bond liability. They reasoned that since this
Court had already decided Dangiw Siggaao in their favor, and that the ruling
therein had become final and executory, the cash bond posted therein could now
be released. 10 They also cited financial difficulty as a reason for resorting to this
course of action and prayed that, in the interest of justice, the motion be granted.
In its Order dated 27 February 2009, the NLRC First Division dismissed
the appeal of petitioner and the latter's CEO for non-perfection. 11 It found that
they had failed to post the required appeal bond equivalent to the monetary
award of P345,879.45. It explained that their Consolidated Motion for the release
of the cash bond in another case (Dangiw Siggaao), for the purpose of applying
the same bond to the appealed case before it, could not be considered as
compliance with the requirement to post the required appeal bond.
Consequently, it declared the labor arbiter's Decision to be final and executory.
The pertinent portions of the assailed Order are quoted below:  DAaEIc

The rules are clear. Appeals from decision involving a monetary

award maybe [sic] perfected only upon posting of a cash or surety-bond
within the ten (10) day reglementary period for filing an appeal. Failure to
file and post the required appeal bond within the said period results in
the appeal not being perfected and the appealed judgment becomes
final and executory. Thus, the Commission loses authority to entertain or
act on the appeal much less reverse the decision of the Labor Arbiter
(Gaudia vs. NLRC, 318 SCRA 439).
 In this case, respondents failed to post the required appeal
bond equivalent to the monetary award of P345,879.45. The
Consolidated Motion for Release of Cash Bond (posted as appeal
bond in another case) with prayer to apply the bond to be released
as appeal bond may not be considered as compliance with the
jurisdictional requirement, as the application or posting is subject
to the condition that the cash bond would be released. Besides,
even if the motion for release is approved, the ten (10) day period
has long expired, rendering the statutory right to appeal forever
lost.
WHEREFORE, respondents' appeal is hereby DISMISSED for
non-perfection and the questioned decision is declared as having
become final and executory. Let the Motion for Release of Cash bond be
forwarded to the Third Division, this Commission, for appropriate action.
SO ORDERED. 12 (Emphasis supplied)
Petitioner and its CEO filed a Motion for Reconsideration. They
emphasized therein that they had tried to comply in good faith with the requisite
appeal bond by trying to produce a cash bond anew and also to procure a new
surety bond. However, after canvassing several bonding companies, the costs
have proved to be prohibitive. 13 Hence, they resorted to using the cash bond
they posted in Dangiw Siggaao because the bond was now free, unencumbered
and could rightfully be withdrawn and used by them. 14 Their motion was denied
in a Resolution dated 27 November 2009. Hence, they filed a Petition
for Certiorari with the CA.

THE CA RULING AFFIRMING THE ORDER OF THE NLRC

On 27 September 2010, the CA issued its assailed Decision 15 affirming

the Order of the NLRC First Division, which had dismissed the appeal of
petitioner and the latter's CEO. According to the CA, they failed to comply with
the requirements of law and consequently lost the right to appeal. 16
The CA explained that under Article 223 of the Labor Code, an appeal
from the labor arbiter's Decision must be filed within 10 calendar days from
receipt of the decision. In case of a judgment involving a monetary award, the
posting of a cash or surety bond in an amount equivalent to the monetary award
is mandatory for the perfection of an appeal. In the instant case, the CA found
that petitioner and its CEO did not pay the appeal fees and the required appeal
bond equivalent to P345,879.45. Instead, it filed a Consolidated Motion praying
that the cash bond it had previously posted in another labor case be released
and applied to the present one. According to the CA, this arrangement is not
allowed under the rules of procedure of the NLRC. 17
 Furthermore, the CA said that since the payment of appeal fees and the
posting of an appeal bond are indispensable jurisdictional requirements,
noncompliance with them resulted in petitioner's failure to perfect its appeal.
Consequently, the labor arbiter's Decision became final and executory and,
hence, binding upon the appellate court. 18
Nevertheless, the CA ruled that the CEO of petitioner LCMC should be
dropped as a party to this case. 19 No specific act was alleged in private
respondent's pleadings to show that he had a hand in Icao's illegal dismissal;
much less, that he acted in bad faith. In fact, the labor arbiter did not cite any
factual or legal basis in its Decision that would render the CEO liable to
respondent. The rule is that in the absence of bad faith, an officer of a
corporation cannot be made personally liable for corporate liabilities. 
cEHSIC

THE ISSUE

The sole issue before the Court is whether or not petitioner complied with
the appeal bond requirement under the Labor Code and the NLRC Rules by filing
a Consolidated Motion to release the cash bond it posted in another case, which
had been decided with finality in its favor, with a view to applying the same cash
bond to the present case.

OUR RULING

The Petition is meritorious. The Court finds that petitioner substantially

complied with the appeal bond requirement.
Before discussing its ruling, however, the Court finds it necessary to
emphasize the well-entrenched doctrine that an appeal is not a matter of right,
but is a mere statutory privilege. It may be availed of only in the manner provided
by law and the rules. Thus, a party who seeks to exercise the right to appeal
must comply with the requirements of the rules; otherwise, the privilege is lost. 20
In appeals from any decision or order of the labor arbiter, the posting of an
appeal bond is required under Article 223 of the Labor Code, which reads:
Article 223.  APPEAL. — Decisions, awards, or orders of the
Labor Arbiter are final and executory unless appealed to the
Commission by any or both parties within ten (10) calendar days from
receipt of such decisions, awards, or orders. Such appeal may be
entertained only on any of the following grounds:
xxx xxx xxx
In case of a judgment involving a monetary award, an appeal
by the employer may be perfected only upon the posting of a cash
or surety bond issued by a reputable bonding company duly accredited
 by the Commission in the amount equivalent to the monetary award in
the judgment appealed from. (Emphasis and underlining supplied)
The 2011 NLRC Rules of Procedure (NLRC Rules) incorporates this
requirement in Rule VI, Section 6, which provides:
SECTION 6.  Bond. — In case the decision of the Labor Arbiter or
the Regional Director involves a monetary award, an appeal by
the employer may be perfected only upon the posting of a bond,
which shall either be in the form of cash deposit or surety bond
equivalent in amount to the monetary award, exclusive of damages
and attorney's fees. (Emphases and underlining supplied)
In Viron Garments Manufacturing Co., Inc. v. NLRC, 21 the Court explained
the mandatory nature of this requirement as follows:
The intention of the lawmakers to make the bond an indispensable
requisite for the perfection of an appeal by the employer, is clearly
limned in the provision that an appeal by the employer may be
perfected "only upon the posting of a cash or surety bond." The word
"only" makes it perfectly clear, that the lawmakers intended the posting
of a cash or surety bond by the employer to be the exclusive
means by which an employer's appeal may be perfected. (Emphases
supplied)
We now turn to the main question of whether petitioner's Consolidated
Motion to release the cash bond it posted in a previous case, for application to
the present case, constitutes compliance with the appeal bond requirement.
While it is true that the procedure undertaken by petitioner is not provided under
the Labor Code or in the NLRC Rules, we answer the question in the affirmative.
We reiterate our pronouncement in Araneta v. Rodas, 22 where the Court
said that when the law does not clearly provide a rule or norm for the tribunal to
follow in deciding a question submitted, but leaves to the tribunal the discretion to
determine the case in one way or another, the judge must decide the question in
conformity with justice, reason and equity, in view of the circumstances of the
case. Applying this doctrine, we rule that petitioner substantially complied with
the mandatory requirement of posting an appeal bond for the reasons explained
below. DaTISc

First, there is no question that the appeal was filed within the 10-day
reglementary period. 23 Except for the alleged failure to post an appeal bond, the
appeal to the NLRC was therefore in order.
Second, it is also undisputed that petitioner has an unencumbered amount
of money in the form of cash in the custody of the NLRC. To reiterate, petitioner
had posted a cash bond of P401,610.84 in the separate case Dangiw Siggaao,
which was earlier decided in its favor. As claimed by petitioner and confirmed by
the Judgment Division of the Judicial Records Office of this Court, the Decision of
the Court in Dangiw Siggaao had become final and executory as of 28 April
2008, or more than seven months before petitioner had to file its appeal in the
present case. This fact is shown by the Entry of Judgment on file with the
aforementioned office. Hence, the cash bond in that case ought to have been
released to petitioner then.
Under the Rule VI, Section 6 of the 2005 NLRC Rules, "[a] cash or surety
bond shall be valid and effective from the date of deposit or posting, until the
case is finally decided, resolved or terminated, or the award satisfied." Hence, it
is clear that a bond is encumbered and bound to a case only for as long as 1) the
case has not been finally decided, resolved or terminated; or 2) the award has
not been satisfied. Therefore, once the appeal is finally decided and no award
needs to be satisfied, the bond is automatically released. Since the money is now
unencumbered, the employer who posted it should now have unrestricted access
to the cash which he may now use as he pleases — as appeal bond in another
case, for instance. This is what petitioner simply did.
Third, the cash bond in the amount of P401,610.84 posted in Dangiw
Siggaao is more than enough to cover the appeal bond in the amount of
P345,879.45 required in the present case.
Fourth, this ruling remains faithful to the spirit behind the appeal bond
requirement which is to ensure that workers will receive the money awarded in
their favor when the employer's appeal eventually fails. 24 There was no showing
at all of any attempt on the part of petitioner to evade the posting of the appeal
bond. On the contrary, petitioner's move showed a willingness to comply with the
requirement. Hence, the welfare of Icao is adequately protected.
Moreover, this Court has liberally applied the NLRC Rules and the Labor
Code provisions on the posting of an appeal bond in exceptional cases. In Your
Bus Lines v. NLRC, 25 the Court excused the appellant's failure to post a bond,
because it relied on the notice of the decision. While the notice enumerated all
the other requirements for perfecting an appeal, it did not include a bond in the
list. In Blancaflor v. NLRC, 26 the failure of the appellant therein to post a bond
was partly caused by the labor arbiter's failure to state the exact amount of
monetary award due, which would have been the basis of the amount of the
bond to be posted. In Cabalan Pastulan Negrito Labor Association v.
NLRC, 27 petitioner-appellant was an association of Negritos performing trash-
sorting services in the American naval base in Subic Bay. The plea of the
association that its appeal be given due course despite its non-posting of a bond,
on account of its insolvency and poverty, was granted by this Court. In UERM-
Memorial Medical Center v. NLRC, 28 we allowed the appellant-employer to post
a property bond in lieu of a cash or surety bond. The assailed judgment involved
more than P17 million; thus, its execution could adversely affect the economic
survival of the employer, which was a medical center.
If in the above-cited cases, the Court found exceptional circumstances that
warranted an extraordinary exercise of its power to exempt a party from the rules
on appeal bond, there is all the more reason in the present case to find that
petitioner substantially complied with the requirement. We emphasize that in this
case we are not even exempting petitioner from the rule, as in fact we are
enforcing compliance with the posting of an appeal bond. We are simply liberally
applying the rules on what constitutes compliance with the requirement, given the
special circumstances surrounding the case as explained above.
Having complied with the appeal bond requirement, petitioner's appeal
before the NLRC must therefore be reinstated.
Finally, a word of caution. Lest litigants be misled into thinking that they
may now wantonly disregard the rules on appeal bond in labor cases, we
reiterate the mandatory nature of the requirement. The Court will liberally apply
the rules only in very highly exceptional cases such as this, in keeping with the
dictates of justice, reason and equity.
WHEREFORE, premises considered, the instant Rule 45 Petition
is GRANTED. The Court of Appeals Decision dated 27 September 2010 and its
Resolution dated 11 March 2011 in CA-G.R. SP. No. 113095, which dismissed
petitioner's Rule 65 Petition, are hereby REVERSED. Finally, the National Labor
Relations Commission Resolutions dated 27 February 2009 and 27 November
2009 are SET ASIDE, and the appeal of petitioner before it is
hereby REINSTATED.
SO ORDERED.
 (Lepanto Consolidated Mining Corp. v. Icao, G.R. No. 196047, [January 15,
|||

2014], 724 PHIL 646-660)

G.R. No. 195227. April 21, 2014.]

FROILAN M. BERGONIO, JR., DEAN G. PELAEZ, CRISANTO O.

GEONGO, WARLITO O. JANAYA, SALVADOR VILLAR, JR.,
RONALDO CAFIRMA, RANDY LUCAR, ALBERTO ALBUERA,
DENNIS NOPUENTE and ALLAN SALVACION, petitioners, vs.
SOUTH EAST ASIAN AIRLINES and IRENE
DORNIER, respondents.
 DECISION

BRION, J  :p

We resolve in this petition for review on certiorari 1 the challenge to the

September 30, 2010 decision 2 and the January 13, 2011 resolution 3 of the
Court of Appeals (CA) in CA-G.R. SP No. 112011.
This CA decision reversed the July 16, 2008 decision 4 of the National
Labor Relations Commission (NLRC), which, in turn, affirmed the March 13, 2008
order 5 of the Labor Arbiter (LA) in NLRC Case No. 00-04-05469-2004. The LA
granted the Motion filed by petitioners Froilan M. Bergonio, Jr., Dean
G. Pelaez, et al., (collectively, the petitioners) for the release of the garnished
amount to satisfy the petitioners' accrued wages.

The Factual Antecedents

On April 30, 2004, the petitioners filed before the LA a complaint for illegal
dismissal and illegal suspension with prayer for reinstatement against
respondents South East Asian Airlines (SEAIR) and Irene Dornier as SEAIR's
President (collectively, the respondents).
In a decision dated May 31, 2005, the LA found the petitioners illegally
dismissed and ordered the respondents, among others, to immediately reinstate
the petitioners with full backwages. The respondents received their copy of this
decision on July 8, 2005. 6
On August 20, 2005, the petitioners filed before the LA a Motion for
issuance of Writ of Execution for their immediate reinstatement.
During the scheduled pre-execution conference held on September 14,
2005, the respondents manifested their option to reinstate the petitioners in the
payroll. The payroll reinstatement, however, did not materialize. Thus, on
September 22, 2005, the petitioners filed before the LA a manifestation for their
immediate reinstatement.
On October 3, 2005, the respondents filed an opposition to the petitioners'
motion for execution. 7 They claimed that the relationship between them and the
petitioners had already been strained because of the petitioners' threatening text
messages, thus precluding the latter's reinstatement.  IAEcCT

On October 7, 2005, the LA granted the petitioners' motion and issued a

writ of execution. 8
 The respondents moved to quash the writ of execution with a prayer to
hold in abeyance the implementation of the reinstatement order. 9 They
maintained that the relationship between them and the petitioners had been so
strained that reinstatement was no longer possible.
The October 7, 2005 writ of execution was returned unsatisfied. In
response, the petitioners filed a motion for re-computation of accrued wages,
and, on January 25, 2006, a motion for execution of the re-computed amount.
On February 16, 2006, the LA granted this motion and issued an alias writ of
execution. 10
On February 21, 2006, the respondents issued
a Memorandum 11 directing the petitioners to report for work on February 24,
2006. The petitioners failed to report for work on the appointed date. On
February 28, 2006, the respondents moved before the LA to suspend the order
for the petitioners' reinstatement. 12
Meanwhile, the respondents appealed with the NLRC the May 31, 2005
illegal dismissal ruling of the LA.
In an order dated August 15, 2006, 13 the NLRC dismissed the
respondents' appeal for non-perfection. The NLRC likewise denied the
respondents' motion for reconsideration in its November 29, 2006 resolution,
prompting the respondents to file before the CA a petition for certiorari.
The NLRC issued an Entry of Judgment on February 6, 2007 declaring its
November 29, 2006 resolution final and executory. The petitioners forthwith filed
with the LA another motion for the issuance of a writ of execution, which the LA
granted on April 24, 2007. The LA also issued another writ of execution. 14 A
Notice of Garnishment was thereafter issued to the respondents' depositary bank
— Metrobank-San Lorenzo Village Branch, Makati City — in the amount of
P1,900,000.00 on June 6, 2007.
On December 18, 2007, the CA rendered its decision (on the illegal
dismissal ruling of the LA) partly granting the respondents' petition. The CA
declared the petitioners' dismissal valid and awarded them P30,000.00 as
nominal damages for the respondents' failure to observe due process.
The records show that the petitioners appealed the December 18, 2007
CA decision with this Court. In a resolution dated August 4, 2008, the Court
denied the petition. The Court likewise denied the petitioners' subsequent motion
for reconsideration, and thereafter issued an Entry of Judgment certifying that its
August 4, 2008 resolution had become final and executory on March 9, 2009.
On January 31, 2008, the petitioners filed with the LA an Urgent Ex-
Parte Motion for the Immediate Release of the Garnished Amount.
 In its March 13, 2008 order, 15 the LA granted the petitioners' motion; it
directed Metrobank-San Lorenzo to release the P1,900,000.00 garnished
amount. The LA found valid and meritorious the respondents' claim for accrued
wages in view of the respondents' refusal to reinstate the petitioners despite the
final and executory nature of the reinstatement aspect of its (LA's) May 31, 2005
decision. The LA noted that as of the December 18, 2007 CA decision (that
reversed the illegal dismissal findings of the LA), the petitioners' accrued wages
amounted to P3,078,366.33.
In its July 16, 2008 resolution, 16 the NLRC affirmed in toto the LA's
March 13, 2008 order. The NLRC afterwards denied the respondents' motion for
reconsideration for lack of merit. 17
The respondents assailed the July 16, 2008 decision and September 29,
2009 resolution of the NLRC via a petition for certiorari filed with the CA. 
DIETcH

The CA's ruling

The CA granted the respondents' petition. 18 It reversed and set aside the
July 16, 2008 decision and the September 29, 2009 resolution of the NLRC and
remanded the case to the Computation and Examination Unit of the NLRC for the
proper computation of the petitioners' accrued wages, computed up to February
24, 2006.
The CA agreed that the reinstatement aspect of the LA's decision is
immediately executory even pending appeal, such that the employer is obliged to
reinstate and pay the wages of the dismissed employee during the period of
appeal until the decision (finding the employee illegally dismissed including the
reinstatement order) is reversed by a higher court. Applying this principle, the CA
noted that the petitioners' accrued wages could have been properly computed
until December 18, 2007, the date of the CA's decision finding the petitioners
validly dismissed.
The CA, however, pointed out that when the LA's decision is "reversed by
a higher tribunal, an employee may be barred from collecting the accrued wages
if shown that the delay in enforcing the reinstatement pending appeal was
without fault" on the employer's part. In this case, the CA declared that the delay
in the execution of the reinstatement order was not due to the respondents'
unjustified act or omission. Rather, the petitioners' refusal to comply with the
February 21, 2006 return-to-work Memorandum that the respondents issued and
personally delivered to them (the petitioners) prevented the enforcement of the
reinstatement order.
Thus, the CA declared that, given this peculiar circumstance (of the
petitioners' failure to report for work), the petitioners' accrued wages should only
be computed until February 24, 2006 when they were supposed to report for
work per the return-to-work Memorandum. Accordingly, the CA reversed, for
grave abuse of discretion, the NLRC's July 16, 2008 decision that affirmed the
LA's order to release the garnished amount.

The Petition

The petitioners argue that the CA gravely erred when it ruled, contrary to
Article 223, paragraph 3 of the Labor Code, that the computation of their accrued
wages stopped when they failed to report for work on February 24, 2006. They
maintain that the February 21, 2006 Memorandum was merely an afterthought
on the respondents' part to make it appear that they complied with the LA's
October 7, 2005 writ of execution. They likewise argue that had the respondents
really intended to have them report for work to comply with the writ of execution,
the respondents could and should have issued the Memorandum immediately
after the LA issued the first writ of execution. As matters stand, the respondents
issued the Memorandum more than four months after the issuance of this writ
and only after the LA issued the alias writ of execution on February 16, 2006.
Additionally, the petitioners direct the Court's attention to the several
pleadings that the respondents filed to prevent the execution of the reinstatement
aspect of the LA's May 31, 2005 decision, i.e., the Opposition to the Issuance of
the Writ of Execution, the Motion to Quash the Writ of Execution and the Motion
to Suspend the Order of Reinstatement. They also point out that in all these
pleadings, the respondents claimed that strained relationship barred their (the
petitioners') reinstatement, evidently confirming the respondents' lack of intention
to reinstate them.
Finally, the petitioners point out that the February 21, 2006 Memorandum
directed them to report for work at Clark Field, Angeles, Pampanga instead of at
the NAIA-Domestic Airport in Pasay City where they had been assigned. They
argue that this directive to report for work at Clark Field violates Article 223,
paragraph 3 of the Labor Code that requires the employee's reinstatement to be
under the same terms and conditions prevailing prior to the dismissal. Moreover,
they point out that the respondents handed the Memorandum only to Pelaez,
who did not act in representation of the other petitioners, and only in the
afternoon of February 23, 2006.
Thus, the petitioners claim that the delay in their reinstatement was in fact
due to the respondents' unjustified acts and that the respondents never really
complied with the LA's reinstatement order.  CIHTac

The Case for the Respondents

 The respondents counter, in their comment, 19 that the issues that the
petitioners raise in this petition are all factual in nature and had already
considered and explained in the CA decision. In any case, the respondents
maintain that the petitioners were validly dismissed and that they complied with
the LA's reinstatement order when it directed the petitioners to report back to
work, which directive the petitioners did not heed.
The respondents add that while the reinstatement of an employee found
illegally dismissed is immediately executory, the employer is nevertheless not
prohibited from questioning this rule especially when the latter has valid and legal
reasons to oppose the employee's reinstatement. In the petitioners' case, the
respondents point out that their relationship had been so strained that
reinstatement was no longer possible. Despite this strained relationship, the
respondents point out that they still required the petitioners to report back to work
if only to comply with the LA's reinstatement order. Instead of reporting for work
as directed, the petitioners, however, insisted for a payroll reinstatement, which
option the law grants to them (the respondents) as employer. Also, contrary to
the petitioners' claim, the Memorandum directed them to report at Clark Field,
Pampanga only for a re-orientation of their respective duties and responsibilities.
Thus, relying on the CA's ruling, the respondents claim that the delay in the
petitioners' reinstatement was in fact due to the latter's refusal to report for work
after the issuance of the February 21, 2006 Memorandum in addition to
their strained relationship.

The Court's Ruling

We GRANT the petition.

Preliminary considerations: jurisdictional

limitations of the Court's Rule 45 review of
the CA's Rule 65 decision in labor cases

In a Rule 45 petition for review on certiorari, what we review are the legal
errors that the CA may have committed in the assailed decision, in contrast with
the review for jurisdictional errors that we undertake in an
original certiorari action. In reviewing the legal correctness of the CA decision in
a labor case taken under Rule 65 of the Rules of Court, we examine the CA
decision in the context that it determined the presence or the absence of grave
abuse of discretion in the NLRC decision before it and not on the basis of
whether the NLRC decision, on the merits of the case, was correct. Otherwise
stated, we proceed from the premise that the CA undertook a Rule 65 review, not
a review on appeal, of the NLRC decision challenged before it. Within this narrow
scope of our Rule 45 review, the question that we ask is: Did the CA correctly
determine whether the NLRC committed grave abuse of discretion in ruling on
the case? 20
In addition, the Court's jurisdiction in a Rule 45 petition for review
on certiorari is limited to resolving only questions of law.
The present petition essentially raises the question — whether the
petitioners may recover the accrued wages prior to the CA's reversal of the LA's
May 31, 2005 decision. This is a question of law that falls well within the Court's
power in a Rule 45 petition.
Resolution of this question of law, however, is inextricably linked with the
largely factual issue of whether the accrued wages should be computed until
December 17, 2008 when the CA reversed the illegal dismissal findings of the LA
or only until February 24, 2006 when the petitioners were supposed to report for
work per the February 21, 2006 Memorandum. In either case, the determination
of this factual issue presupposes another factual issue, i.e., whether the delay in
the execution of the reinstatement order was due to the respondents' fault. As
questions of fact, they are proscribed by our Rule 45 jurisdiction; we generally
cannot address these factual issues except to the extent necessary to
determine whether the CA correctly found the NLRC in grave abuse of discretion
in affirming the release of the garnished amount despite the respondents'
issuance of and the petitioners' failure to comply with the February 21, 2006
return-to-work Memorandum.
The jurisdictional limitations of our Rule 45 review of the CA's Rule 65
decision in labor cases, notwithstanding, we resolve this petition's factual issues
for we find legal errors in the CA's decision. Our consideration of the facts taken
within this narrow scope of our factual review power convinced us, as our
subsequent discussion will show, that no grave abuse of discretion attended the
NLRC decision.  DSHTaC

Nature of the reinstatement aspect of the

LA's decision on a finding of illegal
dismissal

Article 223 (now Article 229) 21 of the Labor Code governs appeals from,

and the execution of, the LA's decision. Pertinently, paragraph 3, Article 223 of
the Labor Code provides:
Article 223. APPEAL. —
xxx xxx xxx
In any event, the decision of the Labor Arbiter reinstating a
dismissed or separated employee, insofar as the reinstatement
aspect is concerned, shall immediately be executory, pending
 appeal. The employee shall either be admitted back to work under the
same terms and conditions prevailing prior to his dismissal or separation
or, at the option of the employer, merely reinstated in the payroll. The
posting of a bond by the employer shall not stay the execution for
reinstatement provided herein. [Emphasis and underscoring supplied]
Under paragraph 3, Article 223 of the Labor Code, the LA's order for the
reinstatement of an employee found illegally dismissed is immediately executory
even during pendency of the employer's appeal from the decision. Under this
provision, the employer must reinstate the employee — either by physically
admitting him under the conditions prevailing prior to his dismissal, and paying
his wages; or, at the employer's option, merely reinstating the employee in the
payroll until the decision is reversed by the higher court. 22 Failure of the
employer to comply with the reinstatement order, by exercising the options in the
alternative, renders him liable to pay the employee's salaries. 23
Otherwise stated, a dismissed employee whose case was favorably
decided by the LA is entitled to receive wages pending appeal upon
reinstatement, which reinstatement is immediately executory. 24 Unless the
appellate tribunal issues a restraining order, the LA is duty bound to implement
the order of reinstatement and the employer has no option but to comply with
it. 25
Moreover, and equally worth emphasizing, is that an order of
reinstatement issued by the LA is self-executory, i.e., the dismissed
employee need not even apply for and the LA need not even issue a writ of
execution to trigger the employer's duty to reinstate the dismissed employee.
In Pioneer Texturizing Corp. v. NLRC, et al., 26 decided in 1997, the Court
clarified once and for all this self-executory nature of a reinstatement order. After
tracing back the various Court rulings interpreting the amendments introduced
by Republic Act No. 6715 27 on the reinstatement aspect of a labor decision
under Article 223 of the Labor Code, the Court concluded that to
otherwise "require the application for and issuance of a writ of execution as
prerequisites for the execution of a reinstatement award would certainly betray
and run counter to the very object and intent of Article 223, i.e., the immediate
execution of a reinstatement order." 28
In short, therefore, with respect to decisions reinstating employees, the law
itself has determined a sufficiently overwhelming reason for its immediate and
automatic execution even pending appeal. 29 The employer is duty-bound to
reinstate the employee, failing which, the employer is liable instead to pay the
dismissed employee's salary. The Court's consistent and prevailing treatment
and interpretation of the reinstatement order as immediately enforceable, in fact,
merely underscores the right to security of tenure of employees that
the Constitution 30 protects.
 The employer is obliged to pay the
dismissed employee's salary if he
refuses to reinstate until actual
reinstatement or reversal by a higher
tribunal; circumstances that may bar an
employee from receiving the accrued wages

As we amply discussed above, an employer is obliged to immediately

reinstate the employee upon the LA's finding of illegal dismissal; if the employer
fails, it is liable to pay the salary of the dismissed employee. Of course, it is not
always the case that the LA's finding of illegal dismissal is, on appeal by the
employer, upheld by the appellate court. After the LA's decision is reversed by a
higher tribunal, the employer's duty to reinstate the dismissed employee is
effectively terminated. This means that an employer is no longer obliged to keep
the employee in the actual service or in the payroll. The employee, in turn, is not
required to return the wages that he had received prior to the reversal of the LA's
decision. 31
The reversal by a higher tribunal of the LA's finding (of illegal dismissal),
notwithstanding, an employer, who, despite the LA's order of reinstatement, did
not reinstate the employee during the pendency of the appeal up to the reversal
by a higher tribunal may still be held liable for the accrued wages of the
employee, i.e., the unpaid salary accruing up to the time the higher tribunal
reverses the decision. 32 The rule, therefore, is that an employee may still
recover the accrued wages up to and despite the reversal by the higher tribunal.
This entitlement of the employee to the accrued wages proceeds from the
immediate and self-executory nature of the reinstatement aspect of the LA's
decision. 
TEHIaA

By way of exception to the above rule, an employee may be barred from

collecting the accrued wages if shown that the delay in enforcing the
reinstatement pending appeal was without fault on the part of the employer. To
determine whether an employee is thus barred, two tests must be satisfied:
(1) actual delay or the fact that the order of reinstatement pending appeal was
not executed prior to its reversal; and (2) the delay must not be due to the
employer's unjustified act or omission. Note that under the second test, the
delay must be without the employer's fault. If the delay is due to the employer's
unjustified refusal, the employer may still be required to pay the salaries
notwithstanding the reversal of the LA's decision. 33

Application of the two-fold test; the

petitioners are entitled to receive their
accrued salaries until December 18, 2007
 As we earlier pointed out, the core issue to be resolved is whether the
petitioners may recover the accrued wages until the CA's reversal of the LA's
decision. An affirmative answer to this question will lead us to reverse the
assailed CA decision for legal errors and reinstate the NLRC's decision affirming
the release of the garnished amount. Otherwise, we uphold the CA's decision to
be legally correct. To resolve this question, we apply the two-fold test.
First, the existence of delay — whether there was actual delay or
whether the order of reinstatement pending appeal was not executed prior to its
reversal? We answer this test in the affirmative.
To recall, on May 31, 2005, the LA rendered the decision finding the
petitioners illegally dismissed and ordering their immediate reinstatement. Per
the records, the respondents received copy of this decision on July 8, 2005. On
August 20, 2005, the petitioners filed before the LA a Motion for Issuance of Writ
of Execution for their immediate reinstatement. The LA issued the Writ of
Execution on October 7, 2005. From the time the respondents received copy of
the LA's decision, and the issuance of the writ of execution, until the CA reversed
this decision on December 17, 2008, the respondents had not reinstated the
petitioners, either by actual reinstatement or in the payroll. This continued non-
execution of the reinstatement order in fact moved the LA to issue an alias writ of
execution on February 16, 2006 and another writ of execution on April 24, 2007.
From these facts and without doubt, there was actual delay in the
execution of the reinstatement aspect of the LA's May 31, 2005 decision before it
was reversed in the CA's decision.
Second, the cause of the delay — whether the delay was not due to the
employer's unjustified act or omission. We answer this test in the negative; we
find that the delay in the execution of the reinstatement pending appeal was due
to the respondents' unjustified acts.
In reversing, for grave abuse of discretion, the NLRC's order affirming the
release of the garnished amount, the CA relied on the fact of the issuance of the
February 21, 2006 Memorandum and of the petitioners' failure to comply with its
return-to-work directive. In other words, with the issuance of this Memorandum,
the CA considered the respondents as having sufficiently complied with their
obligation to reinstate the petitioners. And, the subsequent delay in or the non-
execution of the reinstatement order was no longer the respondents' fault, but
rather of the petitioners who refused to report back to work despite the directive.
Our careful consideration of the facts and the circumstances that
surrounded the case convinced us that the delay in the reinstatement pending
appeal was due to the respondents' fault. For one, the respondents filed several
pleadings to suspend the execution of the LA's reinstatement order, i.e., the
opposition to the petitioners' motion for execution filed on October 3, 2005; the
motion to quash the October 7, 2005 writ of execution with prayer to hold in
abeyance the implementation of the reinstatement order; and the motion to
suspend the order for the petitioners' reinstatement filed on February 28, 2006
after the LA issued the February 16, 2006 alias writ of execution. These
pleadings, to our mind, show a determined effort on the respondents' part to
prevent or suspend the execution of the reinstatement pending appeal.  EaCSTc

Another reason is that the respondents, contrary to the CA's conclusion,

did not sufficiently notify the petitioners of their intent to actually reinstate them;
neither did the respondents give them ample opportunity to comply with the
return-to-work directive. We note that the respondents delivered the February 21,
2006 Memorandum (requiring the petitioners to report for work on February 24,
2006) only in the afternoon of February 23, 2006. Worse, the respondents
handed the notice to only one of the petitioners — Pelaez — who did not act in
representation of the others. Evidently, the petitioners could not reasonably be
expected to comply with a directive that they had no or insufficient notice of.
Lastly, the petitioners continuously and actively pursued the execution of
the reinstatement aspect of the LA's decision, i.e., by filing several motions for
execution of the reinstatement order, and motion to cite the respondents in
contempt and re-computation of the accrued wages for the respondents'
continued failure to reinstate them.
These facts altogether show that the respondents were not at all sincere in
reinstating the petitioners. These facts — when taken together with the fact of
delay — reveal the respondents' obstinate resolve and willful disregard of the
immediate and self-executory nature of the reinstatement aspect of the LA's
decision.
A further and final point that we considered in concluding that the delay
was due to the respondents' fault is the fact that per the 2005 Revised Rules of
Procedure of the NLRC (2005 NLRC Rules), 34 employers are required to submit
a report of compliance within ten (10) calendar days from receipt of the LA's
decision, noncompliance with which signifies a clear refusal to reinstate.
Arguably, the 2005 NLRC Rules took effect only on January 7, 2006; hence, the
respondents could not have been reasonably expected to comply with this duty
that was not yet in effect when the LA rendered its decision (finding illegal
dismissal) and issued the writ of execution in 2005. Nevertheless, when the LA
issued the February 16, 2006 alias writ of execution and the April 24, 2007 writ of
execution, the 2005 NLRC Rules was already in place such that the respondents
had become duty-bound to submit the required compliance report; their
noncompliance with this rule all the more showed a clear and determined refusal
to reinstate.
 All told, under the facts and the surrounding circumstances, the delay was
due to the acts of the respondents that we find were unjustified. We reiterate and
emphasize, Article 223, paragraph 3, of the Labor Code mandates the
employer to immediately reinstate the dismissed employee, either by actually
reinstating him/her under the conditions prevailing prior to the dismissal or, at the
option of the employer, in the payroll. The respondents' failure in this case to
exercise either option rendered them liable for the petitioners' accrued salary until
the LA decision was reversed by the CA on December 17, 2008. We, therefore,
find that the NLRC, in affirming the release of the garnished amount, merely
implemented the mandate of Article 223; it simply recognized as immediate and
self-executory the reinstatement aspect of the LA's decision.
Accordingly, we reverse for legal errors the CA decision. We find no grave
abuse of discretion attended the NLRC's July 16, 2008 resolution that affirmed
the March 13, 2008 decision of the LA granting the release of the garnished
amount.
WHEREFORE, in light of these considerations, we hereby GRANT the
petition. We REVERSE and SET ASIDE the September 30, 2010 decision and
the January 13, 2011 resolution of the Court of Appeals (CA) in CA-G.R. Sp No.
112011. Accordingly, we REINSTATE the July 16, 2008 decision of the National
Labor Relations Commission (NLRC) affirming the March 13, 2008 order of the
Labor Arbiter in NLRC Case No. 00-04-05469-2004.
Costs against the respondents South East Asian Airlines and Irene
Dornier. THIASE

SO ORDERED.
 (Bergonio, Jr., v. South East Asian Airlines, G.R. No. 195227, [April 21, 2014],
|||

733 PHIL 347-364)

G.R. No. 189404. December 11, 2013.]

WILGEN LOON, JERRY ARCILLA, ALBERT PEREYE, ARNOLD

PEREYE, EDGARDO OBOSE, ARNEL MALARAS, PATROCINO
TOETIN, EVELYN LEONARDO, ELMER GLOCENDA, RUFO
CUNAMAY, ROLANDO SAJOL, ROLANDO ABUCAYON,
JENNIFER NATIVIDAD, MARITESS TORION, ARMANDO
LONZAGA, RIZAL GELLIDO, EVIRDE HAQUE, 1 MYRNA
VINAS, RODELITO AYALA, WINELITO OJEL, RENATO
RODREGO, NENA ABINA, EMALYN OLIVEROS, LOUIE
ILAGAN, JOEL ENTIG, ARNEL ARANETA, BENJAMIN COSE,
WELITO LOON and WILLIAM ALIPAO, petitioners, vs. POWER
 MASTER, INC., TRI-C GENERAL SERVICES, and SPOUSES
HOMER and CARINA ALUMISIN, respondents.

DECISION

BRION, J  :p

We resolve the petition for review on certiorari, 2 filed by petitioners Wilgen

Loon, Jerry Arcilla, Albert Pereye, Arnold Pereye, Edgardo Obose, Arnel
Malaras, Patrocino Toetin, Evelyn Leonardo, Elmer Glocenda, Rufo Cunamay,
Rolando Sajol, Rolando Abucayon, Jennifer Natividad, Maritess Torion, Armando
Lonzaga, Rizal Gellido, Evirde Haque, Myrna Vinas, Rodelito Ayala, Winelito
Ojel, Renato Rodrego, Nena Abina, Emalyn Oliveros, Louie Ilagan, Joel Entig,
Arnel Araneta, Benjamin Cose, Welito Loon, William Alipao (collectively,
the petitioners), to challenge the June 5, 2009 decision 3 and the August 28,
2009 resolution 4 of the Court of Appeals (CA) in CA-G.R. SP No. 95182.

The Factual Antecedents

Respondents Power Master, Inc. and Tri-C General Services employed

and assigned the petitioners as janitors and leadsmen in various Philippine Long
Distance Telephone Company (PLDT) offices in Metro Manila area.
Subsequently, the petitioners filed a complaint for money claims against Power
Master, Inc., Tri-C General Services and their officers, the spouses Homer and
Carina Alumisin (collectively, the respondents). The petitioners alleged in their
complaint that they were not paid minimum wages, overtime, holiday, premium,
service incentive leave, and thirteenth month pays. They further averred that the
respondents made them sign blank payroll sheets. On June 11, 2001, the
petitioners amended their complaint and included illegal dismissal as their cause
of action. They claimed that the respondents relieved them from service in
retaliation for the filing of their original complaint. 
HAaECD

Notably, the respondents did not participate in the proceedings before the
Labor Arbiter except on April 19, 2001 and May 21, 2001 when Mr. Romulo
Pacia, Jr. appeared on the respondents' behalf. 5 The respondents' counsel
also appeared in a preliminary mandatory conference on July 5,
2001. 6 However, the respondents neither filed any position paper nor proffered
pieces of evidence in their defense despite their knowledge of the pendency of
the case.

The Labor Arbiter's Ruling

 In a decision 7 dated March 15, 2002, Labor Arbiter (LA) Elias H. Salinas
partially ruled in favor of the petitioners. The LA awarded the petitioners salary
differential, service incentive leave, and thirteenth month pays. In awarding
these claims, the LA stated that the burden of proving the payment of these
money claims rests with the employer. The LA also awarded attorney's fees in
favor of the petitioners, pursuant to Article 111 of the Labor Code. 8
However, the LA denied the petitioners' claims for backwages, overtime,
holiday, and premium pays. The LA observed that the petitioners failed to show
that they rendered overtime work and worked on holidays and rest days without
compensation. The LA further concluded that the petitioners cannot be declared
to have been dismissed from employment because they did not show any notice
of termination of employment. They were also not barred from entering the
respondents' premises.  SCaDAE

The Proceedings before the NLRC

Both parties appealed the LA's ruling with the National Labor Relations
Commission. The petitioners disputed the LA's denial of their claim for
backwages, overtime, holiday and premium pays. Meanwhile, the respondents
questioned the LA's ruling on the ground that the LA did not acquire jurisdiction
over their persons.
The respondents insisted that they were not personally served with
summons and other processes. They also claimed that they paid the petitioners
minimum wages, service incentive leave and thirteenth month pays. As proofs,
they attached photocopied and computerized copies of payroll sheets to
their memorandum on appeal. 9 They further maintained that the petitioners
were validly dismissed. They argued that the petitioners' repeated defiance to
their transfer to different workplaces and their violations of the company rules
and regulations constituted serious misconduct and willful disobedience. 10 
ESDcIA

On January 3, 2003, the respondents filed an unverified supplemental

appeal. They attached photocopied and computerized copies of list of
employees with automated teller machine (ATM) cards to the supplemental
appeal. This list also showed the amounts allegedly deposited in the employees'
ATM cards. 11 They also attached documentary evidence showing that the
petitioners were dismissed for cause and had been accorded due process.
On January 22, 2003, the petitioners filed an Urgent Manifestation and
Motion 12 where they asked for the deletion of the supplemental appeal from the
records because it allegedly suffered from infirmities. First, the supplemental
appeal was not verified. Second, it was belatedly filed six months from the filing
of the respondents' notice of appeal with memorandum on appeal. The
petitioners pointed out that they only agreed to the respondents' filing of a
responsive pleading until December 18, 2002. 13 Third, the attached
documentary evidence on the supplemental appeal bore the petitioners' forged
signatures.
They reiterated these allegations in an Urgent Motion to Resolve
Manifestation and Motion (To Expunge from the Records Respondents'
Supplemental Appeal, Reply and/or Rejoinder) dated January 31,
2003. 14 Subsequently, the petitioners filed an Urgent Manifestation with
Reiterating Motion to Strike-Off the Record Supplemental Appeal/Reply,
Quitclaims and Spurious Documents Attached to Respondents'
Appeal dated August 7, 2003. 15 The petitioners argued in this last motion that
the payrolls should not be given probative value because they were the
respondents' fabrications. They reiterated that the genuine payrolls bore their
signatures, unlike the respondents' photocopies of the payrolls. They also
maintained that their signatures in the respondents' documents (which showed
their receipt of thirteenth month pay) had been forged.

The NLRC Ruling

In a resolution dated November 27, 2003, the NLRC partially ruled in favor
of the respondents. 16 The NLRC affirmed the LA's awards of holiday pay and
attorney's fees. It also maintained that the LA acquired jurisdiction over the
persons of the respondents through their voluntary appearance.
However, it allowed the respondents to submit pieces of evidence for
the first time on appeal on the ground that they had been deprived of due
process. It found that the respondents did not actually receive the LA's
processes. It also admitted the respondents' unverified supplemental appeal on
the ground that technicalities may be disregarded to serve the greater interest of
substantial due process. Furthermore, the Rules of Court do not require the
verification of a supplemental pleading.
The NLRC also vacated the LA's awards of salary differential, thirteenth
month and service incentive leave pays. In so ruling, it gave weight to the
pieces of evidence attached to the memorandum on appeal and the
supplemental appeal. It maintained that the absence of the petitioners' signatures
in the payrolls was not an indispensable factor for their authenticity. It pointed out
that the payment of money claims was further evidenced by the list of employees
with ATM cards. It also found that the petitioners' signatures were not forged. It
took judicial notice that many people use at least two or more different
signatures. AHTICD

The NLRC further ruled that the petitioners were lawfully dismissed on

grounds of serious misconduct and willful disobedience. It found that the
petitioners failed to comply with various memoranda directing them to transfer to
other workplaces and to attend training seminars for the intended reorganization
and reshuffling.
The NLRC denied the petitioners' motion for reconsideration in a resolution
dated April 28, 2006. 17 Aggrieved, the petitioners filed a petition
for certiorari under Rule 65 of the Rules of Court before the CA. 18 
AEaSTC

The CA Ruling

The CA affirmed the NLRC's ruling. The CA held that the petitioners were
afforded substantive and procedural due process. Accordingly, the petitioners
deliberately did not explain their side. Instead, they continuously resisted their
transfer to other PLDT offices and violated company rules and regulations. It also
upheld the NLRC's findings on the petitioners' monetary claims.
The CA denied the petitioners' motion for reconsideration in a resolution
dated August 28, 2009, prompting the petitioners to file the present petition. 19

The Petition

In the petition before this Court, the petitioners argue that the CA
committed a reversible error when it did not find that the NLRC committed grave
abuse of discretion. They reiterate their arguments before the lower tribunals and
the CA in support of this conclusion. They also point out that the respondents
posted a bond from a surety that was not accredited by this Court and by the
NLRC. In effect, the respondents failed to perfect their appeal before the NLRC.
They further insist that the NLRC should not have admitted the respondents'
unverified supplemental appeal. 20  EcASIC

The Respondents' Position

In their Comments, the respondents stress that the petitioners only raised

the issue of the validity of the appeal bond for the first time on appeal. They also
reiterate their arguments before the NLRC and the CA. They additionally submit
that the petitioners' arguments have been fully passed upon and found
unmeritorious by the NLRC and the CA. 21

The Issues

This case presents to us the following issues:

1)  Whether the CA erred when it did not find that the NLRC
committed grave abuse of discretion in giving due course to
the respondents' appeal;
 a)  Whether the respondents perfected their appeal before
the NLRC; and
b)  Whether the NLRC properly allowed the respondents'
supplemental appeal
2)  Whether the respondents were estopped from submitting
pieces of evidence for the first time on appeal;
3)  Whether the petitioners were illegally dismissed and are thus
entitled to backwages;
4)  Whether the petitioners are entitled to salary differential,
overtime, holiday, premium, service incentive leave, and
thirteenth month pays; and  caHASI

5)  Whether the petitioners are entitled to attorney's fees.

The Court's Ruling

The respondents perfected their

appeal with the NLRC because the
revocation of the bonding company's
authority has a prospective
application

Paragraph 2, Article 223 of the Labor Code provides that "[i]n case of a

judgment involving a monetary award, an appeal by the employer may be
perfected only upon the posting of a cash or surety bond issued by a reputable
bonding company duly accredited by the Commission in the amount
equivalent to the monetary award in the judgment appealed from."
Contrary to the respondents' claim, the issue of the appeal bond's validity
may be raised for the first time on appeal since its proper filing is a jurisdictional
requirement. 22 The requirement that the appeal bond should be issued by an
accredited bonding company is mandatory and jurisdictional. The rationale of
requiring an appeal bond is to discourage the employers from using an appeal to
delay or evade the employees' just and lawful claims. It is intended to assure the
workers that they will receive the money judgment in their favor upon the
dismissal of the employer's appeal. 23
In the present case, the respondents filed a surety bond issued by Security
Pacific Assurance Corporation (Security Pacific) on June 28, 2002. At that time,
Security Pacific was still an accredited bonding company. However, the NLRC
revoked its accreditation on February 16, 2003. 24 Nonetheless, this subsequent
revocation should not prejudice the respondents who relied on its then subsisting
accreditation in good faith. In Del Rosario v. Philippine Journalists, Inc., 25 we
ruled that a bonding company's revocation of authority is prospective in
application. 
IDASHa

However, the respondents should post a new bond issued by an

accredited bonding company in compliance with paragraph 4, Section 6, Rule 6
of the NLRC Rules of Procedure . This provision states that "[a] cash or surety
bond shall be valid and effective from the date of deposit or posting, until the
case is finally decided, resolved or terminated or the award satisfied."

The CA correctly ruled that the

NLRC properly gave due course to
the respondents' supplemental
appeal

The CA also correctly ruled that the NLRC properly gave due course to the
respondents' supplemental appeal. Neither the laws nor the rules require the
verification of the supplemental appeal. 26 Furthermore, verification is a formal,
not a jurisdictional, requirement. It is mainly intended for the assurance that the
matters alleged in the pleading are true and correct and not of mere
speculation. 27 Also, a supplemental appeal is merely an addendum to the
verified memorandum on appeal that was earlier filed in the present case; hence,
the requirement for verification has substantially been complied with. 
IDAEHT

The respondents also timely filed their supplemental appeal on January 3,

2003. The records of the case show that the petitioners themselves agreed that
the pleading shall be filed until December 18, 2002. The NLRC further extended
the filing of the supplemental pleading until January 3, 2003 upon the
respondents' motion for extension.

A party may only adduce evidence

for the first time on appeal if he
adequately explains his delay in the
submission of evidence and he
sufficiently proves the allegations
sought to be proven

In labor cases, strict adherence to the technical rules of procedure is not

required. Time and again, we have allowed evidence to be submitted for the first
time on appeal with the NLRC in the interest of substantial justice. 28 Thus, we
have consistently supported the rule that labor officials should use all reasonable
means to ascertain the facts in each case speedily and objectively, without
regard to technicalities of law or procedure, in the interest of due process. 29
 However, this liberal policy should still be subject to rules of reason and
fairplay. The liberality of procedural rules is qualified by two requirements:
(1) a party should adequately explain any delay in the submission of
evidence; and (2) a party should sufficiently prove the allegations sought to
be proven. 30 The reason for these requirements is that the liberal application of
the rules before quasi-judicial agencies cannot be used to perpetuate injustice
and hamper the just resolution of the case. Neither is the rule on liberal
construction a license to disregard the rules of procedure. 31
Guided by these principles, the CA grossly erred in ruling that the NLRC
did not commit grave abuse of discretion in arbitrarily admitting and giving weight
to the respondents' pieces of evidence for the first time on appeal. 
DcHSEa

A.  The respondents failed to

adequately explain their delay
in the submission of evidence

We cannot accept the respondents' cavalier attitude in blatantly

disregarding the NLRC Rules of Procedure. The CA gravely erred when it
overlooked that the NLRC blindly admitted and arbitrarily gave probative value to
the respondents' evidence despite their failure to adequately explain their delay
in the submission of evidence. Notably, the respondents' delay was anchored on
their assertion that they were oblivious of the proceedings before the LA.
However, the respondents did not dispute the LA's finding that Mr. Romulo Pacia,
Jr. appeared on their behalf on April 19, 2001 and May 21, 2001. 32 The
respondents also failed to contest the petitioners' assertion that the respondents'
counsel appeared in a preliminary mandatory conference on July 5, 2001. 33  CSIDEc

Indeed, the NLRC capriciously and whimsically admitted and gave weight
to the respondents' evidence despite its finding that they voluntarily appeared in
the compulsory arbitration proceedings. The NLRC blatantly disregarded the fact
that the respondents voluntarily opted not to participate, to adduce evidence in
their defense and to file a position paper despite their knowledge of the pendency
of the proceedings before the LA. The respondents were also grossly negligent in
not informing the LA of the specific building unit where the respondents were
conducting their business and their counsel's address despite their knowledge of
their non-receipt of the processes. 34

B.  The respondents failed to

sufficiently prove the
allegations sought to be
proven
 Furthermore, the respondents failed to sufficiently prove the allegations
sought to be proven. Why the respondents' photocopied and computerized
copies of documentary evidence were not presented at the earliest opportunity is
a serious question that lends credence to the petitioners' claim that the
respondents fabricated the evidence for purposes of appeal. While we generally
admit in evidence and give probative value to photocopied documents in
administrative proceedings, allegations of forgery and fabrication should
prompt the adverse party to present the original documents for
inspection. 35 It was incumbent upon the respondents to present the originals,
especially in this case where the petitioners had submitted their specimen
signatures. Instead, the respondents effectively deprived the petitioners of the
opportunity to examine and controvert the alleged spurious evidence by not
adducing the originals. This Court is thus left with no option but to rule that the
respondents' failure to present the originals raises the presumption that evidence
willfully suppressed would be adverse if produced. 36  ECTAHc

It was also gross error for the CA to affirm the NLRC's proposition that "[i]t
is of common knowledge that there are many people who use at least two or
more different signatures." 37 The NLRC cannot take judicial notice that many
people use at least two signatures, especially in this case where the petitioners
themselves disown the signatures in the respondents' assailed documentary
evidence. 38 The NLRC's position is unwarranted and is patently unsupported by
the law and jurisprudence.
Viewed in these lights, the scales of justice must tilt in favor of the
employees. This conclusion is consistent with the rule that the employer's cause
can only succeed on the strength of its own evidence and not on the weakness of
the employee's evidence. 39

The petitioners are entitled to

backwages

Based on the above considerations, we reverse the NLRC and the CA's
finding that the petitioners were terminated for just cause and were afforded
procedural due process. In termination cases, the burden of proving just and
valid cause for dismissing an employee from his employment rests upon the
employer. The employer's failure to discharge this burden results in the finding
that the dismissal is unjustified. 40 This is exactly what happened in the present
case. IcDCaT

The petitioners are entitled to salary

differential, service incentive,
holiday, and thirteenth month pays
 We also reverse the NLRC and the CA's finding that the petitioners are not
entitled to salary differential, service incentive, holiday, and thirteenth month
pays. As in illegal dismissal cases, the general rule is that the burden rests on
the defendant to prove payment rather than on the plaintiff to prove non-payment
of these money claims. 41 The rationale for this rule is that the pertinent
personnel files, payrolls, records, remittances and other similar documents —
which will show that differentials, service incentive leave and other claims of
workers have been paid — are not in the possession of the worker but are in the
custody and control of the employer. 42

The petitioners are not entitled to

overtime and premium pays

However, the CA was correct in its finding that the petitioners failed to
provide sufficient factual basis for the award of overtime, and premium pays for
holidays and rest days. The burden of proving entitlement to overtime pay and
premium pay for holidays and rest days rests on the employee because these
are not incurred in the normal course of business. 43 In the present case, the
petitioners failed to adduce any evidence that would show that they actually
rendered service in excess of the regular eight working hours a day, and that
they in fact worked on holidays and rest days.  TDCcAE

The petitioners are entitled to

attorney's fees

The award of attorney's fees is also warranted under the circumstances of

this case. An employee is entitled to an award of attorney's fees equivalent to ten
percent (10%) of the amount of the wages in actions for unlawful withholding of
wages. 44
As a final note, we observe that Rodelito Ayala, Winelito Ojel, Renato
Rodrego and Welito Loon are also named as petitioners in this case. However,
we deny their petition for the reason that they were not part of the proceedings
before the CA. Their failure to timely seek redress before the CA precludes this
Court from awarding them monetary claims.
All told, we find that the NLRC committed grave abuse of discretion in
admitting and giving probative value to the respondents' evidence on appeal,
which errors the CA replicated when it upheld the NLRC rulings.  ASETHC

WHEREFORE, based on these premises, we REVERSE and SET

ASIDE the decision dated June 5, 2009, and the resolution dated August 28,
2009 of the Court of Appeals in CA-G.R. SP No. 95182. This case
is REMANDED to the Labor Arbiter for the sole purpose of computing petitioners'
(Wilgen Loon, Jerry Arcilla, Albert Pereye, Arnold Pereye, Edgardo Obose, Arnel
Malaras, Patrocino Toetin, Evelyn Leonardo, Elmer Glocenda, Rufo Cunamay,
Rolando Sajol, Rolando Abucayon, Jennifer Natividad, Maritess Torion, Armando
Lonzaga, Rizal Gellido, Evirdly Haque, Myrna Vinas, Nena Abina, Emalyn
Oliveros, Louie Ilagan, Joel Entig, Arnel Araneta, Benjamin Cose and William
Alipao) full backwages (computed from the date of their respective dismissals up
to the finality of this decision) and their salary differential, service incentive leave,
holiday, thirteenth month pays, and attorney's fees equivalent to ten percent
(10%) of the withheld wages. The respondents are further directed to
immediately post a satisfactory bond conditioned on the satisfaction of the
awards affirmed in this Decision.
SO ORDERED.
 (Loon v. Power Master, Inc., G.R. No. 189404, [December 11, 2013], 723 PHIL
|||

515-533)

G.R. Nos. 178034 & 178117 & G.R. Nos. 186984-85. October 17, 2013.]

ANDREW JAMES MCBURNIE, petitioner, vs. EULALIO

GANZON, EGI-MANAGERS, INC. and E. GANZON,
INC., respondents.

RESOLUTION

REYES, J  : p

For resolution are the —

(1) third motion for reconsideration 1 filed by Eulalio Ganzon
(Ganzon), EGI-Managers, Inc. (EGI) and E. Ganzon, Inc.,
(respondents) on March 27, 2012, seeking a reconsideration
of the Court's Decision 2 dated September 18, 2009 that
ordered the dismissal of their appeal to the National Labor
Relations Commission (NLRC) for failure to post additional
appeal bond in the amount of P54,083,910.00; and
(2) motion for reconsideration 3 filed by petitioner Andrew James
McBurnie (McBurnie) on September 26, 2012, assailing the
Court en banc's Resolution 4 dated September 4, 2012 that
(1) accepted the case from the Court's Third Division and (2)
 enjoined the implementation of the Labor Arbiter's (LA)
decision finding him to be illegally dismissed by the
respondents.

Antecedent Facts

The Decision dated September 18, 2009 provides the following antecedent
facts and proceedings —
On October 4, 2002, McBurnie, an Australian national, instituted a
complaint for illegal dismissal and other monetary claims against the
respondents. McBurnie claimed that on May 11, 1999, he signed a five-year
employment agreement 5 with the company EGI as an Executive Vice-President
who shall oversee the management of the company's hotels and resorts within
the Philippines. He performed work for the company until sometime in November
1999, when he figured in an accident that compelled him to go back to Australia
while recuperating from his injuries. While in Australia, he was informed by
respondent Ganzon that his services were no longer needed because their
intended project would no longer push through.
The respondents opposed the complaint, contending that their agreement
with McBurnie was to jointly invest in and establish a company for the
management of hotels. They did not intend to create an employer-employee
relationship, and the execution of the employment contract that was being
invoked by McBurnie was solely for the purpose of allowing McBurnie to obtain
an alien work permit in the Philippines. At the time McBurnie left for Australia for
his medical treatment, he had not yet obtained a work permit.  TIESCA

In a Decision 6 dated September 30, 2004, the LA declared McBurnie as

having been illegally dismissed from employment, and thus entitled to receive
from the respondents the following amounts: (a) US$985,162.00 as salary and
benefits for the unexpired term of their employment contract, (b) P2,000,000.00
as moral and exemplary damages, and (c) attorney's fees equivalent to 10% of
the total monetary award.
Feeling aggrieved, the respondents appealed the LA's Decision to the
NLRC. 7 On November 5, 2004, they filed their Memorandum of Appeal 8 and
Motion to Reduce Bond, 9 and posted an appeal bond in the amount of
P100,000.00. The respondents contended in their Motion to Reduce Bond, inter
alia, that the monetary awards of the LA were null and excessive, allegedly with
the intention of rendering them incapable of posting the necessary appeal bond.
They claimed that an award of "more than P60 Million Pesos to a single foreigner
who had no work permit and who left the country for good one month after the
purported commencement of his employment" was a patent
nullity. 10 Furthermore, they claimed that because of their business losses that
may be attributed to an economic crisis, they lacked the capacity to pay the bond
of almost P60 Million, or even the millions of pesos in premium required for such
bond.
On March 31, 2005, the NLRC denied 11 the motion to reduce bond,
explaining that "in cases involving monetary award, an employer seeking to
appeal the [LA's] decision to the Commission is unconditionally required by Art.
223, Labor Code to post bond in the amount equivalent to the monetary award . .
. ." 12 Thus, the NLRC required from the respondents the posting of an additional
bond in the amount of P54,083,910.00.
When their motion for reconsideration was denied, 13 the respondents
decided to elevate the matter to the Court of Appeals (CA) via the Petition
for Certiorari and Prohibition (With Extremely Urgent Prayer for the Issuance of a
Preliminary Injunction and/or Temporary Restraining Order) 14 docketed as CA-
G.R. SP No. 90845.
In the meantime, in view of the respondents' failure to post the required
additional bond, the NLRC dismissed their appeal in a Resolution 15 dated March
8, 2006. The respondents' motion for reconsideration was denied on June 30,
2006. 16 This prompted the respondents to file with the CA the Petition
for Certiorari (With Urgent Prayers for the Immediate Issuance of a Temporary
Restraining Order and a Writ of Preliminary Injunction) 17 docketed as CA-G.R.
SP No. 95916, which was later consolidated with CA-G.R. SP No. 90845.

CA-G.R. SP Nos. 90845 and 95916

On February 16, 2007, the CA issued a Resolution 18 granting the

respondents' application for a writ of preliminary injunction. It directed the NLRC,
McBurnie, and all persons acting for and under their authority to refrain from
causing the execution and enforcement of the LA's decision in favor of McBurnie,
conditioned upon the respondents' posting of a bond in the amount of
P10,000,000.00. McBurnie sought reconsideration of the issuance of the writ of
preliminary injunction, but this was denied by the CA in its Resolution 19 dated
May 29, 2007.  HISAET

McBurnie then filed with the Court a Petition for Review

on Certiorari  20 docketed as G.R. Nos. 178034 and 178117, assailing the CA
Resolutions that granted the respondents' application for the injunctive writ. On
July 4, 2007, the Court denied the petition on the ground of McBurnie's failure to
comply with the 2004 Rules on Notarial Practice and to sufficiently show that the
CA committed any reversible error. 21 A motion for reconsideration was denied
with finality in a Resolution 22 dated October 8, 2007.
 Unyielding, McBurnie filed a Motion for Leave (1) To File Supplemental
Motion for Reconsideration and (2) To Admit the Attached Supplemental Motion
for Reconsideration, 23 which was treated by the Court as a second motion for
reconsideration, a prohibited pleading under Section 2, Rule 56 of the Rules of
Court. Thus, the motion for leave was denied by the Court in a
Resolution 24 dated November 26, 2007. The Court's Resolution dated July 4,
2007 then became final and executory on November 13, 2007; accordingly, entry
of judgment was made in G.R. Nos. 178034 and 178117. 25
In the meantime, the CA ruled on the merits of CA-G.R. SP No.
90845 and CA-G.R. SP No. 95916 and rendered its Decision 26 dated October
27, 2008, allowing the respondents' motion to reduce appeal bond and directing
the NLRC to give due course to their appeal. The dispositive portion of the CA
Decision reads:
WHEREFORE, in view of the foregoing, the petition
for certiorari and prohibition docketed as CA G.R. SP No. 90845 and the
petition for certiorari docketed as CA G.R. SP No. 95916 are GRANTED.
Petitioners['] Motion to Reduce Appeal Bond is GRANTED. Petitioners
are hereby DIRECTED to post appeal bond in the amount of
P10,000,000.00. The NLRC is hereby DIRECTED to give due course to
petitioners' appeal in CA G.R. SP No. 95916 which is ordered remanded
to the NLRC for further proceedings.
SO ORDERED. 27
On the issue 28 of the NLRC's denial of the respondents' motion to reduce
appeal bond, the CA ruled that the NLRC committed grave abuse of discretion in
immediately denying the motion without fixing an appeal bond in an amount that
was reasonable, as it denied the respondents of their right to appeal from the
decision of the LA. 29 The CA explained that "(w)hile Art. 223 of the Labor
Code requiring bond equivalent to the monetary award is explicit, Section 6, Rule
VI of the NLRC Rules of Procedure, as amended, recognized as exception a
motion to reduce bond upon meritorious grounds and upon posting of a bond in a
reasonable amount in relation to the monetary award." 30
On the issue 31 of the NLRC's dismissal of the appeal on the ground of the
respondents' failure to post the additional appeal bond, the CA also found grave
abuse of discretion on the part of the NLRC, explaining that an appeal bond in
the amount of P54,083,910.00 was prohibitive and excessive. Moreover, the
appellate court cited the pendency of the petition for certiorari over the denial of
the motion to reduce bond, which should have prevented the NLRC from
immediately dismissing the respondents' appeal. 32
Undeterred, McBurnie filed a motion for reconsideration. At the same time,
the respondents moved that the appeal be resolved on the merits by the CA. On
March 3, 2009, the CA issued a Resolution 33 denying both motions. McBurnie
then filed with the Court the Petition for Review on Certiorari 34 docketed as G.R.
Nos. 186984-85.  EIaDHS

In the meantime, the NLRC, acting on the CA's order of remand, accepted
the appeal from the LA's decision, and in its Decision 35 dated November 17,
2009, reversed and set aside the Decision of the LA, and entered a new one
dismissing McBurnie's complaint. It explained that based on records, McBurnie
was never an employee of any of the respondents, but a potential investor in a
project that included said respondents, barring a claim of dismissal, much less,
an illegal dismissal. Granting that there was a contract of employment executed
by the parties, McBurnie failed to obtain a work permit which would have allowed
him to work for any of the respondents. 36 In the absence of such permit, the
employment agreement was void and thus, could not be the source of any right
or obligation.

Court Decision dated September 18, 2009

On September 18, 2009, the Third Division of this Court rendered its
Decision 37 which reversed the CA Decision dated October 27, 2008 and
Resolution dated March 3, 2009. The dispositive portion reads:
WHEREFORE, the petition is GRANTED. The Decision of the
Court of Appeals in CA-G.R. SP Nos. 90845 and 95916 dated October
27, 2008 granting respondents' Motion to Reduce Appeal Bond and
ordering the National Labor Relations Commission to give due course to
respondents' appeal, and its March 3, 2009 Resolution denying
petitioner's motion for reconsideration, are REVERSED and SET
ASIDE. The March 8, 2006 and June 30, 2006 Resolutions of the
National Labor Relations Commission in NLRC NCR CA NO. 042913-05
dismissing respondents' appeal for failure to perfect an appeal and
denying their motion for reconsideration, respectively,
are REINSTATED and AFFIRMED.
SO ORDERED. 38
The Court explained that the respondents' failure to post a bond equivalent
in amount to the LA's monetary award was fatal to the appeal. 39 Although an
appeal bond may be reduced upon motion by an employer, the following
conditions must first be satisfied: (1) the motion to reduce bond shall be based on
meritorious grounds; and (2) a reasonable amount in relation to the monetary
award is posted by the appellant. Unless the NLRC grants the motion to reduce
the cash bond within the 10-day reglementary period to perfect an appeal from a
judgment of the LA, the employer is mandated to post the cash or surety bond
securing the full amount within the said 10-day period. 40 The respondents' initial
appeal bond of P100,000.00 was grossly inadequate compared to the LA's
monetary award.
The respondents' first motion for reconsideration 41 was denied by the
Court for lack of merit via a Resolution 42 dated December 14, 2009.
Meanwhile, on the basis of the Court's Decision, McBurnie filed with the
NLRC a motion for reconsideration with motion to recall and expunge from the
records the NLRC Decision dated November 17, 2009. 43 The motion was
granted by the NLRC in its Decision 44 dated January 14, 2010. 45
Undaunted by the denial of their first motion for reconsideration of the
Decision dated September 18, 2009, the respondents filed with the Court a
Motion for Leave to Submit Attached Second Motion for Reconsideration 46 and
Second Motion for Reconsideration, 47 which motion for leave was granted in a
Resolution 48 dated March 15, 2010. McBurnie was allowed to submit his
comment on the second motion, and the respondents, their reply to the
comment. On January 25, 2012, however, the Court issued a
Resolution 49 denying the second motion "for lack of merit," "considering that a
second motion for reconsideration is a prohibited pleading . . . ." 50
The Court's Decision dated September 18, 2009 became final and
executory on March 14, 2012. Thus, entry of judgment 51 was made in due
course, as follows: aIcETS

ENTRY OF JUDGMENT
This is to certify that on September 18, 2009 a decision rendered
in the above-entitled cases was filed in this Office, the dispositive part of
which reads as follows:
xxx xxx xxx
and that the same has, on March 14, 2012 become final and executory
and is hereby recorded in the Book of Entries of Judgments. 52

The Entry of Judgment indicated that the same was made for the Court's
Decision rendered in G.R. Nos. 186984-85.

On March 27, 2012, the respondents filed a Motion for Leave to File
Attached Third Motion for Reconsideration, with an attached Motion for
Reconsideration (on the Honorable Court's 25 January 2012 Resolution) with
Motion to Refer These Cases to the Honorable Court En Banc. 53 The third
motion for reconsideration is founded on the following grounds:
I.
THE PREVIOUS 15 MARCH 2010 RESOLUTION OF THE
HONORABLE COURT ACTUALLY GRANTED RESPONDENTS'
"MOTION FOR LEAVE TO SUBMIT A SECOND MOTION FOR
RECONSIDERATION."
HENCE, RESPONDENTS RESPECTFULLY CONTEND THAT
THE SUBSEQUENT 25 JANUARY 2012 RESOLUTION CANNOT
DENY THE "SECOND MOTION FOR RECONSIDERATION" ON THE
GROUND THAT IT IS A PROHIBITED PLEADING.
MOREOVER, IT IS RESPECTFULLY CONTENDED THAT
THERE ARE VERY PECULIAR CIRCUMSTANCES AND NUMEROUS
IMPORTANT ISSUES IN THESE CASES THAT CLEARLY JUSTIFY
GIVING DUE COURSE TO RESPONDENTS' "SECOND MOTION FOR
RECONSIDERATION," WHICH ARE:
II.
THE 10 MILLION PESOS BOND WHICH WAS POSTED IN
COMPLIANCE WITH THE OCTOBER 27, 2008 DECISION OF THE
COURT OF APPEALS IS A SUBSTANTIAL AND SPECIAL
MERITORIOUS CIRCUMSTANCE TO MERIT RECONSIDERATION OF
THIS APPEAL.
III.
THE HONORABLE COURT HAS HELD IN NUMEROUS LABOR
CASES THAT WITH RESPECT TO ARTICLE 223 OF THE LABOR
CODE, THE REQUIREMENTS OF THE LAW SHOULD BE GIVEN A
LIBERAL INTERPRETATION, ESPECIALLY IF THERE ARE SPECIAL
MERITORIOUS CIRCUMSTANCES AND ISSUES.
IV.
THE [LA'S] JUDGMENT WAS PATENTLY VOID SINCE IT
AWARDS MORE THAN [P]60 MILLION PESOS TO A SINGLE
FOREIGNER WHO HAD NO WORK PERMIT, AND NO WORKING
VISA.
V.
PETITIONER MCBURNIE DID NOT IMPLEAD THE NATIONAL
LABOR RELATIONS COMMISSION (NLRC) IN HIS APPEAL HEREIN,
MAKING THE APPEAL INEFFECTIVE AGAINST THE NLRC. 
AaSHED

VI.
NLRC HAS DISMISSED THE COMPLAINT OF PETITIONER
MCBURNIE IN ITS NOVEMBER 17, 2009 DECISION.
VII.
THE HONORABLE COURT'S 18 SEPTEMBER 2009 DECISION
WAS TAINTED WITH VERY SERIOUS IRREGULARITIES.
 VIII.
G.R. NOS. 178034 AND 178117 HAVE BEEN INADVERTENTLY
INCLUDED IN THIS CASE.
IX.
THE HONORABLE COURT DID NOT DULY RULE UPON THE
OTHER VERY MERITORIOUS ARGUMENTS OF THE
RESPONDENTS WHICH ARE AS FOLLOWS:
(A) PETITIONER NEVER ATTENDED ANY OF ALL 14
HEARINGS BEFORE THE [LA] (WHEN 2 MISSED HEARINGS
MEAN DISMISSAL)[.]
(B) PETITIONER REFERRED TO HIMSELF AS A
"VICTIM" OF LEISURE EXPERTS, INC., BUT NOT OF ANY OF
THE RESPONDENTS[.]
(C) PETITIONER'S POSITIVE LETTER TO
RESPONDENT MR. EULALIO GANZON CLEARLY SHOWS
THAT HE WAS NOT ILLEGALLY DISMISSED NOR EVEN
DISMISSED BY ANY OF THE RESPONDENTS AND
PETITIONER EVEN PROMISED TO PAY HIS DEBTS FOR
ADVANCES MADE BY RESPONDENT[S].
(D) PETITIONER WAS NEVER EMPLOYED BY ANY OF
THE RESPONDENTS. PETITIONER PRESENTED WORK FOR
CORONADO BEACH RESORT WHICH IS [NEITHER] OWNED
NOR CONNECTED WITH ANY OF THE RESPONDENTS.
(E) THE [LA] CONCLUDED THAT PETITIONER WAS
DISMISSED EVEN IF THERE WAS ABSOLUTELY NO
EVIDENCE AT ALL PRESENTED THAT PETITIONER WAS
DISMISSED BY THE RESPONDENTS[.]
(F) PETITIONER LEFT THE PHILIPPINES FOR
AUSTRALIA JUST 2 MONTHS AFTER THE START OF THE
ALLEGED EMPLOYMENT AGREEMENT, AND HAS STILL NOT
RETURNED TO THE PHILIPPINES AS CONFIRMED BY THE
BUREAU OF IMMIGRATION.
(G) PETITIONER COULD NOT HAVE SIGNED AND
PERSONALLY APPEARED BEFORE THE NLRC
ADMINISTERING OFFICER AS INDICATED IN THE
COMPLAINT SHEET SINCE HE LEFT THE COUNTRY 3 YEARS
BEFORE THE COMPLAINT WAS FILED AND HE NEVER CAME
BACK. 54
On September 4, 2012, the Court en banc  55 issued a
Resolution 56 accepting the case from the Third Division. It also issued a
temporary restraining order (TRO) enjoining the implementation of the LA's
Decision dated September 30, 2004. This prompted McBurnie's filing of a Motion
for Reconsideration, 57 where he invoked the fact that the Court's Decision dated
September 18, 2009 had become final and executory, with an entry of judgment
already made by the Court.  HASDcC

Our Ruling

In light of pertinent law and jurisprudence, and upon taking a second hard
look of the parties' arguments and the records of the case, the Court has
ascertained that a reconsideration of this Court's Decision dated September 18,
2009 and Resolutions dated December 14, 2009 and January 25, 2012, along
with the lifting of the entry of judgment in G.R. Nos. 186984-85, is in order.

The Court's acceptance of the

third motion for reconsideration

At the outset, the Court emphasizes that second and subsequent motions
for reconsideration are, as a general rule, prohibited. Section 2, Rule 52 of
the Rules of Court provides that "[n]o second motion for reconsideration of a
judgment or final resolution by the same party shall be entertained." The rule
rests on the basic tenet of immutability of judgments. "At some point, a decision
becomes final and executory and, consequently, all litigations must come to an
end." 58
The general rule, however, against second and subsequent motions for
reconsideration admits of settled exceptions. For one, the present Internal Rules
of the Supreme Court, particularly Section 3, Rule 15 thereof, provides:
Sec. 3. Second motion for reconsideration.  — The Court shall
not entertain a second motion for reconsideration, and any exception to
this rule can only be granted in the higher interest of justice by the
Court en banc upon a vote of at least two-thirds of its actual
membership. There is reconsideration "in the higher interest of
justice" when the assailed decision is not only legally erroneous,
but is likewise patently unjust and potentially capable of causing
unwarranted and irremediable injury or damage to the parties. A
second motion for reconsideration can only be entertained before the
ruling sought to be reconsidered becomes final by operation of law or by
the Court's declaration.
xxx xxx xxx (Emphasis ours)
In a line of cases, the Court has then entertained and granted second
motions for reconsideration "in the higher interest of substantial justice," as
allowed under the Internal Rules when the assailed decision is "legally
erroneous," "patently unjust" and "potentially capable of causing unwarranted
and irremediable injury or damage to the parties." In Tirazona v. Philippine EDS
Techno-Service, Inc. (PET, Inc.), 59 we also explained that a second motion for
reconsideration may be allowed in instances of "extraordinarily persuasive
reasons and only after an express leave shall have been obtained." 60 In Apo
Fruits Corporation v. Land Bank of the Philippines, 61 we allowed a second
motion for reconsideration as the issue involved therein was a matter of public
interest, as it pertained to the proper application of a basic constitutionally-
guaranteed right in the government's implementation of its agrarian reform
program. In San Miguel Corporation v. NLRC,  62 the Court set aside the
decisions of the LA and the NLRC that favored claimants-security guards upon
the Court's review of San Miguel Corporation's second motion for
reconsideration. In Vir-Jen Shipping and Marine Services, Inc. v. NLRC, et
al.,  63  the Court en banc reversed on a third motion for reconsideration the ruling
of the Court's Division on therein private respondents' claim for wages and
monetary benefits.  STaCcA

It is also recognized that in some instances, the prudent action towards a

just resolution of a case is for the Court to suspend rules of procedure, for "the
power of this Court to suspend its own rules or to except a particular case from
its operations whenever the purposes of justice require it, cannot be
questioned." 64 In De Guzman v. Sandiganbayan,  65 the Court, thus, explained:
[T]he rules of procedure should be viewed as mere tools designed to
facilitate the attainment of justice. Their strict and rigid application,
which would result in technicalities that tend to frustrate rather than
promote substantial justice, must always be avoided. Even the Rules
of Court envision this liberality. This power to suspend or even
disregard the rules can be so pervasive and encompassing so as to
alter even that which this Court itself has already declared to be final,
as we are now compelled to do in this case. . . . .
xxx xxx xxx
The Rules of Court was conceived and promulgated to set forth
guidelines in the dispensation of justice but not to bind and chain the
hand that dispenses it, for otherwise, courts will be mere slaves to or
robots of technical rules, shorn of judicial discretion. That is precisely
why courts in rendering real justice have always been, as they in fact
ought to be, conscientiously guided by the norm that when on the
balance, technicalities take a backseat against substantive rights, and
not the other way around. Truly then, technicalities, in the appropriate
language of Justice Makalintal, "should give way to the realities of the
situation." . . . . 66 (Citations omitted)
Consistent with the foregoing precepts, the Court has then reconsidered
even decisions that have attained finality, finding it more appropriate to lift entries
of judgments already made in these cases. In Navarro v. Executive
Secretary,  67 we reiterated the pronouncement in De Guzman that the power to
suspend or even disregard rules of procedure can be so pervasive and
compelling as to alter even that which this Court itself has already declared final.
The Court then recalled in Navarro an entry of judgment after it had determined
the validity and constitutionality of Republic Act No. 9355, explaining that:
Verily, the Court had, on several occasions, sanctioned the recall
of entries of judgment in light of attendant extraordinary circumstances.
The power to suspend or even disregard rules of procedure can be so
pervasive and compelling as to alter even that which this Court itself had
already declared final. In this case, the compelling concern is not only to
afford the movants-intervenors the right to be heard since they would be
adversely affected by the judgment in this case despite not being original
parties thereto, but also to arrive at the correct interpretation of the
provisions of the [Local Government Code (LGC)] with respect to the
creation of local government units. . . . . 68 (Citations omitted)
In Muñoz v. CA,  69 the Court resolved to recall an entry of judgment to
prevent a miscarriage of justice. This justification was likewise applied in Tan
Tiac Chiong v. Hon. Cosico,  70 wherein the Court held that:
The recall of entries of judgments, albeit rare, is not a novelty.
In Muñoz v. CA, where the case was elevated to this Court and a first
and second motion for reconsideration had been denied with finality, the
Court, in the interest of substantial justice, recalled the Entry of
Judgment as well as the letter of transmittal of the records to the Court of
Appeals. 71 (Citation omitted)
In Barnes v. Judge Padilla,  72 we ruled:
[A] final and executory judgment can no longer be attacked by any of
the parties or be modified, directly or indirectly, even by the highest
court of the land.
However, this Court has relaxed this rule in order to serve
substantial justice considering (a) matters of life, liberty, honor or
property, (b) the existence of special or compelling circumstances, (c)
the merits of the case, (d) a cause not entirely attributable to the fault or
negligence of the party favored by the suspension of the rules, (e) a lack
of any showing that the review sought is merely frivolous and dilatory,
and (f) the other party will not be unjustly prejudiced
thereby. 73 (Citations omitted)  STCDaI

As we shall explain, the instant case also qualifies as an exception

to, first, the proscription against second and subsequent motions for
reconsideration, and second, the rule on immutability of judgments; a
reconsideration of the Decision dated September 18, 2009, along with the
Resolutions dated December 14, 2009 and January 25, 2012, is justified by the
higher interest of substantial justice.
To begin with, the Court agrees with the respondents that the Court's prior
resolve to grant, and not just merely note, in a Resolution dated March 15, 2010
the respondents' motion for leave to submit their second motion for
reconsideration already warranted a resolution and discussion of the motion for
reconsideration on its merits. Instead of doing this, however, the Court issued on
January 25, 2012 a Resolution 74 denying the motion to reconsider for lack of
merit, merely citing that it was a "prohibited pleading under Section 2, Rule 52 in
relation to Section 4, Rule 56 of the 1997 Rules of Civil Procedure, as
amended." 75 In League of Cities of the Philippines (LCP) v. Commission on
Elections,  76 we reiterated a ruling that when a motion for leave to file and admit
a second motion for reconsideration is granted by the Court, the Court therefore
allows the filing of the second motion for reconsideration. In such a case, the
second motion for reconsideration is no longer a prohibited pleading. Similarly in
this case, there was then no reason for the Court to still consider the
respondents' second motion for reconsideration as a prohibited pleading, and
deny it plainly on such ground. The Court intends to remedy such error through
this resolution.
More importantly, the Court finds it appropriate to accept the pending
motion for reconsideration and resolve it on the merits in order to rectify its prior
disposition of the main issues in the petition. Upon review, the Court is
constrained to rule differently on the petitions. We have determined the grave
error in affirming the NLRC's rulings, promoting results that are patently unjust for
the respondents, as we consider the facts of the case, pertinent law,
jurisprudence, and the degree of the injury and damage to the respondents that
will inevitably result from the implementation of the Court's Decision dated
September 18, 2009.

The rule on appeal bonds

We emphasize that the crucial issue in this case concerns the sufficiency
of the appeal bond that was posted by the respondents. The present rule on the
matter is Section 6, Rule VI of the 2011 NLRC Rules of Procedure, which was
substantially the same provision in effect at the time of the respondents' appeal
to the NLRC, and which reads:
RULE VI
APPEALS
Sec. 6. BOND. — In case the decision of the Labor Arbiter or the
Regional Director involves a monetary award, an appeal by the employer
may be perfected only upon the posting of a cash or surety bond. The
 appeal bond shall either be in cash or surety in an amount equivalent to
the monetary award, exclusive of damages and attorney's fees.
xxx xxx xxx
No motion to reduce bond shall be entertained except on
meritorious grounds and upon the posting of a bond in a
reasonable amount in relation to the monetary award.
The filing of the motion to reduce bond without compliance with
the requisites in the preceding paragraph shall not stop the running of
the period to perfect an appeal. (Emphasis supplied) IaEScC

While the CA, in this case, allowed an appeal bond in the reduced amount
of P10,000,000.00 and then ordered the case's remand to the NLRC, this Court's
Decision dated September 18, 2009 provides otherwise, as it reads in part:
The posting of a bond is indispensable to the perfection of an
appeal in cases involving monetary awards from the decision of the
Labor Arbiter. The lawmakers clearly intended to make the bond a
mandatory requisite for the perfection of an appeal by the employer as
inferred from the provision that an appeal by the employer may be
perfected "only upon the posting of a cash or surety bond." The
word "only" makes it clear that the posting of a cash or surety bond by
the employer is the essential and exclusive means by which an
employer's appeal may be perfected. . . . .
Moreover, the filing of the bond is not only mandatory but a
jurisdictional requirement as well, that must be complied with in order to
confer jurisdiction upon the NLRC. Non-compliance therewith renders
the decision of the Labor Arbiter final and executory. This requirement is
intended to assure the workers that if they prevail in the case, they will
receive the money judgment in their favor upon the dismissal of the
employer's appeal. It is intended to discourage employers from using an
appeal to delay or evade their obligation to satisfy their employees' just
and lawful claims.
xxx xxx xxx
Thus, it behooves the Court to give utmost regard to the
legislative and administrative intent to strictly require the employer to
post a cash or surety bond securing the full amount of the monetary
award within the 10[-]day reglementary period. Nothing in the Labor
Code or the NLRC Rules of Procedure authorizes the posting of a
bond that is less than the monetary award in the judgment, or
would deem such insufficient posting as sufficient to perfect the
appeal.
While the bond may be reduced upon motion by the employer,
this is subject to the conditions that (1) the motion to reduce the bond
 shall be based on meritorious grounds; and (2) a reasonable
amount in relation to the monetary award is posted by the appellant,
otherwise the filing of the motion to reduce bond shall not stop the
running of the period to perfect an appeal. The qualification effectively
requires that unless the NLRC grants the reduction of the cash bond
within the 10[-lday reglementary period,  the employer is still expected
to post the cash or surety bond securing the full amount within the
said 10[-]day period. If the NLRC does eventually grant the motion for
reduction after the reglementary period has elapsed, the correct relief
would be to reduce the cash or surety bond already posted by the
employer within the 10-day period. 77 (Emphasis supplied;
underscoring ours)
To begin with, the Court rectifies its prior pronouncement — the unqualified
statement that even an appellant who seeks a reduction of an appeal bond
before the NLRC is expected to post a cash or surety bond securing the full
amount of the judgment award within the 10-day reglementary period to perfect
the appeal.

The suspension of the period to

perfect the appeal upon the filing
of a motion to reduce bond

To clarify, the prevailing jurisprudence on the matter provides that the filing
of a motion to reduce bond, coupled with compliance with the two
conditions emphasized in Garcia v. KJ Commercial 78 for the grant of such
motion, namely, (1) a meritorious ground, and (2) posting of a bond in a
reasonable amount, shall suffice to suspend the running of the period to
perfect an appeal from the labor arbiter's decision to the NLRC. 79 To require
the full amount of the bond within the 10-day reglementary period would only
render nugatory the legal provisions which allow an appellant to seek a reduction
of the bond. Thus, we explained in Garcia:  CaSHAc

The filing of a motion to reduce bond and compliance with

the two conditions stop the running of the period to perfect an
appeal. . . .
xxx xxx xxx
The NLRC has full discretion to grant or deny the motion to
reduce bond, and it may rule on the motion beyond the 10-day period
within which to perfect an appeal. Obviously, at the time of the filing of
the motion to reduce bond and posting of a bond in a reasonable
amount, there is no assurance whether the appellant's motion is indeed
based on "meritorious ground" and whether the bond he or she posted is
of a "reasonable amount." Thus, the appellant always runs the risk of
failing to perfect an appeal.
 . . . In order to give full effect to the provisions on motion to
reduce bond, the appellant must be allowed to wait for the ruling of
the NLRC on the motion even beyond the 10-day period to perfect
an appeal. If the NLRC grants the motion and rules that there is indeed
meritorious ground and that the amount of the bond posted is
reasonable, then the appeal is perfected. If the NLRC denies the motion,
the appellant may still file a motion for reconsideration as provided under
Section 15, Rule VII of the Rules. If the NLRC grants the motion for
reconsideration and rules that there is indeed meritorious ground and
that the amount of the bond posted is reasonable, then the appeal is
perfected. If the NLRC denies the motion, then the decision of the labor
arbiter becomes final and executory.
xxx xxx xxx
In any case, the rule that the filing of a motion to reduce
bond shall not stop the running of the period to perfect an appeal is
not absolute. The Court may relax the rule. In Intertranz Container
Lines, Inc. v. Bautista, the Court held:
"Jurisprudence tells us that in labor cases, an appeal from
a decision involving a monetary award may be perfected only
upon the posting of cash or surety bond. The Court, however, has
relaxed this requirement under certain exceptional circumstances
in order to resolve controversies on their merits. These
circumstances include: (1) fundamental consideration of
substantial justice; (2) prevention of miscarriage of justice or of
unjust enrichment; and (3) special circumstances of the case
combined with its legal merits, and the amount and the issue
involved." 80 (Citations omitted and emphasis ours)
A serious error of the NLRC was its outright denial of the motion to reduce
the bond, without even considering the respondents' arguments and totally
unmindful of the rules and jurisprudence that allow the bond's reduction. Instead
of resolving the motion to reduce the bond on its merits, the NLRC insisted on an
amount that was equivalent to the monetary award, merely explaining:
We are constrained to deny respondents['] motion for reduction.
As held by the Supreme Court in a recent case, in cases involving
monetary award, an employer seeking to appeal the Labor Arbiter's
decision to the Commission is unconditionally required by Art.
223, Labor Code to post bond in the amount equivalent to the
monetary award (Calabash Garments vs. NLRC, G.R. No. 110827,
August 8, 1996). . . . 81 (Emphasis ours)
When the respondents sought to reconsider, the NLRC still refused to fully
decide on the motion. It refused to at least make a preliminary determination of
the merits of the appeal, as it held: 
SDcITH
 We are constrained to dismiss respondents' Motion for
Reconsideration. Respondents' contention that the appeal bond is
excessive and based on a decision which is a patent nullity involve[s] the
merits of the case. . . . 82

Prevailing rules and jurisprudence

allow the reduction of appeal bonds.

By such haste of the NLRC in peremptorily denying the respondents'

motion without considering the respondents' arguments, it effectively denied the
respondents of their opportunity to seek a reduction of the bond even when the
same is allowed under the rules and settled jurisprudence. It was equivalent to
the NLRC's refusal to exercise its discretion, as it refused to determine and rule
on a showing of meritorious grounds and the reasonableness of the bond
tendered under the circumstances. 83 Time and again, the Court has cautioned
the NLRC to give Article 223 of the Labor Code, particularly the provisions
requiring bonds in appeals involving monetary awards, a liberal interpretation in
line with the desired objective of resolving controversies on the merits. 84 The
NLRC's failure to take action on the motion to reduce the bond in the manner
prescribed by law and jurisprudence then cannot be countenanced. Although an
appeal by parties from decisions that are adverse to their interests is neither a
natural right nor a part of due process, it is an essential part of our judicial
system. Courts should proceed with caution so as not to deprive a party of the
right to appeal, but rather, ensure that every party has the amplest opportunity for
the proper and just disposition of their cause, free from the constraints of
technicalities. 85 Considering the mandate of labor tribunals, the principle equally
applies to them.
Given the circumstances of the case, the Court's affirmance in the
Decision dated September 18, 2009 of the NLRC's strict application of the rule on
appeal bonds then demands a re-examination. Again, the emerging trend in our
jurisprudence is to afford every party-litigant the amplest opportunity for the
proper and just determination of his cause, free from the constraints of
technicalities. 86 Section 2, Rule I of the NLRC Rules of Procedure also provides
the policy that "[the] Rules shall be liberally construed to carry out the objectives
of the Constitution, the Labor Code of the Philippines and other relevant
legislations, and to assist the parties in obtaining just, expeditious and
inexpensive resolution and settlement of labor disputes." 87
In accordance with the foregoing, although the general rule provides that
an appeal in labor cases from a decision involving a monetary award may be
perfected only upon the posting of a cash or surety bond, the Court has relaxed
this requirement under certain exceptional circumstances in order to resolve
controversies on their merits. These circumstances include: (1) the fundamental
consideration of substantial justice; (2) the prevention of miscarriage of justice or
of unjust enrichment; and (3) special circumstances of the case combined with its
legal merits, and the amount and the issue involved. 88 Guidelines that are
applicable in the reduction of appeal bonds were also explained in Nicol v.
Footjoy Industrial Corporation. 89 The bond requirement in appeals involving
monetary awards has been and may be relaxed in meritorious cases, including
instances in which (1) there was substantial compliance with the Rules, (2)
surrounding facts and circumstances constitute meritorious grounds to reduce
the bond, (3) a liberal interpretation of the requirement of an appeal bond would
serve the desired objective of resolving controversies on the merits, or (4) the
appellants, at the very least, exhibited their willingness and/or good faith by
posting a partial bond during the reglementary period. 90
In Blancaflor v. NLRC,  91 the Court also emphasized that while Article
223 92 of the Labor Code, as amended by Republic Act No. 6715, which requires
a cash or surety bond in an amount equivalent to the monetary award in the
judgment appealed from may be considered a jurisdictional requirement for the
perfection of an appeal, nevertheless, adhering to the principle that substantial
justice is better served by allowing the appeal on the merits to be threshed out by
the NLRC, the foregoing requirement of the law should be given a liberal
interpretation. 
CAIHaE

As the Court, nonetheless, remains firm on the importance of appeal

bonds in appeals from monetary awards of LAs, we stress that the NLRC,
pursuant to Section 6, Rule VI of the NLRC Rules of Procedure, shall only accept
motions to reduce bond that are coupled with the posting of a bond in a
reasonable amount. Time and again, we have explained that the bond
requirement imposed upon appellants in labor cases is intended to ensure the
satisfaction of awards that are made in favor of appellees, in the event that their
claims are eventually sustained by the courts. 93 On the part of the appellants, its
posting may also signify their good faith and willingness to recognize the final
outcome of their appeal.
At the time of a motion to reduce appeal bond's filing, the question of what
constitutes "a reasonable amount of bond" that must accompany the motion may
be subject to differing interpretations of litigants. The judgment of the NLRC
which has the discretion under the law to determine such amount cannot as yet
be invoked by litigants until after their motions to reduce appeal bond are
accepted.
Given these limitations, it is not uncommon for a party to unduly forfeit his
opportunity to seek a reduction of the required bond and thus, to appeal, when
the NLRC eventually disagrees with the party's assessment. These have also
resulted in the filing of numerous petitions against the NLRC, citing an alleged
grave abuse of discretion on the part of the labor tribunal for its finding on the
sufficiency or insufficiency of posted appeal bonds.
It is in this light that the Court finds it necessary to set a parameter for the
litigants' and the NLRC's guidance on the amount of bond that shall hereafter be
filed with a motion for a bond's reduction. To ensure that the provisions of
Section 6, Rule VI of the NLRC Rules of Procedure that give parties the chance
to seek a reduction of the appeal bond are effectively carried out, without
however defeating the benefits of the bond requirement in favor of a winning
litigant, all motions to reduce bond that are to be filed with the NLRC shall be
accompanied by the posting of a cash or surety bond equivalent to 10% of the
monetary award that is subject of the appeal, which shall provisionally be
deemed the reasonable amount of the bond in the meantime that an appellant's
motion is pending resolution by the Commission. In conformity with the NLRC
Rules, the monetary award, for the purpose of computing the necessary appeal
bond, shall exclude damages and attorney's fees. 94 Only after the posting of a
bond in the required percentage shall an appellant's period to perfect an appeal
under the NLRC Rules be deemed suspended.
The foregoing shall not be misconstrued to unduly hinder the NLRC's
exercise of its discretion, given that the percentage of bond that is set by this
guideline shall be merely provisional. The NLRC retains its authority and duty
to resolve the motion and determine the final amount of bond that shall be posted
by the appellant, still in accordance with the standards of "meritorious
grounds" and "reasonable amount". Should the NLRC, after considering the
motion's merit, determine that a greater amount or the full amount of the bond
needs to be posted by the appellant, then the party shall comply accordingly. The
appellant shall be given a period of 10 days from notice of the NLRC order within
which to perfect the appeal by posting the required appeal bond.

Meritorious ground as a condition

for the reduction of the appeal bond

In all cases, the reduction of the appeal bond shall be justified by

meritorious grounds and accompanied by the posting of the required appeal
bond in a reasonable amount.  HIAEcT

The requirement on the existence of a "meritorious ground" delves on the

worth of the parties' arguments, taking into account their respective rights and the
circumstances that attend the case. The condition was emphasized in University
Plans Incorporated v. Solano, 95 wherein the Court held that while the
NLRC's Revised Rules of Procedure "allows the [NLRC] to reduce the amount of
the bond, the exercise of the authority is not a matter of right on the part of the
movant, but lies within the sound discretion of the NLRC upon a showing of
meritorious grounds." 96 By jurisprudence, the merit referred to may pertain to an
appellant's lack of financial capability to pay the full amount of the bond, 97 the
merits of the main appeal such as when there is a valid claim that there was no
illegal dismissal to justify the award, 98 the absence of an employer-employee
relationship, 99 prescription of claims, 100 and other similarly valid issues that are
raised in the appeal. 101 For the purpose of determining a "meritorious ground",
the NLRC is not precluded from receiving evidence, or from making a preliminary
determination of the merits of the appellant's contentions. 102
In this case, the NLRC then should have considered the respondents'
arguments in the memorandum on appeal that was filed with the motion to
reduce the requisite appeal bond. Although a consideration of said arguments at
that point would have been merely preliminary and should not in any way bind
the eventual outcome of the appeal, it was apparent that the respondents'
defenses came with an indication of merit that deserved a full review of the
decision of the LA. The CA, by its Resolution dated February 16, 2007, even
found justified the issuance of a preliminary injunction to enjoin the immediate
execution of the LA's decision, and this Court, a temporary restraining order on
September 4, 2012.
Significantly, following the CA's remand of the case to the NLRC, the latter
even rendered a Decision that contained findings that are inconsistent with
McBurnie's claims. The NLRC reversed and set aside the decision of the LA, and
entered a new one dismissing McBurnie's complaint. It explained that McBurnie
was not an employee of the respondents; thus, they could not have dismissed
him from employment. The purported employment contract of the respondents
with the petitioner was qualified by the conditions set forth in a letter dated May
11, 1999, which reads:
May 11, 1999
MR. ANDREW MCBURNIE
Re: Employment Contract
Dear Andrew,
It is understood that this Contract is made subject to the understanding
that it is effective only when the project financing for our Baguio Hotel
project pushed through.
The agreement with EGI Managers, Inc. is made now to support your
need to facilitate your work permit with the Department of Labor in view
of the expiration of your contract with Pan Pacific.
Regards,
Sgd. Eulalio Ganzon (p. 203, Records) 103
 For the NLRC, the employment agreement could not have given rise to an
employer-employee relationship by reason of legal impossibility. The two
conditions that form part of their agreement, namely, the successful completion
of the project financing for the hotel project in Baguio City and McBurnie's
acquisition of an Alien Employment Permit, remained unsatisfied. 104 The NLRC
concluded that McBurnie was instead a potential investor in a project that
included Ganzon, but the said project failed to pursue due to lack of funds. Any
work performed by McBurnie in relation to the project was merely preliminary to
the business venture and part of his "due diligence" study before pursuing the
project, "done at his own instance, not in furtherance of the employment contract
but for his own investment purposes." 105 Lastly, the alleged employment of the
petitioner would have been void for being contrary to law, since it is undisputed
that McBurnie did not have any work permit. The NLRC declared:  aEHASI

Absent an employment permit, any employment relationship that

[McBurnie] contemplated with the [respondents] was void for being
contrary to law. A void or inexistent contract, in turn, has no force and
effect from the beginning as if it had never [been] entered into. Thus,
without an Alien Employment Permit, the "Employment Agreement" is
void and could not be the source of a right or obligation. In support
thereof, the DOLE issued a certification that [McBurnie] has neither
applied nor [been] issued [an] Alien Employment Permit (p. 204,
Records). 106
McBurnie moved to reconsider, citing the Court's Decision of September
18, 2009 that reversed and set aside the CA's Decision authorizing the remand.
Although the NLRC granted the motion on the said ground via a Decision 107 that
set aside the NLRC's Decision dated November 17, 2009, the findings of the
NLRC in the November 17, 2009 decision merit consideration, especially since
the findings made therein are supported by the case records.
In addition to the apparent merit of the respondents' appeal, the Court finds
the reduction of the appeal bond justified by the substantial amount of the LA's
monetary award. Given its considerable amount, we find reason in the
respondents' claim that to require an appeal bond in such amount could only
deprive them of the right to appeal, even force them out of business and affect
the livelihood of their employees. 108 In Rosewood Processing, Inc. v.
NLRC,  109 we emphasized: "Where a decision may be made to rest on informed
judgment rather than rigid rules, the equities of the case must be accorded their
due weight because labor determinations should not be 'secundum
rationem but also secundum caritatem.'"  110

What constitutes a reasonable

amount in the determination of
the final amount of appeal bond
 As regards the requirement on the posting of a bond in a "reasonable
amount," the Court holds that the final determination thereof by the NLRC shall
be based primarily on the merits of the motion and the main appeal.
Although the NLRC Rules of Procedure, particularly Section 6 of Rule VI
thereof, provides that the bond to be posted shall be "in a reasonable amount in
relation to the monetary award," the merit of the motion shall always take
precedence in the determination. Settled is the rule that procedural rules were
conceived, and should thus be applied in a manner that would only aid the
attainment of justice. If a stringent application of the rules would hinder rather
than serve the demands of substantial justice, the former must yield to the
latter. 111
Thus, in Nicol where the appellant posted a bond of P10,000,000.00 upon
an appeal from the LA's award of P51,956,314.00, the Court, instead of ruling
right away on the reasonableness of the bond's amount solely on the basis of the
judgment award, found it appropriate to remand the case to the NLRC, which
should first determine the merits of the motion. In University Plans,  112 the Court
also reversed the outright dismissal of an appeal where the bond posted in a
judgment award of more than P30,000,000.00 was P30,000.00. The Court then
directed the NLRC to first determine the merit, or lack of merit, of the motion to
reduce the bond, after the appellant therein claimed that it was under
receivership and thus, could not dispose of its assets within a short notice.
Clearly, the rule on the posting of an appeal bond should not be allowed to defeat
the substantive rights of the parties. 113
Notably, in the present case, following the CA's rendition of its Decision
which allowed a reduced appeal bond, the respondents have posted a bond in
the amount of P10,000,000.00. In Rosewood, the Court deemed the posting of a
surety bond of P50,000.00, coupled with a motion to reduce the appeal bond, as
substantial compliance with the legal requirements for an appeal from a
P789,154.39 monetary award "considering the clear merits which appear, res
ipsa loquitor, in the appeal from the [LA's] Decision, and the petitioner's
substantial compliance with rules governing appeals." 114 The foregoing
jurisprudence strongly indicate that in determining the reasonable amount of
appeal bonds, the Court primarily considers the merits of the motions and
appeals.
Given the circumstances in this case and the merits of the respondents'
arguments before the NLRC, the Court holds that the respondents had posted a
bond in a "reasonable amount", and had thus complied with the requirements for
the perfection of an appeal from the LA's decision. The CA was correct in ruling
that:
 In the case of Nueva Ecija I Electric Cooperative, Inc. (NEECO I)
Employees Association, President Rodolfo Jimenez[,] and members[,]
Reynaldo Fajardo, et al. vs. NLRC, Nueva Ecija I Electric Cooperative,
Inc. (NEECO I) and Patricio de la Peña (G.R. No. 116066, January 24,
2000), the Supreme Court recognized that: "the NLRC, in its Resolution
No. 11-01-91 dated November 7, 1991 deleted the phrase "exclusive of
moral and exemplary damages as well as attorney's fees in the
determination of the amount of bond, and provided a safeguard against
the imposition of excessive bonds by providing that "(T)he Commission
may in meritorious cases and upon motion of the appellant, reduce the
amount of the bond."
In the case of Cosico[,] Jr. vs. NLRC[,] 272 SCRA 583, it was
held:
"The unreasonable and excessive amount of bond would
be oppressive and unjust and would have the effect of depriving a
party of his right to appeal."
xxx xxx xxx
In dismissing outright the motion to reduce bond filed by
petitioners, NLRC abused its discretion. It should have fixed an appeal
bond in a reasonable amount. Said dismissal deprived petitioners of their
right to appeal the Labor Arbiter's decision.
xxx xxx xxx
NLRC Rules allow reduction of appeal bond on meritorious
grounds (Sec. 6, Rule VI, NLRC Rules of Procedure). This Court finds
the appeal bond in the amount of [P]54,083,910.00 prohibitive and
excessive, which constitutes a meritorious ground to allow a motion for
reduction thereof. 115
The foregoing declaration of the Court requiring a bond in a reasonable
amount, taking into account the merits of the motion and the appeal, is consistent
with the oft-repeated principle that letter-perfect rules must yield to the broader
interest of substantial justice. 116 
caIDSH

The effect of a denial of the appeal

to the NLRC

In finding merit in the respondents' motion for reconsideration, we also take

into account the unwarranted results that will arise from an implementation of the
Court's Decision dated September 18, 2009. We emphasize, moreover, that
although a remand and an order upon the NLRC to give due course to the appeal
would have been the usual course after a finding that the conditions for the
reduction of an appeal bond were duly satisfied by the respondents, given such
results, the Court finds it necessary to modify the CA's order of remand, and
instead rule on the dismissal of the complaint against the respondents.
Without the reversal of the Court's Decision and the dismissal of the
complaint against the respondents, McBurnie would be allowed to claim benefits
under our labor laws despite his failure to comply with a settled requirement for
foreign nationals.
Considering that McBurnie, an Australian, alleged illegal dismissal and
sought to claim under our labor laws, it was necessary for him to establish, first
and foremost, that he was qualified and duly authorized to obtain employment
within our jurisdiction. A requirement for foreigners who intend to work within the
country is an employment permit, as provided under Article 40, Title II of
the Labor Code which reads:
Art. 40. Employment permit for non-resident aliens. — Any alien
seeking admission to the Philippines for employment purposes and any
domestic or foreign employer who desires to engage an alien for
employment in the Philippines shall obtain an employment permit from
the Department of Labor.
In WPP Marketing Communications, Inc. v. Galera,  117 we held that a
foreign national's failure to seek an employment permit prior to employment
poses a serious problem in seeking relief from the Court. 118 Thus, although the
respondent therein appeared to have been illegally dismissed from employment,
we explained:
This is Galera's dilemma: Galera worked in the Philippines
without proper work permit but now wants to claim employee's benefits
under Philippine labor laws.
xxx xxx xxx
The law and the rules are consistent in stating that the
employment permit must be acquired prior to employment. The Labor
Code states: "Any alien seeking admission to the Philippines for
employment purposes and any domestic or foreign employer who
desires to engage an alien for employment in the Philippines shall obtain
an employment permit from the Department of Labor." Section 4, Rule
XIV, Book I of the Implementing Rules and Regulations provides:
"Employment permit required for entry.  — No alien
seeking employment, whether as a resident or non-resident, may
enter the Philippines without first securing an employment permit
from the Ministry. If an alien enters the country under a non-
working visa and wishes to be employed thereafter, he may be
allowed to be employed upon presentation of a duly approved
employment permit."
 Galera cannot come to this Court with unclean hands. To
grant Galera's prayer is to sanction the violation of the Philippine
labor laws requiring aliens to secure work permits  before their
employment. We hold that the status quo must prevail in the
present case and we leave the parties where they are. This ruling,
however, does not bar Galera from seeking relief from other
jurisdictions. 119 (Citations omitted and underscoring ours)
Clearly, this circumstance on the failure of McBurnie to obtain an
employment permit, by itself, necessitates the dismissal of his labor complaint.
Furthermore, as has been previously discussed, the NLRC has ruled in its
Decision dated November 17, 2009 on the issue of illegal dismissal. It declared
that McBurnie was never an employee of any of the respondents. 120 It explained:
All these facts and circumstances prove that [McBurnie] was
never an employee of Eulalio Ganzon or the [respondent]
companies, but a potential investor in a project with a group
including Eulalio Ganzon and Martinez but said project did not take
off because of lack of funds.
[McBurnie] further claims that in conformity with the provision of
the employment contract pertaining to the obligation of the [respondents]
to provide housing, [respondents] assigned him Condo Unit # 812 of the
Makati Cinema Square Condominium owned by the [respondents]. He
was also allowed to use a Hyundai car. If it were true that the contract of
employment was for working visa purposes only, why did the
[respondents] perform their obligations to him?
There is no question that [respondents] assigned him Condo Unit
# 812 of the MCS, but this was not free of charge. If it were true that it is
part of the compensation package as employee, then [McBurnie] would
not be obligated to pay anything, but clearly, he admitted in his letter that
he had to pay all the expenses incurred in the apartment.
Assuming for the sake of argument that the employment contract
is valid between them, record shows that [McBurnie] worked from
September 1, 1999 until he met an accident on the last week of October.
During the period of employment, [the respondents] must have paid his
salaries in the sum of US$26,000.00, more or less.
However, [McBurnie] failed to present a single evidence that [the
respondents] paid his salaries like payslip, check or cash vouchers duly
signed by him or any document showing proof of receipt of his
compensation from [the respondents] or activity in furtherance of the
employment contract.
Granting again that there was a valid contract of employment, it is
undisputed that on November 1, 1999, [McBurnie] left for Australia and
never came back. . . . . 121 (Emphasis supplied)
 Although the NLRC's Decision dated November 17, 2009 was set aside in
a Decision dated January 14, 2010, the Court's resolve to now reconsider its
Decision dated September 18, 2009 and to affirm the CA's Decision and
Resolution in the respondents' favor effectively restores the NLRC's basis for
rendering the Decision dated November 17, 2009.
More importantly, the NLRC's findings on the contractual relations between
McBurnie and the respondents are supported by the records.
First, before a case for illegal dismissal can prosper, an employer-
employee relationship must first be established. 122 Although an employment
agreement forms part of the case records, respondent Ganzon signed it with the
notation "per my note." 123 The respondents have sufficiently explained that the
note refers to the letter 124 dated May 11, 1999 which embodied certain
conditions for the employment's effectivity. As we have previously explained,
however, the said conditions, particularly on the successful completion of the
project financing for the hotel project in Baguio City and McBurnie's acquisition of
an Alien Employment Permit, failed to materialize. Such defense of the
respondents, which was duly considered by the NLRC in its Decision dated
November 17, 2009, was not sufficiently rebutted by McBurnie.  SCHcaT

Second, McBurnie failed to present any employment permit which would

have authorized him to obtain employment in the Philippines. This circumstance
negates McBurnie's claim that he had been performing work for the respondents
by virtue of an employer-employee relationship. The absence of the employment
permit instead bolsters the claim that the supposed employment of McBurnie was
merely simulated, or did not ensue due to the non-fulfillment of the conditions
that were set forth in the letter of May 11, 1999.
Third, besides the employment agreement, McBurnie failed to present
other competent evidence to prove his claim of an employer-employee
relationship. Given the parties' conflicting claims on their true intention in
executing the agreement, it was necessary to resort to the established criteria for
the determination of an employer-employee relationship, namely: (1) the
selection and engagement of the employee; (2) the payment of wages; (3) the
power of dismissal; and (4) the power to control the employee's conduct. 125 The
rule of thumb remains: the onus probandi falls on the claimant to establish or
substantiate the claim by the requisite quantum of evidence. Whoever claims
entitlement to the benefits provided by law should establish his or her right
thereto. 126 McBurnie failed in this regard. As previously observed by the NLRC,
McBurnie even failed to show through any document such as payslips or
vouchers that his salaries during the time that he allegedly worked for the
respondents were paid by the company. In the absence of an employer-
employee relationship between McBurnie and the respondents, McBurnie could
not successfully claim that he was dismissed, much less illegally dismissed, by
the latter. Even granting that there was such an employer-employee relationship,
the records are barren of any document showing that its termination was by the
respondents' dismissal of McBurnie.
Given these circumstances, it would be a circuitous exercise for the Court
to remand the case to the NLRC, more so in the absence of any showing that the
NLRC should now rule differently on the case's merits. In Medline Management,
Inc. v. Roslinda,  127 the Court ruled that when there is enough basis on which the
Court may render a proper evaluation of the merits of the case, the Court may
dispense with the time-consuming procedure of remanding a case to a labor
tribunal in order "to prevent delays in the disposition of the case," "to serve the
ends of justice" and when a remand "would serve no purpose save to further
delay its disposition contrary to the spirit of fair play." 128 In Real v. Sangu
Philippines, Inc.,  129 we again ruled:
With the foregoing, it is clear that the CA erred in affirming the
decision of the NLRC which dismissed petitioner's complaint for lack of
jurisdiction. In cases such as this, the Court normally remands the case
to the NLRC and directs it to properly dispose of the case on the merits.
"However, when there is enough basis on which a proper evaluation of
the merits of petitioner's case may be had, the Court may dispense with
the time-consuming procedure of remand in order to prevent further
delays in the disposition of the case." "It is already an accepted rule of
procedure for us to strive to settle the entire controversy in a single
proceeding, leaving no root or branch to bear the seeds of litigation. If,
based on the records, the pleadings, and other evidence, the dispute
can be resolved by us, we will do so to serve the ends of justice instead
of remanding the case to the lower court for further
proceedings." . . . . 130 (Citations omitted)
It bears mentioning that although the Court resolves to grant the
respondents' motion for reconsideration, the other grounds raised in the motion,
especially as they pertain to insinuations on irregularities in the Court, deserve no
merit for being founded on baseless conclusions. Furthermore, the Court finds it
unnecessary to discuss the other grounds that are raised in the motion,
considering the grounds that already justify the dismissal of McBurnie's
complaint.
All these considered, the Court also affirms its Resolution dated
September 4, 2012; accordingly, McBurnie's motion for reconsideration thereof is
denied.
WHEREFORE, in light of the foregoing, the Court rules as follows:
(a) The motion for reconsideration filed on September 26, 2012 by
petitioner Andrew James McBurnie is DENIED;
 (b) The motion for reconsideration filed on March 27, 2012 by
respondents Eulalio Ganzon, EGI-Managers, Inc. and E.
Ganzon, Inc. is GRANTED.
(c) The Entry of Judgment issued in G.R. Nos. 186984-85
is LIFTED. This Court's Decision dated September 18, 2009
and Resolutions dated December 14, 2009 and January 25,
2012 are SET ASIDE. The Court of Appeals Decision dated
October 27, 2008 and Resolution dated March 3, 2009 in
CA-G.R. SP No. 90845 and CA-G.R. SP No. 95916
are AFFIRMED WITH MODIFICATION. In lieu of a remand
of the case to the National Labor Relations Commission, the
complaint for illegal dismissal filed by petitioner Andrew
James McBurnie against respondents Eulalio Ganzon, EGI-
Managers, Inc. and E. Ganzon, Inc. is DISMISSED.
Furthermore, on the matter of the filing and acceptance of motions to
reduce appeal bond, as provided in Section 6, Rule VI of the 2011 NLRC Rules
of Procedure, the Court hereby RESOLVES that henceforth, the following
guidelines shall be observed:
(a) The filing of a motion to reduce appeal bond shall be
entertained by the NLRC subject to the following conditions:
(1) there is meritorious ground; and (2) a bond in a
reasonable amount is posted;
(b) For purposes of compliance with condition no. (2), a motion
shall be accompanied by the posting of a provisional cash
or surety bond equivalent to ten percent (10%) of the
monetary award subject of the appeal, exclusive of
damages and attorney's fees;
(c) Compliance with the foregoing conditions shall suffice to
suspend the running of the 10-day reglementary period to
perfect an appeal from the labor arbiter's decision to the
NLRC;
(d) The NLRC retains its authority and duty to resolve the motion to
reduce bond and determine the final amount of bond that
shall be posted by the appellant, still in accordance with the
standards of "meritorious grounds" and "reasonable
amount"; and
(e) In the event that the NLRC denies the motion to reduce bond,
or requires a bond that exceeds the amount of the
provisional bond, the appellant shall be given a fresh period
 of ten (10) days from notice of the NLRC order within which
to perfect the appeal by posting the required appeal bond.
SO ORDERED.  cHCSDa

 (McBurnie v. Ganzon, G.R. Nos. 178034, 178117 & 186984-85 (Resolution),

|||

[October 17, 2013], 719 PHIL 680-728)

G.R. No. 197556. March 25, 2015.]

WATERFRONT CEBU CITY CASINO HOTEL, INC. and MARCO

PROTACIO, petitioners, vs. ILDEBRANDO
LEDESMA, respondent.

DECISION

VILLARAMA, JR., J  : p

This is a petition for review on certiorari under Rule 45 of the 1997 Rules of

Civil Procedure, as amended, seeking to set aside the Decision 1 dated March
17, 2011 and Resolution 2 dated June 21, 2011 of the Court of Appeals (CA) in
CA-G.R. CEB SP No. 05071. The CA reversed the Decision 3 dated November
27, 2009 and Resolution 4 dated February 22, 2010 of the National Labor
Relations Commission (NLRC) and reinstated the Decision 5 dated April 29, 2009
of the Labor Arbiter (LA). The LA declared that respondent Ildebrando Ledesma
was illegally dismissed from his employment by petitioner Waterfront Cebu City
Casino Hotel, Inc. (Waterfront).
The factual antecedents follow:
Respondent was employed as a House Detective at Waterfront located at
Salinas Drive, Cebu City.
On the basis of the complaints filed before Waterfront by Christe 6 Mandal,
a supplier of a concessionaire of Waterfront, and Rosanna Lofranco, who was
seeking a job at the same hotel, Ledesma was dismissed from
employment. 7 From the affidavits 8 and testimonies 9 of Christe Mandal and
Rosanna Lofranco during the administrative hearings conducted by Waterfront,
the latter found, among others, that Ledesma kissed and mashed the breasts of
Christe Mandal inside the hotel's elevator, and exhibited his penis and asked
Rosanna Lofranco to masturbate him at the conference room of the hotel.
On August 12, 2008, Ledesma filed a complaint 10 for illegal dismissal
which was docketed as NLRC RAB-VII Case No. 08-1887-08. The LA found that
the allegations leveled against Ledesma are mere concoctions, and concluded
that Ledesma was illegally dismissed. The dispositive portion of the April 29,
2009 Decision of the LA, reads:
WHEREFORE, in view of the foregoing, a decision is hereby
rendered declaring the suspension as well as the dismissal of herein
complainant illegal. Consequently, respondent Waterfront Cebu City
Hotel is ordered to reinstate complainant Ildebrando Ledesma to his
former position without loss of seniority right and with full backwages
reckoned from the date of the suspension up to actual reinstatement.
Herein respondent is likewise ordered to pay complainant
Ledesma service incentive leave pay in the amount of THREE
THOUSAND NINE HUNDRED TEN PESOS AND FIFTY CENTAVOS
(P3,910.50) plus ten percent (10%) of the total monetary award as
attorney's fees.
All other claims are DISMISSED for lack of merit.
SO ORDERED. 11
On appeal to the NLRC, the latter reversed the ruling of the LA and held
that Ledesma's acts of sexual overtures to Christe Mandal and Rosanna
Lofranco constituted grave misconduct justifying his dismissal from employment.
The fallo of the November 27, 2009 Decision of the NLRC reads:
WHEREFORE, premises considered, the appealed Decision is
hereby REVERSED and SET ASIDE. Another one is entered declaring
the dismissal of complainant as valid. 
cdphil

SO ORDERED. 12
The NLRC denied Ledesma's motion for reconsideration in a Resolution
dated February 22, 2010. A copy of the said Resolution was received by Atty.
Gines Abellana (Atty. Abellana), Ledesma's counsel of record, on March 15,
2010. 13
On May 17, 2010, 14 or sixty-three (63) days after Atty. Abellana received a
copy of the NLRC's Resolution denying the motion for reconsideration, said
counsel filed before the CA a petition for certiorari under Rule 65 of the Rules of
Court.
In its Comment, 15 Waterfront prayed for the outright dismissal of the
petition on the ground that it was belatedly filed.
 On August 5, 2010, Ledesma, now assisted by a new counsel, filed a
motion for leave to file amended petition, 16 and sought the admission of his
Amended Petition for Certiorari. 17 In the amended petition, Ledesma contended
that his receipt on March 24, 2010 (and not the receipt on March 15, 2010 by
Atty. Abellana), is the reckoning date of the 60-day reglementary period within
which to file the petition. Hence, Ledesma claims that the petition was timely filed
on May 17, 2010. 18
By its Resolution 19 dated August 27, 2010, the CA granted leave of court
to Ledesma and admitted his amended petition for certiorari. The CA, thereafter,
rendered a Decision dated March 17, 2011, reversing the Decision of the NLRC
and reinstating the ruling of the LA. The fallo of the assailed CA Decision reads:
IN LIGHT OF ALL THE FOREGOING, this petition is GRANTED.
The 27 November 2009 NLRC Decision and 22 February 2010
Resolution in NLRC Case No. VAC-09-000912-2009
is REVERSED and SET ASIDE and the 29 April 2009 Decision of the
Labor Arbiter is hereby REINSTATED.
No pronouncement as to costs.
SO ORDERED. 20
The CA denied the motion for reconsideration filed by Waterfront in a
Resolution dated June 21, 2011. Thus, the present petition for review
on certiorari where Waterfront raised the main issue of whether the petition
for certiorari was timely filed with the CA. 21
In his Comment, 22 Ledesma sought the dismissal of the instant petition of
Waterfront on the basis of the following formal infirmities: (1) the presentation of
Gaye Maureen Cenabre, the representative of Waterfront, of a Community Tax
Certificate before the Notary Public to prove her identity, violated A.M. No. 02-8-
13-SC, and rendered the jurat in the verification and certification on non-forum
shopping of the petition as defective; and (2) no certified true copy of the August
10, 2011 Board Resolution quoted in the Secretary's Certificate was attached to
the petition.
The Court finds Waterfront's petition to be meritorious.
The procedural infirmities 23 pointed out by Ledesma are not adequate to
cause the dismissal of the present petition. Gaye Maureen Cenabre presented to
the Notary Public a Community Tax Certificate numbered 27401128 to prove her
identity instead of a current identification document issued by an official agency
bearing her photograph and signature as required by A.M. No. 02-8-13-SC. This
rendered the jurat in the verification/certification of non-forum shopping of
Waterfront as defective. Nonetheless, any flaw in the verification, being only a
formal, not a jurisdictional requirement, is not a fatal defect. 24 In like manner,
there is no need to attach the certified true copy of the Board Resolution quoted
in the Secretary's Certificate attached to the petition. Only the judgment, order or
resolution assailed in the petition are the attachments required under Section
4, 25 Rule 45 of the Rules of Court to be duplicate originals or certified true
copies.
On the main issue, the unjustified failure of Ledesma to file his petition
for certiorari before the CA within the 60-day period is a ground for the outright
dismissal of said petition.
Section 4, Rule 65 of the Rules of Court, as amended by A.M. No. 07-7-
12-SC, reads:
SEC. 4. When and where to file the petition. — The petition shall
be filed not later than sixty (60) days from notice of the judgment, order
or resolution. In case a motion for reconsideration or new trial is timely
filed, whether such motion is required or not, the petition shall be filed
not later than sixty (60) days counted from the notice of the denial of the
motion.
If the petition relates to an act or an omission of a municipal trial
court or of a corporation, a board, an officer or a person, it shall be filed
with the Regional Trial Court exercising jurisdiction over the territorial
area as defined by the Supreme Court. It may also be filed with the
Court of Appeals or with the Sandiganbayan, whether or not the same is
in aid of the court's appellate jurisdiction. If the petition involves an act or
an omission of a quasi-judicial agency, unless otherwise provided by law
or these rules, the petition shall be filed with and be cognizable only by
the Court of Appeals.
In election cases involving an act or an omission of a municipal or
a regional trial court, the petition shall be filed exclusively with the
Commission on Elections, in aid of its appellate jurisdiction.
In Laguna Metts Corporation v. Court of Appeals, 26 we categorically ruled
that the present rule now mandatorily requires compliance with the reglementary
period. The period can no longer be extended as previously allowed before the
amendment, thus:
As a rule, an amendment by the deletion of certain words or
phrases indicates an intention to change its meaning. It is presumed that
the deletion would not have been made if there had been no intention to
effect a change in the meaning of the law or rule. The amended law or
rule should accordingly be given a construction different from that
previous to its amendment.
If the Court intended to retain the authority of the proper courts to
grant extensions under Section 4 of Rule 65, the paragraph providing for
such authority would have been preserved. The removal of the said
 paragraph under the amendment by A.M. No. 07-7-12-SC of Section 4,
Rule 65 simply meant that there can no longer be any extension of the
60-day period within which to file a petition for certiorari.
The rationale for the amendments under A.M. No. 07-7-12-SC is
essentially to prevent the use (or abuse) of the petition
for certiorari under Rule 65 to delay a case or even defeat the ends of
justice. Deleting the paragraph allowing extensions to file petition on
compelling grounds did away with the filing of such motions. As the
Rule now stands, petitions for certiorari must be filed strictly within
60 days from notice of judgment or from the order denying a
motion for reconsideration. 27 (Additional emphasis and underscoring
supplied)
In the subsequent case of Domdom v. Third & Fifth Divisions of the
Sandiganbayan, 28 the absence of a specific prohibition in Section 4 of Rule 65,
as amended, for the extension of the 60-day period to file a petition
for certiorari was construed as a discretionary authority of the courts to grant an
extension.
Republic v. St. Vincent De Paul Colleges, Inc. 29 clarified
the "conflict" between the rulings in Laguna Metts
Corporation 30 and Domdom, 31 in that the former is the general rule while the
latter is the exception, thus:
What seems to be a "conflict" is actually more apparent than real.
A reading of the foregoing rulings leads to the simple conclusion
that Laguna Metts Corporation involves a strict application of the
general rule that petitions for certiorari must be filed strictly within
sixty (60) days from notice of judgment or from the order denying a
motion for reconsideration. ,span>Domdom, on the other
hand, relaxed the rule and allowed an extension of the sixty (60)-day
period subject to the Court's sound discretion. 32 (Emphasis in the
original)
In relaxing the rules and allowing an extension, Thenamaris Philippines,
Inc. v. Court of Appeals 33 reiterated the necessity for the party invoking liberality
to advance a reasonable or meritorious explanation 34 for the failure to file the
petition for certiorari within the 60-day period.

The petition for certiorari was filed

with the CA beyond the 60-day
period

Atty. Abellana, Ledesma's counsel, admittedly received a copy of the

NLRC Resolution denying the Motion for Reconsideration on March 15,
2010 while Ledesma received his copy on March 24, 2010.
 Ledesma erroneously asserted in his petition for certiorari filed before the
CA, that the 60th day is May 15, 2010, counted from March 15, 2010. 35 In
computing a period, the first day shall be excluded, and the last
included; 36 hence, the last day to file his petition for certiorari is on May 14,
2010, a Friday. Ledesma therefore belatedly filed his petition on May 17,
2010. HCTaAS

Realizing his procedural faux pas, Ledesma filed an amended petition

where he contended that he timely filed his petition for certiorari on May 17, 2010
counted from his receipt of the NLRC Resolution denying his motion for
reconsideration on March 24, 2010. 37 This stance is bereft of any legal basis.
When a party to a suit appears by counsel, service of every judgment and all
orders of the court must be sent to the counsel. This is so because notice to
counsel is an effective notice to the client, while notice to the client and not his
counsel is not notice in law. 38 Receipt of notice by the counsel of record is the
reckoning point of the reglementary period. 39
The negligence of Atty. Abellana in the computation of the 60-day period,
and reckoning such period from the party's receipt of the assailed NLRC
resolution were similax arguments rejected in Labao v. Flores. 40 In
the Labao case, 41 the respondents maintained that they should not suffer the
negligence of their counsel in the late filing of their petition for certiorari, and the
60-day period be reckoned from their own notice of the NLRC's denial of their
motion for reconsideration. In rejecting said arguments we ruled as follows:
The general rule is that a client is bound by the acts, even
mistakes, of his counsel in the realm of procedural technique. The
exception to this rule is when the negligence of counsel is so gross,
reckless and inexcusable that the client is deprived of his day in court.
The failure of a party's counsel to notify him on time of the adverse
judgment, to enable him to appeal therefrom, is negligence that is not
excusable. We have repeatedly held that notice sent to counsel of record
is binding upon the client, and the neglect or failure of counsel to inform
him of an adverse judgment resulting in the loss of his right to appeal is
not a ground for setting aside a judgment valid and regular on its
face. 42 (Emphasis omitted)
With the expiration of the 60-day period to file a petition for certiorari, a
review of the Resolution of the NLRC will be beyond the jurisdiction of any
court. 43 No longer assailable, the NLRC Resolution could not be altered or
modified, as previously held in Labao v. Flores: 44
The NLRC's resolution became final ten (10) days after counsel's
receipt, and the respondents' failure to file the petition within the required
(60)-day period rendered it impervious to any attack through a Rule 65
 petition for certiorari. Thus, no court can exercise jurisdiction to review
the resolution.
Needless to stress, a decision that has acquired finality becomes
immutable and unalterable and may no longer be modified in any
respect, even if the modification is meant to correct erroneous
conclusions of fact or law and whether it will be made by the court that
rendered it or by the highest court of the land. All the issues between the
parties are deemed resolved and laid to rest once a judgment becomes
final and executory; execution of the decision proceeds as a matter of
right as vested rights are acquired by the winning party. Just as a losing
party has the right to appeal within the prescribed period, the winning
party has the correlative right to enjoy the finality of the decision on the
case. After all, a denial of a petition for being time-barred is tantamount
to a decision on the merits. Otherwise, there will be no end to litigation,
and this will set to naught the main role of courts of justice to assist in
the enforcement of the rule of law and the maintenance of peace and
order by settling justiciable controversies with finality.

Ledesma did not attempt to justify

the belated filing of his petition for
certiorari

The relaxation of procedural rules may be allowed only when there are
exceptional circumstances to justify the same. 45 There should be an effort on the
part of the party invoking liberality to advance a reasonable or meritorious
explanation for his/her failure to comply with the rules. 46 Moreover, those who
seek exemption from the application of a procedural rule have the burden of
proving the existence of exceptionally meritorious reason warranting such
departure. 47 In Philippine National Bank v. Commissioner of Internal
Revenue, 48 we said:
It is an accepted tenet that rules of procedure must be faithfully
followed except only when, for persuasive and weighting reasons, they
may be relaxed to relieve a litigant of an injustice commensurate with his
failure to comply with the prescribed procedure. Concomitant to a
liberal interpretation of the rules of procedure, however, should be
an effort on the part of the party invoking liberality to adequately
explain his failure to abide by the rules. (Emphasis supplied)
Both in his petition and amended petition, Ledesma never invoked the
liberality of the CA nor endeavored to justify the belated filing of his petition. On
the contrary, Ledesma remained firm that his petition was filed with the CA within
the reglementary period. 49 Absent valid and compelling reasons for the
procedural lapse, the desired leniency cannot be accorded to Ledesma. 50
 In sum, the late filing by Ledesma of his petition for certiorari, and his
failure to justify his procedural lapse to merit a lenient application of the rules
divested the CA of jurisdiction to entertain the petition. 51
Assuming for a moment that the petition for certiorari was timely filed with
the CA, said recourse should suffer the same fate of dismissal for lack of merit.
Otherwise stated, there is no substantial justice that may be served here in
disregarding the procedural flaw committed by Ledesma because the NLRC
correctly found him guilty of misconduct or improper behavior in committing
lascivious conduct and demanding sexual favors from Christe Mandal and
Rosanna Lofranco.
The CA ruled in favor of Ledesma since it believed his version that the
complainants merely invented the accusations against him because Waterfront
failed to present as evidence the CCTV footages of the alleged lascivious
conduct of Ledesma inside the elevator and the conference room. But this
argument was not even raised by Ledesma himself and it was only the CA which
utilized this as a justification to bolster its findings that Ledesma did not commit
any infraction. This being a labor case, the evidence required is only substantial
evidence which was adequately established here by the positive and credible
testimonies of the complainants.
Notably, Ledesma never refuted, at the administrative investigation level
at Waterfront, and even at the proceedings before the LA, NLRC, and the CA,
the allegations leveled against him by Rosanna Lofranco that, after deluding her
to perform a massage on him, Ledesma exhibited to her his penis and requested
that he be masturbated while inside the conference room of the hotel. If not for
the position of Ledesma as a House Detective, he will not have access to the
conference room nor will he know that the premises is not monitored through a
closed-circuit television, 52 thus giving him the untrammeled opportunity to
accomplish his lewd design on the unsuspecting victim. Such acts of Ledesma
constituted misconduct or improper behavior 53 which is a just cause for his
dismissal.
WHEREFORE, the petition for review on certiorari is GRANTED. The
March 17, 2011 Decision and June 21, 2011 Resolution of the Court of Appeals
in CA-G.R. CEB SP No. 05071 are REVERSED and SET ASIDE. The November
27, 2009 Decision and February 22, 2010 Resolution of the National Labor
Relations Commission which found as valid the dismissal from employment of
Ildebrando Ledesma are REINSTATED.
No pronouncement as to costs.
SO ORDERED.  SEIcHa
 (Waterfront Cebu City Casino Hotel, Inc. v. Ledesma, G.R. No. 197556, [March
|||

25, 2015])

G.R. No. 198675. September 23, 2015.]

ILAW BUKLOD NG MANGGAGAWA (IBM) NESTLE

PHILIPPINES, INC. CHAPTER (ICE CREAM AND CHILLED
PRODUCTS DIVISION), ITS OFFICERS, MEMBERS BONIFACIO
T. FLORENDO, EMILIANO B. PALANAS and GENEROSO P.
LAXAMANA, petitioners, vs. NESTLE PHILIPPINES,
INC., respondent.

DECISION

PERALTA, J  : p

Assailed in the instant petition for review on certiorari under Rule 45 of

the Rules of Court are the Resolutions 1 of the Court of Appeals (CA), dated
June 30, 2011 2 and September 28, 2011, 3 respectively, in CA-G.R. SP No.
118459. The June 30, 2011 Resolution dismissed herein petitioners' petition
for review, while the September 28, 2011 Resolution denied petitioners'
Motion for Reconsideration.
The factual and procedural antecedents of the case are as follows:
On January 13, 1997, herein petitioner union staged a strike against
herein respondent company's Ice Cream and Chilled Products Division, citing,
as grounds, respondent's alleged violation of the collective bargaining
agreement (CBA), dismissal of union officers and members, discrimination
and other unfair labor practice (ULP) acts.
As a consequence, respondent filed with the National Labor Relations
Commission (NLRC) a Petition for Injunction with Prayer for Issuance of
Temporary Restraining Order, Free Ingress and Egress Order, and
Deputization Order.
On January 20, 1997, a temporary restraining order was issued by the
NLRC. Thereafter, on February 7, 1997, the NLRC issued a preliminary
injunction.
 On February 26, 1997, respondent filed a Petition to Declare Strike
Illegal.
Subsequently, on April 2, 1997, then Department of Labor and
Employment (DOLE) Acting Secretary, issued an Order assuming jurisdiction
over the strike and certifying the same to the NLRC.
On June 2, 1997, petitioner union filed a petition for certiorari with this
Court, questioning the above order of the Acting DOLE Secretary.
However, after a series of conciliation meetings and discussions
between the parties, they agreed to resolve their differences and came up
with a compromise which was embodied in a Memorandum of Agreement
(MOA) dated August 4, 1998, pertinent portions of which are as follows:
xxx xxx xxx
1. The COMPANY [herein respondent] shall cause the dismissal of all
criminal cases against dismissed employees arising out of or as
consequences of the strike that started on January 13, 1997.
Future illegal acts of the UNION [herein petitioner] shall not be
covered by this agreement.
2. The UNION shall unqualifiedly withdraw its Petition
for Certiorari pending with the Supreme Court.
3. The COMPANY and the UNION shall jointly file a motion to withdraw
any and all actions pending with the NLRC including the Certified
Case, arising out of or as consequences of the strike that started on
Jan. 13, 1997.
4. As a consequence of the strike leading to the execution of this
Memorandum of Agreement, the UNION shall cease and desist from
picketing any office or factory of the COMPANY as well as any
government agency or office of the Courts. It shall likewise remove
streamers, barricades and structures that it had put up around the
COMPANY's Aurora Plant in Quezon City upon the execution of this
Agreement and shall forever cease and desist from re-establishing the
same.
5. The COMPANY shall issue the corresponding Certificates of Past
Employment to all dismissed employees.
6. The COMPANY shall continue to recognize the UNION as the
certified bargaining agent of all rank-and-file daily-paid employees of
its Ice Cream and Chilled Products Division up to the life of the existing
Collective Bargaining Agreement.
7. The UNION shall immediately elect a new set of officers who will
replace its dismissed officers. The newly-elected officers shall
exclusively come from the UNION membership who are active
 employees of the COMPANY. The UNION shall inform the COMPANY
of the said newly-elected officers.
8. The COMPANY shall pay dismissed employees their accrued
benefits (i.e., Unpaid wages, proportionate 13th and 14th months pay
and vacation leave (VL) commutation), if any, up to the date of their
actual work in accordance with the existing CBA and COMPANY
programs and policies and consistent with the COMPANY's existing
guidelines. Their respective accountabilities shall be deducted from the
said accrued benefits and that the payment of the same shall
furthermore be subject to the execution and submission to the
COMPANY by the dismissed employees of the corresponding
individual releases and quitclaims.
9. The COMPANY and the UNION agree that this Agreement shall
constitute a final resolution of all issues related to or arising from the
strike that started on January 13, 1997, including the dismissal of a
total of one-hundred thirty (132) (sic) UNION officers and members,
who are all represented by Atty. Potenciano A. Flores, Jr., as herein
provided.
xxx xxx xxx 4
On August 6, 1998, the parties filed a Joint Motion to Dismiss stating
that they are no longer interested in pursuing the petition for injunction filed by
respondent as a consequence of the settlement of their dispute.
On October 12, 1998, the NLRC issued its Decision approving the
parties' compromise agreement and granting their Joint Motion to Dismiss.
On January 25, 2010, or after a lapse of more than eleven (11) years
from the time of execution of the subject MOA, petitioners filed with the NLRC
a Motion for Writ of Execution contending that they have not been paid the
amounts they are entitled to in accordance with the MOA.
Respondent filed its Opposition to the Motion for Writ of Execution
contending that petitioners' remedy is already barred by prescription because,
under the 2005 Revised Rules of the NLRC, a decision or order may be
executed on motion within five (5) years from the date it becomes final and
executory and that the same decision or order may only be enforced by
independent action within a period of ten (10) years from the date of its
finality.
On November 18, 2010, the NLRC promulgated its Resolution denying
petitioners' application for the issuance of a writ of execution on the ground of
prescription.
Petitioners filed a Motion for Reconsideration but the NLRC, in its
Resolution dated February 14, 2011, dismissed it for lack of merit.
 Petitioners then filed a petition for certiorari with the CA questioning the
above Resolutions of the NLRC. The basic issue raised before the CA was
whether or not petitioners' claim for payment is barred by prescription.
On June 30, 2011, the CA issued the first of its questioned Resolutions
dismissing petitioners' certiorari petition on the ground that it is a wrong mode
of appeal. The CA held that petitioners' appeal involves a pure question of law
which should have been taken directly to this Court via a petition for review
on certiorari under Rule 45 of the Rules of Court.
Petitioners filed a Motion for Reconsideration, but the CA denied it in its
second questioned Resolution.
Hence, the instant petition for review on certiorari raising the following
Assignment of Errors, to wit:
Reversible Error No. 1
The Court of Appeals erred in misappreciating the facts of the
case.
Reversible Error No. 2
The Court of Appeals erred in sustaining that the Petitioners'
demand to be paid has prescribed. 5
Like petitioners' petition for certiorari filed with the CA, the main issue
raised in the present petition is whether petitioners' claim is already barred by
prescription.
Petitioners' basic contention is that respondent cannot invoke the
defense of prescription because it is guilty of deliberately causing delay in
paying petitioners' claims and that petitioners, on the other hand, are entitled
to protection under the law because they had been vigilant in exercising their
right as provided for under the subject MOA.
The Court is not persuaded.
There is no dispute that the compromise agreement between herein
petitioner union, representing its officers and members, and respondent
company was executed on August 4, 1998 and was subsequently approved
via the NLRC Decision dated October 12, 1998. However, considering
petitioners' allegation that the terms and conditions of the agreement have not
been complied with by respondent, petitioners should have moved for the
issuance of a writ of execution.
It is wrong for petitioners' counsel to argue that since the NLRC
Decision approving the parties' compromise agreement was immediately
executory, there was no need to file a motion for execution. It is settled that
when a compromise agreement is given judicial approval, it becomes more
than a contract binding upon the parties. 6 Having been sanctioned by the
court, it is entered as a determination of a controversy and has the force and
effect of a judgment. 7 It is immediately executory and not appealable, except
for vices of consent or forgery. 8 The non-fulfillment of its terms and
conditions justifies the issuance of a writ of execution; in such an
instance, execution becomes a ministerial duty of the court. 9 Stated
differently, a decision on a compromise agreement is final and
executory. 10 Such agreement has the force of law and is conclusive between
the parties. 11 It transcends its identity as a mere contract binding only upon
the parties thereto, as it becomes a judgment that is subject to execution
in accordance with the Rules. 12
In this respect, the law and the rules provide the mode and the periods
within which a party may enforce his right.
The most relevant rule in the instant case is Section 8, Rule XI, 2005
Revised Rules of Procedure of the NLRC which states that:
Section 8. Execution by Motion or by Independent Action. — A
decision or order may be executed on motion within five (5) years from
the date it becomes final and executory. After the lapse of such period,
the judgment shall become dormant, and may only be enforced by an
independent action within a period of ten (10) years from date of its
finality.
In the same manner, pertinent portions of Sections 4 (a) and 6, Rule III,
of the NLRC Manual on Execution of Judgment, provide as follows:
Section 4. Issuance of a Writ. — Execution shall issue upon an
order, resolution or decision that finally disposes of the actions or
proceedings and after the counsel of record and the parties have been
duly furnished with the copies of the same in accordance with the
NLRC Rules of Procedure, provided:
a) The Commission or Labor Arbiter
shall, motu proprio or upon motion of any interested
party, issue a writ of execution on a judgment only within
five (5) years from the date it becomes final and
executory. . . .
xxx xxx xxx
Section 6. Execution by Independent Action. — A judgment
after the lapse of five (5) years from the date it becomes final and
executory and before it is barred by prescription, may only be enforced
by an independent action.
Similarly, Section 6, Rule 39 of the Rules of Court, which can be
applied in a suppletory manner, provides:
 Sec. 6. Execution by motion or by independent action. — A final
and executory judgment or order may be executed on motion within
five (5) years from the date of its entry. After the lapse of such time,
and before it is barred by the statute of limitations, a judgment may be
enforced by action. The revived judgment may also be enforced by
motion within five years from the date of its entry and, thereafter, by
action before it is barred by the statute of limitations.
Article 1144 of the Civil Code may, likewise be applied, as it provides
that an action upon a written contract must be brought within ten years from
the time the right of action accrues.
It is clear from the above law and rules that a judgment may be
executed on motion within five years from the date of its entry or from the date
it becomes final and executory. After the lapse of such time, and before it is
barred by the statute of limitations, a judgment may be enforced by action. If
the prevailing party fails to have the decision enforced by a mere motion after
the lapse of five years from the date of its entry (or from the date it becomes
final and executory), the said judgment is reduced to a mere right of action in
favor of the person whom it favors and must be enforced, as are all ordinary
actions, by the institution of a complaint in a regular form. 13
In the present case, the five-and ten-year periods provided by law and
the rules are more than sufficient to enable petitioners to enforce their right
under the subject MOA. In this case, it is clear that the judgment of the NLRC,
having been based on a compromise embodied in a written contract, was
immediately executory upon its issuance on October 12, 1998. Thus, it could
have been executed by motion within five (5) years. It was not. Nonetheless, it
could have been enforced by an independent action within the next five (5)
years, or within ten (10) years from the time the NLRC Decision was
promulgated. It was not. Therefore, petitioners' right to have the NLRC
judgment executed by mere motion as well as their right of action to enforce
the same judgment had prescribed by the time they filed their Motion for Writ
of Execution on January 25, 2010.
It is true that there are instances in which this Court allowed execution
by motion even after the lapse of five years upon meritorious grounds.
However, in instances when this Court allowed execution by motion even after
the lapse of five years, there is, invariably, only one recognized exception, i.e.,
when the delay is caused or occasioned by actions of the judgment debtor
and/or is incurred for his benefit or advantage. 14 In the present case, there is
no indication that the delay in the execution of the MOA, as claimed by
petitioners, was caused by respondent nor was it incurred at its instance or for
its benefit or advantage.
 It is settled that the purpose of the law (or rule) in prescribing time
limitations for enforcing judgments or actions is to prevent obligors from
sleeping on their rights. 15 In this regard, petitioners insist that they are vigilant
in exercising their right to pursue payment of the monetary awards in their
favor. However, a careful review of the records at hand would show that
petitioners failed to prove their allegation. The only evidence presented to
show that petitioners ever demanded payment was a letter dated May 22,
2008, signed by one Atty. Calderon, representing herein individual petitioners,
addressed to respondent company and seeking proof that the company has
indeed complied with the provisions of the subject MOA. 16 Considering that
the NLRC Decision approving the MOA was issued as early as October 12,
1998, the letter from petitioners' counsel, which was dated almost ten years
after the issuance of the NLRC Decision, can hardly be considered as
evidence of vigilance on the part of petitioners. No proof was ever presented
showing that petitioners did not sleep on their rights. Despite their claims to
the contrary, the records at hand are bereft of any evidence to establish that
petitioners exerted any effort to enforce their rights under the subject MOA,
either individually, through their union or their counsel. It is a basic rule in
evidence that each party must prove his affirmative allegation, that mere
allegation is not evidence. 17 Indeed, as allegation is not evidence, the rule
has always been to the effect that a party alleging a critical fact must support
his allegation with substantial evidence which has been construed to mean
such relevant evidence as a reasonable mind will accept as adequate to
support a conclusion. 18 Unfortunately, petitioners failed in this respect.
Even granting, for the sake of argument, that the records of the case
were lost, as alleged by petitioners, leading to the delay in the enforcement of
petitioners' rights, such loss of the records cannot be regarded as having
interrupted the prescriptive periods for filing a motion or an action to enforce
the NLRC Decision because such alleged loss could not have prevented
petitioners from attempting to reconstitute the records and, thereafter, filing
the required motion or action on time. 19
As a final note, it bears to reiterate that while the scales of justice
usually tilt in favor of labor, the present circumstances prevent this Court from
applying the same in the instant petition. Even if our laws endeavor to give life
to the constitutional policy on social justice and on the protection of labor, it
does not mean that every labor dispute will be decided in favor of the
workers. 20 The law also recognizes that management has rights which are
also entitled to respect and enforcement in the interest of fair play. 21 Stated
otherwise, while the Court fully recognizes the special protection which
the Constitution, labor laws, and social legislation accord the workingman, the
Court cannot, however, alter or amend the law on prescription to relieve
petitioners of the consequences of their inaction. Vigilantibus, non
 dormientibus, jura subveniunt — Laws come to the assistance of the vigilant,
not of the sleeping. 22
WHEREFORE, the instant petition is DENIED. The Resolutions of the
Court of Appeals, dated June 30, 2011 and September 28, 2011, respectively,
in CA-G.R. SP No. 118459, are AFFIRMED.
SO ORDERED.
 (Ilaw Buklod ng Manggagawa (IBM) Nestle Phils., Inc. Chapter v. Nestle Phils.,
|||

Inc., G.R. No. 198675, [September 23, 2015], 770 PHIL 266-278)

G.R. No. 182800. April 20, 2015.]

MANILA MINING CORPORATION, petitioner, vs. LOWITO

AMOR, ET AL., respondents.

DECISION

PEREZ, J  :p

Compliance with the requirements for the perfection of an appeal from

the decision of a Labor Arbiter is at issue in this Rule 45 Petition for Review
on Certiorari which primarily seeks the nullification of the 29 November 2007
Decision 1 rendered by the then Twenty-Second Division of the Court of
Appeals (CA) in CA-G.R. SP No. 00609, 2 the decretal portion of which states:
WHEREFORE, the petition is hereby GRANTED. The
Resolutions of the NLRC dated 25 April 2005 and 30 June 2007,
respectively, are ANNULLED and SET ASIDE. The 25 October 2004
Resolution of the Labor Arbiter is REINSTATED.
SO ORDERED. 3
The facts are not in dispute.
Respondents Lowito Amor, Rollybie Ceredon, Julius Cesar, Ronito
Martinez and Fermin Tabili, Jr. were regular employees of petitioner Manila
Mining Corporation, a domestic corporation which operated a mining claim in
Placer, Surigao del Norte, in pursuit of its business of large-scale open-pit
mining for gold and copper ore. In compliance with existing environmental
laws, petitioner maintained Tailing Pond No. 7 (TP No. 7), a tailings
containment facility required for the storage of waste materials generated by
its mining operations. When the mine tailings being pumped into TP No. 7
reached the maximum level in December 2000, petitioner temporarily shut
down its mining operations pending approval of its application to increase said
facility's capacity by the Department of Environment and Natural Resources-
Environment Management Bureau (DENR-EMB), Butuan City. Although the
DENR-EMB issued a temporary authority on 25 January 2001 for it to be able
to continue operating TP No. 7 for another six (6) months and to increase its
capacity, petitioner failed to secure an extension permit when said temporary
authority eventually lapsed. 4
On 27 July 2001, petitioner served a notice, informing its employees
and the Department of Labor and Employment Regional Office No. XII
(DOLE) of the temporary suspension of its operations for six months and the
temporary lay-off of two-thirds of its employees. 5 After the lapse of said
period, petitioner notified the DOLE on 11 December 2001 that it was
extending the temporary shutdown of its operations for another six
months. 6 Adversely affected by petitioner's continued failure to resume its
operations, respondents filed the complaint for constructive dismissal and
monetary claims which was docketed as NLRC Case No. RAB-13-10-00226-
2003 before the Regional Arbitration Branch No. XIII of the National Labor
Relations Commission (NLRC). On 25 October 2004, Executive Labor Arbiter
Benjamin E. Pelaez rendered a Decision holding petitioner liable for
constructive dismissal in view of the suspension of its operations beyond the
six-month period allowed under Article 286 7 of the Labor Code of the
Philippines. Finding that the cause of suspension of petitioner's business was
not beyond its control, 8 the Labor Arbiter applied Article 283 9 of the same
Code and disposed of the case in the following wise:
WHEREFORE, premises considered, judgment is hereby
entered:

1) Declaring [respondents] to have been constructively dismissed

from their employment; and

2) Ordering [petitioner] to pay . . . [respondents] their separation

pay equivalent to one (1) month pay or to at least one-half
(1/2) month pay for every year of service, whichever is
higher, a fraction of at least six (6) months shall be
considered as one whole year, moral damages and
exemplary damages in the amount of Ten Thousand Pesos
(P10,000.00) and Five Thousand Pesos (P5,000.00),
respectively, for each of the [respondents] and attorney's
fees equivalent to ten (10%) percent in the total amount of
TWO MILLION ONE HUNDRED THIRTY EIGHT
 THOUSAND ONE HUNDRED NINETY & 02/100 PESOS
(P2,138,190.02) ONLY . . .

All other claims are dismissed for lack of merit.

SO ORDERED. 10
Aggrieved, petitioner filed its memorandum of appeal before the
NLRC 11 and moved for the reduction of the appeal bond to P100,000.00, on
the ground that its financial losses in the preceding years had rendered it
unable to put up one in cash and/or surety equivalent to the monetary
award. 12 In opposition, respondents moved for the dismissal of the appeal in
view of the fact that, despite receipt of the appealed decision on 24 November
2004, petitioner mailed their copy of the memorandum of appeal only on 7
February 2005. Respondents also argued that the appeal bond tendered by
petitioner was so grossly disproportionate to monetary award for the same to
be considered substantial compliance with the requirements for the perfection
of an appeal from a Labor Arbiter's decision. 13 Without addressing the
procedural issues raised by respondents, however, the NLRC Fifth Division
went on to render a Resolution dated 25 April 2005 in NLRC CA No. M-
008433-2005, reversing the appealed decision and dismissing the complaint
for lack of merit. Finding that the continued suspension of petitioner's
operations was due to circumstances beyond its control, the NLRC ruled that,
under Article 283 of the Labor Code, respondents were not even entitled to
separation pay considering the eventual closure of their employer's business
due to serious business losses or financial reverses. 14
Unfazed by the denial of their motion for reconsideration in the NLRC's
30 June 2005 Resolution, 15 respondents filed the Rule 65 petition
for certiorari which was docketed as CA-G.R. SP No. 00609 before the
Mindanao Station of the CA. Insisting that petitioner's memorandum of appeal
was filed 65 days after the lapse of reglementary period for appeal,
respondents called attention to the fact that, as grossly inadequate as it
already was vis-à-vis the P2,138,190.02 16 monetary award adjudicated in
their favor, the check in the sum of P100,000.00 deposited by petitioner by
way of appeal bond was dishonored upon presentment for payment. Aside
from the fact that the Labor Arbiter's 25 October 2004 Decision had already
attained finality, respondents faulted the NLRC for applying Article 283 of
the Labor Code absent allegation and proof of compliance with the
requirements for the closure of an employer's business due to serious
business losses. 17 In its comment, on the other hand, petitioner claimed that,
having caused the same to be immediately funded, the check it issued for the
appeal bond had since been deposited by the NLRC. Insisting that the
cessation of its operations was due to causes beyond its control, petitioner
argued that the subsequent closure of its business due to business losses
exempted it from paying separation pay. 18
On 29 November 2007, the CA's then Twenty-Second Division
rendered the herein assailed decision, granting respondents' petition and
nullifying the NLRC's 25 April 2005 Resolution. In reinstating the Labor
Arbiter's 25 October 2004 Decision, the CA ruled that petitioner failed to
perfect its appeal therefrom considering that the copy of its 3 December 2004
Memorandum of Appeal intended for respondents was served the latter by
registered mail only on 7 February 2005. Aside from posting an unusually
smaller sum as appeal bond, petitioner was likewise faulted for replenishing
the check it issued only on 1 April 2005 or 24 days before the rendition of the
assailed NLRC Decision. Applying the principle that the right to appeal is
merely a statutory remedy and that the party who seeks to avail of the same
must strictly follow the requirements therefor, the CA decreed that the Labor
Arbiter's Decision had already attained finality and, for said reason, had been
placed beyond the NLRC's power of review. 19 Petitioner's motion for
reconsideration of the foregoing decision was denied for lack of merit in the
CA's 2 May 2008 Resolution, 20 hence, this Rule 45 petition for review
on certiorari. 21
Petitioner seeks the reversal of the CA's 29 November 2007 Decision
and 2 May 2008 Resolution on the following grounds:
THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT
PETITIONER'S APPEAL FILED WITH THE NATIONAL LABOR
RELATIONS COMMISSION WAS FATALLY DEFECTIVE [SINCE IT]
HAD FULLY COMPLIED WITH THE REQUIREMENTS OF
THE LABOR CODE FOR PERFECTING AN APPEAL.
THE COURT OF APPEALS COMMITTED A GRAVE ABUSE OF
DISCRETION IN IMMEDIATELY SETTING ASIDE THE DECISION
OF THE NLRC WITHOUT REVIEWING THE MERITS OF THE CASE.
AT THE TIME OF THE PROMULGATION OF THE ASSAILED
DECISION BY THE COURT OF APPEALS, THE HONORABLE
SUPREME COURT HAD ALREADY AFFIRMED THE FINDING THAT
PETITIONER WAS ALREADY PERMANENTLY CLOSED DUE TO
MASSIVE FINANCIAL LOSSES. 22
Time and again, it has been held that the right to appeal is not a natural
right or a part of due process; it is merely a statutory privilege, and may be
exercised only in the manner and in accordance with the provisions of
law. 23 A party who seeks to avail of the right must, therefore, comply with the
requirements of the rules, failing which the right to appeal is invariably
lost. 24 Insofar as appeals from decisions of the Labor Arbiter are concerned,
Article 223 of the Labor Code of the Philippines 25 provides that, "(d)ecisions,
awards, or orders of the Labor Arbiter are final and executory unless appealed
to the [NLRC] by any or both parties within ten (10) calendar days from the
receipt of such decisions, awards or orders." In case of a judgment involving a
monetary award, the same provision mandates that, "an appeal by the
employer may be perfected only upon the posting of a cash or surety bond
issued by a reputable bonding company duly accredited by the [NLRC] in the
amount equivalent to the monetary award in the judgment appealed from."
Alongside the requirement that "the appellant shall furnish a copy of the
memorandum of appeal to the other party," the foregoing requisites for the
perfection of an appeal are reiterated under Sections 1, 4 and 6, Rule VI of
the NLRC Rules of Procedure in force at the time petitioner appealed the
Labor Arbiter's 25 October 2004 Decision, viz.:
SECTION 1. PERIODS OF APPEAL. — Decisions, resolutions
or orders of the Labor Arbiter shall be final and executory unless
appealed to the Commission by any or both parties within ten (10)
calendar days from receipt of such decisions, resolutions or orders of
the Labor Arbiter . . . . If the 10th . . . day . . . falls on a Saturday,
Sunday or a holiday, the last day to perfect the appeal shall be the next
working day.
SECTION 4. REQUISITES FOR PERFECTION OF APPEAL. —
(a) The Appeal shall be filed within the reglementary period as
provided in Section 1 of this Rule; shall be verified by appellant himself
in accordance with Section 4, Rule 7 of the Rules of Court, with proof
of payment of the required appeal fee and the posting of a cash or
surety bond as provided in Section 6 of this Rule; shall be
accompanied by memorandum of appeal in three (3) legibly typewritten
copies which shall state the grounds relied upon and the arguments in
support thereof; the relief prayed for; and a statement of the date when
the appellant received the appealed decision, resolution or order and a
certificate of non-forum shopping with proof of service on the other
party of such appeal. A mere notice of appeal without complying with
the other requisites aforestated shall not stop the running of the period
for perfecting an appeal. (Italics supplied)
xxx xxx xxx
SECTION 6. BOND. — In case the decision of the Labor Arbiter
or the Regional Director involves a monetary award, an appeal by the
employer may be perfected only upon the posting of a cash or surety
bond. The appeal bond shall either be in cash or surety in an amount
equivalent to the monetary award, exclusive of damages and attorney's
fees.
xxx xxx xxx
 No motion to reduce bond shall be entertained except on
meritorious grounds and upon the posting of a bond in a reasonable
amount in relation to the monetary award.
The filing of the motion to reduce bond without compliance with
the requisites in the preceding paragraph shall not stop the running of
the period to perfect an appeal.
Having received the Labor Arbiter's Decision on 24 November
2004, 26 petitioner had ten (10) calendar days or until 4 December 2004 within
which to perfect an appeal. Considering that the latter date fell on a Saturday,
petitioner had until the next working day, 6 December 2004, within which to
comply with the requirements for the perfection of its appeal. Our perusal of
the record shows that, despite bearing the date 3 December 2004, petitioner's
memorandum of appeal was subscribed before Notary Public Ronald Rex
Recidoro only on 6 December 2004. 27 Without proof as to the actual date of
filing of said pleading being presented by both parties, the CA discounted the
timeliness of its filing in light of the established fact that the copy thereof
intended for respondents was only served by registered mail on 7 February
2005. 28 Since proof of service of the memorandum on appeal is required for
the perfection of an appeal from the decision of the Labor Arbiter, the CA
ruled that "respondents filed its appeal not earlier than 07 February 200[5],
which is way beyond the ten-day reglementary period to appeal." 29
As allegation is not evidence, however, the rule is settled that the
burden of evidence lies with the party who asserts the affirmative of an
issue. 30 As the parties claiming the non-perfection of petitioner's appeal, it
was, therefore, respondents who had the burden of proving that said
memorandum of appeal was, indeed, filed out of time. By and of itself, the fact
that the copy of memorandum of appeal intended for respondents was served
upon them by registered mail only on 7 February 2005 does not necessarily
mean that petitioner's appeal from the Labor Arbiter's decision was filed out of
time. On the principle that justice should not be sacrificed for technicality, 31 it
has been ruled that the failure of a party to serve a copy of the memorandum
to the opposing party is not a jurisdictional defect and does not bar the NLRC
from entertaining the appeal. 32 Considering that such an omission is merely
regarded as a formal lapse or an excusable neglect, 33 the CA reversibly erred
in ruling that, under the circumstances, petitioner could not have filed its
appeal earlier than 7 February 2005.
The question regarding the appeal bond rises from the record which
shows that, in addition to its memorandum of appeal, petitioner filed a 6
December 2004 motion for the reduction of the appeal bond on the ground
that the cash equivalent of the monetary award and/or cost of the surety bond
have proven to be prohibitive in view of the tremendous business losses it
allegedly sustained. As supposed measure of its good faith in complying with
the Rules, petitioner attached to its motion Philam Bank Check No.
0000627153, dated 6 December 2004, in the amount of P100,000.00 only. As
pointed out by respondents, however, said check was subsequently
dishonored upon presentment for payment for insufficiency of funds. In its 1
April 2005 Ex-Parte Manifestation, petitioner informed the NLRC that it "only
learned belatedly that the same check was dishonored" as there appeared to
be "an inadvertent mix-up as other checks issued for [its] other obligations
were negotiated ahead [thereof], leaving an insufficient balance in its
account." As a consequence, petitioner claimed that "the deficiency in deposit
has been promptly and immediately replenished as soon as the check's
dishonor was reported" and that the same may already be re-deposited at any
of NLRC's depositary banks. 34
The issue that has bedevilled labor litigation for long has been clarified
by the ruling in McBurnie v. Ganzon, et al., 35 which built on and extended the
ruling that while it is true that reduction of the appeal bond has been allowed
in meritorious cases 36 on the principle that substantial justice is better served
by allowing appeals on the merits, 37 it has been ruled that the employer
should comply with the following conditions: (1) the motion to reduce the bond
shall be based on meritorious grounds; and (2) a reasonable amount in
relation to the monetary award is posted by the appellant, otherwise the filing
of the motion to reduce bond shall not stop the running of the period to perfect
an appeal. 38
The McBurnie ruling pronounced:
xxx xxx xxx
Furthermore, on the matter of the filing and acceptance of
motions to reduce appeal bond, as provided in Section 6, Rule VI of
the 2011 NLRC Rules of Procedure, the Court hereby RESOLVES that
henceforth, the following guidelines shall be observed:

(a) The filing of a motion to reduce appeal bond shall be

entertained by the NLRC subject to the following
conditions: (1) there is meritorious ground; and (2) a bond
in a reasonable amount is posted;

(b) For purposes of compliance with condition no. (2), a motion

shall be accompanied by the posting of a provisional cash
or surety bond equivalent to ten percent (10), of the
monetary award subject of the appeal, exclusive of
damages and attorney's fees;

(c) Compliance with the foregoing conditions shall suffice to

suspend the running of the 10-day reglementary period to
 perfect an appeal from the labor arbiter's decision to the
NLRC;

(d) The NLRC retains its authority and duty to resolve the motion
to reduce bond and determine the final amount of bond
that shall be posted by the appellant, still in accordance
with the standards of meritorious grounds and reasonable
amount; and

(e) In the event that the NLRC denies the motion to reduce bond,
or requires a bond that exceeds the amount of the
provisional bond, the appellant shall be given a fresh
period of ten (10) days from notice of the NLRC order
within which to perfect the appeal by posting the required
appeal bond. 39

In this case, we see that with no proof to substantiate its claim,

petitioner moved for a reduction of the appeal bond on the preferred basis of
serious losses and reverses it supposedly sustained in the years prior to the
rendition of the Labor Arbiter's decision.
The first condition may be left for the nonce. As to the second condition,
we may consider that the amount of P100,000.00 supposedly posted was
provisional bond sufficient to suspend the running of the 10-day reglementary
period to perfect an appeal from the Labor Arbiter's decision.
That would however not improve petitioner's position one bit.
Respondent correctly called attention to the fact that the check
submitted by petitioner was dishonored upon presentment for payment,
thereby rendering the tender thereof ineffectual. Although the NLRC chose
not to address the issue of the perfection of the appeal as well as the
reduction of the bond in its Resolution dated 25 April 2005, the record shows
that petitioner only manifested its deposit of the funds for the check 24 days
before the resolution of its appeal or 116 days after its right to appeal the
Labor Arbiter's decision had expired. Having filed its motion and
memorandum on the very last day of the reglementary period for appeal,
moreover, petitioner had no one but itself to blame for failing to post the full
amount pending the NLRC's action on its motion for reduction of the appeal
bond. If redundancy be risked it must be emphasized that the posting of a
bond is indispensable to the perfection of an appeal in cases involving
monetary awards from the decision of the Labor Arbiter. Since it is the posting
of a cash or surety bond which confers jurisdiction upon the NLRC, 40 the rule
is settled that non-compliance is fatal and has the effect of rendering the
award final and executory. 41
 Viewed in the light of the foregoing considerations, the CA cannot be
faulted for no longer discussing the merits of petitioner's case. Although
appeal is an essential part of our judicial process, it has been held, time and
again, that the right thereto is not a natural right or a part of due process but is
merely a statutory privilege. Thus, the perfection of an appeal in the manner
and within the period prescribed by law is not only mandatory but also
jurisdictional and failure of a party to conform to the rules regarding appeal will
render the judgment final and executory. Once a decision attains finality, it
becomes the law of the case and can no longer be revised, reviewed,
changed or altered. The basic rule of finality of judgment is grounded on the
fundamental principle of public policy and sound practice that, at the risk of
occasional error, the judgment of courts and the award of quasi-judicial
agencies must become final at some definite date fixed by law. 42
Without necessarily resulting to a termination of employment, an
employer may at any rate, bona fide suspend the operation of its business for
a period of not exceeding six months under Article 286 of the Labor
Code.  43 While the employer is, on the one hand, duty bound to reinstate his
employees to their former positions without loss of seniority rights if the
operation of the business is resumed within six months, employment is
deemed terminated where the suspension exceeds said period. 44 Not having
resumed its operations within six months from the time it suspended its
operations on 27 July 2001, it necessarily follows that petitioner is liable to
pay respondents' separation pay 45 computed at one (1) month pay or at least
one-half (1/2) month pay for every year of service, whichever is higher, 46 as
well as the damages and attorney's fees adjudicated by the Labor Arbiter.
Without proof of the serious business losses it allegedly sustained and/or
compliance with the reportorial requirements under Article 283 of the Labor
Code, petitioner cannot expediently plead exemption from said liabilities due
to the supposed financial reverses which led to the eventual closure of its
business. It is essentially required that the alleged losses in business
operations must be proven for, otherwise, said ground for termination would
be susceptible to abuse by scheming employers who might be merely feigning
business losses or reverses in their business ventures in order to ease out
employees. 47 The condition of business losses justifying retrenchment is
normally shown by audited financial documents like yearly balance sheets
and profit and loss statements as well as annual income tax returns 48 which
were not presented in this case.
Neither can petitioner evade said liabilities on the strength of the 28
July 2005 Decision rendered by the CA's Twenty-Second Division in CA-G.R.
SP No. 00072, entitled Rosito Asumen, et al. v. National Labor Relations
Commission, et al., where its employees' claim for separation pay was denied
on account of the subsequent closure of its business due to serious business
 losses and financial reverses. 49 Although the employees Rule 45 petition for
review on certiorari had been denied in the 7 February 2007 Resolution
issued by this Court's Second Division in UDK-13776, 50 the ruling in said
case can hardly be considered binding on respondents who were not parties
thereto. As for the inequality in benefits which would supposedly result if the
CA's assailed decision and resolution were not reversed, suffice it to say that
this Court had sustained the claim for separation pay of petitioner's
employees in the case of Manila Mining Corp. Employees Association-
Federation of Free Workers Chapter, et al. v. Manila Mining Corporation, et
al.  51 Stare decisis is inapplicable; the matter of separation pay for petitioner's
employees has been decided case to case.
WHEREFORE, premises considered, the petition is DENIED for lack of
merit.
SO ORDERED.
|||  (Manila Mining Corp. v. Amor, G.R. No. 182800, [April 20, 2015])

G.R. No. 198675. September 23, 2015.]

ILAW BUKLOD NG MANGGAGAWA (IBM) NESTLE

PHILIPPINES, INC. CHAPTER (ICE CREAM AND CHILLED
PRODUCTS DIVISION), ITS OFFICERS, MEMBERS BONIFACIO
T. FLORENDO, EMILIANO B. PALANAS and GENEROSO P.
LAXAMANA, petitioners, vs. NESTLE PHILIPPINES,
INC., respondent.

DECISION

PERALTA, J  : p

Assailed in the instant petition for review on certiorari under Rule 45 of

the Rules of Court are the Resolutions 1 of the Court of Appeals (CA), dated
June 30, 2011 2 and September 28, 2011, 3 respectively, in CA-G.R. SP No.
118459. The June 30, 2011 Resolution dismissed herein petitioners' petition
for review, while the September 28, 2011 Resolution denied petitioners'
Motion for Reconsideration.
The factual and procedural antecedents of the case are as follows:
 On January 13, 1997, herein petitioner union staged a strike against
herein respondent company's Ice Cream and Chilled Products Division, citing,
as grounds, respondent's alleged violation of the collective bargaining
agreement (CBA), dismissal of union officers and members, discrimination
and other unfair labor practice (ULP) acts.
As a consequence, respondent filed with the National Labor Relations
Commission (NLRC) a Petition for Injunction with Prayer for Issuance of
Temporary Restraining Order, Free Ingress and Egress Order, and
Deputization Order.
On January 20, 1997, a temporary restraining order was issued by the
NLRC. Thereafter, on February 7, 1997, the NLRC issued a preliminary
injunction.
On February 26, 1997, respondent filed a Petition to Declare Strike
Illegal.
Subsequently, on April 2, 1997, then Department of Labor and
Employment (DOLE) Acting Secretary, issued an Order assuming jurisdiction
over the strike and certifying the same to the NLRC.
On June 2, 1997, petitioner union filed a petition for certiorari with this
Court, questioning the above order of the Acting DOLE Secretary.
However, after a series of conciliation meetings and discussions
between the parties, they agreed to resolve their differences and came up
with a compromise which was embodied in a Memorandum of Agreement
(MOA) dated August 4, 1998, pertinent portions of which are as follows:
xxx xxx xxx
1. The COMPANY [herein respondent] shall cause the dismissal of all
criminal cases against dismissed employees arising out of or as
consequences of the strike that started on January 13, 1997.
Future illegal acts of the UNION [herein petitioner] shall not be
covered by this agreement.
2. The UNION shall unqualifiedly withdraw its Petition
for Certiorari pending with the Supreme Court.
3. The COMPANY and the UNION shall jointly file a motion to withdraw
any and all actions pending with the NLRC including the Certified
Case, arising out of or as consequences of the strike that started on
Jan. 13, 1997.
4. As a consequence of the strike leading to the execution of this
Memorandum of Agreement, the UNION shall cease and desist from
picketing any office or factory of the COMPANY as well as any
government agency or office of the Courts. It shall likewise remove
 streamers, barricades and structures that it had put up around the
COMPANY's Aurora Plant in Quezon City upon the execution of this
Agreement and shall forever cease and desist from re-establishing the
same.
5. The COMPANY shall issue the corresponding Certificates of Past
Employment to all dismissed employees.
6. The COMPANY shall continue to recognize the UNION as the
certified bargaining agent of all rank-and-file daily-paid employees of
its Ice Cream and Chilled Products Division up to the life of the existing
Collective Bargaining Agreement.
7. The UNION shall immediately elect a new set of officers who will
replace its dismissed officers. The newly-elected officers shall
exclusively come from the UNION membership who are active
employees of the COMPANY. The UNION shall inform the COMPANY
of the said newly-elected officers.
8. The COMPANY shall pay dismissed employees their accrued
benefits (i.e., Unpaid wages, proportionate 13th and 14th months pay
and vacation leave (VL) commutation), if any, up to the date of their
actual work in accordance with the existing CBA and COMPANY
programs and policies and consistent with the COMPANY's existing
guidelines. Their respective accountabilities shall be deducted from the
said accrued benefits and that the payment of the same shall
furthermore be subject to the execution and submission to the
COMPANY by the dismissed employees of the corresponding
individual releases and quitclaims.
9. The COMPANY and the UNION agree that this Agreement shall
constitute a final resolution of all issues related to or arising from the
strike that started on January 13, 1997, including the dismissal of a
total of one-hundred thirty (132) (sic) UNION officers and members,
who are all represented by Atty. Potenciano A. Flores, Jr., as herein
provided.
xxx xxx xxx 4
On August 6, 1998, the parties filed a Joint Motion to Dismiss stating
that they are no longer interested in pursuing the petition for injunction filed by
respondent as a consequence of the settlement of their dispute.
On October 12, 1998, the NLRC issued its Decision approving the
parties' compromise agreement and granting their Joint Motion to Dismiss.
On January 25, 2010, or after a lapse of more than eleven (11) years
from the time of execution of the subject MOA, petitioners filed with the NLRC
a Motion for Writ of Execution contending that they have not been paid the
amounts they are entitled to in accordance with the MOA.
 Respondent filed its Opposition to the Motion for Writ of Execution
contending that petitioners' remedy is already barred by prescription because,
under the 2005 Revised Rules of the NLRC, a decision or order may be
executed on motion within five (5) years from the date it becomes final and
executory and that the same decision or order may only be enforced by
independent action within a period of ten (10) years from the date of its
finality.
On November 18, 2010, the NLRC promulgated its Resolution denying
petitioners' application for the issuance of a writ of execution on the ground of
prescription.
Petitioners filed a Motion for Reconsideration but the NLRC, in its
Resolution dated February 14, 2011, dismissed it for lack of merit.
Petitioners then filed a petition for certiorari with the CA questioning the
above Resolutions of the NLRC. The basic issue raised before the CA was
whether or not petitioners' claim for payment is barred by prescription.
On June 30, 2011, the CA issued the first of its questioned Resolutions
dismissing petitioners' certiorari petition on the ground that it is a wrong mode
of appeal. The CA held that petitioners' appeal involves a pure question of law
which should have been taken directly to this Court via a petition for review
on certiorari under Rule 45 of the Rules of Court.
Petitioners filed a Motion for Reconsideration, but the CA denied it in its
second questioned Resolution.
Hence, the instant petition for review on certiorari raising the following
Assignment of Errors, to wit:
Reversible Error No. 1
The Court of Appeals erred in misappreciating the facts of the
case.
Reversible Error No. 2
The Court of Appeals erred in sustaining that the Petitioners'
demand to be paid has prescribed. 5
Like petitioners' petition for certiorari filed with the CA, the main issue
raised in the present petition is whether petitioners' claim is already barred by
prescription.
Petitioners' basic contention is that respondent cannot invoke the
defense of prescription because it is guilty of deliberately causing delay in
paying petitioners' claims and that petitioners, on the other hand, are entitled
to protection under the law because they had been vigilant in exercising their
right as provided for under the subject MOA.
 The Court is not persuaded.
There is no dispute that the compromise agreement between herein
petitioner union, representing its officers and members, and respondent
company was executed on August 4, 1998 and was subsequently approved
via the NLRC Decision dated October 12, 1998. However, considering
petitioners' allegation that the terms and conditions of the agreement have not
been complied with by respondent, petitioners should have moved for the
issuance of a writ of execution.
It is wrong for petitioners' counsel to argue that since the NLRC
Decision approving the parties' compromise agreement was immediately
executory, there was no need to file a motion for execution. It is settled that
when a compromise agreement is given judicial approval, it becomes more
than a contract binding upon the parties. 6 Having been sanctioned by the
court, it is entered as a determination of a controversy and has the force and
effect of a judgment. 7 It is immediately executory and not appealable, except
for vices of consent or forgery. 8 The non-fulfillment of its terms and
conditions justifies the issuance of a writ of execution; in such an
instance, execution becomes a ministerial duty of the court. 9 Stated
differently, a decision on a compromise agreement is final and
executory. 10 Such agreement has the force of law and is conclusive between
the parties. 11 It transcends its identity as a mere contract binding only upon
the parties thereto, as it becomes a judgment that is subject to execution
in accordance with the Rules. 12
In this respect, the law and the rules provide the mode and the periods
within which a party may enforce his right.
The most relevant rule in the instant case is Section 8, Rule XI, 2005
Revised Rules of Procedure of the NLRC which states that:
Section 8. Execution by Motion or by Independent Action. — A
decision or order may be executed on motion within five (5) years from
the date it becomes final and executory. After the lapse of such period,
the judgment shall become dormant, and may only be enforced by an
independent action within a period of ten (10) years from date of its
finality.
In the same manner, pertinent portions of Sections 4 (a) and 6, Rule III,
of the NLRC Manual on Execution of Judgment, provide as follows:
Section 4. Issuance of a Writ. — Execution shall issue upon an
order, resolution or decision that finally disposes of the actions or
proceedings and after the counsel of record and the parties have been
duly furnished with the copies of the same in accordance with the
NLRC Rules of Procedure, provided:
 a) The Commission or Labor Arbiter
shall, motu proprio or upon motion of any interested
party, issue a writ of execution on a judgment only within
five (5) years from the date it becomes final and
executory. . . .
xxx xxx xxx
Section 6. Execution by Independent Action. — A judgment
after the lapse of five (5) years from the date it becomes final and
executory and before it is barred by prescription, may only be enforced
by an independent action.
Similarly, Section 6, Rule 39 of the Rules of Court, which can be
applied in a suppletory manner, provides:
Sec. 6. Execution by motion or by independent action. — A final
and executory judgment or order may be executed on motion within
five (5) years from the date of its entry. After the lapse of such time,
and before it is barred by the statute of limitations, a judgment may be
enforced by action. The revived judgment may also be enforced by
motion within five years from the date of its entry and, thereafter, by
action before it is barred by the statute of limitations.
Article 1144 of the Civil Code may, likewise be applied, as it provides
that an action upon a written contract must be brought within ten years from
the time the right of action accrues.
It is clear from the above law and rules that a judgment may be
executed on motion within five years from the date of its entry or from the date
it becomes final and executory. After the lapse of such time, and before it is
barred by the statute of limitations, a judgment may be enforced by action. If
the prevailing party fails to have the decision enforced by a mere motion after
the lapse of five years from the date of its entry (or from the date it becomes
final and executory), the said judgment is reduced to a mere right of action in
favor of the person whom it favors and must be enforced, as are all ordinary
actions, by the institution of a complaint in a regular form. 13
In the present case, the five-and ten-year periods provided by law and
the rules are more than sufficient to enable petitioners to enforce their right
under the subject MOA. In this case, it is clear that the judgment of the NLRC,
having been based on a compromise embodied in a written contract, was
immediately executory upon its issuance on October 12, 1998. Thus, it could
have been executed by motion within five (5) years. It was not. Nonetheless, it
could have been enforced by an independent action within the next five (5)
years, or within ten (10) years from the time the NLRC Decision was
promulgated. It was not. Therefore, petitioners' right to have the NLRC
judgment executed by mere motion as well as their right of action to enforce
the same judgment had prescribed by the time they filed their Motion for Writ
of Execution on January 25, 2010.
It is true that there are instances in which this Court allowed execution
by motion even after the lapse of five years upon meritorious grounds.
However, in instances when this Court allowed execution by motion even after
the lapse of five years, there is, invariably, only one recognized exception, i.e.,
when the delay is caused or occasioned by actions of the judgment debtor
and/or is incurred for his benefit or advantage. 14 In the present case, there is
no indication that the delay in the execution of the MOA, as claimed by
petitioners, was caused by respondent nor was it incurred at its instance or for
its benefit or advantage.
It is settled that the purpose of the law (or rule) in prescribing time
limitations for enforcing judgments or actions is to prevent obligors from
sleeping on their rights. 15 In this regard, petitioners insist that they are vigilant
in exercising their right to pursue payment of the monetary awards in their
favor. However, a careful review of the records at hand would show that
petitioners failed to prove their allegation. The only evidence presented to
show that petitioners ever demanded payment was a letter dated May 22,
2008, signed by one Atty. Calderon, representing herein individual petitioners,
addressed to respondent company and seeking proof that the company has
indeed complied with the provisions of the subject MOA. 16 Considering that
the NLRC Decision approving the MOA was issued as early as October 12,
1998, the letter from petitioners' counsel, which was dated almost ten years
after the issuance of the NLRC Decision, can hardly be considered as
evidence of vigilance on the part of petitioners. No proof was ever presented
showing that petitioners did not sleep on their rights. Despite their claims to
the contrary, the records at hand are bereft of any evidence to establish that
petitioners exerted any effort to enforce their rights under the subject MOA,
either individually, through their union or their counsel. It is a basic rule in
evidence that each party must prove his affirmative allegation, that mere
allegation is not evidence. 17 Indeed, as allegation is not evidence, the rule
has always been to the effect that a party alleging a critical fact must support
his allegation with substantial evidence which has been construed to mean
such relevant evidence as a reasonable mind will accept as adequate to
support a conclusion. 18 Unfortunately, petitioners failed in this respect.
Even granting, for the sake of argument, that the records of the case
were lost, as alleged by petitioners, leading to the delay in the enforcement of
petitioners' rights, such loss of the records cannot be regarded as having
interrupted the prescriptive periods for filing a motion or an action to enforce
the NLRC Decision because such alleged loss could not have prevented
petitioners from attempting to reconstitute the records and, thereafter, filing
the required motion or action on time. 19
 As a final note, it bears to reiterate that while the scales of justice
usually tilt in favor of labor, the present circumstances prevent this Court from
applying the same in the instant petition. Even if our laws endeavor to give life
to the constitutional policy on social justice and on the protection of labor, it
does not mean that every labor dispute will be decided in favor of the
workers. 20 The law also recognizes that management has rights which are
also entitled to respect and enforcement in the interest of fair play. 21 Stated
otherwise, while the Court fully recognizes the special protection which
the Constitution, labor laws, and social legislation accord the workingman, the
Court cannot, however, alter or amend the law on prescription to relieve
petitioners of the consequences of their inaction. Vigilantibus, non
dormientibus, jura subveniunt — Laws come to the assistance of the vigilant,
not of the sleeping. 22
WHEREFORE, the instant petition is DENIED. The Resolutions of the
Court of Appeals, dated June 30, 2011 and September 28, 2011, respectively,
in CA-G.R. SP No. 118459, are AFFIRMED.
SO ORDERED.
 (Ilaw Buklod ng Manggagawa (IBM) Nestle Phils., Inc. Chapter v. Nestle Phils.,
|||

Inc., G.R. No. 198675, [September 23, 2015], 770 PHIL 266-278)

G.R. No. 195109. February 4, 2015.]

ANDY D. BALITE, DELFIN M. ANZALDO AND MONALIZA DL.

BIHASA, petitioners, vs. SS VENTURES INTERNATIONAL, INC.,
SUNG SIK LEE AND EVELYN RAYALA, respondents.

DECISION

PEREZ, J  : p

This is a Petition for Review on Certiorari pursuant to Rule 45 of

the Revised Rules of Court, assailing the 18 June 2010 Decision 1 rendered by
the Tenth Division of the Court of Appeals in CA-G.R. SP No. 109589. In its
assailed decision, the appellate court reversed the Resolution of the National
Labor Relations Commission (NLRC) which denied the Motion to Reduce Appeal
Bond filed by respondents SS Ventures International, Inc., Sung Sik Lee and
Evelyn Rayala.
In a Resolution 2 dated 30 December 2010, the appellate court refused to
reconsider its earlier decision.

The Facts

Respondent SS Ventures International, Inc. is a domestic corporation duly

engaged in the business of manufacturing footwear products for local sales and
export abroad. It is represented in this action by respondents Sung Sik Lee and
Evelyn Rayala. Petitioners Andy Balite (Balite), Monaliza Bihasa (Bihasa) and
Delfin Anzaldo (Anzaldo) were regular employees of the respondent company
until their employments were severed for violation of various company policies.
For his part, Balite was issued a Show Cause Memorandum by the
respondent company on 4 August 2005 charging him with the following
infractions: (1) making false reports, malicious and fraudulent statements and
rumor-mongering against the company; (2) threatening and intimidating co-
workers; (3) refusing to cooperate in the conduct of investigation; and (4) gross
negligence in the care and use of the company property resulting in the damage
of the finished products. After respondent found Balite's explanation insufficient,
he was dismissed from employment, through a Notice of Termination on 6
September 2005.
Bihasa, on the other hand, was charged with absence without leave on two
occasions and with improper behavior, stubbornness, arrogance and
uncooperative attitude towards superiors and employees. Bihasa was likewise
terminated from the service on 5 May 2006 after her explanation in an
administrative investigation was found unsatisfactory by the respondent
company.
Anzaldo was also dismissed from employment after purportedly giving him
due process. The records of the infractions he committed as well as the date of
his termination, however, are not borne by the records.
Consequently, the three employees charged respondents with illegal
dismissal and recovery of backwages, 13th month pay and attorney's fees before
the Labor Arbiter.
In refuting the allegations of the petitioners, respondents averred that
petitioners were separated from employment for just causes and after affording
them procedural due process of law.
On 30 December 2007, the Labor Arbiter rendered a Decision 3 in favor of
petitioners and held that respondents are liable for illegal dismissal for failing to
comply with the procedural and substantive requirements in terminating
employment. The decretal portion of the Labor Arbiter Decision reads:
WHEREFORE, premises considered, [petitioners] are hereby
found to have been illegally dismissed even as respondents are held
liable therefore.
Consequently, respondent corporation is hereby ordered to
reinstate [petitioners] to their former positions without loss of seniority
rights and other privileges with backwages initially computed at this time
and reflected below.
The reinstatement aspect of this decision is immediately
executory and thus respondents are hereby required to submit a report
of compliance therewith within ten (10) days from receipt thereof.
Respondent corporation is likewise ordered to pay [petitioners]
their 13th month pay and 10% attorney's fees.
    Backwages 13th month pay Attorney's fees
         
1. Andy Balite P162,969.04    P17,511.00       P18,048.00      
2. Delfin Anzaldo 158,299.44    17,511.00       17,511.00      
3. Monaliza Bihasa 116,506.62    17,511.00       13,401.75      
All other claims are dismissed for lack of factual or legal
basis. 4 
CIAcSa

Aggrieved, respondents interposed an appeal by filing a Notice of Appeal

and paying the corresponding appeal fee. However, instead of filing the required
appeal bond equivalent to the total amount of the monetary award which is
P490,308.00, respondents filed a Motion to Reduce the Appeal Bond to
P100,000.00 and appended therein a manager's check bearing the said amount.
Respondents cited financial difficulty as justification for their inability to post the
appeal bond in full owing to the partial shutdown of respondent company's
operations.
In a Resolution 5 dated 27 November 2008, the NLRC dismissed the
appeal filed by the respondents for non-perfection. The NLRC ruled that posting
of an appeal bond equivalent to the monetary award is indispensable for the
perfection of the appeal and the reduction of the appeal bond, absent any
showing of meritorious ground to justify the same, is not warranted in the instant
case.
Similarly ill-fated was respondents' Motion for Reconsideration which was
denied by the NLRC in a Resolution 6 dated 30 April 2009.
 On certiorari, the Court of Appeals reversed the NLRC Decision and
allowed the relaxation of the rule on posting of the appeal bond. According to the
appellate court, there was substantial compliance with the rules for the perfection
of an appeal because respondents seasonably filed their Memorandum of Appeal
and posted an appeal bond in the amount of P100,000.00. While the amount of
the appeal bond posted was not equivalent to the monetary award, the Court of
Appeals ruled that respondents were able to sufficiently prove their incapability to
post the required amount of bond. 7 The Court of Appeals disposed in this wise:
WHEREFORE, premises considered, finding grave abuse of
discretion on the part of the [NLRC], the instant petition is GRANTED.
The [NLRC's] Resolutions dated November 27, 2008 and April 30, 2009,
respectively, are hereby SET ASIDE. [The NLRC] is hereby directed to
decide petitioners' appeal on the merits. 8
In a Resolution 9 dated 30 December 2010, the Court of Appeals refused
to reconsider its earlier decision.
Petitioners are now before this Court via this instant Petition for Review
on Certiorari 10 praying that the Court of Appeals Decision and Resolution be
reversed and set aside on the ground that:
WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS
COMMITTED A GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK OR IN EXCESS OF JURISDICTION WHEN IT REVERSED THE
RESOLUTION OF THE NLRC DISMISSING RESPONDENTS' APPEAL
FOR NON-PERFECTION THEREOF. 11

The Court's Ruling

Petitioners, in assailing the appellate court's decision, argue that posting of

an appeal bond in full is not only mandatory but a jurisdictional requirement that
must be complied with in order to confer jurisdiction upon the NLRC. They posit
that the posting of an insufficient amount of appeal bond, as in this case, resulted
to the non-perfection of the appeal rendering the decision of the Labor Arbiter
final and executory.
Banking on the appellate court's decision, respondents, for their part, urge
the Court to relax the rules on appeal underscoring on the so-called "utmost good
faith" they demonstrated in filing a Motion to Reduce Appeal Bond and in posting
a cash bond in the amount of P100,000.00. In justifying their inability to post the
required appeal bond, respondents reasoned that respondent company is in dire
financial condition due to lack of orders from customers constraining it to
temporarily shut down its operations resulting in significant loss of revenues.
Respondents now plea for the liberal interpretation of the rules so that the case
can be threshed out on the merits, and not on technicality.
 Time and again we reiterate the established rule that in the exercise of the
Supreme Court's power of review, the Court is not a trier of facts 12 and does not
routinely undertake the re-examination of the evidence presented by the
contending parties during the trial of the case considering that the findings of
facts of labor officials who are deemed to have acquired expertise in matters
within their respective jurisdiction are generally accorded not only respect, but
even finality, and are binding upon this Court, when supported by substantial
evidence. 13
The NLRC ruled that no appeal had been perfected on time because of
respondents' failure to post the required amount of appeal bond. As a result of
which, the decision of the Labor Arbiter has attained finality. The Court of
Appeals, on the contrary, allowed the relaxation of the rules and held that
respondents were justified in failing to pay the required appeal bond. Despite the
non-posting of the appeal bond in full, however, the appellate court deemed that
respondents were able to seasonably perfect their appeal before the NLRC,
thereby directing the NLRC to resolve the case on the merits.  ICAcHE

The pertinent rule on the matter is Article 223 of the Labor Code, as

amended, which sets forth the rules on appeal from the Labor Arbiter's monetary
award:
ART. 223. Appeal. — Decisions, awards, or orders of the Labor
Arbiter are final and executory unless appealed to the Commission by
any or both parties within ten (10) calendar days from receipt of such
decisions, awards, or orders. . . . .
xxx xxx xxx
In case of a judgment involving a monetary award, an appeal by
the employer may be perfected only upon the posting of a cash or
surety bond issued by a reputable bonding company duly accredited by
the Commission in the amount equivalent to the monetary award in the
judgment appealed from. (Emphases ours).
Implementing the aforestated provisions of the Labor Code are the
provisions of Rule VI of the 2011 Rules of Procedure of the NLRC on perfection
of appeals which read:
Section 1. Periods of Appeal. — Decisions, awards or orders of
the Labor Arbiter shall be final and executory unless appealed to the
Commission by any or both parties within ten (10) calendar days from
receipt thereof. . . . If the 10th day or the 5th day, as the case may be,
falls on a Saturday, Sunday or holiday, the last day to perfect the appeal
shall be the first working day following such Saturday, Sunday or
holiday.
xxx xxx xxx
 Section 4. Requisites for Perfection of Appeal. — (a) The appeal
shall be:
(1) filed within the reglementary period as provided in Section 1 of
this Rule;
(2) verified by the appellant himself/herself in accordance with
Section 4, Rule 7 of the Rules of Court, as amended;
(3) in the form a of a memorandum of appeal which shall state the
grounds relied upon and the arguments in support thereof;
the relief prayed for; and with a statement of the date when
the appellant received the appealed decision, award or
order;
(4) in three (3) legibly typewritten or printed copies; and
(5) accompanied by:
i) proof of payment of the required appeal fee and legal
research fee;
ii) posting of cash or surety bond as provided in Section 6
of this Rule; and
iii) proof of service upon the other parties.
xxx xxx xxx
(b) A mere notice of appeal without complying with the other
requisites aforestated shall not stop the running of the period for
perfecting an appeal.
xxx xxx xxx
Section 5. Appeal Fee. — The appellant shall pay the prevailing
appeal fee and legal research fee to the Regional Arbitration Branch or
Regional Office of origin, and the official receipt of such payment shall
form part of the records of the case.
Section 6. Bond. — In case the decision of the Labor Arbiter, or
the Regional Director involves a monetary award, an appeal by the
employer shall be perfected only upon the posting of a bond, which
shall either be in the form of cash deposit or surety bond equivalent in
amount to the monetary award, exclusive of damages and attorney's
fees.
xxx xxx xxx
The Commission through the Chairman may on justifiable
grounds blacklist a bonding company, notwithstanding its accreditation
by the Supreme Court.
 These statutory and regulatory provisions explicitly provide that an appeal
from the Labor Arbiter to the NLRC must be perfected within ten calendar days
from receipt of such decisions, awards or orders of the Labor Arbiter. In a
judgment involving a monetary award, the appeal shall be perfected only upon
(1) proof of payment of the required appeal fee; (2) posting of a cash or surety
bond issued by a reputable bonding company; and (3) filing of a
memorandum of appeal. 14
In McBurnie v. Ganzon, 15 we harmonized the provision on appeal that its
procedures are fairly applied to both the petitioner and the respondent, assuring
by such application that neither one or the other party is unfairly favored. We
pronounced that the posting of a cash or surety bond in an amount equivalent to
10% of the monetary award pending resolution of the motion to reduce appeal
bond shall be deemed sufficient to perfect an appeal, to wit:  DEICaA

It is in this light that the Court finds it necessary to set a

parameter for the litigants' and the NLRC's guidance on the amount of
bond that shall hereafter be filed with a motion for a bond's reduction. To
ensure that the provisions of Section 6, Rule VI of the NLRC Rules of
Procedure that give parties the chance to seek a reduction of the appeal
bond are effectively carried out, without however defeating the benefits
of the bond requirement in favor of a winning litigant, all motions to
reduce bond that are to be filed with the NLRC shall be accompanied by
the posting of a cash or surety bond equivalent to 10% of the monetary
award that is subject of the appeal, which shall provisionally be deemed
the reasonable amount of the bond in the meantime that an appellant's
motion is pending resolution by the Commission. In conformity with the
NLRC Rules, the monetary award, for the purpose of computing the
necessary appeal bond, shall exclude damages and attorney's fees.
Only after the posting of a bond in the required percentage shall an
appellant's period to perfect an appeal under the NLRC Rules be
deemed suspended.
The rule We set in McBurnie was clarified by the Court in Sara Lee
Philippines v. Ermilinda Macatlang. 16 Considering the peculiar circumstances
in Sara Lee, We determined what is the reasonable amount of appeal bond. We
underscored the fact that the amount of 10% of the award is not a permissible
bond but is only such amount that shall be deemed reasonable in the meantime
that the appellant's motion is pending resolution by the Commission. The actual
reasonable amount yet to be determined is necessarily a bigger amount. In an
effort to strike a balance between the constitutional obligation of the state to
afford protection to labor on the one hand, and the opportunity afforded to the
employer to appeal on the other, We considered the appeal bond in the amount
of P725M which is equivalent to 25% of the monetary award sufficient to perfect
the appeal, viz.:
 We sustain the Court of Appeals in so far as it increases the
amount of the required appeal bond. But we deem it reasonable to
reduce the amount of the appeal bond to P725 Million. This directive
already considers that the award if not illegal, is extraordinarily huge and
that no insurance company would be willing to issue a bond for such big
money. The amount of P725 Million is approximately 25% of the basis
above calculated. It is a balancing of the constitutional obligation of the
state to afford protection to labor which, specific to this case, is
assurance that in case of affirmance of the award, recovery is not
negated; and on the other end of the spectrum, the opportunity of the
employer to appeal.
By reducing the amount of the appeal bond in this case, the
employees would still be assured of at least substantial compensation, in
case a judgment award is affirmed. On the other hand, management will
not be effectively denied of its statutory privilege of appeal.
In line with Sara Lee and the objective that the appeal on the merits to be
threshed out soonest by the NLRC, the Court holds that the appeal bond posted
by the respondent in the amount of P100,000.00 which is equivalent to around
20% of the total amount of monetary bond is sufficient to perfect an appeal. With
the employer's demonstrated good faith in filing the motion to reduce the bond on
demonstrable grounds coupled with the posting of the appeal bond in the
requested amount, as well as the filing of the memorandum of appeal, the right of
the employer to appeal must be upheld. This is in recognition of the importance
of the remedy of appeal, which is an essential part of our judicial system and the
need to ensure that every party litigant is given the amplest opportunity for the
proper and just disposition of his cause freed from the constraints of
technicalities. 17
WHEREFORE, premises considered, the petition is DENIED. The assailed
Decision and Resolution of the Court of Appeals are hereby AFFIRMED.
SO ORDERED.
 (Balite v. SS Ventures International, Inc., G.R. No. 195109, [February 4, 2015],
|||

753 PHIL 132-143)

G.R. No. 207156. January 16, 2017.]

TURKS SHAWARMA COMPANY/GEM

ZEÑAROSA, petitioners, vs. FELICIANO Z. PAJARON and
LARRY A. CARBONILLA, respondents.
 DECISION

DEL CASTILLO, J  : p

The liberal interpretation of the rules applies only to justifiable causes

and meritorious circumstances.
By this Petition for Review on Certiorari, 1 petitioner Turks Shawarma
Company and its owner, petitioner Gem Zeñarosa (Zeñarosa), assail the May
8, 2013 Decision 2 of the Court of Appeals (CA) in CA-G.R. SP No. 121956,
which and affirmed the Orders dated March 18, 2011 3 and September 29,
2011 4 of the National Labor Relations Commission (NLRC) dismissing their
appeal on the ground of non-perfection for failure to post the required bond.
Factual Antecedents
Petitioners hired Feliciano Z. Pajaron (Pajaron) in May 2007 as service
crew and Larry A. Carbonilla (Carbonilla) in April 2007 as head crew. On April
15, 2010, Pajaron and Carbonilla filed their respective Complaints 5 for
constructive and actual illegal dismissal, non-payment of overtime pay,
holiday pay, holiday premium, rest day premium, service incentive leave pay
and 13th month pay against petitioners. Both Complaints were consolidated.
Pajaron alleged that on April 9, 2010, Zeñarosa asked him to sign a
piece of paper 6 stating that he was receiving the correct amount of wages
and that he had no claims whatsoever from petitioners. Disagreeing to the
truthfulness of the statements, Pajaron refused to sign the paper prompting
Zeñarosa to fire him from work. Carbonilla, on the other hand, alleged that
sometime in June 2008, he had an altercation with his supervisor Conchita
Marcillana (Marcillana) while at work. When the incident was brought to the
attention of Zeñarosa, he was immediately dismissed from service. He was
also asked by Zeñarosa to sign a piece of paper acknowledging his debt
amounting to P7,000.00.
Both Pajaron and Carbonilla claimed that there was no just or
authorized cause for their dismissal and that petitioners also failed to comply
with the requirements of due process. As such, they prayed for separation pay
in lieu of reinstatement due to strained relations with petitioners and
backwages as well as nominal, moral and exemplary damages. Petitioners
also claimed for non-payment of just wages, overtime pay, holiday pay,
holiday premium, service incentive leave pay and 13th month pay.  CAIHTE

Petitioners denied having dismissed Pajaron and Carbonilla; they

averred that they actually abandoned their work. They alleged that Pajaron
would habitually absent himself from work for an unreasonable length of time
without notice; and while they rehired him several times whenever he
returned, they refused to rehire him this time after he abandoned work in April
2009. As for Carbonilla, he was reprimanded and admonished several times
for misbehavior and disobedience of lawful orders and was advised that he
could freely leave his work if he could not follow instructions. Unfortunately, he
left his work without any reason and without settling his unpaid obligation in
the amount of P78,900.00, which compelled them to file a criminal case 7 for
estafa against him. In addition, criminal complaints 8 for slander were filed
against both Pajaron and Carbonilla for uttering defamatory words that
allegedly compromised Zeñarosa's reputation as a businessman. Petitioners,
thus, insisted that their refusal to rehire Pajaron and Carbonilla was for valid
causes and did not amount to dismissal from employment. Finally, petitioners
claimed that Pajaron and Carbonilla failed to substantiate their claims that
they were not paid labor standards benefits.
Proceedings before the Labor Arbiter
In a Decision 9 dated December 10, 2010, the Labor Arbiter found
credible Pajaron and Carbonilla's version and held them constructively and
illegally dismissed by petitioners. The Labor Arbiter found it suspicious for
petitioners to file criminal cases against Pajaron and Carbonilla only after the
complaints for illegal dismissal had been filed. Pajaron and Carbonilla were
thus awarded the sum of P148,753.61 and P49,182.66, respectively,
representing backwages, separation pay in lieu of reinstatement, holiday pay,
service incentive leave pay and 13th month pay. The dispositive portion of the
Labor Arbiter's Decision reads:
WHEREFORE, in light of the foregoing, judgment is hereby
rendered declaring respondent TURKS SHAWARMA COMPANY,
[liable] to pay complainants as follows:
I. FELICIANO Z. PAJARON, JR.
1. Limited backwages computed from April 9, 2010 up to the date
of this Decision, in the amount of SIXTY EIGHT
THOUSAND NINE HUNDRED NINETY EIGHT PESOS &
74/100 (Php68,998.74)
2. Separation pay, in lieu of reinstatement equivalent to one
month's salary for every year of service computed from
May 1, 2007 up to the date of this decision, in the amount
of THIRTY ONE THOUS[A]ND FIVE HUNDRED TWELVE
PESOS (Php31,512.00);
3. Holiday pay, in the amount of TWELVE THOUSAND SIX
HUNDRED EIGHTY ONE PESOS (Php12,681.00);
 4. Service incentive leave pay, in the amount of FIVE
THOUSAND FOUR HUNDRED THREE PESOS & 46/100
(Php5,403.46); and
5. Thirteenth month pay, in the amount of THIRTY THOUSAND
ONE HUNDRED FIFTY EIGHT PESOS & 41/100
(Php30,158.41).
II. LARRY A. CARBONILLA
1. Separation pay, in lieu of reinstatement equivalent to one
month's salary for every year of service computed from
April 1, 2007 up to the date of this decision, in the amount
of FORTY TWO THOUSAND AND SIXTEEN PESOS
(Php42,016.00);
2. Holiday pay in the amount of TWO THOUSAND PESOS
(Php2,000.00);
3. Service incentive leave pay, in the amount of EIGHT
HUNDRED THIRTY THREE PESOS & 33/100
(Php833.33); and
4. Thirteenth month pay, in the amount of FOUR THOUSAND
THREE HUNDRED THIRTY THREE PESOS & 33/100
(Php4,333.33).
Other claims herein sought and prayed for are hereby denied for
lack of legal and factual bases. 
DETACa

SO ORDERED. 10
Proceedings before the National Labor Relations Commission
Due to alleged non-availability of counsel, Zeñarosa himself filed a
Notice of Appeal with Memorandum and Motion to Reduce Bond 11 with the
NLRC. Along with this, Zeñarosa posted a partial cash bond in the amount of
P15,000.00, 12 maintaining that he cannot afford to post the full amount of the
award since he is a mere backyard micro-entrepreneur. He begged the NLRC
to reduce the bond.
The NLRC, in an Order 13 dated March 18, 2011, denied the motion to
reduce bond. It ruled that financial difficulties may not be invoked as a valid
ground to reduce bond; at any rate, it was not even substantiated by proof.
Moreover, the partial bond in the amount of P15,000.00 is not reasonable in
relation to the award which totalled to P197,936.27. Petitioners' appeal was
thus dismissed by the NLRC for non-perfection.
On April 7, 2011, petitioners, through a new counsel, filed a Motion for
Reconsideration (with plea to give due course to the appeal) 14 averring that
the outright dismissal of their appeal was harsh and oppressive considering
that they had substantially complied with the Rules through the posting of a
partial bond and their willingness to post additional bond if necessary.
Moreover, their motion to reduce bond was meritorious since payment of the
full amount of the award will greatly affect the company's operations; besides
the appeal was filed by Zeñarosa without the assistance of a counsel.
Petitioners thus implored for a more liberal application of the Rules and
prayed that their appeal be given due course. Along with this motion for
reconsideration, petitioners tendered the sum of P207,435.53 representing
the deficiency of the appeal bond. 15
In an Order 16 dated September 29, 2011, the NLRC denied the Motion
for Reconsideration, reiterating that the grounds for the reduction of the
appeal bond are not meritorious and that the partial bond posted is not
reasonable. The NLRC further held that the posting of the remaining balance
on April 7, 2011 or three months and eight days from receipt of the Labor
Arbiter's Decision on December 30, 2010 cannot be allowed, otherwise, it will
be tantamount to extending the period to appeal which is limited only to 10
days from receipt of the assailed Decision.
Proceedings before the Court of Appeals
Petitioners filed a Petition for Certiorari with application for Writ of
Preliminary Injunction and Temporary Restraining Order 17 with the CA. They
insisted that the NLRC gravely abused its discretion in dismissing the appeal
for failure to post the required appeal bond.
On May 8, 2013, the CA rendered a Decision 18 dismissing the Petition
for Certiorari. It held that the NLRC did not commit any grave abuse of
discretion in dismissing petitioners' appeal for non-perfection because
petitioners failed to comply with the requisites in filing a motion to reduce
bond, namely, the presence of a meritorious ground and the posting of a
reasonable amount of bond. The CA stated that financial difficulties is not
enough justification to dispense with the mandatory posting of a bond
inasmuch as there is an option of posting a surety bond from a reputable
bonding company duly accredited by the NLRC, which, unfortunately,
petitioners failed to do. The CA noted that the lack of assistance of a counsel
is not an excuse because petitioners ought to know the Rules in filing an
appeal; moreover, ignorance of the law does not excuse them from
compliance therewith.
Hence, this present Petition.
Issue
Petitioners insist that the CA erred in affirming the NLRC's dismissal of
their appeal for the following reasons: first, there was substantial compliance
with the Rules on perfection of appeal; second, the surrounding facts and
circumstances constitute meritorious grounds to reduce the appeal bond;
third, they exhibited willingness and good faith by posting a partial bond
during the reglementary period; and lastly, a liberal interpretation of the
requirement of an appeal bond would serve the desired objective of resolving
controversies on the merits. Petitioners claim that there is a necessity to
resolve the merits of their appeal since the Labor Arbiter's Decision declaring
Pajaron and Carbonilla illegally terminated from employment was not based
on substantial evidence.  aDSIHc

Our Ruling
The Petition has no merit.
The Court has time and again held that "[t]he right to appeal is neither a
natural right nor is it a component of due process. It is a mere statutory
privilege, and may be exercised only in the manner and in accordance with
the provisions of the law." 19 "The party who seeks to avail of the same must
comply with the requirements of the rules. Failing to do so, the right to appeal
is lost." 20
Article 223 of the Labor Code, which sets forth the rules on appeal from
the Labor Arbiter's monetary award, provides:
ART. 223. Appeal. — Decisions, awards, or orders of the Labor
Arbiter are final and executory unless appealed to the Commission by
any or both parties within ten (10) calendar days from receipt of such
decisions, awards, or orders. Such appeal may be entertained only on
any of the following grounds:
(a) If there is prima facie evidence of abuse of discretion on the
part of the Labor Arbiter;
(b) If the decision, order or award was secured through fraud or
coercion, including graft and corruption;
(c) If made purely on questions of law; and
(d) If serious errors in the finding of facts are raised which would
cause grave or irreparable damage or injury to the appellant.
In case of a judgment involving a monetary award, an
appeal by the employer may be perfected only upon the posting
of a cash or surety bond issued by a reputable bonding company
duly accredited by the Commission in the amount equivalent to
the monetary award in the judgment appealed from.
xxx xxx xxx.
(Emphasis supplied)
Meanwhile, Sections 4 and 6 of Rule VI of the 2005 Revised Rules of
Procedure of the NLRC, which were in effect when petitioners filed their
appeal, provide:
 Section 4. Requisites for perfection of appeal. — (a) The Appeal
shall be: 1) filed within the reglementary period as provided in Section
1 of this Rule; 2) verified by the appellant himself in accordance with
Section 4, Rule 7 of the Rules of Court, as amended; 3) in the form of
a memorandum of appeal which shall state the grounds relied upon
and the arguments in support thereof, the relief prayed for, and with a
statement of the date the appellant received the appealed decision,
resolution or order; 4) in three (3) legibly typewritten or printed copies;
and 5) accompanied by i) proof of payment of the required appeal fee;
ii) posting of a cash or surety bond as provided in Section 6 of this
Rule; iii) a certificate of non-forum shopping; and iv) proof of service
upon the other parties.
b) A mere notice of appeal without complying with the other
requisites aforestated shall not stop the running of the period for
perfecting an appeal.
xxx xxx xxx
Section 6. Bond. — In case the decision of the Labor Arbiter or
the Regional Director involves a monetary award, an appeal by the
employer may be perfected only upon the posting of a bond, which
shall either be in the form of cash deposit or surety bond equivalent in
amount to the monetary award, exclusive of damages and attorney's
fees.
xxx xxx xxx
No motion to reduce bond shall be entertained except on
meritorious grounds, and upon the posting of a bond in a reasonable
amount. The mere filing of a motion to reduce bond without complying
with the requisites in the preceding paragraphs shall not stop the
running of the period to perfect an appeal.
"It is clear from both the Labor Code and the NLRC Rules of
Procedure that there is legislative and administrative intent to strictly apply the
appeal bond requirement, and the Court should give utmost regard to this
intention." 21 The posting of cash or surety bond is therefore mandatory and
jurisdictional; failure to comply with this requirement renders the decision of
the Labor Arbiter final and executory. 22 This indispensable requisite for the
perfection of an appeal "is to assure the workers that if they finally prevail in
the case[,] the monetary award will be given to them upon the dismissal of the
employer's appeal [and] is further meant to discourage employers from using
the appeal to delay or evade payment of their obligations to the
employees." 23
However, the Court, in special and justified circumstances, has relaxed
the requirement of posting a supersedeas bond for the perfection of an appeal
on technical considerations to give way to equity and justice. 24 Thus, under
Section 6 of Rule VI of the 2005 NLRC Revised Rules of Procedure, the
reduction of the appeal bond is allowed, subject to the following conditions: (1)
the motion to reduce the bond shall be based on meritorious grounds; and (2)
a reasonable amount in relation to the monetary award is posted by the
appellant. Compliance with these two conditions will stop the running of the
period to perfect an appeal. ETHIDa

In the case at bar, petitioners filed a Motion to Reduce Bond together

with their Notice of Appeal and posted a cash bond of P15,000.00 within the
10-day reglementary period to appeal. The CA correctly found that the NLRC
did not commit grave abuse of discretion in denying petitioners' motion to
reduce bond as such motion was not predicated on meritorious and
reasonable grounds and the amount tendered is not reasonable in relation to
the award. The NLRC correctly held that the supposed ground cited in the
motion is not well-taken for there was no evidence to prove Zeñarosa's claim
that the payment of the full amount of the award would greatly affect his
business due to financial setbacks. Besides, "the law does not require outright
payment of the total monetary award; [the appellant has the option to post
either a cash or surety bond. In the latter case, appellant must pay only a]
moderate and reasonable sum for the premium to ensure that the award will
be eventually paid should the appeal fail." 25 Moreover, the absence of
counsel is not a valid excuse for non-compliance with the rules. As aptly
observed by the CA, Zeñarosa cannot feign ignorance of the law considering
that he was able to post a partial bond and ask for a reduction of the appeal
bond. At any rate, petitioners did not advance any reason for the alleged
absence of counsel except that they were simply abandoned. Neither did
petitioners explain why they failed to procure a new counsel to properly assist
them in filing the appeal. Moreover, the partial bond posted was not
reasonable. In the case of McBurnie v. Ganzon, 26 the Court has set a
provisional percentage of 10% of the monetary award (exclusive of damages
and attorney's fees) as reasonable amount of bond that an appellant should
post pending resolution by the NLRC of a motion for a bond's reduction. Only
after the posting of this required percentage shall an appellant's period to
perfect an appeal be suspended. Applying this parameter, the P15,000.00
partial bond posted by petitioners is not considered reasonable in relation to
the total monetary award of P197,936.27.
Petitioners, nevertheless, rely on a number of cases wherein the Court
allowed the relaxation of the stringent requirement of the rule. In Nicol v.
Footjoy Industrial Corporation, 27 the Court reversed the NLRC's denial of the
appellant's motion to reduce bond upon finding adequate evidence to justify
the reduction. In Rada v. National Labor Relations
Commission 28 and Blancaflor v. National Labor Relations Commission, 29 the
NLRC allowed the late payment of the bond because the appealed Decision
of the Labor Arbiter did not state the exact amount to be awarded, hence
there could be no basis for determining the amount of the bond to be filed. It
was only after the amount of superseades bond was specified by the NLRC
that the appellants filed the bond. In YBL (Your Bus Line) v. National Labor
Relations Commission, 30 the Court was propelled to relax the requirements
relating to appeal bonds as there were valid issues raised in the appeal. In Dr.
Postigo v. Philippine Tuberculosis Society, Inc., 31 the respondent therein
deferred the posting of the bond and instead filed a motion to reduce bond on
the ground that the Labor Arbiter's computation of the award is erroneous
which circumstance justified the relaxation of the appeal bond requirement. In
all of these cases, though, there were meritorious grounds that warranted the
reduction of the appeal bond, which, as discussed, is lacking in the case at
bench.
Petitioners, furthermore, claim that the NLRC's outright dismissal of
their appeal was harsh and oppressive since they should still be given
opportunity to complete the required bond upon the filing of their motion for
reconsideration. Thus, they insist that their immediate posting of the
deficiency when they filed a motion for reconsideration constituted substantial
compliance with the Rules.
The contention is untenable.
The NLRC exercises full discretion in resolving a motion for the
reduction of bond 32 in accordance with the standards of meritorious grounds
and reasonable amount. The "reduction of the bond is not a matter of right on
the part of the movant [but] lies within the sound discretion of the NLRC x x
x." 33
In order to give full effect to the provisions on motion to reduce bond,
the appellant must be allowed to wait for the ruling of the NLRC on the
motion even beyond the 10-day period to perfect an appeal. If the
NLRC grants the motion and rules that there is indeed meritorious
ground and that the amount of the bond posted is reasonable, then the
appeal is perfected. If the NLRC denies the motion, the appellant may
still file a motion for reconsideration as provided under Section 15,
Rule VII of the Rules. If the NLRC grants the motion for
reconsideration and rules that there is indeed meritorious ground and
that the amount of the bond posted is reasonable, then the appeal is
perfected. If the NLRC denies the motion, then the decision of the
Labor Arbiter becomes final and executory. 34
The rulings in Garcia v. KJ Commercial 35 and Mendoza v. HMS Credit
Corporation 36 cannot dissuade this Court from relaxing the rules. In Garcia,
the NLRC initially denied the appeal of respondent therein due to the absence
of meritorious grounds in its motion to reduce bond and unreasonable amount
of partial bond posted. However, upon the posting of the full amount of bond
when respondent filed its motion for reconsideration, the NLRC granted the
motion for reconsideration on the ground of substantial compliance with the
rules after considering the merits of the appeal. Likewise, in Mendoza, the
NLRC initially denied respondents' Motion to Reduce Appeal Bond with a
partial bond. Respondents thereafter promptly complied with the NLRC's
directive to post the differential amount between the judgment award and the
sum previously tendered by them. The Court held that the appeal was filed
timely on account of respondents' substantial compliance with the
requirements on appeal bond. In both Garcia and Mendoza, however, the
NLRC took into consideration the substantial merits of the appealed cases in
giving due course to the appeals. It, in fact, reversed the Labor Arbiters'
rulings in both cases. In contrast, petitioners in the case at bench have no
meritorious appeal as would convince this Court to liberally apply the rule.
Stated otherwise, petitioners' case will still fail on its merits even if we
are to allow their appeal to be given due course. After scrupulously examining
the contrasting positions and arguments of the parties, we find that the Labor
Arbiter's Decision declaring Pajaron and Carbonilla illegally dismissed was
supported by substantial evidence. While petitioners vehemently argue that
Pajaron and Carbonilla abandoned their work, the records are devoid of
evidence to show that there was intent on their part to forego their
employment. In fact, petitioners adamantly admitted that they refused to rehire
Pajaron and Carbonilla despite persistent requests to admit them to work.
Hence, petitioners essentially admitted the fact of dismissal. However, except
for their empty and general allegations that the dismissal was for just causes,
petitioners did not proffer any evidence to support their claim of misconduct or
misbehavior on the part of Pajaron and Carbonilla. "In termination cases, the
burden of proof rests on the employer to show that the dismissal is for a just
cause." 37 For lack of any clear, valid, and just cause in terminating Pajaron
and Carbonilla's employment, petitioners are indubitably guilty of illegal
dismissal. cSEDTC

All told, we find no error on the part of the CA in ruling that the NLRC
did not gravely abused its discretion in dismissing petitioners' appeal for non-
perfection due to non-compliance with the requisites of filing a motion to
reduce bond.
[T]he merit of [petitioners'] case does not warrant the liberal application
of the x x x rules x x x. While it is true that litigation is not a game of
technicalities and that rules of procedure shall not be strictly enforced
at the cost of substantial justice, it must be emphasized that procedural
rules should not likewise be belittled or dismissed simply because their
non-observance might result in prejudice to a party's substantial rights.
Like all rules, they are required to be followed, except only for the most
persuasive of reasons. 38
 WHEREFORE, the Petition is DENIED. The May 8, 2013 Decision of
the Court of Appeals in CA-G.R. SP No. 121956 is AFFIRMED.
SO ORDERED.
 (Turks Shawarma Co. v. Pajaron, G.R. No. 207156, [January 16, 2017], 803
|||

PHIL 315-330)

G.R. No. 118651. October 16, 1997.]

PIONEER TEXTURIZING CORP. and/or JULIANO

LIM, petitioners,vs.NATIONAL LABOR RELATIONS
COMMISSION, PIONEER TEXTURIZING WORKERS UNION and
LOURDES A. DE JESUS, respondents.

 (Pioneer Texturizing Corp. v. National Labor Relations Commission, G.R. No.

|||

118651, [October 16, 1997], 345 PHIL 1057-1077)

FRANCISCO, J  : p

The facts are as follows:

Private respondent Lourdes A. de Jesus is petitioners' reviser/trimmer
since 1980. As reviser/trimmer, de Jesus based her assigned work on a paper
note posted by petitioners. The posted paper which contains the corresponding
price for the work to be accomplished by a worker is identified by its P.O.
Number. On August 15, 1992, de Jesus worked on P.O. No. 3853 by trimming
the cloths' ribs. She thereafter submitted tickets corresponding to the work done
to her supervisor. Three days later, de Jesus received from petitioners' personnel
manager a memorandum requiring her to explain why no disciplinary action
should be taken against her for dishonesty and tampering of official records and
documents with the intention of cheating as P.O. No. 3853 allegedly required no
trimming. The memorandum also placed her under preventive suspension for
thirty days starting from August 19, 1992. In her handwritten explanation, de
Jesus maintained that she merely committed a mistake in trimming P.O. No.
3853 as it has the same style and design as P.O. No. 3824 which has an
attached price list for trimming the ribs and admitted that she may have been
negligent in presuming that the same work was to be done with P.O. No. 3853,
but not for dishonesty or tampering. Petitioners' personnel department,
nonetheless, terminated her from employment and sent her a notice of
termination dated September 18, 1992.
On September 22, 1992, de Jesus filed a complaint for illegal dismissal
against petitioners. The Labor Arbiter who heard the case noted that de Jesus
was amply accorded procedural due process in her termination from service.
Nevertheless, after observing that de Jesus made some further trimming on P.O.
No. 3853 and that her dismissal was not justified, the Labor Arbiter held
petitioners guilty of illegal dismissal. Petitioners were accordingly ordered to
reinstate de Jesus to her previous position without loss of seniority rights and
with full backwages from the time of her suspension on August 19, 1992.
Dissatisfied with the Labor Arbiter's decision, petitioners appealed to public
respondent National Labor Relations Commission (NLRC).In its July 21, 1994
decision, the NLRC 1 ruled that de Jesus was negligent in presuming that the ribs
of P.O. No. 3853 should likewise be trimmed for having the same style and
design as P.O. No. 3824, thus petitioners cannot be entirely faulted for
dismissing de Jesus. The NLRC declared that the status quo between them
should be maintained and affirmed the Labor Arbiter's order of reinstatement, but
without backwages. The NLRC further "directed petitioner to pay de Jesus her
back salaries from the date she filed her motion for execution on September 21,
1993 up to the date of the promulgation of [the] decision." 2 Petitioners filed their
partial motion for reconsideration which the NLRC denied, hence this petition
anchored substantially on the alleged NLRC's error in holding that de Jesus is
entitled to reinstatement and back salaries. On March 6, 1996, petitioners filed its
supplement to the petition amplifying further their arguments. In a resolution
dated February 20, 1995, the Court required respondents to comment thereon.
Private respondent de Jesus and the Office of the Solicitor General, in behalf of
public respondent NLRC, subsequently filed their comments. Thereafter,
petitioners filed two rejoinders [should be replies] to respondents' respective
comments. Respondents in due time filed their rejoinders.  cdphil

There are two interrelated and crucial issues, namely: (1) whether or not
de Jesus was illegally dismissed, and (2) whether or not an order for
reinstatement needs a writ of execution.
Petitioners insist that the NLRC gravely abused its discretion in holding
that de Jesus is entitled to reinstatement to her previous position for she was not
illegally dismissed in the first place. In support thereof, petitioners quote portions
of the NLRC decision which stated that "respondents [petitioners herein] cannot
be entirely faulted for dismissing the complainant" 3 and that there was "no illegal
dismissal to speak of in the case at bar". 4 Petitioners further add that de Jesus
breached the trust reposed in her, hence her dismissal from service is proper on
the basis of loss of confidence, citing as authority the cases of Ocean Terminal
Services, Inc. v. NLRC,197 SCRA 491; Coca-Cola Bottlers
Phil.,Inc. v. NLRC,172 SCRA 751, and Piedad v.Lanao del Norte Electric
Cooperative, 5 154 SCRA 500.
The arguments lack merit.
The entire paragraph which comprises the gist of the NLRC's decision from
where petitioners derived and isolated the aforequoted portions of the NLRC's
observation reads in full as follows:
"We cannot fully subscribe to the complainant's claim that she
trimmed the ribs of PO3853 in the light of the sworn statement of her
supervisor Rebecca Madarcos (Rollo,p. 64) that no trimming was
necessary because the ribs were already of the proper length. The
complainant herself admitted in her sinumpaang salaysay (Rollo,p. 45)
that "Aking napansin na hindi pantay-pantay ang lapad ng mga ribs
PO3853 — mas maigsi ang nagupit ko sa mga ribs ng PO3853 kaysa sa
mga ribs ng mga nakaraang PO's. The complainant being an
experienced reviser/trimmer for almost twelve (12) years should have
called the attention of her supervisor regarding her observation of
PO3853. It should be noted that complainant was trying to claim as
production output 447 pieces of trimmed ribs of PO3853 which
respondents insists that complainant did not do any. She was therefore
negligent in presuming that the ribs of PO3853 should likewise be
trimmed for having the same style and design as PO3824. Complainant
cannot pass on the blame to her supervisor whom she claimed checked
the said tickets prior to the submission to the Accounting Department. As
explained by respondent, what the supervisor does is merely not the
submission of tickets and do some checking before forwarding the same
to the Accounting Department. It was never disputed that it is the
Accounting Department who does the detailed checking and
computation of the tickets as has been the company policy and practice.
Based on the foregoing and considering that respondent cannot be
entirely faulted for dismissing complainant as the complainant herself
was also negligent in the performance of her job, We hereby rule that
status quo between them should be maintained as a matter of course.
We thus affirm the decision of Labor Arbiter reinstating the complainant
but without backwages. The award of backwages in general are granted
on grounds of equity for earnings which a worker or employee has lost
due to his illegal dismissal. (Indophil Acrylic Mfg.Corporation
vs. NLRC,G.R. No. 96488 September 27, 1993) There being no illegal
dismissal to speak in the case at bar, the award for backwages should
necessarily be deleted." 6
We note that the NLRC's decision is quite categorical in finding that de
Jesus was merely negligent in the performance of her duty. Such negligence, the
Labor Arbiter delineated, was brought about by the petitioners' plain
improvidence. Thus:
 "After careful assessment of the allegations and documents
available on record, we are convinced that the penalty of dismissal was
not justified.
"At the outset, it is remarkable that respondents did not deny nor
dispute that P.O. 3853 has the same style and design as P.O. 3824; that
P.O. 3824 was made as guide for the work done on P.O. 3853; and,
most importantly, that the notation correction on P.O. 3824 was made
only after the error was discovered by respondents' Accounting
Department.
"Be that as it may, the factual issue in this case is whether or not
complainant trimmed the ribs of P.O. 3853?
"Respondents maintained that she did not because the record in
Accounting Department allegedly indicates that no trimming is to be
done on P.O. 3853. Basically, this allegation is unsubstantiated.
"It must be emphasized that in termination cases the burden of
proof rests upon the employer.
"In the instant case, respondents' mere allegation that P.O. 3853
need not be trimmed does not satisfy the proof required to warrant
complainant's dismissal.
"Now, granting that the Accounting record is correct, we still
believe that complainant did some further trimming on P.O. 3853 based
on the following grounds:
"Firstly, Supervisor Rebecca Madarcos who ought to know the
work to be performed because she was in-charged of assigning jobs,
reported no anomaly when the tickets were submitted to her.
"Incidentally, supervisor Madarcos testimony is suspect because
if she could recall what she ordered the complainant to do seven (7)
months ago (to revise the collars and plackets of shirts) there was no
reason for her not to detect the alleged tampering at the time
complainant submitted her tickets, after all, that was part of her job, if not
her main job.
"Secondly, she did not exceed her quota, otherwise she could
have simply asked for more.
"That her output was remarkably big granting it is true, is well
explained in that the parts she had trimmed were lesser compared to
those which she had cut before.
"In this connection, respondents misinterpreted the handwritten
explanation of the complainant dated 20 August 1992, because the letter
never admits that she never trimmed P.O. 3853, on the contrary the
following sentence,
 'Sa katunayan nakapagbawas naman talaga ako na di ko
inaasahang inalis na pala ang presyo ng Sec. 9 P.O. 3853 na ito.'
is crystal clear that she did trim the ribs on P.O. 3853." 7
Gleaned either from the Labor Arbiter's observations or from the NLRC's
assessment, it distinctly appears that petitioners' accusation of dishonesty and
tampering of official records and documents with intention of cheating against de
Jesus was not substantiated by clear and convincing evidence. Petitioners simply
failed, both before the Labor Arbiter and the NLRC, to discharge the burden of
proof and to validly justify de Jesus' dismissal from service. The law, in this light,
directs the employers, such as herein petitioners, not to terminate the services of
an employee except for a just or authorized cause under the Labor Code. 8 Lack
of a just cause in the dismissal from service of an employee, as in this case,
renders the dismissal illegal, despite the employer's observance of procedural
due process. 9 And while the NLRC stated that "there was no illegal dismissal to
speak of in the case at bar" and that petitioners cannot be entirely faulted
therefor, said statements are inordinate pronouncements which did not remove
the assailed dismissal from the realm of illegality. Neither can these
pronouncements preclude us from holding otherwise.
We also find the imposition of the extreme penalty of dismissal against de
Jesus as certainly harsh and grossly disproportionate to the negligence
committed, especially where said employee holds a faithful and an untarnished
twelve-year service record. While an employer has the inherent right to discipline
its employees, we have always held that this right must always be exercised
humanely, and the penalty it must impose should be commensurate to the
offense involved and to the degree of its infraction. 10 The employer should bear
in mind that, in the exercise of such right, what is at stake is not only the
employee's position but her livelihood as well.
Equally unmeritorious is petitioners' assertion that the dismissal is justified
on the basis of loss of confidence. While loss of confidence, as correctly argued
by petitioners, is one of the valid grounds for termination of employment, the
same, however, cannot be used as a pretext to vindicate each and every
instance of unwarranted dismissal. To be a valid ground, it must be shown that
the employee concerned is responsible for the misconduct or infraction and that
the nature of his participation therein rendered him absolutely unworthy of the
trust and confidence demanded by his position. 11 In this case, petitioners were
unsuccessful in establishing their accusations of dishonesty and tampering of
records with intention of cheating. Indeed, even if petitioners' allegations against
de Jesus were true, they just the same failed to prove that her position needs the
continued and unceasing trust of her employers. The breach of trust must be
related to the performance of the employee's functions. 12 Surely, de Jesus who
occupies the position of a reviser/trimmer does not require the petitioners'
perpetual and full confidence. In this regard, petitioners' reliance on the cases
of Ocean Terminal Services,Inc. v. NLRC ;Coca-Cola Bottlers
Phil.,Inc. v. NLRC ;and Piedad v.Lanao del Norte Electric Cooperative,which
when perused involve positions that require the employers' full trust and
confidence, is wholly misplaced. In Ocean Terminal Services,for instance, the
dismissed employee was designated as expediter and canvasser whose
responsibility is mainly to make emergency procurements of tools and
equipments and was entrusted with the necessary cash for buying them. The
case of Coca-Cola Bottlers,on the other hand, involves a sales agent whose job
exposes him to the everyday financial transactions involving the employer's
goods and funds, while that of Piedad concerns a bill collector who essentially
handles the employer's cash collections. Undoubtedly, the position of a
reviser/trimmer could not be equated with that of a canvasser, sales agent, or a
bill collector. Besides, the involved employees in the three aforementioned cases
were clearly proven guilty of infractions unlike private respondent in the case at
bar. Thus, petitioners' dependence on these cited cases is inaccurate, to say the
least. More, whether or not de Jesus meets the day's quota of work she, just the
same, is paid the daily minimum wage. 13
Corollary to our determination that de Jesus was illegally dismissed is her
imperative entitlement to reinstatement and backwages as mandated by
law. 14 Whence, we move to the second issue, i.e., whether or not an order for
reinstatement needs a writ of execution.
Petitioners' theory is that an order for reinstatement is not self-executory.
They stress that there must be a writ of execution which may be issued by the
NLRC or by the Labor Arbiter motu proprio or on motion of an interested party.
They further maintain that even if a writ of execution was issued, a timely appeal
coupled by the posting of appropriate supersedeas bond, which they did in this
case, effectively forestalled and stayed execution of the reinstatement order of
the Labor Arbiter. As supporting authority, petitioners emphatically cite and bank
on the case of Maranaw Hotel Resort Corporation (Century Park Sheraton
Manila) v. NLRC ,238 SCRA 190.
Private respondent de Jesus, for her part, maintains that petitioners should
have reinstated her immediately after the decision of the Labor Arbiter ordering
her reinstatement was promulgated since the law mandates that an order for
reinstatement is immediately executory. An appeal, she says, could not stay the
execution of a reinstatement order for she could either be admitted back to work
or merely reinstated in the payroll without need of a writ of execution. De Jesus
argues that a writ of execution is necessary only for the enforcement of
decisions, orders, or awards which have acquired finality. In effect, de Jesus is
urging the Court to re-examine the ruling laid down in Maranaw.
 Article 223 of the Labor Code, as amended by R.A. No. 6715 which took
effect on March 21, 1989, pertinently provides:
"ART. 223. Appeal. — Decisions, awards, or orders of the Labor
Arbiter are final and executory unless appealed to the Commission by
any or both parties within ten (10) calendar days from receipt of such
decisions, awards, or orders. Such appeal may be entertained only on
any of the following grounds:
xxx xxx xxx
"In any event, the decision of the Labor Arbiter reinstating a
dismissed or separated employee, insofar as the reinstatement aspect is
concerned, shall immediately be executory, even pending appeal. The
employee shall either be admitted back to work under the same terms
and conditions prevailing prior to his dismissal or separation or, at the
option of the employer, merely reinstated in the payroll. The posting of a
bond by the employer shall not stay the execution for reinstatement
provided herein.
xxx xxx xxx

We initially interpreted the aforequoted provision in Inciong v. NLRC . 15 The

Court 16 made this brief comment:

"The decision of the Labor Arbiter in this case was rendered on

December 18, 1988, or three (3) months before Article 223 of the Labor
Code was amended by Republic Act 6715 (which became law on March
21, 1989), providing that a decision of the Labor Arbiter ordering the
reinstatement of a dismissed or separated employee shall be
immediately executory insofar as the reinstatement aspect is concerned,
and the posting of an appeal bond by the employer shall not stay such
execution. Since this new law contains no provision giving it retroactive
effect (Art. 4, Civil Code), the amendment may not be applied to this
case."

which the Court adopted and applied in Callanta v. NLRC. 17 In Zamboanga

City Water District v. Buat, 18 the Court construed Article 223 to mean exactly
what it says. We said:

"Under the said provision of law, the decision of the Labor Arbiter
reinstating a dismissed or separated employee insofar as the
reinstatement aspect is concerned, shall be immediately executory, even
pending appeal. The employer shall reinstate the employee concerned
either by: (a) actually admitting him back to work under the same terms
and conditions prevailing prior to his dismissal or separation; or (b) at the
option of the employer, merely reinstating him in the payroll. Immediate
reinstatement is mandated and is not stayed by the fact that the
 employer has appealed, or has posted a cash or surety bond pending
appeal.'' 19

We expressed a similar view a year earlier in Medina v. Consolidated

Broadcasting System (CBS)-DZWX 20 and laid down the rule that an employer
who fails to comply with an order of reinstatement makes him liable for the
employee's salaries. Thus:

"Petitioners construe the above paragraph to mean that the

refusal of the employer to reinstate an employee as directed in an
executory order of reinstatement would make it liable to pay the latter's
salaries. This interpretation is correct. Under Article 223 of the Labor
Code, as amended, an employer has two options in order for him to
comply with an order of reinstatement, which is immediately executory,
even pending appeal. Firstly, he can admit the dismissed employee back
to work under the same terms and conditions prevailing prior to his
dismissal or separation or to a substantially equivalent position if the
former position is already filled up as we have ruled in Union of
Supervisors (RB) NATU vs. Sec. of Labor,128 SCRA 442
[1984];and Pedroso vs. Castro,141 SCRA 252 [1986].Secondly, he can
reinstate the employee merely in the payroll. Failing to exercise any of
the above options, the employer can be compelled under pain of
contempt, to pay instead the salary of the employee. This interpretation
is more in consonance with the constitutional protection to labor (Section
3, Art. XIII, 1987 Constitution).The right of a person to his labor is
deemed to be property within the meaning of the constitutional guaranty
that no one shall be deprived of life, liberty, and property without due
process of law. Therefore, he should be protected against any arbitrary
and unjust deprivation of his job (Bondoc vs.People's Bank and Trust
Co., Inc.,103 SCRA 599 [1981]).The employee should not be left without
any remedy in case the employer unreasonably delays reinstatement.
Therefore, we hold that the unjustified refusal of the employer to
reinstate an illegally dismissed employee entitles the employee to
payment of his salaries ..." 21 
cda

The Court, however, deviated from this construction in the case

of Maranaw.Reinterpreting the import of Article 223 in Maranaw,the
Court 22 declared that the reinstatement aspect of the Labor Arbiter's decision
needs a writ of execution as it is not self-executory, a declaration the Court
recently reiterated and adopted in Archilles Manufacturing Corp. v. NLRC . 23

We note that prior to the enactment of R.A. No. 6715, Article 223 24 of

the Labor Code contains no provision dealing with the reinstatement of an
illegally dismissed employee. The amendment introduced by R.A. No. 6715 is an
innovation and a far departure from the old law indicating thereby the legislature's
unequivocal intent to insert a new rule that will govern the reinstatement aspect
of a decision or resolution in any given labor dispute. In fact, the law as now
worded employs the phrase "shall immediately be executory" without qualification
emphasizing the need for prompt compliance. As a rule, "shall" in a statute
commonly denotes an imperative obligation and is inconsistent with the idea of
discretion 25 and that the presumption is that the word "shall", when used in a
statute, is mandatory. 26 An appeal or posting of bond, by plain mandate of the
law, could not even forestall nor stay the executory nature of an order of
reinstatement. The law, moreover, is unambiguous and clear. Thus, it must be
applied according to its plain and obvious meaning, according to its express
terms. In Globe-Mackay Cable and Radio Corporation v. NLRC, 27 we held that:
"Under the principles of statutory construction, if a statute is clear,
plain and free from ambiguity, it must be given its literal meaning and
applied without attempted interpretation. This plain-meaning rule
or verba legis derived from the maxim index animi sermo est (speech is
the index of intention) rests on the valid presumption that the words
employed by the legislature in a statute correctly express its intent or will
and preclude the court from construing it differently. The legislature is
presumed to know the meaning of the words, to have used words
advisedly, and to have expressed its intent by the use of such words as
are found in the statute. Verba legis non est recedendum,or from the
words of a statute there should be no departure."  28
And in conformity with the executory nature of the reinstatement
order, Rule V, Section 16 (3) of the New Rules of Procedure of the NLRC strictly
requires the Labor Arbiter to direct the employer to immediately reinstate the
dismissed employee. Thus:
"In case the decision includes an order of reinstatement, the Labor Arbiter shall
direct the employer to immediately reinstate the dismissed or separated employee
even pending appeal. The order of reinstatement shall indicate that the employee
shall either be admitted back to work under the same terms and conditions
prevailing prior to his dismissal or separation or, at the option of the employer,
merely reinstated in the payroll."
In declaring that reinstatement order is not self-executory and needs a writ
of execution, the Court, in Maranaw,adverted to the rule provided under Article
224. We said:
"It must be stressed, however, that although the reinstatement
aspect of the decision is immediately executory,it does not follow that it
is self-executory.There must be a writ of execution which may be
issued motu proprio or on motion of an interested party. Article 224 of
the Labor Code provides:
'ART. 224. Execution of decisions, orders or awards. — (a) The
Secretary of Labor and Employment or any Regional Director, the
 Commission or any Labor Arbiter, or med-arbiter or voluntary arbitrator
may, motu proprio or on motion of any interested party,issue a writ of
execution on a judgment within five (5) years from the date it becomes
final and executory ...' (emphasis supplied)
"The second paragraph of Section 1, Rule VIII of the New Rules
of Procedure of the NLRC also provides:
'The Labor Arbiter, POEA Administrator, or the Regional Director,
or his duly authorized hearing officer of origin shall, motu proprio or on
motion of any interested party,issue a writ of execution on a judgment
only within five (5) years from the date it becomes final and
executory ...No motion for execution shall be entertained nor a writ be
issued unless the Labor Arbiter is in possession of the records of the
case which shall include an entry of judgment.' (emphasis supplied)
xxx xxx xxx
"In the absence then of an order for the issuance of a writ of
execution on the reinstatement aspect of the decision of the Labor
Arbiter, the petitioner was under no legal obligation to admit back to work
the private respondent under the terms and conditions prevailing prior to
her dismissal or, at the petitioner's option, to merely reinstate her in the
payroll. An option is a right of election to exercise a privilege, and the
option in Article 223 of the Labor Code is exclusively granted to the
employer. The event that gives rise for its exercise is not the
reinstatement decree of a Labor Arbiter, but the writ for its execution
commanding the employer to reinstate the employee, while the final act
which compels the employer to exercise the option is the service upon it
of the writ of execution when, instead of admitting the employee back to
his work, the employer chooses to reinstate the employee in the payroll
only. If the employer does not exercise this option, it must forthwith admit
the employee back to work, otherwise it may be punished for
contempt." 29
A closer examination, however, shows that the necessity for a writ of
execution under Article 224 applies only to final and executory decisions which
are not within the coverage of Article 223. For comparison, we quote the material
portions of the subject articles:
"ART. 223. Appeal....
"In any event, the decision of the Labor Arbiter reinstating a
dismissed or separated employee, insofar as the reinstatement aspect is
concerned, shall immediately be executory, even pending appeal.The
employee shall either be admitted back to work under the same terms
and conditions prevailing prior to his dismissal or separation or, at the
option of the employer, merely reinstated in the payroll. The posting of a
 bond by the employer shall not stay the execution for reinstatement
provided herein. aisadc

xxx xxx xxx

"ART. 224. Execution of decisions, orders, or awards.— (a) The
Secretary of Labor and Employment or any Regional Director, the
Commission or any Labor Arbiter, or med-arbiter or voluntary arbitrator
may, motu propio or on motion of any interested party, issue a writ of
execution on a judgment within five (5) years from the date it becomes
final and executory,requiring a sheriff or a duly deputized officer to
execute or enforce final decisions, orders or awards of the Secretary of
Labor and Employment or regional director, the Commission, the Labor
Arbiter or med-arbiter, or voluntary arbitrators. In any case, it shall be the
duty of the responsible officer to separately furnish immediately the
counsels of record and the parties with copies of said decisions, orders
or awards. Failure to comply with the duty prescribed herein shall subject
such responsible officer to appropriate administrative sanctions."

Article 224 states that the need for a writ of execution applies only within five
(5) years from the date a decision, an order or award becomes final and
executory.It can not relate to an award or order of reinstatement still to be
appealed or pending appeal which Article 223 contemplates. The provision of
Article 223 is clear that an award for reinstatement shall be immediately
executory even pending appeal and the posting of a bond by the employer
shall not stay the execution for reinstatement.The legislative intent is quite
obvious, i.e.,to make an award of reinstatement immediately enforceable,
even pending appeal. To require the application for and issuance of a writ of
execution as prerequisites for the execution of a reinstatement award would
certainly betray and run counter to the very object and intent of Article 223,
i.e.,the immediate execution of a reinstatement order. The reason is simple.
An application for a writ of execution and its issuance could be delayed for
numerous reasons. A mere continuance or postponement of a scheduled
hearing, for instance, or an inaction on the part of the Labor Arbiter or the
NLRC could easily delay the issuance of the writ thereby setting at naught the
strict mandate and noble purpose envisioned by Article 223. In other words, if
the requirements of Article 224 were to govern, as we so declared
in Maranaw, then the executory nature of a reinstatement order or award
contemplated by Article 223 will be unduly circumscribed and rendered
ineffectual. In enacting the law, the legislature is presumed to have ordained a
valid and sensible law, one which operates no further than may be necessary
to achieve its specific purpose. Statutes, as a rule, are to be construed in the
light of the purpose to be achieved and the evil sought to be remedied. 30 And
where the statute is fairly susceptible of two or more constructions, that
construction should be adopted which will most tend to give effect to the
 manifest intent of the lawmaker and promote the object for which the statute
was enacted, and a construction should be rejected which would tend to
render abortive other provisions of the statute and to defeat the object which
the legislator sought to attain by its enactment. 31 In introducing a new rule on
the reinstatement aspect of a labor decision under R A. No. 6715, Congress
should not be considered to be indulging in mere semantic exercise. On
appeal, however, the appellate tribunal concerned may enjoin or suspend the
reinstatement order in the exercise of its sound discretion.

Furthermore, the rule is that all doubts in the interpretation and

implementation of labor laws should be resolved in favor of labor. 32 In ruling that
an order or award for reinstatement does not require a writ of execution the Court
is simply adhering and giving meaning to this rule. Henceforth, we rule that an
award or order for reinstatement is self-executory. After receipt of the decision or
resolution ordering the employee's reinstatement, the employer has the right to
choose whether to re-admit the employee to work under the same terms and
conditions prevailing prior to his dismissal or to reinstate the employee in the
payroll. In either instance, the employer has to inform the employee of his choice.
The notification is based on practical considerations for without notice, the
employee has no way of knowing if he has to report for work or not.  cda

WHEREFORE, the petition is DENIED and the decision of the Labor

Arbiter is hereby REINSTATED.
Costs against petitioner.
SO ORDERED.
 (Pioneer Texturizing Corp. v. National Labor Relations Commission, G.R. No.
|||

118651, [October 16, 1997], 345 PHIL 1057-1077)

G.R. No. 152329. April 22, 2003.]

ALEJANDRO ROQUERO, petitioner,vs.PHILIPPINE AIRLINES,

INC., respondent.

 (Roquero v. Philippine Airlines Inc., G.R. No. 152329, [April 22, 2003], 449
|||

PHIL 437-446)

PUNO, J  : p
 Brought up on this Petition for Review is the decision of the Court of
Appeals dismissing Alejandro Roquero as an employee of the respondent
Philippine Airlines, Inc.
Roquero, along with Rene Pabayo, were ground equipment mechanics of
respondent Philippine Airlines, Inc. (PAL for brevity).From the evidence on
record, it appears that Roquero and Pabayo were caught red-handed possessing
and using Methamphetamine Hydrochloride or shabu in a raid conducted by PAL
security officers and NARCOM personnel.
The two alleged that they did not voluntarily indulge in the said act but
were instigated by a certain Jojie Alipato who was introduced to them by Joseph
Ocul, Manager of the Airport Maintenance Division of PAL. Pabayo alleged that
Alipato often bragged about the drugs he could smuggle inside the company
premises and invited other employees to take the prohibited drugs. Alipato was
unsuccessful, until one day, he was able to persuade Pabayo to join him in taking
the drugs. They met Roquero along the way and he agreed to join them. Inside
the company premises, they locked the door and Alipato lost no time in preparing
the drugs to be used. When they started the procedure of taking the drugs,
armed men entered the room, arrested Roquero and Pabayo and seized the
drugs and the paraphernalia used. 1 Roquero and Pabayo were subjected to a
physical examination where the results showed that they were positive of drugs.
They were also brought to the security office of PAL where they executed written
confessions without the benefit of counsel. 2
On March 30, 1994, Roquero and Pabayo received a "notice of
administrative charge" 3 for violating the PAL Code of Discipline. They were
required to answer the charges and were placed under preventive suspension.
Roquero and Pabayo, in their "reply to notice of administrative
charge," 4 assailed their arrest and asserted that they were instigated by PAL to
take the drugs. They argued that Alipato was not really a trainee of PAL but was
placed in the premises to instigate the commission of the crime. They based their
argument on the fact that Alipato was not arrested. Moreover, Alipato has no
record of employment with PAL.
In a Memorandum dated July 14, 1994, Roquero and Pabayo were
dismissed by PAL. 5 Thus, they filed a case for illegal dismissal. 6
In the Labor Arbiter's decision, the dismissal of Roquero and Pabayo was
upheld. The Labor Arbiter found both parties at fault — PAL for applying means
to entice the complainants into committing the infraction and the complainants for
giving in to the temptation and eventually indulging in the prohibited activity.
Nonetheless, the Labor Arbiter awarded separation pay and attorney's fees to the
complainants. 7
 While the case was on appeal with the National Labor Relations
Commission (NLRC), the complainants were acquitted by the Regional Trial
Court (RTC) Branch 114, Pasay City, in the criminal case which charged them
with "conspiracy for possession and use of a regulated drug in violation of
Section 16, Article III of Republic Act 6425," on the ground of instigation.
The NLRC ruled in favor of complainants as it likewise found PAL guilty of
instigation. It ordered reinstatement to their former positions but without
backwages. 8 Complainants did not appeal from the decision but filed a motion
for a writ of execution of the order of reinstatement. The Labor Arbiter granted
the motion but PAL refused to execute the said order on the ground that they
have filed a Petition for Review before this Court. 9 In accordance with the case
of St. Martin Funeral Home vs. NLRC and Bienvenido Aricayos, 10 PAL's petition
was referred to the Court of Appeals. 11
During the pendency of the case with the Court of Appeals, PAL, and
Pabayo filed a Motion to Withdraw/Dismiss the case with respect to Pabayo, after
they voluntarily entered into a compromise agreement. 12 The motion was
granted in a Resolution promulgated by the Former Thirteenth Division of the
Court of Appeals on January 29, 2002. 13
The Court of Appeals later reversed the decision of the NLRC and
reinstated the decision of the Labor Arbiter insofar as it upheld the dismissal of
Roquero. However, it denied the award of separation pay and attorney's fees to
Roquero on the ground that one who has been validly dismissed is not entitled to
those benefits. 14
The motion for reconsideration by Roquero was denied. In this Petition for
Review on Certiorari under Rule 45, he raises the following issues:
1. Whether or not the instigated employee shall be solely
responsible for an action arising from the instigation
perpetrated by the employer;
2. Can the executory nature of the decision, more so the
reinstatement aspect of a labor tribunal's order be halted by
a petition having been filed in higher courts without any
restraining order or preliminary injunction having been
ordered in the meantime?
3. Would the employer who refused to reinstate an employee
despite a writ duly issued be held liable to pay the salary of
the subject employee from the time that he was ordered
reinstated up to the time that the reversed decision was
handed down? 15
 I

There is no question that petitioner Roquero is guilty of serious misconduct

for possessing and using shabu.He violated Chapter 2, Article VII, Section 4 of
the PAL Code of Discipline which states:
"Any employee who, while on company premises or on duty,
takes or is under the influence of prohibited or controlled drugs, or
hallucinogenic substances or narcotics shall be dismissed." 16
Serious misconduct is defined as "the transgression of some established
and definite rule of action, a forbidden act, a dereliction of duty, willful in
character, and implies wrongful intent and not mere error in judgment." 17 For
serious misconduct to warrant the dismissal of an employee, it (1) must be
serious; (2) must relate to the performance of the employee's duty; and (3) must
show that the employee has become unfit to continue working for the
employer. 18
It is of public knowledge that drugs can damage the mental faculties of the
user. Roquero was tasked with the repair and maintenance of PAL's airplanes.
He cannot discharge that duty if he is a drug user. His failure to do his job can
mean great loss of lives and properties. Hence, even if he was instigated to take
drugs he has no right to be reinstated to his position. He took the drugs fully
knowing that he was on duty and more so that it is prohibited by company rules.
Instigation is only a defense against criminal liability. It cannot be used as a
shield against dismissal from employment especially when the position involves
the safety of human lives.
Petitioner cannot complain he was denied procedural due process. PAL
complied with the twin-notice requirement before dismissing the petitioner. The
twin-notice rule requires (1) the notice which apprises the employee of the
particular acts or omissions for which his dismissal is being sought along with the
opportunity for the employee to air his side, and (2) the subsequent notice of the
employer's decision to dismiss him. 19 Both were given by respondent PAL.
Article 223 (3rd paragraph) of the Labor Code 20 as amended by Section
12 of Republic Act No. 6715, 21 and Section 2 of the NLRC Interim Rules on
Appeals under RA No. 6715, Amending the Labor Code, 22 provide that an order
of reinstatement by the Labor Arbiter is immediately executory even pending
appeal. The rationale of the law has been explained in Aris (Phil.) Inc. vs.
NLRC: 23
"In authorizing execution pending appeal of the reinstatement
aspect of a decision of the Labor Arbiter reinstating a dismissed or
separated employee, the law itself has laid down a compassionate policy
 which, once more, vivifies and enhances the provisions of the 1987
Constitution on labor and the working man.
xxx xxx xxx
These duties and responsibilities of the State are imposed not so
much to express sympathy for the workingman as to forcefully and
meaningfully underscore labor as a primary social and economic force,
which the Constitution also expressly affirms with equal intensity. Labor
is an indispensable partner for the nation's progress and stability.
xxx xxx xxx
...In short, with respect to decisions reinstating employees, the
law itself has determined a sufficiently overwhelming reason for its
execution pending appeal.
xxx xxx xxx
...Then, by and pursuant to the same power (police power),the
State may authorize an immediate implementation, pending appeal, of a
decision reinstating a dismissed or separated employee since that
saving act is designed to stop, although temporarily since the appeal
may be decided in favor of the appellant, a continuing threat or danger to
the survival or even the life of the dismissed or separated employee and
his family."
The order of reinstatement is immediately executory. The unjustified
refusal of the employer to reinstate a dismissed employee entitles him to
payment of his salaries effective from the time the employer failed to reinstate
him despite the issuance of a writ of execution. 24 Unless there is a restraining
order issued, it is ministerial upon the Labor Arbiter to implement the order of
reinstatement. In the case at bar, no restraining order was granted. Thus, it was
mandatory on PAL to actually reinstate Roquero or reinstate him in the payroll.
Having failed to do so, PAL must pay Roquero the salary he is entitled to, as if he
was reinstated, from the time of the decision of the NLRC until the finality of the
decision of this Court.
We reiterate the rule that technicalities have no room in labor cases where
the Rules of Court are applied only in a suppletory manner and only to effectuate
the objectives of the Labor Code and not to defeat them. 25 Hence, even if the
order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory
on the part of the employer to reinstate and pay the wages of the dismissed
employee during the period of appeal until reversal by the higher court. On the
other hand, if the employee has been reinstated during the appeal period and
such reinstatement order is reversed with finality, the employee is not required to
reimburse whatever salary he received for he is entitled to such, more so if he
actually rendered services during the period.
 IN VIEW WHEREOF, the dismissal of petitioner Roquero is AFFIRMED,
but respondent PAL is ordered to pay the wages to which Roquero is entitled
from the time the reinstatement order was issued until the finality of this
decision. 
ITCcAD

SO ORDERED.
 (Roquero v. Philippine Airlines Inc., G.R. No. 152329, [April 22, 2003], 449
|||

PHIL 437-446)

G.R. No. 148247. August 7, 2006.]

AIR PHILIPPINES CORPORATION, petitioner, vs. ENRICO E.

ZAMORA, respondent.

DECISION

AUSTRIA-MARTINEZ, J  : p

Only those pleadings, parts of case records and documents which are
material and pertinent, in that they may provide the basis for a determination of
a prima facie case of abuse of discretion, are required to be attached to a
petition for certiorari. A petition lacking such documents contravenes paragraph
2, Section 1, Rule 65 and may be dismissed outright under Section 3, Rule 46.
However, if it is shown that the omission has been rectified by the subsequent
submission of the documents required, the petition must be given due course or
reinstated, if it had been previously dismissed. 1
Other pleadings and portions of case records need not accompany the
petition, unless the court will require them in order to aid it in its review of the
case. Omission of these documents from the petition will not warrant its
dismissal. 2
For being allegedly contrary to the foregoing rule, the Resolutions dated
January 11, 2001 and May 23, 2001 of the Court of Appeals in CA G.R. SP No.
62388 entitled, "Air Philippines Corporation, Petitioner, versus, National Labor
Relations Commission (5th Division) and Enrico Zamora, Respondents" are
sought to be annuled in the Petition for Review on Certiorari under Rule 45 that is
now before us. 3
The facts are not in dispute.
 Enrico Zamora (Zamora) was employed with Air Philippines Corporation
(APC) as a B-737 Flight Deck Crew. 4 He applied for promotion to the position of
airplane captain and underwent the requisite training program. After completing
training, he inquired about his promotion but APC did not act on it; instead, it
continued to give him assignments as flight deck crew. Thus, Zamora filed a
Complaint with the Labor Arbiter. He argued that the act of APC of withholding
his promotion rendered his continued employment with it oppressive and unjust.
He therefore asked that APC be held liable for constructive dismissal. 5
APC denied that it dismissed complainant. It pointed out that, when the
complaint was filed on May 14, 1997, complainant was still employed with it. It
was only on May 22, 1997 that complainant stopped reporting for work, not
because he was forced to resign, but because he had joined a rival airline, Grand
Air. 6
In a Decision dated September 16, 1998, the Labor Arbiter ruled in favor of
Zamora and declared APC liable for constructive dismissal. It held:
WHEREFORE, judgment is hereby rendered finding respondent
liable for illegal dismissal and ordering the respondent to:
1. Reinstate complainant to his position as B-737 Captain without
loss of seniority right immediately upon receipt thereof (sic);
2. Pay complainant his full backwages from May 15, 1997 up to the
promulgation of this decision on (sic) the amount of P1,732,500
(sic);
3. Pay complainant the amount of TWO MILLION PESOS
(P2,000,000.00) in the concept of moral damages and ONE
MILLION PESOS (P1,000,000.00) as exemplary damages;
4. Pay attorney's fees equivalent to TEN PERCENT (10%) of the total
award. (Emphasis supplied)
SO ORDERED. 7
Zamora immediately filed a Motion for Execution of the order of
reinstatement. On November 6, 1998, the Labor Arbiter granted the motion and
issued a writ of execution directing APC to reinstate complainant to his former
position. 8
Meanwhile, APC filed with the NLRC an appeal assailing the finding of the
Labor Arbiter that it was liable for constructive dismissal. 9
The NLRC granted the appeal in a Resolution dated February 10, 1999. It
held that no dismissal, constructive or otherwise, took place for it was Zamora
himself who voluntarilly terminated his employment by not reporting for work and
by joining a competitor Grand Air. 10
 However, upon Motion for Reconsideration 11 filed by Zamora, the NLRC,
in a Resolution dated December 17, 1999, modified its earlier Resolution, thus:
WHEREFORE, the instant Motion for Reconsideration filed by
complainant is DENIED for lack of merit and the appealed decision
AFFIRMED, while the instant petition for injunction filed by respondent is
GRANTED.
However, respondent Air Philippines Corporation is ordered
to pay complainant his unpaid salaries and allowances in the total
amount of P198,502.30 within fifteen (15) days from receipt of this
resolution. 12 (Emphasis supplied)
Displeased with the modification, APC sought a partial reconsideration of
the foregoing resolution 13 but the NLRC denied the same. In its Resolution of
October 11, 2000, the NLRC justified the award of unpaid salaries in this manner:
The grant of salaries and allowances to complainant arose
from the order of his reinstatement which is executory even
pending appeal of respondent questioning the same, pursuant to
Article 223 of the Labor Code. In the eyes of the law, complainant was
as if actually working from the date respondent received the copy of the
appealed decision of the Labor Arbiter directing the reinstatement of
complainant based on his finding that the latter was illegally dismissed
from employment. 14 (Emphasis supplied)
This prompted APC (hereafter referred to as petitioner) to file a Petition
for Certiorari with the Court of Appeals to have the December 17, 1999
Resolution of the NLRC partially annulled and its October 11, 2000 Resolution
set aside on the ground that these were issued with grave abuse of discretion.
Petitioner attached to its petition, certified true copies of the Resolutions of the
NLRC dated February 10, 1999, December 17, 1999 and October 11, 2000 and
the Decision of the Labor Arbiter dated September 16, 1998, and photocopies of
the February 24, 1999 notice of garnishment, March 11, 1999 Order of the Labor
Arbiter authorizing Sheriff Fulgencio Lavarez to implement the writ of execution,
and March 23, 1999 Resolution of the NLRC enjoining implementation of the writ
of execution. 15
In a Resolution dated January 11, 2001, the Court of Appeals dismissed
the petition for failure of petitioner to ". . . attach copies of all pleadings (such
complaint, answer, position paper) and other material portions of the record as
would support the allegations therein . . . ." 16
Petitioner filed a Motion for Reconsideration from the said Resolution and
attached to it the pleadings and portions of the case record required by the Court
of Appeals. 17 Zamora (hereafter referred to as respondent) filed an Opposition to
Motion for Reconsideration. 18
 In a Resolution dated May 23, 2001, the Court of Appeals denied the
motion for reconsideration, thus:
Up for consideration is petitioner's motion for reconsideration
(pages 64-71 of the Rollo) of this Court's resolution of dismissal (page
54, id.), which was promulgated on January 11, 2001. Considering
private respondent's undisputed comment on said motion (pages
159-161. id.), the same is hereby DENIED. The resolution of
dismissal stands. 19 (Emphasis supplied)
And so, herein Petition for Review on Certiorari under Rule 45. Petitioner
would have us annul and set aside the January 11, 2001 and May 23, 2001
Resolutions of the Court of Appeals on the following grounds:
A. The Honorable Court of Appeals did not rule in accordance
with prevailing laws and jurisprudence when it dismissed the petition
for certiorari filed by petitioner APC on the ground that petitioner APC
supposedly failed to attach copies of all pleadings (such as complaint,
answer, position papers) and other materials portions of the record as
would support the allegations therein.
B. The Honorable Court of Appeals did not rule in accordance
with prevailing laws and jurisprudence when it denied petitioner APC's
motion for reconsideration in spite of the fact that petitioner APC
submitted copies of all pleadings and documents mentioned in its
petition for certiorari.
C. The Honorable Court of Appeals did not rule in accordance
with prevailing laws and jurisprudence when it denied petitioner APC's
motion for reconsideration on a new ground namely, the alleged failure
of petitioner APC to dispute respondent Zamora's comment and/or
opposition to motion for reconsideration ("Opposition"), in spite of the
fact that (i) the Honorable Court of Appeals did not order petitioner APC
to reply to the said opposition; and (ii) the said Opposition is patently
unmeritorious. 20
Respondent filed his Comment to the petition. 21
We grant the petition.
We agree with petitioner on the first and second issues.
In its Resolution of January 11, 2001, the Court of Appeals cited as ground
for the dismissal of the petition for certiorari its lack of certified true copies of the
pleadings and material portions of the case record. This is an erroneous ruling,
petitioner insists, for the deficiency was excusable: pleadings and other portions
of the case records were not attached to the petition because these documents
had no bearing on the sole issue raised therein, which was, whether the NLRC
committed grave abuse of discretion in awarding unpaid salaries to respondent
despite having adjudged the latter at fault for abandonment of employment. 22
Respondent disagrees. He argues that the requirements under Section 1,
Rule 65 are mandatory and jurisdictional; petitioner's failure to comply with them
was a valid ground for the dismissal of its petition. 23
Both views are actually correct.
Certiorari, being an extraordinary remedy, the party seeking it must strictly
observe the requirements for its issuance. 24 Some of these requirements are
found in paragraph 2, Section 1 of Rule 65, which reads:
SECTION. 1. Petition for certiorari. —
xxx xxx xxx
The petition shall be accompanied by a certified true copy of the
judgment, order or resolution subject thereof, copies of all pleadings and
documents relevant and pertinent thereto . . . .
 

These requirements are emphasized in Section 3, Rule 46, thus:

SEC. 3. Contents and filing of petition; effect of non-compliance

with requirements. —
xxx xxx xxx
[The petition] shall be . . . accompanied by a clearly legible
duplicate original or certified true copy of the judgment, order, resolution,
or ruling subject thereof, such material portions of the record as are
referred to therein, and other documents relevant or pertinent thereto . . .
.
xxx xxx xxx
The failure of the petitioner to comply with any of the foregoing
requirements shall be sufficient ground for the dismissal of the petition.
Note that the foregoing rules speak of two sets of documents to be
attached to the petition. The first set consists of certified true copies of the
judgment, order or resolution subject of the petition. Duplicate originals or
certified true copies thereof must be appended to enable the reviewing court to
determine whether the court, body or tribunal, which rendered the same
committed grave abuse of discretion. 25 The second set consists of the
pleadings, portions of the case record and other documents which are material
and pertinent to the petition. 26 Mere photocopies thereof may be attached to
the petition. 27 It is this second set of documents which is relevant to this case.
 As a general rule, a petition lacking copies of essential pleadings and
portions of the case record may be dismissed. 28 This rule, however, is not
petrified. As the exact nature of the pleadings and parts of the case record which
must accompany a petition is not specified, much discretion is left to the
appellate court to determine the necessity for copies of pleading and other
documents. 29 There are, however, guideposts it must follow.
First, not all pleadings and parts of case records are required to be
attached to the petition. Only those which are relevant and pertinent must
accompany it. The test of relevancy is whether the document in question will
support the material allegations in the petition, whether said document will make
out a prima facie case of grave abuse of discretion as to convince the court to
give due course to the petition. 30
Second, even if a document is relevant and pertinent to the petition, it need
not be appended if it is shown that the contents thereof can also found in another
document already attached to the petition. Thus, if the material allegations in a
position paper are summarized in a questioned judgment, it will suffice that only a
certified true copy of the judgment is attached. 31
Third, a petition lacking an essential pleading or part of the case record
may still be given due course or reinstated (if earlier dismissed) upon showing
that petitioner later submitted the documents required, 32 or that it will serve the
higher interest of justice that the case be decided on the merits. 33
It is readily apparent in this case that the Court of Appeals was
overzealous in its enforcement of the rules.
To begin with, the pleadings and other documents it required of petitioner
were not at all relevant to the petition. It is noted that the only issue raised by
petitioner was whether the NLRC committed grave abuse of discretion in granting
respondent unpaid salaries while declaring him guilty of abandonment of
employment. Certainly, copies of the Resolutions of the NLRC dated February
10, 1999, December 17, 1999 and October 11, 2000 would have sufficed as
basis for the Court of Appeals to resolve this issue. After all, it is in these
Resolutions that the NLRC purportedly made contrary findings.
There was no need at all for copies of the position papers and other
pleadings of the parties; these would have only cluttered the docket. Besides, a
summary of the material allegations in the position papers can be found in both
the September 16, 1998 Decision of the Labor Arbiter and the February 10, 1999
Resolution of the NLCR. Quick reference to copies of the decision and resolution
would have already satisfied any question the court may have had regarding the
pleadings of the parties.
 The attachments of petitioner to its petition for certiorari were already
sufficient even without the pleadings and portions of the case record. It was
therefore unreasonable of the Court of Appeals to have dismissed it. More so
that petitioner later corrected the purported deficiency by submitting copies of the
pleadings and other documents.
This brings us to the third issue. Again, we agree with petitioner that the
Court of Appeals erred in denying its motion for reconsideration.
In its May 23, 2001 Resolution, the Court of Appeals cited as basis for
denying the motion for reconsideration of petitioner from the January 11, 2000
Resolution the latter's purported failure to contravene the Opposition filed by
respondent. 34 This is certainly a curious ground to deny a motion for
reconsideration. As pointed out by petitioner, a reply to an opposition to a motion
for reconsideration is not filed as a matter of course. An order from the court may
issue though to direct the movant to file a reply. In this case, no such order came
from the Court of Appeals instructing petitioner to counter the Opposition filed by
respondent. Hence, it cannot be assumed that in failing to file a reply, petitioner,
in effect, conceded to the Opposition of respondent.
It is not as if the Opposition which respondent filed required any answer.
The matters discussed therein were not even germane to the issue raised in the
motion for reconsideration. It was as though respondent passed in silence
petitioner's arguments against the January 11, 2000 Resolution. If we are to be
technical about it, it was instead the motion for reconsideration of petitioner which
was not contravened by respondent. It was error on the part of the Court of
Appeals to have denied it.
In sum, we annul and set aside the January 11, 2000 and May 23, 2001
Resolutions of the Court of Appeals. There is no more obstacle then to the
petition for certiorari taking its course. However, rather than remand it to the
Court of Appeals for resolution, we resolve it here and now to expedite
matters. 35
We hold that the NLRC did not commit grave abuse of discretion in holding
petitioner liable to respondent for P198,502.30.
The premise of the award of unpaid salary to respondent is that prior to the
reversal by the NLRC of the decision of the Labor Arbiter, the order of
reinstatement embodied therein was already the subject of an alias writ of
execution even pending appeal. Although petitioner did not comply with this writ
of execution, its intransigence made it liable nonetheless to the salaries of
respondent pending appeal. There is logic in this reasoning of the NLRC.
In Roquero v. Philippine Airlines, Inc., we resolved the same issue as follows:
 We reiterate the rule that technicalities have no room in labor
cases where the Rules of Court are applied only in a suppletory manner
and only to effectuate the objectives of the Labor Code and not to defeat
them. 36 Hence, even if the order of reinstatement of the Labor
Arbiter is reversed on appeal, it is obligatory on the part of the
employer to reinstate and pay the wages of the dismissed
employee during the period of appeal until reversal by the higher
court. On the other hand, if the employee has been reinstated during the
appeal period and such reinstatement order is reversed with finality, the
employee is not required to reimburse whatever salary he received for
he is entitled to such, more so if he actually rendered services during the
period. 37
There is a policy elevated in this ruling. In Aris (Phil.) Inc. v. National Labor
Relations Commission, we held:
In short, with respect to decisions reinstating employees, the law
itself has determined a sufficiently overwhelming reason for its execution
pending appeal.
xxx xxx xxx
. . . Then, by and pursuant to the same power (police power), the
State may authorize an immediate implementation, pending appeal, of a
decision reinstating a dismissed or separated employee since that
saving act is designed to stop, although temporarily since the appeal
may be decided in favor of the appellant, a continuing threat or danger to
the survival or even the life of the dismissed or separated employee and
his family. 38
We cannot do less. The petition for certiorari in CA G.R. SP No. 62388
must be dismissed.
WHEREFORE, the petition is GRANTED. The January 11, 2000 and May
23, 2001 Resolutions of the Court of Appeals are ANNULLED AND SET ASIDE,
and the Petition for Certiorari docketed as CA G.R. SP No. 62388 is
DISMISSED. The Resolutions dated December 17, 1999 and October 11, 2000
of the National Labor Relations Commission are AFFIRMED.
Costs against petitioner.
SO ORDERED.
 (Air Philippines Corp. v. Zamora, G.R. No. 148247, [August 7, 2006], 529 PHIL
|||

718-731)
 G.R. No. 177026. January 30, 2009.]

LUNESA O. LANSANGAN AND ROCITA

CENDAÑA, petitioners, vs. AMKOR TECHNOLOGY
PHILIPPINES, INC., respondent.

DECISION

CARPIO-MORALES, J  : p

An anonymous e-mail was sent to the General Manager of Amkor

Technology Philippines (respondent) detailing allegations of malfeasance on
the part of its supervisory employees Lunesa Lansangan and Rosita Cendaña
(petitioners) for "stealing company time". 1 Respondent thus investigated the
matter, requiring petitioners to submit their written explanation. In handwritten
letters, petitioners admitted their wrongdoing. 2 Respondent thereupon
terminated petitioners for "extremely serious offenses" as defined in its Code
of Discipline, 3 prompting petitioners to file a complaint for illegal dismissal
against it. 4 
ACcDEa

Labor Arbiter Arthur L. Amansec, by Decision of October 20,

2004, 5 dismissed petitioners' complaint, he having found them guilty of
"[s]wiping another employees' [sic] I.D. card or requesting another
employee to swipe one's I.D. card to gain personal advantage and/or in
the interest of cheating", an offense of dishonesty punishable as a
serious form of misconduct and fraud or breach of trust under Article 282
of the Labor Code:
xxx xxx xxx
which allows the dismissal of an employee for a valid cause.
(Emphasis and underscoring supplied)
The Arbiter, however, ordered the reinstatement of petitioners to their
former positions without backwages "as a measure of equitable and
compassionate relief" owing mainly to petitioners' prior unblemished
employment records, show of remorse, harshness of the penalty and
defective attendance monitoring system of respondent. 6  ACcDEa

Respondent assailed the reinstatement aspect of the Arbiter's order

before the National Labor Relations Commission (NLRC).
 In the meantime, petitioners, without appealing the Arbiter's finding
them guilty of "dishonesty as a form of serious misconduct and fraud or
breach of trust", moved for the issuance of a "writ of reinstatement". 7
After a series of oppositions, motions and orders, 8 the Arbiter issued an
alias writ of execution following which respondent's bank account at
Equitable-PCI Bank was garnished. Respondent thereupon moved for the
quashal of the alias writ of execution and lifting of the notice of garnishment,
which the Arbiter denied by Order of January 26, 2005, drawing respondent to
appeal to the NLRC.
After consolidating respondent's appeal from the Labor Arbiter's order
of reinstatement and subsequent appeal/order denying the quashal of the
alias writ of execution and lifting of the notice of garnishment, the NLRC, by
Resolution of June 30, 2005, 9 granted respondent's appeals by deleting the
reinstatement aspect of the Arbiter's decision and setting aside the Arbiter's
Alias Writ of Execution and Notice of Garnishment. Thus the NLRC disposed
as follows:
 ACcDEa

ACCORDINGLY, the appeal is hereby GRANTED. The Labor

Arbiter's Decision dated October 20, 2004 is hereby MODIFIED
by DELETING the portion that ruled for appelle[e]s' reinstatement.
Consequently, the Writ of Execution dated November 19, 2004, the
subsequent Alias Writ of Execution dated January 26, 2005, and the
Notice of Garnishment dated January 14, 2005 served upon Equitable
PCI Bank by Sheriff Agripina Sangel are hereby ordered to be SET
ASIDE.
SO ORDERED. (Underscoring supplied)
Petitioners' motion for reconsideration of the NLRC Resolution having
been denied, they filed a petition for certiorari before the Court of Appeals
which, by Decision 10 of September 19, 2006, while affirming the finding that
petitioners were guilty of misconduct and the like, ordered respondent to "pay
petitioners their corresponding backwages without qualification and deduction
for the period covering October 20, 2004 (date of the Arbiter's decision) up to
June 30, 2005 (date of the NLRC Decision)", citing Article 223 of the Labor
Code and Roquero v. Philippine Airlines. 11
Both parties' filed their respective motions for partial reconsideration
which were denied. 12 Only petitioners have come to this Court via the present
petition for review, 13 contending that:
 ACcDEa

I
WITH ALL DUE RESPECT, THE ORDER OF THE HONORABLE
COURT OF APPEALS LIMITING THE PAYMENT OF
BACKWAGES [TO] THE PETITIONERS FROM OCTOBER 20, 2004
 (ARBITER DECISION) UP TO JUNE 30, 2005 (NLRC DECISION)
ONLY IS CONTRARY TO THE CASE OF ALEJANDRO ROQUERO VS.
PHILIPPINE AIRLINES, INC.[,] G.R. NO. 152329, APRIL [22,] 2003
[AND]
II
. . . THE HONORABLE COURT OF APPEALS COMMITTED GRAVE
ABUSE OF DISCRETION IN CONCLUDING THAT THE PETITIONERS
COMMITTED SERIOUS MISCONDUCT, FRAUD, DISHONESTY AND
BREACH OF TRUST. BUT EVEN ASSUMING THAT THE
PETITIONERS COMMITTED THE SWIPING IN OF IDENTIFICATION
CARD, THE PENALTY OF DISMISSAL IS TOO SEVERE, HARSH AND
CONTRARY TO ARTICLE 282 OF THE LABOR CODE OF THE
PHILIPPINES AND EXISTING JURISPRUDENCE. 14
Since respondent did not appeal from the appellate court's decision, the
said court's order for it to pay backwages to petitioners for the therein
specified period has become final.  ACcDEa

Petitioners highlight the Court's ruling in Roquero v. Philippine

Airlines  15 where the therein employer was ordered to pay the wages to which
the therein employee was entitled from the time the reinstatement order was
issued until the finality of this Court's decision 16 in favor of the therein
employee. Thus, petitioners contend that the payment of backwages
should not be computed only up to the promulgation by the NLRC of its
decision.
In its Comment, 17 respondent asserts that, inter alia, petitioners'
reliance on Roquero is misplaced in view of the glaring factual differences
between said case and the present case.
The petition fails.
The decision of the Arbiter finding that petitioners committed
"dishonesty as a form of serious misconduct and fraud, or breach of trust" had
become final, petitioners not having appealed the same before the NLRC as
in fact they even moved for the execution of the reinstatement aspect of the
decision. It bears recalling that it was only respondent which assailed the
Arbiter's decision to the NLRC — to solely question the propriety of the order
for reinstatement, and it succeeded.
Roquero, as well as Article 223 18 of the Labor Code on which the
appellate court also relied, finds no application in the present case. Article 223
concerns itself with an interim relief, granted to a dismissed or separated
employee while the case for illegal dismissal is pending appeal, as what
happened in Roquero. It does not apply where there is no finding of illegal
dismissal, as in the present case. ACcDEa
 The Arbiter found petitioners' dismissal to be valid. Such finding had, as
stated earlier, become final, petitioners not having appealed it. Following
Article 279 which provides:
xxx xxx xxx
In cases of regular employment, the employer shall not terminate
the services of an employee except for a just cause or when authorized
by this Title. An employee who is unjustly dismissed from work shall be
entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his
other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual
reinstatement (Emphasis, underscoring and italics supplied),

petitioners are not entitled to full backwages as their dismissal was not found
to be illegal. Agabon v. NLRC  19 so states –– payment of backwages and
other benefits is justified only if the employee was unjustly dismissed.  ACcDEa

WHEREFORE, the petition is DENIED.

No costs.
SO ORDERED.
 (Lansangan v. Amkor Technology Philippines, Inc., G.R. No. 177026, [January
|||

30, 2009], 597 PHIL 487-493)

G.R. Nos. 142732-33. December 4, 2007.]

MARILOU S. GENUINO, petitioner, vs. NATIONAL LABOR

RELATIONS COMMISSION, CITIBANK, N.A., WILLIAM
FERGUSON, and AZIZ RAJKOTWALA, respondents.

[G.R. Nos. 142753-54. December 4, 2007.]

CITIBANK, N.A., WILLIAM FERGUSON, and AZIZ

RAJKOTWALA, petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION and MARILOU GENUINO, respondents.
 DECISION

VELASCO, JR., J  : p

The Case

This Petition for Review on Certiorari under Rule 45 seeks to set aside the
September 30, 1999 Decision 1 and March 31, 2000 Resolution 2 of the Court of
Appeals (CA) in the consolidated cases docketed as CA-G.R. SP Nos. 51532
and 51533. The appellate court dismissed the parties' petitions involving the
National Labor Relations Commission's (NLRC's) Decision 3 and
Resolution, 4 which held that Marilou S. Genuino was validly dismissed by
Citibank, N.A. (Citibank). The NLRC likewise ordered the payment of salaries
from the time that Genuino was reinstated in the payroll to the date of the NLRC
decision. Upon reconsideration, however, the CA modified its decision and held
that Citibank failed to observe due process in CA-G.R. SP No. 51532; hence,
Citibank should indemnify Genuino in the amount of PhP5,000. Both parties are
now before this Court assailing portions of the CA's rulings. In G.R. Nos. 142732-
33, Genuino assails the CA's finding that her dismissal was valid. In G.R. Nos.
142753-54, Citibank questions the CA's finding that Citibank violated Genuino's
right to procedural due process and that Genuino has a right to salaries.
Citibank is an American banking corporation duly licensed to do business
in the Philippines. William Ferguson was the Manila Country Corporate Officer
and Business Head of the Global Finance Bank of Citibank while Aziz Rajkotwala
was the International Business Manager for the Global Consumer Bank of
Citibank. 5
Genuino was employed by Citibank sometime in January 1992 as
Treasury Sales Division Head with the rank of Assistant Vice-President. She
received a monthly compensation of PhP60,487.96, exclusive of benefits and
privileges. 6
On August 23, 1993, Citibank sent Genuino a letter charging her with
"knowledge and/or involvement" in transactions "which were irregular or even
fraudulent." In the same letter, Genuino was informed she was under preventive
suspension. 7
Genuino wrote Citibank on September 13, 1993 and asked the bank the
following:
a. Confront our client with the factual and legal basis of your charges,
and afford her an opportunity to explain; 
ACDIcS
 b. Substantiate your charge of fraudulent transactions against our client;
or if the same cannot be substantiated;
c. Correct/repair/compensate the damage you have caused our client. 8
On September 13, 1993, Citibank, through Victorino P. Vargas, its Country
Senior Human Resources Officer, sent a letter to Genuino, the relevant portions
of which read:
As you are well aware, the bank served you a letter dated August
23, 1993 advising you that ongoing investigations show that you are
involved and/or know of irregular transactions which are at the very least
in conflict with the bank's interest, and, may even be fraudulent in
nature.
These transactions are those involving Global Pacific and/or
Citibank and the following bank clients, among others:
1. Norma T. de Jesus
2. Carmen Intengan/Romeo Neri
3. Mario Mamon
4. Vienna Ochoa/IETI
5. William Samara
6. Roberto Estandarte
7. Rita Browner
8. Ma. Redencion Sumpaico
9. Cesar Bautista
10. Teddy Keng
11. NDC-Guthrie
12. Olivia Sy
In view of the foregoing, you are hereby directed to explain in
writing three (3) days from your receipt hereof why your employment
should not be terminated in view of your involvement in these irregular
transactions. You are also directed to appear in an administrative
investigation of the matter which is set on Tuesday, Sept. 21, 1993 at
2:00 P.M. at the HR Conference Room, 6th Floor, Citibank Center. You
may bring your counsel if you so desire. 9 
AacCHD

Genuino's counsel replied through a letter dated September 17, 1993,

demanding for a bill of particulars regarding the charges against Genuino.
Citibank's counsel replied on September 20, 1993, as follows:
 1.2. [T]he bank has no intention of converting the administrative
investigation of this case to a full blown trial. What it is prepared to do is
give your client, as required by law and Supreme Court decisions, an
opportunity to explain her side on the issue of whether she violated the
conflict of interest rule — either in writing (which could be in the form of a
letter-reply to the September 13, 1993 letter to Citibank, N.A.) or in
person, in the administrative investigation which is set for tomorrow
afternoon vis-à-vis the bank clients/parties mentioned in the letter of
Citibank, N.A.
xxx xxx xxx
2.2. You will certainly not deny that we have already fully
discussed with you what is meant by the conflict with the bank's interest
vis-à-vis the bank clients/parties named in the September 13, 1993 letter
of Citibank to Ms. Genuino. As we have repeatedly explained to you,
what the bank meant by it is that your client and Mr. Dante Santos, using
the facilities of their family corporations (Torrance and Global) appear to
have participated in the diversion of bank clients' funds from Citibank to,
and investment thereof in, other companies and that they made money
in the process, in violation of the conflict of law rule. It is her side of this
issue that Citibank, N.A. is waiting to receive/hear from Ms. Genuino. 10
Genuino did not appear in the administrative investigation held on
September 21, 1993. Her lawyers wrote a letter to Citibank's counsel asking
"what bank clients' funds were diverted from the bank and invested in other
companies, the specific amounts involved, the manner by which and the date
when such diversions were purportedly affected." In reply, Citibank's counsel
noted Genuino's failure to appear in the investigation and gave Genuino up to
September 23, 1993 to submit her written explanation. Genuino did not submit
her written explanation. 11
On September 27, 1993, Citibank informed Genuino of the result of their
investigation. It found that Genuino with Santos used "facilities of Genuino's
family corporation, namely, Global Pacific, personally and actively participated in
the diversion of bank clients' funds to products of other companies that yielded
interests higher than what Citibank products offered, and that Genuino and
Santos realized substantial financial gains, all in violation of existing company
policy and the Corporation Code, which for your information, carries a penal
sanction." 12
Genuino's employment was terminated by Citibank on grounds of (1)
serious misconduct, (2) willful breach of the trust reposed upon her by the bank,
and (3) commission of a crime against the bank. 13  CAacTH

On October 15, 1993, Genuino filed before the Labor Arbiter a

Complaint 14 against Citibank docketed as NLRC Case No. 00-10-06450-93 for
illegal suspension and illegal dismissal with damages and prayer for temporary
restraining order and/or writ of preliminary injunction. The Labor Arbiter rendered
a Decision 15 on May 2, 1994, the dispositive portion of which reads:
WHEREFORE, finding the dismissal of the complainant Marilou
S. Genuino to be without just cause and in violation of her right to due
process, respondent CITIBANK, N.A., and any and all persons acting on
its behalf or by or under their authority are hereby ordered to reinstate
complainant immediately to her former position as Treasury Sales
Division Head or its equivalent without loss of seniority rights and other
benefits, with backwages from August 23, 1993 up to April 30, 1994 in
the amount of P493,800.00 (P60,000 x 8.23 mos.) subject to adjustment
until reinstated actually or in the payroll.
Respondents are likewise ordered to pay complainant the amount
of 1.5 Million Pesos and P500,000.00 by way of moral and exemplary
damages plus 10% of the total monetary award as attorney's fees. 16
Both parties appealed to the NLRC. The NLRC, in its September 3, 1994
Decision in NLRC-NCR Case No. 00-10-06450-93 (CA No. 006947-94), reversed
the Labor Arbiter's decision with the following modification:
WHEREFORE, Judgment is hereby rendered (1) SETTING
ASIDE the appealed decision of the Labor Arbiter; (2) DECLARING the
dismissal of the complainant valid and legal on the ground of serious
misconduct and breach of trust and confidence and consequently
DISMISSING the complaint a quo; but (3) ORDERING the respondent
bank to pay the salaries due to the complainant from the date it
reinstated complainant in the payroll (computed at P60,000.00 a month,
as found by the Labor Arbiter) up to and until the date of this decision.
SO ORDERED. 17
The parties' motions for reconsideration were denied by the NLRC in a
resolution dated October 28, 1994. 18

The Ruling of the Court of Appeals

On December 6, 1994, Genuino filed a petition for certiorari docketed as

G.R. No. 118023 with this Court. Citibank's petition for certiorari, on the other
hand, was docketed as G.R. No. 118667. In the January 27, 1999 Resolution, we
referred these petitions to the CA pursuant to our ruling in St. Martin Funeral
Home v. NLRC. 19  EHaASD

Genuino's petition before the CA was docketed as CA-G.R. SP No. 51532

while Citibank's petition was docketed as CA-G.R. SP No. 51533. Genuino
prayed for the reversal of the NLRC's decision insofar as it declared her
dismissal valid and legal. Meanwhile, Citibank questioned the NLRC's order to
pay Genuino's salaries from the date of reinstatement until the date of the
NLRC's decision.
The CA promulgated its decision on September 30, 1999, denying due
course to and dismissing both petitions. 20 Both parties filed motions for
reconsideration and on March 31, 2000, the appellate court modified its decision
and held:
WHEREFORE, save for the MODIFICATION ordering Citibank,
N.A. to pay Ms. Marilou S. Genuino five thousand pesos (P5,000.00) as
indemnity for non-observance of due process in CA-G.R. SP No. 51532,
this Court's 30 September 1999 decision
is REITERATED and AFFIRMED in all other respects.
SO ORDERED. 21
Hence, we have this petition.

The Issue

WHETHER OR NOT THE DISMISSAL OF GENUINO IS FOR A

JUST CAUSE AND IN ACCORDANCE WITH DUE PROCESS
In G.R. Nos. 142732-33, Genuino contends that Citibank failed to observe
procedural due process in terminating her employment. This failure is allegedly
an indication that there were no valid grounds in dismissing her. In G.R. Nos.
142753-54, Citibank questions the ruling that Genuino has a right to
reinstatement under Article 223 of the Labor Code. Citibank contends that the
Labor Arbiter's finding is not supported by evidence; thus, the decision is void.
Since a void decision cannot give rise to any rights, Citibank opines that there
can be no right to payroll reinstatement.

The dismissal was for just cause but lacked due process

We affirm that Genuino was dismissed for just cause but without the
observance of due process.
In a string of cases, 22 we have repeatedly said that the requirement of twin
notices must be met. In the recent case of King of Kings Transport, Inc. v.
Mamac, we explained:  HTASIa

To clarify, the following should be considered in terminating the

services of employees:
(1) The first written notice to be served on the employees
should contain the specific causes or grounds for termination against
them, and a directive that the employees are given the opportunity to
submit their written explanation within a reasonable period. "Reasonable
 opportunity" under the Omnibus Rules means every kind of assistance
that management must accord to the employees to enable them to
prepare adequately for their defense. This should be construed as a
period of at least five (5) calendar days from receipt of the notice to give
the employees an opportunity to study the accusation against them,
consult a union official or lawyer, gather data and evidence, and decide
on the defenses they will raise against the complaint. Moreover, in order
to enable the employees to intelligently prepare their explanation and
defenses, the notice should contain a detailed narration of the facts and
circumstances that will serve as basis for the charge against the
employees. A general description of the charge will not suffice. Lastly,
the notice should specifically mention which company rules, if any, are
violated and/or which among the grounds under Art. 282 is being
charged against the employees.
(2) After serving the first notice, the employers should schedule
and conduct a hearing or conference wherein the employees will be
given the opportunity to: (1) explain and clarify their defenses to the
charge against them; (2) present evidence in support of their defenses;
and (3) rebut the evidence presented against them by the management.
During the hearing or conference, the employees are given the chance
to defend themselves personally, with the assistance of a representative
or counsel of their choice. Moreover, this conference or hearing could be
used by the parties as an opportunity to come to an amicable settlement.
(3) After determining that termination of employment is justified,
the employers shall serve the employees a written notice of
termination indicating that: (1) all circumstances involving the charge
against the employees have been considered; and (2) grounds have
been established to justify the severance of their employment. 23
The Labor Arbiter found that Citibank failed to adequately notify Genuino of
the charges against her. On the contrary, the NLRC held that "the function of a
'notice to explain' is only to state the basic facts of the employer's charges, which
. . . the letters of September 13 and 17, 1993 in question have fully served." 24  SCaEcD

We agree with the CA that the dismissal was valid and legal, and with its
modification of the NLRC ruling that PhP5,000 is due Genuino for failure of
Citibank to observe due process.
The Implementing Rules and Regulations of the Labor Code provide that
any employer seeking to dismiss a worker shall furnish the latter a written notice
stating the particular acts or omissions constituting the grounds for
dismissal. 25 The purpose of this notice is to sufficiently apprise the employee of
the acts complained of and enable him/her to prepare his/her defense.
In this case, the letters dated August 23, September 13 and 20, 1993 sent
by Citibank did not identify the particular acts or omissions allegedly committed
by Genuino. The August 23, 1993 letter charged Genuino with having "some
knowledge and/or involvement" in some transactions "which have the
appearance of being irregular at the least and may even be fraudulent." The
September 13, 1993 letter, on the other hand, mentioned "irregular transactions"
involving Global Pacific and/or Citibank and 12 bank clients. Lastly, the
September 20, 1993 letter stated that Genuino and "Mr. Dante Santos, using the
facilities of their family corporations (Torrance and Global) appear to have
participated in the diversion of bank clients' funds from Citibank to, and
investment thereof in, other companies and that they made money in the
process, in violation of the conflict of law rule [sic]." The extent of Genuino's
alleged knowledge and participation in the diversion of bank's clients' funds,
manner of diversion, and amounts involved; the acts attributed to Genuino that
conflicted with the bank's interests; and the circumstances surrounding the
alleged irregular transactions, were not specified in the notices/letters.
While the bank gave Genuino an opportunity to deny the truth of the
allegations in writing and participate in the administrative investigation, the fact
remains that the charges were too general to enable Genuino to intelligently and
adequately prepare her defense.
The two-notice requirement of the Labor Code is an essential part of due
process. The first notice informing the employee of the charges should neither
be pro-forma nor vague. It should set out clearly what the employee is being held
liable for. The employee should be afforded ample opportunity to be heard and
not mere opportunity. As explained in King of Kings Transport, Inc., ample
opportunity to be heard is especially accorded the employees sought to be
dismissed after they are specifically informed of the charges in order to give them
an opportunity to refute such accusations leveled against them. Since the notice
of charges given to Genuino is inadequate, the dismissal could not be in
accordance with due process.
While we hold that Citibank failed to observe procedural due process, we
nevertheless find Genuino's dismissal justified.
Citibank maintains that Genuino was aware of the bank's Corporate Policy
Manual specifically Chapter 3 on "Principles and Policies" with regard to avoiding
conflicts of interest. She had even submitted a Conflict of Interest Survey to
Citibank. In that survey, she denied any knowledge of engaging in transactions in
conflict with Citibank's interests. Citibank, for its part, submitted evidence
showing 99% ownership of Global stocks by Genuino and Santos. In July 1993,
Citibank discovered that Genuino and Santos were instrumental in the withdrawal
by bank depositors of PhP120 million of investments in Citibank. This amount
was subsequently invested in another foreign bank, Internationale Nederlanden
Bank, N.V., under the control of Global and Torrance, another corporation
controlled by Genuino and Santos. 26 Citibank also filed two criminal complaints
against Genuino and Santos for violations of the conflict of interest rule provided
in Sec. 31 in relation to Sec. 144 27 of the Corporation Code. 28  ITADaE

We note also that during the proceedings before the Labor Arbiter,
Citibank presented the following affidavits, with supporting documentary
evidence against Genuino:
1) Vic Lim, an officer of Citibank who investigated the anomalies of
Genuino and Santos, concluded that Genuino and Santos realized substantial
financial gains out of the transfer of monies as supported by the following
documents:
1) [S]ome of the Term Investment Applications (TIA), Applications for
Money Transfer, all filled up in the handwriting of Ms. Marilou
Genuino. These documents cover/show the transfer of the monies
of the Citibank clients from their money placements/deposits with
Citibank, N.A. to Global and/or Torrance.
2) [S]ome of the checks that were drawn by Global and Torrance against
their Citibank accounts in favor of the other companies by which
Global and Torrance transferred the monies of the bank clients to
the other companies.
3) [S]ome of the checks drawn by the other companies in favor of Global
or Torrance by which the other companies remitted back to Global
and/or Torrance the monies of the bank clients concerned.
4) [S]ome of the checks drawn by Global and Torrance against their
Citibank accounts in favor of Mr. Dante Santos and Ms. Marilou
Genuino, covering the shares of the latter in the spreads or
margins Global and Torrance had derived from the investments of
the monies of the Citibank clients in the other companies.
5) [S]ome of the checks drawn by Torrance and Global in favor of
Citibank clients by which Global and Torrance remitted back to
said bank clients their principal investments (or portions thereof)
and the rates of interests realized from their investment placed
with the other companies less the spreads made by Global and/or
Torrance, Mr. Dante L. Santos and Ms. Marilou Genuino. 29
In Lim's Reply-Affidavit with attached supporting documents, he stated that
out of the competing money placement activities, Genuino and Santos derived
financial gains amounting to PhP2,027,098.08 and PhP2,134,863.80,
respectively. 30 
AcCTaD

2) Marilyn Bautista, a Treasury Sales Specialist in the Treasury

Department of the Global Consumer Bank of Citibank and whose superiors were
Genuino and Santos, stated that:
 Based on documents that have subsequently come to my
knowledge, I realized that the two (Genuino and Dante L. Santos), with
the active cooperation of Redencion Sumpaico (the Accountant of
Global) had . . . brokered for their own benefits and/or of Global the sale
of the financial products of Citibank called "Mortgage Backed Securities"
or MBS and in the process made money at the expense of the (Citibank)
investors and the bank. 31
3) Patrick Cheng attested to other transactions from which Genuino,
Santos, and Global brokered the Mortgage Backed Securities (MBS), namely:
ICC/Nemesio and Olivia Sy transaction, San Miguel Corporation/ICC,
CIPI/Asiatrust, FAPE, PERAA and Union Bank, and NDC-Guthrie transactions. 32
In her defense, Genuino asserts that Citibank has no evidence of any
wrongful act or omission imputable to her. According to her, she did not try to
conceal from the bank her participation in Global and she even disclosed the
information when Global designated Citibank as its depositary. She avers there
was no conflict of interest because Global was not engaged in Citibank's
accepting deposits and granting loans, nor in money placement activities that
compete with Citibank's activities; and neither does Citibank invest in the outlets
used by Global. She claims that the controversy between Santos and Global had
already been amicably resolved in a Compromise Agreement between the two
parties. 33
Genuino further asserts that the letter of termination did not indicate what
existing company policy had been violated, and what acts constituted serious
misconduct or willful breach of the trust reposed by the bank. She claims that
Lim's testimony that the checks issued by Global in her name were profits was
malicious, hearsay, and lacked factual basis. She also posits that as to the
withdrawals of clients, she could not possibly dictate on the depositors. She
pointed out that the depositors even sent Citibank a letter dated August 25, 1993
informing the bank that the withdrawals were made upon their express
instructions. Genuino avers the bank's loss of confidence should have to be
proven by substantial evidence, setting out the facts upon which loss of
confidence in the employee may be made to rest. 34
Contrary to the Labor Arbiter's finding, the NLRC found the following facts
supported by the records:
a) Respondent bank has a conflict of interest rule, embodied in Chapter
3 of its Corporate Policy Manual, prohibiting the officers of the
bank from engaging in business activities, situations or
circumstances that are in conflict with the interest of the bank. 
SAaTHc

b) Complainant was familiar with said conflict of interest rule of the bank
and of her duty to disclose to the bank in writing any personal
 circumstances which conflicts or appears to be in conflict with
Citibank's interest.
c) Complainant is a substantial stockholder of Global Pacific, but she did
not disclose fact to the bank.
d) Global Pacific is engaged in money placement business like Citibank,
N.A.; that in carrying out its said money placement business, it
used funds belonging to Citibank clients which were withdrawn
from Citibank with participation of complainant and Dante L.
Santos. In one transaction of this nature, P120,000,000.00
belonging to Citibank clients was withdrawn from Citibank, N.A.
and placed in another foreign bank, under the control of Global
Pacific. Said big investment money was returned to Citibank, N.A.
only when Citibank, N.A. filed an injunction suit.
e) Global Pacific also engaged in the brokering of the ABS or MBS,
another financial product of Citibank. It was the duty of
complainant Genuino and Dante L. Santos to sell said product on
behalf of Citibank, N.A. and for Citibank N.A.'s benefit. In the
brokering of the ABS or MBS, Global Pacific made substantial
profits which otherwise would have gone to Citibank, N.A. if only
they brokered the ABS or MBS for and on behalf of Citibank, N.A.
Art. 282 (c) of the Labor Code provides that an employer may terminate an
employment for fraud or willful breach by the employee of the trust reposed in
him/her by his/her employer or duly authorized representative. In order to
constitute as just cause for dismissal, loss of confidence should relate to acts
inimical to the interests of the employer. 35 Also, the act complained of should
have arisen from the performance of the employee's duties. 36 For loss of trust
and confidence to be a valid ground for an employee's dismissal, it must be
substantial and not arbitrary, and must be founded on clearly established facts
sufficient to warrant the employee's separation from work. 37 We also held that:
[L]oss of confidence is a valid ground for dismissing an employee
and proof beyond reasonable doubt of the employee's misconduct is not
required. It is sufficient if there is some basis for such loss of confidence
or if the employer has reasonable ground to believe or to entertain the
moral conviction that the employee concerned is responsible for the
misconduct and that the nature of his participation therein rendered him
unworthy of the trust and confidence demanded by his position. 38
As Assistant Vice-President of Citibank's Treasury Department, Genuino
was tasked to solicit investments, and peso and dollar deposits for, and keep
them in Citibank; and to sell and/or push for the sale of Citibank's financial
products, such as the MBS, for the account and benefit of Citibank. 39 She held a
position of trust and confidence. There is no way she could deny any knowledge
of the bank's policies nor her understanding of these policies as reflected in the
survey done by the bank. She could not likewise feign ignorance of the
businesses of Citibank, and of Global and Torrance. Assuming that Citibank did
not engage in the same securities dealt with by Global and Torrance;
nevertheless, it is to the interests of Citibank to retain its clients and continue
investing in Citibank. Curiously, Genuino did not even dissuade the depositors
from withdrawing their monies from Citibank, and was even instrumental in the
transfers of monies from Citibank to a competing bank through Global and
Torrance, the corporations under Genuino's control.  TcHCDI

All the pieces of evidence compel us to conclude that Genuino did not
have her employer's interest. The letter of the bank's clients which attested that
the withdrawals from Citibank were made upon their instructions is of no import.
It did not explain why they preferred to invest in Global and Torrance, nor did it
mention that Genuino tried to dissuade them from withdrawing their deposits.
Genuino herself admitted her relationship with some of the depositors in her
affidavit, to wit:
6. Contrary to the allegations of Mr. Lim in par. 6.1 up to 8.1 concerning
the alleged scheme employed in the questioned transactions,
insinuating an "in" and "out" movement of funds of the seven (7)
depositors, the truth is that after said "depositors"
instructed/authorized us to effect the withdrawal of their
respective monies from Citibank to attain the common goal
of higher yields utilizing Global as the vehicle for bulk
purchases of securities or papers not dealt with/offered by
Citibank, said pooled investment remained with Global, and
were managed through Global for over a year until the
controversy arose;
10. The seven (7) "depositors" mentioned in Mr. Lim's Affidavits are
the long-time friends of affiant Genuino who had formed a
loosely constituted investment group for purposes of realizing
higher yields derivable from pooled investments, and as
the advisor of the group she had in effect chosen Citibank as
the initial repository of their respective monies prior to the
implementation of plans for pooled investments under Global.
Hence, she had known and dealt with said "depositors" before
they became substantial depositors of Citibank. She did not come
across them because of Citibank. 40 (Emphasis supplied.)
All told, Citibank had valid grounds to dismiss Genuino on ground of loss of
confidence.
In view of Citibank's failure to observe due process, however, nominal
damages are in order but the amount is hereby raised to PhP30,000 pursuant
to Agabon v. NLRC. The NLRC's order for payroll reinstatement is set aside.
 In Agabon, we explained:  DSEaHT

The violation of the petitioners' right to statutory due process by

the private respondent warrants the payment of indemnity in the form of
nominal damages. The amount of such damages is addressed to the
sound discretion of the court, taking into account the relevant
circumstances. Considering the prevailing circumstances in the case at
bar, we deem it proper to fix it at P30,000.00. We believe this form of
damages would serve to deter employers from future violations of the
statutory due process rights of employees. At the very least, it provides a
vindication or recognition of this fundamental right granted to the latter
under the Labor Code and its Implementing Rules. 41
Thus, the award of PhP5,000 to Genuino as indemnity for non-observance
of due process under the CA's March 31, 2000 Resolution in CA-G.R. SP No.
51532 is increased to PhP30,000.
Anent the directive of the NLRC in its September 3, 1994 Decision
ordering Citibank "to pay the salaries due to the complainant from the date it
reinstated complainant in the payroll (computed at P60,000.00 a month, as found
by the Labor Arbiter) up to and until the date of this decision," the Court hereby
cancels said award in view of its finding that the dismissal of Genuino is for a
legal and valid ground.
Ordinarily, the employer is required to reinstate the employee during the
pendency of the appeal pursuant to Art. 223, paragraph 3 of the Labor Code,
which states:
In any event, the decision of the Labor Arbiter reinstating a
dismissed or separated employee, insofar as the reinstatement aspect is
concerned, shall immediately be executory, even pending appeal. The
employee shall either be admitted back to work under the same terms
and conditions prevailing prior to his dismissal or separation or, at the
option of the employer, merely reinstated in the payroll. The posting of a
bond by the employer shall not stay the execution for reinstatement
provided herein.
If the decision of the labor arbiter is later reversed on appeal upon the
finding that the ground for dismissal is valid, then the employer has the right to
require the dismissed employee on payroll reinstatement to refund the salaries
s/he received while the case was pending appeal, or it can be deducted from the
accrued benefits that the dismissed employee was entitled to receive from
his/her employer under existing laws, collective bargaining agreement provisions,
and company practices. 42 However, if the employee was reinstated to work
during the pendency of the appeal, then the employee is entitled to the
compensation received for actual services rendered without need of refund.  IDSEAH
 Considering that Genuino was not reinstated to work or placed on payroll
reinstatement, and her dismissal is based on a just cause, then she is not entitled
to be paid the salaries stated in item no. 3 of the fallo of the September 3, 1994
NLRC Decision.
WHEREFORE, the petitions of Genuino in G.R. Nos. 142732-33 are
DENIED for lack of merit. The petitions of Citibank in G.R. Nos. 142753-54 are
GRANTED. The September 30, 1999 Decision and March 31, 2000 Resolution in
CA-G.R. SP Nos. 51532 and 51533 are AFFIRMED with MODIFICATION that
Genuino is entitled to PhP30,000 as indemnity for non-observance of due
process. Item (3) in the dispositive portion of the September 3, 1994 Decision of
the NLRC in NLRC-NCR Case No. 00-10-06450-93 (CA No. 006947-94) is
DELETED and SET ASIDE, and said NLRC decision is MODIFIED as follows:
WHEREFORE, Judgment is hereby rendered (1) SETTING
ASIDE the appealed decision of the Labor Arbiter; (2) DECLARING the
dismissal of the complainant valid and legal on the ground of serious
misconduct and breach of trust and confidence and consequently
DISMISSING the complaint a quo; but (3) ORDERING the respondent
bank to pay the complainant nominal damages in the amount of
PhP30,000.
SO ORDERED.
 (Genuino v. National Labor Relations Commission, G.R. Nos. 142732-33 &
|||

142753-54, [December 4, 2007], 564 PHIL 315-336)

G.R. No. 164856. January 20, 2009.]

JUANITO A. GARCIA and ALBERTO J.

DUMAGO, petitioners, vs. PHILIPPINE AIRLINES,
INC., respondent.

DECISION

CARPIO-MORALES, J  : p
 Petitioners Juanito A. Garcia and Alberto J. Dumago assail the
December 5, 2003 Decision and April 16, 2004 Resolution of the Court of
Appeals 1 in CA-G.R. SP No. 69540 which granted the petition for certiorari of
respondent, Philippine Airlines, Inc. (PAL), and denied petitioners' Motion for
Reconsideration, respectively. The dispositive portion of the assailed Decision
reads: ECDaTI

WHEREFORE, premises considered and in view of the foregoing,

the instant petition is hereby GIVEN DUE COURSE. The assailed
November 26, 2001 Resolution as well as the January 28, 2002
Resolution of public respondent National Labor Relations Commission
[NLRC] is hereby ANNULLED and SET ASIDE for having been issued
with grave abuse of discretion amounting to lack or excess of
jurisdiction. Consequently, the Writ of Execution and the Notice of
Garnishment issued by the Labor Arbiter are hereby likewise
ANNULLED and SET ASIDE.
SO ORDERED. 2
The case stemmed from the administrative charge filed by PAL against
its employees-herein petitioners 3 after they were allegedly caught in the act
of sniffing shabu when a team of company security personnel and law
enforcers raided the PAL Technical Center's Toolroom Section on July 24,
1995.
After due notice, PAL dismissed petitioners on October 9, 1995 for
transgressing the PAL Code of Discipline, 4 prompting them to file a complaint
for illegal dismissal and damages which was, by Decision of January 11,
1999, 5 resolved by the Labor Arbiter in their favor, thus ordering PAL to, inter
alia, immediately comply with the reinstatement aspect of the decision.
Prior to the promulgation of the Labor Arbiter's decision, the Securities
and Exchange Commission (SEC) placed PAL (hereafter referred to as
respondent), which was suffering from severe financial losses, under an
Interim Rehabilitation Receiver, who was subsequently replaced by a
Permanent Rehabilitation Receiver on June 7, 1999.
From the Labor Arbiter's decision, respondent appealed to the NLRC
which, by Resolution of January 31, 2000, reversed said decision
and dismissed petitioners' complaint for lack of merit. 6
Petitioners' Motion for Reconsideration was denied by Resolution of
April 28, 2000 and Entry of Judgment was issued on July 13, 2000. 7  TEcCHD

Subsequently or on October 5, 2000, the Labor Arbiter issued a Writ of

Execution (Writ) respecting the reinstatement aspect of his January 11, 1999
Decision, and on October 25, 2000, he issued a Notice of Garnishment
(Notice). Respondent thereupon moved to quash the Writ and to lift the Notice
while petitioners moved to release the garnished amount.
In a related move, respondent filed an Urgent Petition for Injunction with
the NLRC which, by Resolutions of November 26, 2001 and January 28,
2002, affirmed the validity of the Writ and the Notice issued by the Labor
Arbiter but suspended and referred the action to the Rehabilitation Receiver
for appropriate action.
Respondent elevated the matter to the appellate court which issued the
herein challenged Decision and Resolution nullifying the NLRC Resolutions
on two grounds, essentially espousing that: (1) a subsequent finding of a valid
dismissal removes the basis for implementing the reinstatement aspect of a
labor arbiter's decision (the first ground), and (2) the impossibility to comply
with the reinstatement order due to corporate rehabilitation provides a
reasonable justification for the failure to exercise the options under Article 223
of the Labor Code (the second ground).
By Decision of August 29, 2007, this Court PARTIALLY GRANTED the
present petition and effectively reinstated the NLRC Resolutions insofar as it
suspended the proceedings, viz.:
Since petitioners' claim against PAL is a money claim for their
wages during the pendency of PAL's appeal to the NLRC, the same
should have been suspended pending the rehabilitation proceedings.
The Labor Arbiter, the NLRC, as well as the Court of Appeals should
have abstained from resolving petitioners' case for illegal dismissal and
should instead have directed them to lodge their claim before PAL's
receiver.
However, to still require petitioners at this time to re-file their labor
claim against PAL under peculiar circumstances of the case — that their
dismissal was eventually held valid with only the matter of reinstatement
pending appeal being the issue — this Court deems it legally expedient
to suspend the proceedings in this case.
WHEREFORE, the instant petition is PARTIALLY GRANTED in
that the instant proceedings herein are SUSPENDED   until further notice
from this Court. Accordingly, respondent Philippine Airlines, Inc. is
hereby DIRECTED to quarterly update the Court as to the status of its
ongoing rehabilitation. No costs.  HEITAD

SO ORDERED. 8 (Italics in the original; underscoring supplied)

By Manifestation and Compliance of October 30, 2007, respondent
informed the Court that the SEC, by Order of September 28, 2007, granted its
request to exit from rehabilitation proceedings. 9
 In view of the termination of the rehabilitation proceedings, the Court
now proceeds to resolve the remaining issue for consideration, which
is whether petitioners may collect their wages during the period between
the Labor Arbiter's order of reinstatement pending appeal and the NLRC
decision overturning that of the Labor Arbiter, now that respondent has
exited from rehabilitation proceedings.

Amplification of the First Ground

The appellate court counted on as its first ground the view that a
subsequent finding of a valid dismissal removes the basis for implementing
the reinstatement aspect of a labor arbiter's decision.
On this score, the Court's attention is drawn to seemingly divergent
decisions concerning reinstatement pending appeal or, particularly,
the option of payroll reinstatement. On the one hand is the jurisprudential
trend as expounded in a line of cases including Air Philippines Corp. v.
Zamora, 10 while on the other is the recent case of Genuino v. National Labor
Relations Commission. 11 At the core of the seeming divergence is the
application of paragraph 3 of Article 223 of the Labor Code which reads:
In any event, the decision of the Labor Arbiter reinstating a
dismissed or separated employee, insofar as the  reinstatement
aspect is concerned, shall immediately be executory, pending
appeal. The employee shall either be admitted back to work under the
same terms and conditions prevailing prior to his dismissal or separation
or, at the option of the employer, merely reinstated in the payroll. The
posting of a bond by the employer shall not stay the execution for
reinstatement provided herein. (Emphasis and underscoring supplied)
The view as maintained in a number of cases is that:  cSIADa

. . . [E]ven if the order of reinstatement of the Labor Arbiter is

reversed on appeal, it is obligatory on the part of the employer to
reinstate and pay the wages of the dismissed employee during the
period of appeal until reversal by the higher court. On the other
hand, if the employee has been reinstated during the appeal period and
such reinstatement order is reversed with finality, the employee
is  not  required to reimburse whatever salary he received for he is
entitled to such, more so if he actually rendered services during the
period. 12 (Emphasis in the original; italics and underscoring supplied)

In other words, a dismissed employee whose case was favorably decided by

the Labor Arbiter is entitled to receive wages pending appeal upon
reinstatement, which is immediately executory. Unless there is a restraining
order, it is ministerial upon the Labor Arbiter to implement the order of
reinstatement and it is mandatory on the employer to comply therewith. 13

The opposite view is articulated in Genuino which states:

If the decision of the labor arbiter is later reversed on appeal upon
the finding that the ground for dismissal is valid, then  the employer has
the right to require the dismissed employee   on payroll
reinstatement  to refund the salaries s/he received  while the case
was pending appeal, or it can be deducted from the accrued
benefits that the dismissed employee was entitled to receive from his/her
employer under existing laws, collective bargaining agreement
provisions, and company practices. However, if the employee was
reinstated to work during the pendency of the appeal, then the employee
is entitled to the compensation received for actual services rendered
without need of refund.
Considering that Genuino was not reinstated to work or placed on
payroll reinstatement, and her dismissal is based on a just cause, then
she is not entitled to be paid the salaries stated in item no. 3 of
the fallo of the September 3, 1994 NLRC Decision. 14 (Emphasis, italics
and underscoring supplied)
It has thus been advanced that there is no point in releasing the wages
to petitioners since their dismissal was found to be valid, and to do so would
constitute unjust enrichment.
Prior to Genuino, there had been no known similar case containing a
dispositive portion where the employee was required to refund the salaries
received on payroll reinstatement. In fact, in a catena of cases, 15 the Court
did not order the refund of salaries garnished or received by payroll-reinstated
employees despite a subsequent reversal of the reinstatement order.  SCIAaT

The dearth of authority supporting Genuino is not difficult to fathom for

it would otherwise render inutile the rationale of reinstatement pending
appeal.
. . . [T]he law itself has laid down a compassionate policy which,
once more, vivifies and enhances the provisions of the 1987
Constitution on labor and the working man.
xxx xxx xxx
These duties and responsibilities of the State are imposed not so
much to express sympathy for the workingman as to forcefully and
meaningfully underscore labor as a primary social and economic force,
which the Constitution also expressly affirms with equal intensity. Labor
is an indispensable partner for the nation's progress and stability.
xxx xxx xxx
 . . . In short, with respect to decisions reinstating employees, the
law itself has determined a sufficiently overwhelming reason for its
execution pending appeal.
xxx xxx xxx
. . . Then, by and pursuant to the same power (police power), the
State may authorize an immediate implementation, pending appeal, of a
decision reinstating a dismissed or separated employee since that
saving act is designed to stop, although temporarily since the appeal
may be decided in favor of the appellant, a continuing threat or danger to
the survival or even the life of the dismissed or separated employee and
his family. 16
The social justice principles of labor law outweigh or render
inapplicable the civil law doctrine of unjust enrichment espoused by
Justice Presbitero Velasco, Jr. in his Separate Opinion. The constitutional and
statutory precepts portray the otherwise "unjust" situation as a condition
affording full protection to labor.
Even outside the theoretical trappings of the discussion and into the
mundane realities of human experience, the "refund doctrine" easily
demonstrates how a favorable decision by the Labor Arbiter could harm, more
than help, a dismissed employee. The employee, to make both ends meet,
would necessarily have to use up the salaries received during the pendency
of the appeal, only to end up having to refund the sum in case of a final
unfavorable decision. It is mirage of a stop-gap leading the employee to a
risky cliff of insolvency. 
SADECI

Advisably, the sum is better left unspent. It becomes more logical and
practical for the employee to refuse payroll reinstatement and simply find work
elsewhere in the interim, if any is available. Notably, the option of payroll
reinstatement belongs to the employer, even if the employee is able and
raring to return to work. Prior to Genuino, it is unthinkable for one to refuse
payroll reinstatement. In the face of the grim possibilities, the rise of
concerned employees declining payroll reinstatement is on the horizon.
Further, the Genuinoruling not only disregards the social justice
principles behind the rule, but also institutes a scheme unduly favorable to
management. Under such scheme, the salaries dispensed pendente
lite merely serve as a bond posted in installment by the employer. For in the
event of a reversal of the Labor Arbiter's decision ordering reinstatement, the
employer gets back the same amount without having to spend ordinarily for
bond premiums. This circumvents, if not directly contradicts, the proscription
that the "posting of a bond [even a cash bond] by the employer shall not stay
the execution for reinstatement." 17
 In playing down the stray posture in Genuino requiring the dismissed
employee on payroll reinstatement to refund the salaries in case a final
decision upholds the validity of the dismissal, the Court realigns the proper
course of the prevailing doctrine on reinstatement pending appeal vis-à-vis
the effect of a reversal on appeal.
Respondent insists that with the reversal of the Labor Arbiter's
Decision, there is no more basis to enforce the reinstatement aspect of the
said decision. In his Separate Opinion, Justice Presbitero Velasco, Jr.
supports this argument and finds the prevailing doctrine in Air Philippines and
allied cases inapplicable because, unlike the present case, the writ of
execution therein was secured prior to the reversal of the Labor Arbiter's
decision.
The proposition is tenuous. First, the matter is treated as a mere race
against time. The discussion stopped there without considering the cause of
the delay. Second, it requires the issuance of a writ of execution despite the
immediately executory nature of the reinstatement aspect of the decision.
In Pioneer Texturing  * Corp. v. NLRC,  18 which was cited in Panuncillo v.
CAP Philippines, Inc.,  19 the Court observed:
. . . The provision of Article 223 is clear that an award [by the
Labor Arbiter] for reinstatement shall be immediately executory even
pending appeal and the posting of a bond by the employer shall not stay
the execution for reinstatement. The legislative intent is quite
obvious, i.e., to make an award of reinstatement immediately
enforceable, even pending appeal. To require the application for and
issuance of a writ of execution as prerequisites for the execution of a
reinstatement award would certainly betray and run counter to the
very object and intent of Article 223, i.e., the immediate execution of a
reinstatement order. The reason is simple. An application for a writ of
execution and its issuance could be delayed for numerous reasons. A
mere continuance or postponement of a scheduled hearing, for instance,
or an inaction on the part of the Labor Arbiter or the NLRC could easily
delay the issuance of the writ thereby setting at naught the strict
mandate and noble purpose envisioned by Article 223. In other words, if
the requirements of Article 224 [including the issuance of a writ of
execution] were to govern, as we so declared in Maranaw, then the
executory nature of a reinstatement order or award contemplated by
Article 223 will be unduly circumscribed and rendered ineffectual. In
enacting the law, the legislature is presumed to have ordained a valid
and sensible law, one which operates no further than may be necessary
to achieve its specific purpose. Statutes, as a rule, are to be construed in
the light of the purpose to be achieved and the evil sought to be
remedied. . . . In introducing a new rule on the reinstatement aspect of a
labor decision under Republic Act No. 6715, Congress should not be
 considered to be indulging in mere semantic exercise. . . . 20 (Italics in
the original; emphasis and underscoring supplied)  HDCAaS

The Court reaffirms the prevailing principle that even if the order of
reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the
part of the employer to reinstate and pay the wages of the dismissed
employee during the period of appeal until reversal by the higher court. 21 It
settles the view that the Labor Arbiter's order of reinstatement
is immediately executory and the employer has to either re-admit them to
work under the same terms and conditions prevailing prior to their dismissal,
or to reinstate them in the payroll, and that failing to exercise the options in
the alternative, employer must pay the employee's salaries. 22

Amplification of the Second Ground

The remaining issue, nonetheless, is resolved in the negative on the

strength of the second ground relied upon by the appellate court in the
assailed issuances. The Court sustains the appellate court's finding that the
peculiar predicament of a corporate rehabilitation rendered it impossible for
respondent to exercise its option under the circumstances.
The spirit of the rule on reinstatement pending appeal animates the
proceedings once the Labor Arbiter issues the decision containing an order of
reinstatement. The immediacy of its execution needs no further
elaboration. Reinstatement pending appeal necessitates its immediate
execution during the pendency of the appeal, if the law is to serve its noble
purpose. At the same time, any attempt on the part of the employer to evade
or delay its execution, as observed in Panuncillo and as what actually
transpired in Kimberly, 23 Composite, 24 Air
Philippines, 25 and Roquero, 26 should not be countenanced.
After the labor arbiter's decision is reversed by a higher tribunal,
the employee may be barred from collecting the accrued wages, if it is
shown that the delay in enforcing the reinstatement pending appeal
was without fault on the part of the employer.  SIaHDA

The test is two-fold: (1) there must be actual delay or the fact that the
order of reinstatement pending appeal was not executed prior to its reversal;
and (2) the delay must not be due to the employer's unjustified act or
omission. If the delay is due to the employer's unjustified refusal, the employer
may still be required to pay the salaries notwithstanding the reversal of the
Labor Arbiter's decision.
In Genuino, there was no showing that the employer refused to
reinstate the employee, who was the Treasury Sales Division Head, during
the short span of four months or from the promulgation on May 2, 1994 of the
Labor Arbiter's Decision up to the promulgation on September 3, 1994 of the
NLRC Decision. Notably, the former NLRC Rules of Procedure did not lay
down a mechanism to promptly effectuate the self-executory order of
reinstatement, making it difficult to establish that the employer actually
refused to comply.
In a situation like that in International Container Terminal Services, Inc.
v. NLRC  27 where it was alleged that the employer was willing to comply with
the order and that the employee opted not to pursue the execution of the
order, the Court upheld the self-executory nature of the reinstatement order
and ruled that the salary automatically accrued from notice of the Labor
Arbiter's order of reinstatement until its ultimate reversal by the NLRC. It was
later discovered that the employee indeed moved for the issuance of a writ
but was not acted upon by the Labor Arbiter. In that scenario where the delay
was caused by the Labor Arbiter, it was ruled that the inaction of the Labor
Arbiter who failed to act upon the employee's motion for the issuance of a writ
of execution may no longer adversely affect the cause of the dismissed
employee in view of the self-executory nature of the order of reinstatement. 28
The new NLRC Rules of Procedure, which took effect on January 7,
2006, now require the employer to submit a report of compliance within 10
calendar days from receipt of the Labor Arbiter's decision, 29 disobedience to
which clearly denotes a refusal to reinstate. The employee need not file a
motion for the issuance of the writ of execution since the Labor
Arbiter shall thereafter motu proprio issue the writ. With the new rules in
place, there is hardly any difficulty in determining the employer's
intransigence in immediately complying with the order.
In the case at bar, petitioners exerted efforts 30 to execute the Labor
Arbiter's order of reinstatement until they were able to secure a writ of
execution, albeit issued on October 5, 2000 after the reversal by the NLRC of
the Labor Arbiter's decision. Technically, there was still actual delay which
brings to the question of whether the delay was due to
respondent's unjustified act or omission.
It is apparent that there was inaction on the part of respondent to
reinstate them, but whether such omission was justified depends on the onset
of the exigency of corporate rehabilitation. 
ADaECI

It is settled that upon appointment by the SEC of a rehabilitation

receiver, all actions for claims before any court, tribunal or board against the
corporation shall ipso jure be suspended. 31 As stated early on, during the
pendency of petitioners' complaint before the Labor Arbiter, the SEC placed
respondent under an Interim Rehabilitation Receiver. After the Labor Arbiter
rendered his decision, the SEC replaced the Interim Rehabilitation Receiver
with a Permanent Rehabilitation Receiver.
 Case law recognizes that unless there is a restraining order, the
implementation of the order of reinstatement is ministerial and
mandatory. 32 This injunction or suspension of claims by legislative
fiat 33 partakes of the nature of a restraining order that constitutes a legal
justification for respondent's non-compliance with the reinstatement order.
Respondent's failure to exercise the alternative options of actual
reinstatement and payroll reinstatement was thus justified. Such being the
case, respondent's obligation to pay the salaries pending appeal, as the
normal effect of the non-exercise of the options, did not attach.
While reinstatement pending appeal aims to avert the continuing threat
or danger to the survival or even the life of the dismissed employee and his
family, it does not contemplate the period when the employer-corporation
itself is similarly in a judicially monitored state of being resuscitated in order to
survive.
The parallelism between a judicial order of corporation rehabilitation as
a justification for the non-exercise of its options, on the one hand, and a claim
of actual and imminent substantial losses as ground for retrenchment, on the
other hand, stops at the red line on the financial statements. Beyond the
analogous condition of financial gloom, as discussed by Justice Leonardo
Quisumbing in his Separate Opinion, are more salient distinctions. Unlike the
ground of substantial losses contemplated in a retrenchment case, the state
of corporate rehabilitation was judicially pre-determined by a competent court
and not formulated for the first time in this case by respondent.
More importantly, there are legal effects arising from a judicial order
placing a corporation under rehabilitation. Respondent was, during the period
material to the case, effectively deprived of the alternative choices under
Article 223 of the Labor Code, not only by virtue of the statutory injunction but
also in view of the interim relinquishment of management control to give way
to the full exercise of the powers of the rehabilitation receiver. Had there been
no need to rehabilitate, respondent may have opted for actual physical
reinstatement pending appeal to optimize the utilization of resources. Then
again, though the management may think this wise, the rehabilitation receiver
may decide otherwise, not to mention the subsistence of the injunction on
claims.
In sum, the obligation to pay the employee's salaries upon the
employer's failure to exercise the alternative options under Article 223 of
the Labor Code is not a hard and fast rule, considering the inherent
constraints of corporate rehabilitation. cCTAIE

WHEREFORE, the petition is PARTIALLY DENIED. Insofar as the

Court of Appeals Decision of December 5, 2003 and Resolution of April 16,
2004 annulling the NLRC Resolutions affirming the validity of the Writ of
 Execution and the Notice of Garnishment are concerned, the Court finds no
reversible error.
SO ORDERED.
 (Garcia v. Philippine Airlines, Inc., G.R. No. 164856, [January 20, 2009], 596
|||

PHIL 510-586)

G.R. No. 173076. October 10, 2007.]

MT. CARMEL COLLEGE, petitioner, vs. JOCELYN RESUENA,

EDDIE VILLALON, SYLVIA SEDAYON and ZONSAYDA
EMNACE, respondents.

DECISION

CHICO-NAZARIO, J  : p

In this Petition for Review on Certiorari under Rule 45 of the Revised

Rules of Court, petitioner seeks the reversal of the Decision 1 dated 2 June
2006 of the Court of Appeals in CA-G.R. CEB-SP No. 01615 entitled, Mt.
Carmel College v. National Labor Relations Commission, Labor Arbiter
Phibun D. Pura, Jocelyn Resuena, et al. Petitioner seeks remedy from this
Court for an alleged illegal execution of the Decision 2 dated 30 October 2001
by the National Labor Relations Commission (NLRC) in NLRC CASE No. V-
000176-2000 (RAB CASE Nos. 06-06-10393-98; 06-06-10394-98; 06-06-
10395-98; 06-06-10414-98) as affirmed by the Court of Appeals in CA-G.R.
SP No. 80639 in a Decision 3 dated 17 March 2004, insisting it was not in
accord with the dispositive portion thereof. Petitioner is not appealing the
judgment itself but the manner of execution of the same.
The following are the factual antecedents of the instant Petition:
Petitioner Mt. Carmel College is a private educational institution. It is
administered by the Carmelite Fathers at New Escalante, Negros Occidental.
Respondents were employees of petitioner, namely: Jocelyn Resuena
(Accounting Clerk), Eddie Villalon (Elementary Department Principal); Sylvia
Sedayon (Treasurer), and Zonsayda Emnace (Secretary to the Director).
On 21 November 1997, respondents, together with several faculty
members, non-academic personnel, and other students, participated in a
protest action against petitioner. Thereafter, petitioner's Director, Rev. Fr.
Modesto E. Malandac, issued a Memorandum to each of the respondents.
The Memorandum directed respondents to explain in writing why they should
not be dismissed for loss of trust and confidence for joining the protest action
against the school administration. Petitioner maintained that respondents
were occupying positions of highly confidential nature. After a hearing
conducted by petitioner's Fact-Finding Committee and submission of its
Report on 25 April 1998, recommending dismissal or suspension of
respondents, petitioner issued written notices of termination to respondents
on 7 May 1998. Respondents were terminated by petitioner on 15 May
1998. IcHAaS

Separate complaints were filed by each of the four respondents against

petitioner before Regional Arbitration Branch VI of the NLRC in Bacolod City.
Respondents charged petitioner with illegal dismissal and claimed 13th month
pay, separation pay, damages and attorney's fees. The cases were docketed
as RAB Cases No. 06-06-10393-98, 06-06-10394-98, 06-06-10395-98, and
06-06-10414-98. All four cases were consolidated, and Labor Arbiter Ray T.
Drilon thereafter issued a Decision 4 dated 25 May 1999 affirming the validity
of respondents' termination by petitioner on the ground of loss of trust and
confidence. Although the Decision found respondents to have been legally
dismissed, as equitable relief, however, they were awarded separation pay
computed at one month pay for every year of service, 5 their proportionate
13th month pay, and attorney's fees. Their claims for moral and exemplary
damages were denied. In issuing the aforesaid Decision, the Labor Arbiter
ruled:
WHEREFORE, premises considered, judgment is hereby
rendered ordering [herein petitioner] Mount Carmel College represented
by Fr. Modesto Malandac to pay [herein respondents] Jocelyn Resuena,
Zonsayda Emnace, Eddie Villalon and Sylvia Sedayon, their respective
13th month pay, separation pay and attorney's fee in the total sum of
THREE HUNDRED THIRTY-FOUR THOUSAND EIGHT HUNDRED
SEVENTY-FIVE PESOS AND 67/100 (P334,875.47) to be deposited
with this office within ten (10) days from receipt of this decision.
The complaint for moral and exemplary damages is hereby
dismissed for lack of legal basis.
All other claims are hereby dismissed for lack of merit. 6
On 9 September 1999, Labor Arbiter Drilon issued to the parties a
Notice of Judgment/Decision of his 25 May 1999 Decision. The notice
indicated that a "decision of the Labor Arbiter reinstating a dismissed or
separated employee, in so far as the reinstatement aspect is concerned, shall
immediately be executory, even pending appeal. The employee shall either be
admitted back to work under the same terms and conditions prevailing prior to
his dismissal or separation or at the option of the employee (sic) merely
reinstated in the payroll." 7
In the meantime, petitioner appealed to the NLRC Fourth Division in
Cebu City, seeking the reversal of the portion of the Labor Arbiter's Decision
dated 25 May 1999 awarding separation pay to respondents. The NLRC
dismissed the appeal in its Decision dated 30 October 2001. In the same
Decision dismissing the appeal, the NLRC reversed and modified the 25 May
1999 Decision of the Labor Arbiter, and declared the termination of
respondents to be illegal. It ordered the reinstatement of respondents, with
payment of backwages or payment of separation pay in lieu thereof. The
pertinent portion of the 30 October 2001 NLRC Decision reads:
We rule that complainants were illegally dismissed and must
therefore be ordered reinstated with payment of backwages from the
time they were illegally dismissed up to the time of their actual
reinstatement.
All other claims are hereby dismissed for lack of merit.
WHEREFORE, premises considered the instant appeal is hereby
DISMISSED for lack of merit and the appealed decision is hereby
AFFIRMED with modification ordering the [herein petitioner] the payment
of the backwages of the [herein respondents] from May 15, 1998 up to
May 25, 1999, further directing the reinstatement of the [respondents] to
their original positions without loss of seniority or in lieu thereof the
payment of their separation pay as computed in the appealed decision. 8
Petitioner filed a Motion for Reconsideration of the 30 October 2001
Decision of the NLRC. The said Motion was denied in the 19 June 2003
Resolution of the NLRC.  HEASaC

The case was elevated to the Court of Appeals via a Special Civil
Action for Certiorari and Prohibition, docketed as CA-G.R. SP No. 80639
where petitioner assailed the aforementioned NLRC Decision dated 30
October 2001 and Resolution dated 19 June 2003, arguing that there is more
than enough basis for loss of trust and confidence as ground for dismissing
respondents. It also reiterated compliance with the twin requirements of notice
and hearing. The Court of Appeals denied the petition in a Decision
promulgated on 17 March 2004, ruling thus:
Consequently, we find no grave abuse of discretion committed by
the NLRC in ruling that [herein respondents] have been illegally
dismissed. Likewise, said [NLRC] correctly held that even if such
participation of [respondents] in the protest picket is rather improper
under the circumstances or disappointing to the School Administrator
who had rightly expected them to take the side of the administration or at
least stayed neutral on the demand for ouster of Fr. Malandac and
 Barairo, dismissal is definitely too harsh where a less punitive action
such as reprimand or disciplinary action would have been sufficient.
Considering the long years of faithful service of [respondents] in the
School without previous record of misconduct, as duly noted by the
NLRC in its decision, their termination on the basis of alleged loss of
confidence by taking part in an otherwise legitimate and constitutionally-
protected right to free speech and peaceful assembly, is certainly illegal
and unjustified.
xxx xxx xxx
Having been illegally dismissed, [respondents] are entitled to back
wages from the time of their termination until reinstatement, and if
reinstatement is no longer possible, the grant of separation pay
equivalent to one (1) month for every year of service. However, in this
case since the Labor Arbiter did not order reinstatement, the NLRC
correctly excluded the period of the appeal in the computation of back
wages due to [respondents].
Finally, on the prayer for injunctive relief sought by petitioner on
the ground that [public respondent] Labor Arbiter exceeded his
jurisdiction in issuing the writ of execution despite the fact that his
decision did not order reinstatement and that he is bereft of authority to
implement the decision of the NLRC (Fourth Division).
xxx xxx xxx
Considering that there is already an entry of judgment on the
Decision dated October 30, 2001, and in view of Our disposition of this
petition, we find no more obstacle for the enforcement of the said
judgment even pending appeal, in accordance with Sections 1 and 2,
Rule VIII of the NLRC Rules of Procedure, as amended, as well as
Sections 2, 4 and 6, Rule III of the NLRC Manual on Execution of
Judgment.
xxx xxx xxx
WHEREFORE, premises considered, the present petition is
hereby DENIED DUE COURSE and accordingly DISMISSED for lack of
merit. The assailed Decision and Resolution are AFFIRMED. 9
No Motion for Reconsideration of the afore-quoted Court of Appeals
Decision in CA-G.R. SP No. 80639 was filed and it became final and
executory on 14 April 2004.
At about the same time as the foregoing developments in CA-G.R. SP
No. 80639, Labor Arbiter Phibun D. Pura issued an Order on 19 May 2003
opining on the self-executory nature of a reinstatement order:
To be sure the Court has not been consistent in its interpretation
of Art. 223. The nagging issue has always been whether the
 reinstatement order is self-executory. Citing the divergent views of the
court beginning with Inciong v. NLRC followed by the deviation in
interpretation in Maranaw Hotel Corporation (Century Park Sheraton
Manila) v. NLRC, as reiterated and adopted in Archilles Manufacturing
Corporation v. NLRC and Purificacion Ram v. NLRC, the Court in the
1997 Pioneer case has laid down the doctrine that henceforth an Order
or award for reinstatement is self-executory, meaning that it does not
require a writ of execution, much less a motion for its issuance, as
maintained by petitioner. . . . .
Successive writs of execution pertaining to the backwages and accrued
salaries of the respondents were issued by Labor Arbiter Pura on these dates:
9 June 2003, 10 10 December 2003, 11 and 20 January 2004. 12  CTIDcA

The first writ of execution, issued on 9 June 2003, directed the sheriff to
collect from petitioner, the amount of P503,028.05 representing backwages
from 15 May 1998 to 25 May 1999. Based on the Sheriff's Report dated 25
June 2003, reinstatement had not been effected. There was a Notice of
Garnishment issued to the Equitable-PCI Bank Escalante Branch. Labor
Arbiter Pura ordered the release of the garnished amount of P508,168.05 with
the said bank for deposit to the Cashier of NLRC Regional Arbitration Branch
VI in Bacolod City. Petitioner moved to quash the Writ of Execution dated 9
June 2003. It was denied.
By 4 December 2003, the NLRC entered in its Book of Entries of
Judgment its Decision dated 30 October 2001. The records of the case were
endorsed back to NLRC Regional Arbitration Branch VI for the execution of its
final and executory decision, as no restraining order was issued by the Court
of Appeals.
After an exchange of pleadings, respondents filed an Ex-Parte Motion
for Issuance of Writ of Execution with the Labor Arbiter considering that the
Entry of Judgment was already issued by the NLRC. On 10 December 2003,
the Labor Arbiter granted the Motion and issued the second Writ of Execution.
On motion of respondents, the Labor Arbiter ordered the release to them of
the garnished amount of P503,028.05 deposited with the Cashier of NLRC
Regional Arbitration Branch VI.
However, the foregoing amount was considered to be only a partial
payment of the monetary awards due the respondents and the unpaid
balance thereof continued to grow to P1,307,806.50. Respondents thus filed a
motion for partial writ of execution, which the Labor Arbiter granted by issuing
the third Writ of Execution on 20 January 2004. 13 Under the foregoing writs of
execution, the aggregate amount of P1,736.592.08 14 was garnished by
Bailiff/Acting Sheriff Romeo D. Pasustento, representing respondents'
accrued salaries, backwages, attorney's fees and sheriff's fees computed
from the promulgation of the NLRC Decision 30 October 2001.
Respondents filed on 14 July 2004 yet another Motion to Issue a Writ of
Execution to collect backwages from 1 January 2004 to 30 June 2004.
Petitioner opposed the motion, but the Motion to Issue a Writ of Execution
was granted.
On 31 January 2005, Labor Arbiter Pura issued an Order 15 adopting
the computation of the Fiscal Examiner of NLRC Regional Arbitration Branch
VI and issuing a writ of execution to enforce the NLRC Decision dated 30
October 2001. The dispositive portion of the said Order reads:
In light of the foregoing, we have no choice but to adopt the
computation of the RAB Fiscal Examiner, hereto attached and forming
part of the record of these cases and conformably thereto, we grant the
Motion to Issue Writ of Execution on backwages for the period stated in
this computation, taking into consideration the grant of differentials as
there are benefits which accrued to the [herein respondents] and which
they should have enjoyed had they been employed and/or reinstated, as
the case may be, and such other amount as may accrue until actually
reinstated or in lieu of reinstatement, to pay [respondents] separation
pay to be computed at one (1) month salary for every year of service in
addition to backwages the formula adopted by the Labor Arbiter in the
Decision dated May 25, 1999, page 7, paragraph 1.
Let therefore a Writ of Execution be, as it is hereby issued to
enforce judgment in the above entitled cases. 16
On 8 February 2005, petitioner filed a Motion for Reconsideration of the
foregoing Order contending that the judgment of the NLRC mandated the
payment of separation pay as computed in the appealed decision.
Respondents likewise filed a Manifestation and Motion to include the month of
November 2004 in the computation. In an Order dated 10 February 2005, the
Labor Arbiter denied the petitioner's Motion for Reconsideration. On 22
February 2005, he issued an Alias Writ of Execution 17 for the collection from
petitioner of the amount of P1,131,035.00 representing respondents'
backwages, separation pay, and attorney's fees. Petitioner filed a Motion to
Quash the Alias Writ of Execution on 17 March 2005. 18  TaEIcS

On 15 April 2005, the Labor Arbiter issued an Order where it found no

compelling reason to warrant the grant of the Motion to Quash the Alias Writ
of Execution. The afore-stated Order thus reads:
WHEREFORE, for lack of merit the Motion to Quash the Alias
Writ dated March 17, 2005 is denied. [Respondents'] Motion to Include
February and March 2005 in the Computation of wages is hereby
 GRANTED. The entry of appearance of the collaborating counsel is duly
noted. 19
From the said Order of the Labor Arbiter, petitioner filed with the NLRC
an appeal with an application for issuance of a writ of preliminary injunction on
the execution of judgment, docketed as NLRC Case No. V-000377-05.
Petitioner assailed the 15 April 2005 Order of the Labor Arbiter averring that
the latter seriously committed errors when he ordered the payment and
garnishment of backwages beyond the period 15 May 1998 to 25 May 1999.
The NLRC dismissed the petitioner's appeal in a Resolution 20 dated 15
August 2005 for lack of merit. Petitioner filed a Motion for Reconsideration but
it was denied by the NLRC in a Resolution dated 30 November 2005,
disposed of as follows:
WHEREFORE, premises considered, the appeal of respondents
is hereby DISMISSED for lack of merit. The 15 April 2005 Order of Labor
Arbiter Phibun Pura is AFFIRMED. 21
From the foregoing, petitioner filed with the Court of Appeals a Special
Civil Action for Certiorari and Prohibition, docketed as CA-G.R. CEB-SP No.
01615, praying for the setting aside and nullification of the Resolutions dated
15 August 2005 and 30 November 2005 of the NLRC in NLRC Case No. V-
000377-05. Petitioner contended that the NLRC acted with grave abuse of
discretion when it denied its appeal and motion for reconsideration and in not
ruling that there was already satisfaction of judgment. The crux of petitioner's
case, as succinctly worded by the Court of Appeals in CA-G.R. CEB-SP No.
01615:
[P]etitioner seeks to annul and set aside the resolutions dated
August 15, 2005 and November 30, 2005 of the respondent NLRC in
NLRC Case No. V-000377-05 when the latter refuses to invalidate the
various writs of executions and to refund petitioner of whatever excess
there might be on the theory that the execution done by the respondent
Labor Arbiter was illegal and in fact goes beyond what is stated in the
decision dated October 30, 2001 of the respondent NLRC in NLRC Case
No. V-000176-2000. 22
The Court of Appeals eventually dismissed CA-G.R. CEB-SP No.
01615, ruling as follows:
Thus, petitioner's avowal that their liability for private respondents'
backwages is limited from May 15, 1998 up to May 25, 1999 is
untenable on these grounds:
First, there is no showing, in the case at bench, that petitioner
exercised its option to reinstate private respondents to their former
position or to grant them separation pay. Accordingly, backwages have
to be granted to private respondents until their reinstatement to their
 former position is effected or upon petitioner's payment of separation
pay to private respondents if reinstatement is no longer feasible; and  IcAaSD

Second, the decision dated March 17, 2004 of the 17th Division of
the Court of Appeals in CA-G.R. SP No. 80639 acquiesced the propriety
of the issuance of the writs of execution by the respondent labor arbiter
on June 9, 2003, December 10, 2003 and January 30, 2004. On April
14, 2004, the said decision which sanctioned the payment of backwages
even beyond May 25, 1999, became final and executory . . . .
xxx xxx xxx
In light of the foregoing disquisition, we hereby find public
respondent NLRC to have acted accordingly and without grave abuse of
discretion when it issued the questioned Resolutions dated August 15,
2005 and November 30, 2005, respectively. Grave abuse of discretion
means such capricious and whimsical exercise of judgment as is
equivalent to lack of jurisdiction, or, in other words where the power is
exercised in an arbitrary or despotic manner by reason of passion or
personal hostility, and it must be so patent and gross as to amount to an
evasion of positive duty or to a virtual refusal to perform the duty
enjoined or to act at all in contemplation of law. It is not sufficient that a
tribunal, in the exercise of power, abused its discretion; such abuse must
be grave.
WHEREFORE, in view of the foregoing, the present petition is
hereby DISMISSED and the assailed Resolutions dated August 15, 2005
and November 30, 2005, respectively, issued by the respondent NLRC
in NLRC Case No. V-000377-05 are hereby AFFIRMED. 23
Hence, petitioner filed the instant Petition for Review on Certiorari,
raising the following issues:
I.
THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING
THE LABOR ARBITER AND THE NLRC THAT THE AWARD OF
BACKWAGES GOES BEYOND THE PERIOD FROM 15 MAY 1998 UP
TO 25 MAY 1999 ON THE SUPPOSITION THAT REINSTATEMENT IS
SELF-EXECUTORY AND DOES NOT NEED A WRIT OF EXECUTION
FOR ITS ENFORCEMENT.
II.
THE HONORABLE COURT OF APPEALS ERRED IN NOT FINIDING
THAT THE CONTINUING GRANT AND AWARD OF BACKWAGES UP
TO THE PRESENT IS CONTRARY TO LAW AND JURISPRUDENCE
AS LAID DOWN BY THIS HONORABLE SUPREME COURT.
Petitioner prays that this Court render judgment (a) annulling and
setting aside the assailed Decision on 02 June 2006 of the Court of Appeals
in CA-G.R. CEB-SP No. 01615 and all its orders and issuances; (b) ordering
that backwages be computed and executed corresponding only to the period
from 15 May 1998 to 25 May 1999; (c) ordering that separation pay be
computed based on the computation as originally submitted by the Labor
Arbiter, P344,875.47, which corresponds to the date of respondents'
employment until 15 May 1998; (d) that no other award except for backwages
for the period 15 May 1998 to 25 May 1999 and separation pay amounting to
P344,875.47 shall be paid by petitioner; and (e) that the respondents be
ordered to refund and pay the alleged excess in the amounts garnished by
virtue of the Writs of Execution dated 9 June 2003, 10 December 2003, and
30 January 2004.
In sum, the resolution of this petition hinges on the following issues: (1)
whether reinstatement in the instant case is self-executory and does not need
a writ of execution for its enforcement; and (2) whether the continuing award
of backwages is proper.
Petitioner insists that what is at issue is the manner of execution of the
NLRC Decision dated 30 October 2001 in NLRC CASE No. V-000176-2000
(RAB CASE Nos. 06-06-10393-98; 06-06-10394-98; 06-06-10395-98; 06-06-
10414-98), as affirmed by the Decision dated 17 March 2004 of the Court of
Appeals in CA-G.R. No. 80639.  ECSHAD

In ruling on the consolidated complaints filed by the four respondents,

Labor Arbiter Drilon found that they were not illegally dismissed but ordered
that they be awarded 13th month pay, separation pay and attorney's fees in
the amount of P334,875.47. Upon appeal to the NLRC, the NLRC reversed
the findings of the Labor Arbiter ruling that the termination of respondents was
illegal and ordering the payment of backwages of respondents from 15 May
1998 up to 25 May 1999. It further directed the reinstatement of respondents
or payment of separation pay, with backwages. This was affirmed by the
Court of Appeals.
While petitioner concedes that the case pertaining to the complaints for
illegal dismissal filed by the respondents before the Labor Arbiter had been
resolved with finality by the Court of Appeals in CA-G.R. No. 80639, no other
remedy having been taken therefrom, it however assails the correctness and
validity of the execution of the judgment therein. Petitioner avers that the
Court of Appeals erred in upholding the Labor Arbiter and the NLRC that the
award of backwages goes beyond the period 15 May 1998 to 25 May 1999 on
the supposition that reinstatement is self-executory and does not need a writ
of execution for its enforcement. Petitioner postulates that the Labor Arbiter
went beyond the terms of the NLRC Decision, as affirmed by the Court of
Appeals, and erroneously used as bases inapplicable law 24 and
jurisprudence 25 in the execution of the same. Petitioner contends that the
Labor Arbiter's reliance on Pioneer Texturizing Corp. v. National Labor
Relations Commission 26 is misplaced, for it applied Article 223 of the Labor
Code 27 since reinstatement was ordered at the Labor Arbiter's level while in
the instant case, reinstatement was ordered upon appeal to the NLRC.
Petitioner argues that the relevant statutory and regulatory provisions herein
are Article 224 of the Labor Code,28 and Rule III of the NLRC Manual for
Execution of Judgment, 29 given that there was no order of reinstatement at
the Labor Arbiter level but only at the NLRC level. Petitioner insists that,
applying Article 224 of the Labor Code in the instant case, any reinstatement
aspect of the NLRC Decision, as affirmed by the Court of Appeals, should
have been done through the issuance of a Writ of Execution as it is no longer
self-executory. It furthermore contends that it was impossible to reinstate
respondents, whether by way of an immediate execution or by way of a self-
executory nature, since there was nothing to execute pending appeal because
there was no order for reinstatement.
Petitioner vehemently raises the argument that the award of backwages
subject to execution is limited to the period prior to the appeal and does not
include the period during the pendency of the appeal, on the contention that
reinstatement during appeal is warranted only when the Labor Arbiter rules
that the dismissed employee should be reinstated. In support of its foregoing
argument, petitioner invokes Filflex Industrial & Manufacturing Corporation v.
National Labor Relations Commission 30 where this Court ruled:
In other words, reinstatement during appeal is warranted only
when the labor arbiter (LA) himself rules that the dismissed employee
should be reinstated. In the present case, neither the dispositive portion
nor the text of the labor arbiter's decision ordered the reinstatement of
private respondent. Further, the back wages granted to private
respondent were specifically limited to the period prior to the filing of the
appeal with Respondent NLRC. In fact, the LA's decision ordered her
separation from service for the parties' "mutual advantage and most
importantly to physical and health welfare of the complainant." Hence, it
is an error and an abuse of discretion for the NLRC to hold that the
award of limited back wages, by implication, included an order for private
respondent's reinstatement.  AHCaED

An order for reinstatement must be specifically declared and

cannot be presumed; like back wages, it is a separate and distinct relief
given to an illegally dismissed employee. There being no specific order
for reinstatement and the order being for complainant's separation, there
can be no basis for the award of salaries/back wages during the
pendency of appeal.
Petitioner's reliance on Filflex is misplaced and inapplicable to the case
at bar. Indeed in Filflex, this Court ruled that the award of backwages is
limited to the period prior to the filing of the appeal with the NLRC. This Court
had declared in the aforesaid case that reinstatement during appeal is
warranted only when the Labor Arbiter himself rules that the dismissed
employee should be reinstated. But this was precisely because on appeal to
the NLRC, it found that there was no illegal dismissal; thus, neither
reinstatement nor backwages may be awarded. In fact, Filfex deleted the
award of backwages granted during appeal, reiterating that an award of
backwages by the NLRC during the period of appeal is totally inconsistent
with its finding of a valid dismissal. In the instant petition, the NLRC Decision
dated 30 October 2001 finding the termination of respondents illegal, had the
effect of reversing Labor Arbiter Drilon's Decision dated 25 May 1999.
This Court sees no cogent reason as to the relevance of a discussion
on whether or not reinstatement is self-executory. However, since petitioner
raised this issue, this Court has opted to discuss it. Verily, Article 223 of
the Labor Code is not applicable in the instant case. The said provision
stipulates that the decision of the Labor Arbiter reinstating a dismissed or
separated employee, insofar as the reinstatement aspect is concerned, shall
immediately be executory, even pending appeal.
Petitioner contends that the statutory provision applicable is Article 224
of the Labor Code,as well as Rule III, Section 2 (b) of the NLRC Manual on
Execution of Judgment, because the case was decided on appeal.
Furthermore, it is a decision which is of a final and executory nature. The
provisions invoked by petitioner reads:
Art. 224. Execution of decisions, orders or awards. — (a) The
Secretary of Labor and Employment or any Regional Director, the
Commission or any Labor Arbiter, or med-arbiter or voluntary arbitrator
may, motu proprio or on motion of any interested party, issue a writ of
execution on a judgment within five (5) years from the date it becomes
final and executory . . . . 31
If the execution be for the reinstatement of any person to any
position, office or employment, such writ shall be served by the sheriff
upon the losing party or upon any other person required by law to obey
the same, and such party or person may be punished for contempt if he
disobeys such decisions, order for reinstatement. 32
The records of the case indicate that when Labor Arbiter Drilon issued
its 25 May 1999 Decision, there was no order of reinstatement yet although
the dispositive portion of the 31 January 2005 Order issued by Labor Arbiter
Pura already provided for reinstatement or payment of separation pay, to wit:
In light of the foregoing, we have no choice but to adopt the
computation of the RAB Fiscal Examiner, hereto attached and forming
part of the record of these cases and conformably thereto, we grant the
 Motion to Issue Writ of Execution on backwages for the period stated in
this computation, taking into consideration the grant of differentials as
there are benefits which accrued to the complainants and which they
should have enjoyed had they been employed and/or reinstated, as the
case may be, and such other amount as may accrue until actually
reinstated or in lieu of reinstatement, to pay complainants separation pay
to be computed at one (1) month salary for every year of service in
addition to backwages the formula adopted by the Labor Arbiter in the
Decision dated May 25, 1999, page 7, paragraph 1.
Let therefore a Writ of Execution be, as it is hereby issued to
enforce judgment in the above entitled cases. 33 CIHTac

Art. 223 of the Labor Code provides that reinstatement is immediately

executory even pending appeal only when the Labor Arbiter himself ordered
the reinstatement. In this case, the original Decision of Labor Arbiter Drilon did
not order reinstatement. Reinstatement in this case was actually ordered by
the NLRC, affirmed by the Court of Appeals. The order of Labor Arbiter Pura
on 31 January 2005 directing reinstatement was issued after the Court of
Appeals Decision dated 17 March 2004 which affirmed the NLRC's order of
reinstatement. Thus, Art. 223 finds no application in the instant case.
Considering that the order for reinstatement was first decided upon appeal to
the NLRC and affirmed with finality by the Court of Appeals in CA-G.R. SP
80369 on 17 March 2004, petitioner rightly invoked Art. 224 of the Labor
Code.As contemplated by Article 224 of the Labor Code,the Secretary of
Labor and Employment or any Regional Director, the Commission or any
Labor Arbiter, or med-arbiter or voluntary arbitrator may, motu proprio or on
motion of any interested party, issue a writ of execution on a judgment within
five (5) years from the date it becomes final and executory. Consequently,
under Rule III of the NLRC Manual on the Execution of Judgment, it is
provided that if the execution be for the reinstatement of any person to a
position, an office or an employment, such writ shall be served by the sheriff
upon the losing party or upon any other person required by law to obey the
same, and such party or person may be punished for contempt if he disobeys
such decision or order for reinstatement. 34
However, as we can glean from the succeeding discussion, the above
findings will not affect the award of backwages for the period beyond 25 May
1999.
Anent the second issue, petitioner contends that the 25 May 1999
Decision of Labor Arbiter Drilon did not order the reinstatement of
respondents. Petitioner posits that since there was no finding of illegal
dismissal at the Labor Arbiter's level, then it follows that there was no
reinstatement aspect, and its liability for backwages is limited to the period
from 15 May 1998 up to 25 May 1999, i.e., from dismissal to promulgation of
the Labor Arbiter's Decision only, as allegedly determined by the NLRC in its
Decision dated 30 October 2001. It argues that while the said NLRC Decision
awarded backwages from 15 May 1998 to 25 May 1999 only, the Writs of
Execution issued pursuant thereto ordered the payment of backwages way
beyond the period stated in the Decision 35 it is supposed to execute.
Petitioner's argument is absurd. Abbott v. National Labor Relations
Commission, 36 as cited by petitioner, declared that there exists a big
difference when what is sought to be reviewed is the manner of execution of a
decision and not the decision itself. "While it is true that the decision itself has
become final and executory and so can no longer be challenged, there is no
question that it must be enforced in accordance with its terms and conditions.
Any deviation therefrom can be the subject of a proper appeal." 37 In the
instant case, however, the manner of execution falls squarely within the terms
of the Decision it seeks to implement.
The 30 October 2001 NLRC Decision ruled as follows:
We rule that complainants were illegally dismissed and must
therefore be ordered reinstated with payment of backwages from the
time they were illegally dismissed up to the time of their actual
reinstatement.
All other claims are hereby dismissed for lack of merit.
WHEREFORE, premises considered the instant appeal is hereby
DISMISSED for lack of merit and the appealed decision is hereby
AFFIRMED with modification ordering the respondents the payment of
the backwages of the complainants from May 15, 1998 up to May 25,
1999, further directing the reinstatement of the complainants to their
original positions without loss of seniority or in lieu thereof the payment
of their separation pay as computed in the appealed decision. 38
When the afore-quoted NLRC Decision was appealed to the Court of
Appeals in CA-G.R. SP No. 80639, there seemed to be a contradiction
between the body and the fallo of the appellate court's Decision dated 17
March 2004. Petitioner cites the following from the text of the Court of Appeals
Decision:
However, in this case since the Labor Arbiter did not order
reinstatement, the NLRC correctly excluded the period of the appeal in
the computation of back wages due to private respondents. 39
The dispositive portion of the same Decision, however, concludes:
WHEREFORE, premises considered, the present petition is
hereby DENIED DUE COURSE and accordingly DISMISSED for lack of
merit. The assailed Decision and Resolution are AFFIRMED. 40  TaEIcS
 The general rule is that where there is conflict between the dispositive
portion or the fallo and the body of the decision, the fallo controls. This rule
rests on the theory that the fallo is the final order while the opinion in the body
is merely a statement ordering nothing. 41 Clearly, the award of backwages to
respondents does not merely cover the period from 15 May 1998 up to 25
May 1999 alone. 42 The findings of the NLRC, which were affirmed with finality
in CA-G.R. SP No. 80639, and subject of execution in the instant petition,
pronounced:
We rule that [respondents] were illegally dismissed and must
therefore be ordered reinstated with payment of backwages from the
time they were illegally dismissed up to the time of their actual
reinstatement.
All other claims are hereby dismissed for lack of merit.
WHEREFORE, premises considered the instant appeal is hereby
DISMISSED for lack of merit and the appealed decision is hereby
AFFIRMED with modification ordering the [petitioner] payment of the
backwages of the [respondents] from May 15, 1998 up to May 25, 1999,
further directing the reinstatement of the [respondents] to their original
positions without loss of seniority or in lieu thereof the payment of their
separation pay as computed in the appealed decision. 43
The above ruling of the NLRC in its Decision dated 30 October 2001
had the effect of reversing and modifying the findings of the Labor Arbiter.
Under Article 218 (c) of the Labor Code,the Commission is empowered to
"correct, amend, or waive any error, defect or irregularity whether in
substance or form," in the exercise of its appellate jurisdiction. 44 The
dispositive portion of the Labor Arbiter's Decision as worded is clear and
needs no further interpretation. The NLRC found respondents to have been
illegally dismissed by petitioner, and ordered reinstatement and payment of
backwages. Additionally, it stated that where reinstatement is not
possible, separation pay as computed in the appealed decision should be
awarded to respondents. Petitioner interprets the dispositive portion of the
NLRC Decision to mean that it is ordered to pay respondents backwages from
15 May 1998 to 25 May 1999 only. Petitioner seems to have missed that the
aforestated NLRC Decision also directed it to reinstate respondents, or in lieu
thereof, pay separation pay. This, petitioner failed to do. Petitioner did not
exercise the option of either reinstatement or paying the separation pay of
respondents.
Backwages are to be computed from the time of illegal dismissal until
reinstatement or upon petitioner's payment of separation pay to respondents if
reinstatement is no longer possible. Article 279 of the Labor Code, as
amended, states:
 Art. 279. Security of Tenure. — . . .
In cases of regular employment the employer shall not terminate
the services of an employee except for a just cause or when authorized
by this Title. An employee who is unjustly dismissed from work shall be
entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his
other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual
reinstatement.
Thus, an illegally dismissed employee is entitled to two reliefs:
backwages and reinstatement. The two reliefs provided are separate and
distinct. In instances where reinstatement is no longer feasible because of
strained relations between the employee and the employer, separation pay is
granted. In effect, an illegally dismissed employee is entitled to either
reinstatement, if viable, or separation pay if reinstatement is no longer viable,
and backwages. 45
The normal consequences of respondents' illegal dismissal, then, are
reinstatement without loss of seniority rights, and payment of backwages
computed from the time compensation was withheld up to the date of actual
reinstatement. Where reinstatement is no longer viable as an option,
separation pay equivalent to one (1) month salary for every year of service
should be awarded as an alternative. 46 The payment of separation pay is in
addition to payment of backwages.  HEDaTA

Concomitantly, it is evident that respondents' backwages should not be

limited to the period from 15 May 1998 to 25 May 1999. The backwages due
respondents must be computed from the time they were unjustly dismissed
until their actual reinstatement to their former position or upon petitioner's
payment of separation pay to them if reinstatement is no longer feasible.
Thus, until petitioner actually implements the reinstatement aspect of the
NLRC Decision dated 30 October 2001, as affirmed in the Court of Appeals
Decision dated 17 March 2004 in CA-G.R. SP No. 80639, its obligation to
respondents, insofar as accrued backwages and other benefits are
concerned, continues to accumulate.
This Court takes this occasion to reiterate that execution is the final
stage of litigation, the end of the suit. It can not and should not be frustrated
except for serious reasons demanded by justice and equity. 47 "Litigation must
end sometime and somewhere. An effective and efficient administration of
justice requires that, once a judgment has become final, the winning party be
not, through a mere subterfuge, be deprived of the fruits of the verdicts.
Courts must, therefore, guard against any scheme calculated to bring about
 that result. Constituted as they are to put an end to controversies, courts
should frown upon any attempt to prolong them." 48
WHEREFORE, the instant petition is dismissed. The Decision dated 2
June 2006 of the Court of Appeals in CA-G.R. CEB-SP No. 01615 is
AFFIRMED. Petitioner is ORDERED to (1) reinstate respondents to their
original positions without loss of seniority rights, with payment of (a)
backwages computed from 15 May 1998, the time compensation of
respondents was withheld from them when they were unjustly terminated, up
to the time of reinstatement; and (b) accrued 13th month pay for the same
period; OR in lieu of reinstatement, (2) pay respondents (a) separation pay, in
the amount equivalent to one (1) month pay for every year of service; and (b)
backwages, computed from 15 May 1998, the time compensation of
respondents was withheld from them when they were unjustly terminated, up
to the time of payment thereof; and (c) the accrued 13th month pay for the
same period. For this purpose, the records of this case are hereby
REMANDED to the Labor Arbiter for proper computation of the subject money
claims as discussed above. Costs against petitioner.
SO ORDERED.
 (Mt. Carmel College v. Resuena, G.R. No. 173076, [October 10, 2007], 561
|||

PHIL 620-646)

G.R. No. 147806. November 12, 2002.]

NERISSA BUENVIAJE, SONIA FLORES, BELMA OLIVIO,

GENALYN PELOBELLO, MARYJANE MENOR, JOSIE
RAQUERO, ESTRELITA MANAHAN, REBECCA EBOL, and
ERLINDA ARGA, petitioners, vs. THE HONORABLE COURT OF
APPEALS (SPECIAL FORMER SEVENTH
DIVISION, HONORABLE ARBITER ROMULUS PROTASIO,
COTTONWAY MARKETING CORPORATION and MICHAEL G.
TONG, President and General Manager, respondents.

DECISION

PUNO, J  : p
 This petition seeks to set aside the Decision dated March 13, 2000 and
Resolution dated February 13, 2001 of the Court of Appeals in CA-G.R. SP No.
53204 entitled "Cottonway Marketing Corp. vs. National Labor Relations
Commission, et al."
The facts are as follows:
Petitioners were former employees of Cottonway Marketing Corp.
(Cottonway), hired as promo girls for their garment products. In October, 1994,
after their services were terminated as the company was allegedly suffering
business losses, petitioners filed with the National Labor Relations Commission
(NLRC) a complaint for illegal dismissal, underpayment of salary, and non-
payment of premium pay for rest day, service incentive leave pay and thirteenth
month pay against Cottonway Marketing Corp. and Network Fashion Inc./JCT
International Trading. 1
On December 19, 1995, Labor Arbiter Romulus S. Protasio issued a
Decision finding petitioners' retrenchment valid and ordering Cottonway to pay
petitioners' separation pay and their proportionate thirteenth month pay. 2
On appeal, the NLRC, in its Decision dated March 26, 1996, reversed the
Decision of the Labor Arbiter and ordered the reinstatement of petitioners without
loss of seniority rights and other privileges. It also ordered Cottonway to pay
petitioners their proportionate thirteenth month pay and their full backwages
inclusive of allowances and other benefits, or their monetary equivalent
computed from the time their salaries were withheld from them up to the date of
their actual reinstatement. 3
Cottonway filed a motion for reconsideration which was denied by the
Commission in a Resolution dated July 31, 1996. 4
On August 30, 1996, Cottonway filed with the NLRC a manifestation
stating that they have complied with the order of reinstatement by sending
notices dated June 5, 1996 requiring the petitioners to return to work, but to no
avail; and consequently, they sent letters to petitioners dated August 1, 1996
informing them that they have lost their employment for failure to comply with the
return to work orders. 5 Cottonway also filed a petition for certiorari with the
Supreme Court which was dismissed on October 14, 1996. 6
On November 6, 1997, petitioners filed with the NLRC a motion for
execution of its Decision on the ground that it had become final and executory. 7
On December 4, 1996, the Research and Investigation Unit of the NLRC
issued a computation of the monetary award in accordance with the March 26
Decision of the NLRC. 8
 Meanwhile, Cottonway filed a motion for reconsideration of the Supreme
Court Resolution of October 14, 1996 dismissing the petition for certiorari. The
motion for reconsideration was denied with finality on January 13, 1997. 9
On March 4, 1997, Cottonway filed a manifestation with the NLRC
reiterating their allegations in their manifestation dated August 30, 1996, and
further alleging that petitioners have already found employment elsewhere. 10
On March 13, 1997, the Research and Investigation Unit of the NLRC
Issued an additional computation of petitioners' monetary award in accordance
with the March 26 NLRC decision. 11
On the same date, Cottonway filed with the NLRC a supplemental
manifestation praying that the Commission allow the reception of evidence with
respect to their claim that petitioners have found new employment. The
Commission denied Cottonway's prayer in an Order dated March 24, 1997 12 and
Resolution dated July 24, 1997. 13
Nonetheless, on April 8, 1998, Labor Arbiter Romulus S. Protasio issued
an Order declaring that the award of backwages and proportionate thirteenth
month pay to petitioners should be limited from the time of their illegal dismissal
up to the time they received the notice of termination sent by the company upon
their refusal to report for work despite the order of reinstatement. He cited the
fact that petitioners failed to report to their posts without justifiable reason despite
respondent's order requiring them to return to work immediately. The Labor
Arbiter ordered the Research and Investigation Unit to recompute the monetary
award in accordance with its ruling. 14
The April 8 Order of the Labor Arbiter, however, was set aside by the
Commission in its Resolution dated September 21, 1998. The Commission ruled
that its Decision dated March 26, 1996 has become final and executory and it is
the ministerial duty of the Labor Arbiter to issue the corresponding writ of
execution to effect full and unqualified implementation of said decision. 15 The
Commission thus ordered that the records of the case be remanded to the Labor
Arbiter for execution. Cottonway moved for reconsideration of said resolution, to
no avail.
Hence, Cottonway filed a petition for certiorari with the Court of Appeals
seeking the reversal of the ruling of the NLRC and the reinstatement of the Order
dated April 8, 1998 issued by Labor Arbiter Romulus S. Protasio.
The appellate court granted the petition in its Decision dated March 13,
2000. 16 It ruled that petitioners' reinstatement was no longer possible as they
deliberately refused to return to work despite the notice given by Cottonway. The
Court of Appeals thus held that the amount of backwages due them should be
computed only up to the time they received their notice of termination. It said:
 "Petitioner's termination of private respondents' employment by
reason of their failure to report for work despite due notice being valid, it
would change the substance of the questioned March 26, 1996 decision
which awards backwages to the complainants up to their reinstatement.
Again, private respondents' reinstatement is no longer possible because
of the supervening event which is their valid termination. The deliberate
failure to report for work after notice to return bars reinstatement. It
would be unjust and inequitable then to require petitioner to pay private
respondents their backwages even after the latter were validly
terminated when in fact petitioner dutifully complied with the
reinstatement aspect of the decision. Thus, the period within which the
monetary award of private respondents should be based is limited up to
the time of private respondents' receipt of the respective notices of
termination on August 27, 1998." 17

The Court of Appeals denied petitioners' motion for reconsideration in a

Resolution issued on February 13, 2001. 18

Petitioners now question the Decision and Resolution of the Court of

Appeals. They impute the following errors:
"I. That the Honorable Court of Appeals gravely abused its discretion
amounting to lack of and/or in excess of jurisdiction in rendering
the assailed decision in CA-G.R. No. SP 53204 without first
performing its ministerial duty of taking initial judicial action
thereon unlawfully depriving the petitioners the opportunity to
comment and/or file responsive pleadings to the petition resulting
to their being unlawfully denied a day in court;
II. That the Honorable Court of Appeals gravely abused its discretion
amounting to lack of and/or in excess of jurisdiction in rendering a
decision in CA-G.R. No. SP 53204 reversing and setting aside the
lawful and appropriate September 21, 1998 and March 31, 1999
resolutions of the Honorable NLRC and reinstating the irregular
and illegal April 8, 1998 Order of Honorable Arbiter Romulus
Protasio; and
III. That the Honorable Court of Appeals gravely abused its discretion
amounting to lack of and/or in excess of jurisdiction in issuing the
February 13, 2001 Resolution which denied petitioners' motion for
reconsideration from the decision of March 13, 2000 without
stating the legal basis therefor." 19
We proceed directly to the central issue in this case which is the
computation of petitioners' backwages — whether it should be limited from the
time they were illegally dismissed until they received the notice of termination
sent by Cottonway on August 1, 1996 as argued by respondent company, or
whether it should be computed from the time of their illegal dismissal until their
actual reinstatement as argued by the petitioners.
We agree with the petitioners.
The issue of the legality of the termination of petitioners' services has been
settled in the NLRC decision dated March 26, 1996. Thus, Cottonway was
ordered to reinstate petitioners to their former position without loss of seniority
rights and other privileges and to pay them full backwages. The dispositive
portion of the decision read:
"WHEREFORE, the decision appealed from is hereby
REVERSED. Respondent Cottonway Marketing Corporation is hereby
ordered to reinstate the complainants without loss of seniority rights and
other privileges and to pay them the following: (1) their proportionate
13th month pay for 1994; and (2) their full backwages inclusive of
allowances and other benefits, or their monetary equivalent computed
from the time their salaries were withheld from them up to the date of
their actual reinstatement.
SO ORDERED."

These are the reliefs afforded to employees whose employment is unlawfully

severed. Reinstatement restores the employee to the position from which he
was removed, i.e., to his status quo ante dismissal, while the grant of
backwages allows the same employee to recover from the employer that
which he lost by way of wages because of his dismissal. 20

Under R.A. 6715, employees who are illegally dismissed are entitled to full
backwages, inclusive of allowances and other benefits or their monetary
equivalent, computed from the time their actual compensation was withheld from
them up to the time of their actual reinstatement. If reinstatement is no longer
possible, the backwages shall be computed from the time of their illegal
termination up to the finality of the decision. 21 The Court explained the meaning
of "full backwages" in the case of Bustamante vs. NLRC: 22
"The Court deems it appropriate, however, to reconsider such
earlier ruling on the computation of backwages as enunciated in said
Pines City Educational Center case, by now holding that conformably
with the evident legislative intent as expressed in Rep. Act No. 6715,
above-quoted, backwages to be awarded to an illegally dismissed
employee, should not, as a general rule, be diminished or reduced by
the earnings derived by him elsewhere during the period of his illegal
dismissal. The underlying reason for this ruling is that the employee,
while litigating the legality (illegality) of his dismissal, must still earn a
living to support himself and family, while full backwages have to be paid
by the employer as part of the price or penalty he has to pay for illegally
 dismissing his employee. The clear legislative intent of the amendment
in Rep. Act No. 6715 is to give more benefits to workers than was
previously given them under the Mercury Drug rule or the "deduction of
earnings elsewhere" rule. Thus, a closer adherence to the legislative
policy behind Rep. Act No. 6715 points to "full backwages" as meaning
exactly that, i.e., without deducting from backwages the earnings
derived elsewhere by the concerned employee during the period of his
illegal dismissal. In other words, the provision calling for "full backwages"
to illegally dismissed employees is clear, plain and free from ambiguity
and, therefore, must be applied without attempted or strained
interpretation. Index animi sermo est." (emphasis supplied)

The Court does not see any reason to depart from this rule in the case of herein
petitioners. The decision of the NLRC dated March 26, 1996 has become final
and executory upon the dismissal by this Court of Cottonway's petition
for certiorari assailing said decision and the denial of its motion for
reconsideration. Said judgment may no longer be disturbed or modified by any
court or tribunal. It is a fundamental rule that when a judgment becomes final and
executory, it becomes immutable and unalterable, and any amendment or
alteration which substantially affects a final and executory judgment is void,
including the entire proceedings held for that purpose. Once a judgment
becomes final and executory, the prevailing party can have it executed as a
matter of right, and the issuance of a writ of execution becomes a ministerial duty
of the court. A decision that has attained finality becomes the law of the case
regardless of any claim that it is erroneous. The writ of execution must therefore
conform to the judgment to be executed and adhere strictly to the very essential
particulars. 23

To justify the modification of the final and executory decision of the NLRC
dated March 26, 1996, the Court of Appeals cited the existence of a supervening
event, that is, the valid termination of petitioners' employment due to their refusal
to return to work despite notice from respondents reinstating them to their former
position.
We cannot concur with said ruling. Petitioners' alleged failure to return to
work cannot be made the basis for their termination. Such failure does not
amount to abandonment which would justify the severance of their employment.
To warrant a valid dismissal on the ground of abandonment, the employer must
prove the concurrence of two elements: (1) the failure to report for work or
absence without valid or justifiable reason, and (2) a clear intention to sever the
employer-employee relationship. 24
The facts of this case do not support the claim of Cottonway that
petitioners have abandoned their desire to return to their previous work at said
company. It appears that three months after the NLRC had rendered its decision
ordering petitioners' reinstatement to their former positions, Cottonway sent
individual notices to petitioners mandating them to immediately report to work.
The standard letter, signed by the company's legal counsel, Atty. Ambrosio B. De
Luna, and sent to each of the petitioners read:
"June 5, 1996
Dear Ms. Alivid, 25
By virtue of the decision of the National Labor Relation(s)
Commission dated March 26, 1996 in Belma Alivid vs. Network Fashion,
Inc., JCT Int'l Trading and, Cotton Mktg., Corp., NLRC CASE NO. NCR-
010210-96 and NLRC NCR-00-10-07238-94, you are hereby ordered to
report for work within five (5) days from receipt of this letter, otherwise,
your failure will be deemed lack of interest to continue and considered to
have abandoned your employment with the company.
Please give this matter your utmost attention.
Very Truly Your(s),

(SGD) AMBROSIO B. DE LUNA

Legal Counsel"

The petitioners, however, were not able to promptly comply with the order.
Instead, their counsel, Atty. Roberto LL. Peralta, sent a reply letter to Atty. De
Luna stating that his clients were not in a position to comply with said order
since the NLRC has not yet finally disposed of the case. The reply letter
stated: 26

"June 20, 1996

ATTY. AMBROSIO B. DE LUNA
Unit 2-D Bouganvilla (sic) Mansions
91 P. Tuazon Street, Cubao
Quezon City
Compañero,
Your letter dated June 5, 1996 to our clients, Erlinda Arga, et al.,
complainants in NLRC NCR CASE NO. 00-10-07238-94, Genalyn
Pelobello, et al. vs. Network Fashion, et al., was referred to us for
reply.
Please be informed that our said clients are not in a position now to
comply with your order for them to report for work within five (5)
days from receipt thereof since the National Labor Relations
 Commission, First Division, has yet to finally disposed off (sic) the
case.
However, if it is now a case that your client, Mr. Michael Tong, is
yielding to the Decision dated March 26, 1996 of the NLRC, we are
then willing to sit down with you relative to the satisfaction of the
same to avoid said decision from being enforced by the sheriff.
Trusting your cooperation on this matter.
Thank you.
Very truly yours,
(sgd) ROBERTO LL. PERALTA
Counsel For The Complainants"

Consequently, Cottonway sent the petitioners individual notices of

termination. The standard letter of termination which was likewise signed by
counsel and individually addressed to petitioners stated:

"August 1, 1996
BELMA ALIVID
c/o Sonia Flores
#1256-A St. Nino Street
Tondo(,) Manila
Dear Ms. Alivid, 27
For your failure to report for work as per letter dated June 5, 1996
within the period of five days from receipt of the same, you are
considered to have lost your employment status effective this date with
the company on the ground of failure to report for work.
Please be guided accordingly.
Very truly yours,

(sgd) Ambrosio B. De Luna

Legal Counsel of
Network Fashion(,) Inc."

We note that Cottonway, before finally deciding to dispense with their

services, did not give the petitioners the opportunity to explain why they were
not able to report to work. The records also do not bear any proof that all the
petitioners received a copy of the letters. Cottonway merely claimed that
some of them have left the country and some have found other employment.
This, however, does not necessarily mean that petitioners were no longer
interested in resuming their employment at Cottonway as it has not been
 shown that their employment in the other companies was permanent. It
should be expected that petitioners would seek other means of income to tide
them over during the time that the legality of their termination is under
litigation. Furthermore, petitioners never abandoned their suit against
Cottonway. While the case was pending appeal before the NLRC, the Court of
Appeals and this Court, petitioners continued to file pleadings to ensure that
the company would comply with the directive of the NLRC to reinstate them
and to pay them full backwages in case said decision is upheld. Moreover, in
his reply to the company's first letter, petitioners' counsel expressed
willingness to meet with the company's representative regarding the
satisfaction of the NLRC decision.

It appears that the supposed notice sent by Cottonway to the petitioners

demanding that they report back to work immediately was only a scheme to
remove the petitioners for good. Petitioners' failure to instantaneously abide by
the directive gave them a convenient reason to dispense with their services. This
the Court cannot allow. Cottonway, cited Article 223 of the Labor Code providing
that the decision ordering the reinstatement of an illegally dismissed employee is
immediately executory even pending appeal as basis for its decision to terminate
the employment of petitioners. We are not convinced. Article 223 of the Labor
Code provides:
"ART. 223. Appeal. — Decisions, awards, or orders of the Labor
Arbiter are final and executory unless appealed to the Commission by
any or both parties within ten (10) calendar days from receipt of such
decisions, awards, or orders. . . .
xxx xxx xxx
In any event, the decision of the Labor Arbiter reinstating a
dismissed or separated employee, insofar as the reinstatement aspect is
concerned, shall immediately be executory, even pending appeal. The
employee shall either be admitted back to work under the same terms
and conditions prevailing prior to his dismissal or separation or, at the
option of the employer, merely reinstated in the payroll. The posting of a
bond by the employer shall not stay the execution for reinstatement
provided herein. . . .
xxx xxx xxx."

The foregoing provision is intended for the benefit of the employee and cannot
be used to defeat their own interest. The law mandates the employer to either
admit the dismissed employee back to work under the same terms and
conditions prevailing prior to his dismissal or to reinstate him in the payroll to
abate further loss of income on the part of the employee during the pendency
of the appeal. But we cannot stretch the language of the law as to give the
 employer the right to remove an employee who fails to immediately comply
with the reinstatement order, especially when there is reasonable explanation
for the failure. If Cottonway were really sincere in its offer to immediately
reinstate petitioners to their former positions, it should have given them
reasonable time to wind up their current preoccupation or at least to explain
why they could not return to work at Cottonway at once. Cottonway did not do
either. Instead, it gave them only five days to report to their posts and when
the petitioners failed to do so, it lost no time in serving them their individual
notices of termination. We are, therefore, not impressed with the claim of
respondent company that petitioners have been validly dismissed on August
1, 1996 and hence their backwages should only be computed up to that time.
We hold that petitioners are entitled to receive full backwages computed from
the time their compensation was actually withheld until their actual
reinstatement, or if reinstatement is no longer possible, until the finality of the
decision, in accordance with the Decision of the NLRC dated March 26, 1996
which has attained finality. 28

IN VIEW WHEREOF, the petition is GRANTED. The Decision of the Court

of Appeals dated March 13, 2000 and Resolution dated February 13, 2001 in CA-
G.R. SP No. 53204 are REVERSED and SET ASIDE. Let the records of this
case be remanded to the Labor Arbiter for execution in accordance with the
Decision of the NLRC dated March 26, 1996.  aTcHIC

SO ORDERED.
 (Buenviaje v. Court of Appeals, G.R. No. 147806, [November 12, 2002], 440
|||

PHIL 84-99)

G.R. No. 177467. March 9, 2011.]

PFIZER, INC. AND/OR REY GERARDO BACARRO, AND/OR

FERDINAND CORTES, AND/OR ALFRED MAGALLON, AND/OR
ARISTOTLE ARCE, petitioners, vs. GERALDINE
VELASCO, respondent.

DECISION

LEONARDO-DE CASTRO, J  : p
 This is a petition for review on certiorari under Rule 45 of the Rules of
Civil Procedure to annul and set aside the Resolution 1 dated October 23,
2006 as well as the Resolution 2 dated April 10, 2007 both issued by the Court
of Appeals in CA-G.R. SP No. 88987 entitled, "Pfizer, Inc. and/or Rey
Gerardo Bacarro, and/or Ferdinand Cortes, and/or Alfred Magallon, and/or
Aristotle Arce v. National Labor Relations Commission Second Division and
Geraldine Velasco." The October 23, 2006 Resolution modified upon
respondent's motion for reconsideration the Decision 3 dated November 23,
2005 of the Court of Appeals by requiring PFIZER, Inc. (PFIZER) to pay
respondent's wages from the date of the Labor Arbiter's Decision 4 dated
December 5, 2003 until it was eventually reversed and set aside by the Court
of Appeals. The April 10, 2007 Resolution, on the other hand, denied
PFIZER's motion for partial reconsideration.
The facts of this case, as stated in the Court of Appeals Decision dated
November 23, 2005, are as follows:
Private respondent Geraldine L. Velasco was employed with
petitioner PFIZER, INC. as Professional Health Care Representative
since 1 August 1992. Sometime in April 2003, Velasco had a medical
work up for her high-risk pregnancy and was subsequently advised bed
rest which resulted in her extending her leave of absence. Velasco filed
her sick leave for the period from 26 March to 18 June 2003, her
vacation leave from 19 June to 20 June 2003, and leave without pay
from 23 June to 14 July 2003.
On 26 June 2003, while Velasco was still on leave, PFIZER
through its Area Sales Manager, herein petitioner Ferdinand Cortez,
personally served Velasco a "Show-cause Notice" dated 25 June 2003.
Aside from mentioning about an investigation on her possible violations
of company work rules regarding "unauthorized deals and/or discounts
in money or samples and unauthorized withdrawal and/or pull-out of
stocks" and instructing her to submit her explanation on the matter within
48 hours from receipt of the same, the notice also advised her that she
was being placed under "preventive suspension" for 30 days or from that
day to 6 August 2003 and consequently ordered to surrender the
following "accountabilities;" 1) Company Car, 2) Samples and Promats,
3) CRF/ER/VEHICLE/SOA/POSAP/MPOA and other related Company
Forms, 4) Cash Card, 5) Caltex Card, and 6) MPOA/TPOA Revolving
Travel Fund. The following day, petitioner Cortez together with one Efren
Dariano retrieved the above-mentioned "accountabilities" from Velasco's
residence.
In response, Velasco sent a letter addressed to Cortez dated 28
June 2003 denying the charges. In her letter, Velasco claimed that the
transaction with Mercury Drug, Magsaysay Branch covered by her check
(no. 1072) in the amount of P23,980.00 was merely to accommodate two
 undisclosed patients of a certain Dr. Renato Manalo. In support thereto,
Velasco attached the Doctor's letter and the affidavit of the latter's
secretary.
On 12 July 2003, Velasco received a "Second Show-cause
Notice" informing her of additional developments in their investigation.
According to the notice, a certain Carlito Jomen executed an affidavit
pointing to Velasco as the one who transacted with a printing shop to
print PFIZER discount coupons. Jomen also presented text messages
originating from Velasco's company issued cellphone referring to the
printing of the said coupons. Again, Velasco was given 48 hours to
submit her written explanation on the matter. On 16 July 2003, Velasco
sent a letter to PFIZER via Aboitiz courier service asking for additional
time to answer the second Show-cause Notice.  SECAHa

That same day, Velasco filed a complaint for illegal suspension

with money claims before the Regional Arbitration Branch. The following
day, 17 July 2003, PFIZER sent her a letter inviting her to a disciplinary
hearing to be held on 22 July 2003. Velasco received it under protest
and informed PFIZER via the receiving copy of the said letter that she
had lodged a complaint against the latter and that the issues that may be
raised in the July 22 hearing "can be tackled during the hearing of her
case" or at the preliminary conference set for 5 and 8 of August 2003.
She likewise opted to withhold answering the Second Show-cause
Notice. On 25 July 2003, Velasco received a "Third Show-cause Notice,"
together with copies of the affidavits of two Branch Managers of Mercury
Drug, asking her for her comment within 48 hours. Finally, on 29 July
2003, PFIZER informed Velasco of its "Management Decision"
terminating her employment.
On 5 December 2003, the Labor Arbiter rendered its decision
declaring the dismissal of Velasco illegal, ordering her reinstatement with
backwages and further awarding moral and exemplary damages with
attorney's fees. On appeal, the NLRC affirmed the same but deleted the
award of moral and exemplary damages. 5
The dispositive portion of the Labor Arbiter's Decision dated December
5, 2003 is as follows:
WHEREFORE, judgment is hereby rendered declaring that
complainant was illegally dismissed. Respondents are ordered to
reinstate the complainant to her former position without loss of seniority
rights and with full backwages and to pay the complainant the following:
1. Full backwages (basic salary, company benefits, all allowances
as of December 5, 2003 in the amount of P572,780.00);
2. 13th Month Pay, Midyear, Christmas and performance bonuses
in the amount of P105,300.00;
 3. Moral damages of P50,000.00;
4. Exemplary damages in the amount of P30,000.00;
5. Attorney's Fees of 10% of the award excluding damages in the
amount of P67,808.00.
The total award is in the amount of P758,080.00. 6
PFIZER appealed to the National Labor Relations Commission (NLRC)
but its appeal was denied via the NLRC Decision 7 dated October 20, 2004,
which affirmed the Labor Arbiter's ruling but deleted the award for damages,
the dispositive portion of which is as follows:
WHEREFORE, premises considered, the instant appeal and the
motion praying for the deposit in escrow of complainant's payroll
reinstatement are hereby denied and the Decision of the Labor Arbiter is
affirmed with the modification that the award of moral and exemplary
damages is deleted and attorney's fees shall be based on the award of
13th month pay pursuant to Article III of the Labor Code.8
PFIZER moved for reconsideration but its motion was denied for lack of
merit in a NLRC Resolution 9 dated December 14, 2004.
Undaunted, PFIZER filed with the Court of Appeals a special civil action
for the issuance of a writ of certiorari under Rule 65 of the Rules of Court to
annul and set aside the aforementioned NLRC issuances. In a Decision dated
November 23, 2005, the Court of Appeals upheld the validity of respondent's
dismissal from employment, the dispositive portion of which reads as follows:
WHEREFORE, the instant petition is GRANTED. The assailed
Decision of the NLRC dated 20 October 2004 as well as its Resolution of
14 December 2004 is hereby ANNULED and SET ASIDE. Having found
the termination of Geraldine L. Velasco's employment in accordance
with the two notice rule pursuant to the due process requirement and
with just cause, her complaint for illegal dismissal is hereby
DISMISSED. 10
Respondent filed a Motion for Reconsideration which the Court of
Appeals resolved in the assailed Resolution dated October 23, 2006 wherein
it affirmed the validity of respondent's dismissal from employment but modified
its earlier ruling by directing PFIZER to pay respondent her wages from the
date of the Labor Arbiter's Decision dated December 5, 2003 up to the Court
of Appeals Decision dated November 23, 2005, to wit:  ICcDaA

IN VIEW WHEREOF, the dismissal of private respondent

Geraldine Velasco is AFFIRMED, but petitioner PFIZER, INC. is hereby
ordered to pay her the wages to which she is entitled to from the time the
reinstatement order was issued until November 23, 2005, the date of
promulgation of Our Decision. 11
 Respondent filed with the Court a petition for review under Rule 45 of
the Rules of Civil Procedure, which assailed the Court of Appeals Decision
dated November 23, 2005 and was docketed as G.R. No. 175122.
Respondent's petition, questioning the Court of Appeals' dismissal of her
complaint, was denied by this Court's Second Division in a minute
Resolution 12 dated December 5, 2007, the pertinent portion of which states:
Considering the allegations, issues and arguments adduced in the
petition for review on certiorari, the Court resolves to DENY the petition
for failure to sufficiently show any reversible error in the assailed
judgment to warrant the exercise of this Court's discretionary appellate
jurisdiction, and for raising substantially factual issues.
On the other hand, PFIZER filed the instant petition assailing the
aforementioned Court of Appeals Resolutions and offering for our resolution a
single legal issue, to wit:
Whether or not the Court of Appeals committed a serious but
reversible error when it ordered Pfizer to pay Velasco wages from the
date of the Labor Arbiter's decision ordering her reinstatement until
November 23, 2005, when the Court of Appeals rendered its decision
declaring Velasco's dismissal valid. 13
The petition is without merit.
PFIZER argues that, contrary to the Court of Appeals' pronouncement
in its assailed Decision dated November 23, 2005, the ruling in Roquero v.
Philippine Airlines, Inc. 14 is not applicable in the case at bar, particularly with
regard to the nature and consequences of an order of reinstatement, to wit:
The order of reinstatement is immediately executory. The
unjustified refusal of the employer to reinstate a dismissed
employee entitles him to payment of his salaries effective from the
time the employer failed to reinstate him despite the issuance of a
writ of execution. Unless there is a restraining order issued, it is
ministerial upon the Labor Arbiter to implement the order of
reinstatement. In the case at bar, no restraining order was
granted. Thus, it was mandatory on PAL to actually
reinstate Roquero or reinstate him in the payroll. Having failed to
do so, PAL must pay Roquero the salary he is entitled to, as if he
was reinstated, from the time of the decision of the NLRC until the
finality of the decision of the Court. 15 (Emphases supplied.) 
It is PFIZER's contention in its Memorandum 16 that "there was no
unjustified refusal on [its part] to reinstate [respondent] Velasco during the
pendency of the appeal," 17 thus, the pronouncement in Roquero cannot be
made to govern this case. During the pendency of the case with the Court of
Appeals and prior to its November 23, 2005 Decision, PFIZER claimed that it
had already required respondent to report for work on July 1, 2005. However,
according to PFIZER, it was respondent who refused to return to work when
she wrote PFIZER, through counsel, that she was opting to receive her
separation pay and to avail of PFIZER's early retirement program.
In PFIZER's view, it should no longer be required to pay wages
considering that (1) it had already previously paid an enormous sum to
respondent under the writ of execution issued by the Labor Arbiter; (2) it was
allegedly ready to reinstate respondent as of July 1, 2005 but it was
respondent who unjustifiably refused to report for work; (3) it would
purportedly be tantamount to allowing respondent to choose "payroll
reinstatement" when by law it was the employer which had the right to choose
between actual and payroll reinstatement; (4) respondent should be deemed
to have "resigned" and therefore not entitled to additional backwages or
separation pay; and (5) this Court should not mechanically apply Roquero but
rather should follow the doctrine in Genuino v. National Labor Relations
Commission 18 which was supposedly "more in accord with the dictates of
fairness and justice." 19
We do not agree.
At the outset, we note that PFIZER's previous payment to respondent of
the amount of P1,963,855.00 (representing her wages from December 5,
2003, or the date of the Labor Arbiter decision, until May 5, 2005) that was
successfully garnished under the Labor Arbiter's Writ of Execution dated May
26, 2005 cannot be considered in its favor. Not only was this sum legally due
to respondent under prevailing jurisprudence but also this circumstance
highlighted PFIZER's unreasonable delay in complying with the reinstatement
order of the Labor Arbiter. A perusal of the records, including PFIZER's own
submissions, confirmed that it only required respondent to report for work on
July 1, 2005, as shown by its Letter 20 dated June 27, 2005, which is almost
two years from the time the order of reinstatement was handed down in the
Labor Arbiter's Decision dated December 5, 2003.  EHSAaD

As far back as 1997 in the seminal case of Pioneer Texturizing

Corporation v. National Labor Relations Commission, 21 the Court held that an
award or order of reinstatement is immediately self-executory without the
need for the issuance of a writ of execution in accordance with the third
paragraph of Article 223 22 of the Labor Code.In that case, we discussed in
length the rationale for that doctrine, to wit:
The provision of Article 223 is clear that an award [by the Labor
Arbiter] for reinstatement shall be immediately executory even pending
appeal and the posting of a bond by the employer shall not stay the
execution for reinstatement. The legislative intent is quite obvious, i.e., to
make an award of reinstatement immediately enforceable, even pending
 appeal. To require the application for and issuance of a writ of
execution as prerequisites for the execution of a reinstatement
award would certainly betray and run counter to the very object and
intent of Article 223, i.e., the immediate execution of a reinstatement
order. The reason is simple. An application for a writ of execution and its
issuance could be delayed for numerous reasons. A mere continuance
or postponement of a scheduled hearing, for instance, or an inaction on
the part of the Labor Arbiter or the NLRC could easily delay the issuance
of the writ thereby setting at naught the strict mandate and noble
purpose envisioned by Article 223. In other words, if the requirements of
Article 224 [including the issuance of a writ of execution] were to govern,
as we so declared in Maranaw, then the executory nature of a
reinstatement order or award contemplated by Article 223 will be unduly
circumscribed and rendered ineffectual. In enacting the law, the
legislature is presumed to have ordained a valid and sensible law, one
which operates no further than may be necessary to achieve its specific
purpose. Statutes, as a rule, are to be construed in the light of the
purpose to be achieved and the evil sought to be prevented. . . . In
introducing a new rule on the reinstatement aspect of a labor decision
under Republic Act No. 6715, Congress should not be considered to be
indulging in mere semantic exercise. . . . 23 (Italics in the original;
emphasis and underscoring supplied.)
In the case at bar, PFIZER did not immediately admit respondent back
to work which, according to the law, should have been done as soon as an
order or award of reinstatement is handed down by the Labor Arbiter without
need for the issuance of a writ of execution. Thus, respondent was entitled to
the wages paid to her under the aforementioned writ of execution. At most,
PFIZER's payment of the same can only be deemed partial
compliance/execution of the Court of Appeals Resolution dated October 23,
2006 and would not bar respondent from being paid her wages from May 6,
2005 to November 23, 2005.
It would also seem that PFIZER waited for the resolution of its appeal to
the NLRC and, only after it was ordered by the Labor Arbiter to pay the
amount of P1,963,855.00 representing respondent's full backwages from
December 5, 2003 up to May 5, 2005, did PFIZER decide to require
respondent to report back to work via the Letter dated June 27, 2005.
PFIZER makes much of respondent's non-compliance with its return-to-
work directive by downplaying the reasons forwarded by respondent as less
than sufficient to justify her purported refusal to be reinstated. In PFIZER's
view, the return-to-work order it sent to respondent was adequate to satisfy
the jurisprudential requisites concerning the reinstatement of an illegally
dismissed employee.
 It would be useful to reproduce here the text of PFIZER's Letter dated
June 27, 2005:
Dear Ms. Velasco:
Please be informed that, pursuant to the resolutions dated 20
October 2004 and 14 December 2004 rendered by the National Labor
Relations Commission and the order dated 24 May 2005 issued by
Executive Labor Arbiter Vito C. Bose, you are required to report for work
on 1 July 2005, at 9:00 a.m., at Pfizer's main office at the 23rd Floor,
Ayala Life-FGU Center, 6811 Ayala Avenue, Makati City, Metro Manila.
Please report to the undersigned for a briefing on your work
assignments and other responsibilities, including the appropriate
relocation benefits.
For your information and compliance.  ITCcAD

Very truly yours,

(Sgd.)
Ma. Eden Grace Sagisi
Labor and Employee Relations Manager 24
To reiterate, under Article 223 of the Labor Code,an employee entitled
to reinstatement "shall either be admitted back to work under the same
terms and conditions prevailing prior to his dismissal or separation or, at the
option of the employer, merely reinstated in the payroll."
It is established in jurisprudence that reinstatement means restoration
to a state or condition from which one had been removed or separated. The
person reinstated assumes the position he had occupied prior to his
dismissal. Reinstatement presupposes that the previous position from which
one had been removed still exists, or that there is an unfilled position which is
substantially equivalent or of similar nature as the one previously occupied by
the employee. 25
Applying the foregoing principle to the case before us, it cannot be said
that with PFIZER's June 27, 2005 Letter, in belated fulfillment of the Labor
Arbiter's reinstatement order, it had shown a clear intent to reinstate
respondent to her former position under the same terms and conditions nor to
a substantially equivalent position. To begin with, the return-to-work order
PFIZER sent respondent is silent with regard to the position or the exact
nature of employment that it wanted respondent to take up as of July 1, 2005.
Even if we assume that the job awaiting respondent in the new location is of
the same designation and pay category as what she had before, it is plain
from the text of PFIZER's June 27, 2005 letter that such reinstatement was
not "under the same terms and conditions" as her previous employment,
considering that PFIZER ordered respondent to report to its main office in
Makati City while knowing fully well that respondent's previous job had her
stationed in Baguio City (respondent's place of residence) and it was still
necessary for respondent to be briefed regarding her work assignments and
responsibilities, including her relocation benefits.
The Court is cognizant of the prerogative of management to transfer an
employee from one office to another within the business establishment,
provided that there is no demotion in rank or diminution of his salary, benefits
and other privileges and the action is not motivated by discrimination, made in
bad faith, or effected as a form of punishment or demotion without sufficient
cause. 26 Likewise, the management prerogative to transfer personnel must
be exercised without grave abuse of discretion and putting to mind the basic
elements of justice and fair play. There must be no showing that it is
unnecessary, inconvenient and prejudicial to the displaced employee. 27
The June 27, 2005 return-to-work directive implying that respondent
was being relocated to PFIZER's Makati main office would necessarily cause
hardship to respondent, a married woman with a family to support residing in
Baguio City. However, PFIZER, as the employer, offered no reason or
justification for the relocation such as the filling up of respondent's former
position and the unavailability of substantially equivalent position in Baguio
City. A transfer of work assignment without any justification therefor, even if
respondent would be presumably doing the same job with the same pay,
cannot be deemed faithful compliance with the reinstatement order. In other
words, in this instance, there was no real, bona fide reinstatement to speak of
prior to the reversal by the Court of Appeals of the finding of illegal dismissal. 
In view of PFIZER's failure to effect respondent's actual or payroll
reinstatement, it is indubitable that the Roquero ruling is applicable to the
case at bar. The circumstance that respondent opted for separation pay in lieu
of reinstatement as manifested in her counsel's Letter 28 dated July 18, 2005
is of no moment. We do not see respondent's letter as taking away the option
from management to effect actual or payroll reinstatement but, rather under
the factual milieu of this case, where the employer failed to categorically
reinstate the employee to her former or equivalent position under the same
terms, respondent was not obliged to comply with PFIZER's ambivalent
return-to-work order. To uphold PFIZER's view that it was respondent who
unjustifiably refused to work when PFIZER did not reinstate her to her former
position, and worse, required her to report for work under conditions
prejudicial to her, is to open the doors to potential employer abuse.
Foreseeably, an employer may circumvent the immediately enforceable
reinstatement order of the Labor Arbiter by crafting return-to-work directives
that are ambiguous or meant to be rejected by the employee and then
disclaim liability for backwages due to non-reinstatement by capitalizing on
the employee's purported refusal to work. In sum, the option of the employer
to effect actual or payroll reinstatement must be exercised in good faith.
Moreover, while the Court has upheld the employer's right to choose
between actually reinstating an employee or merely reinstating him in the
payroll, we have also in the past recognized that reinstatement might no
longer be possible under certain circumstances. In F.F. Marine Corporation v.
National Labor Relations Commission, 29 we had the occasion to state:
It is well-settled that when a person is illegally dismissed, he is
entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages. In the event, however, that
reinstatement is no longer feasible, or if the employee decides not be
reinstated, the employer shall pay him separation pay in lieu of
reinstatement. Such a rule is likewise observed in the case of a strained
employer-employee relationship or when the work or position formerly
held by the dismissed employee no longer exists. In sum, an illegally
dismissed employee is entitled to: (1) either reinstatement if viable or
separation pay if reinstatement is no longer viable, and (2)
backwages. 30 (Emphasis supplied.)  cdasia2005

Similarly, we have previously held that an employee's demand for

separation pay may be indicative of strained relations that may justify
payment of separation pay in lieu of reinstatement. 31 This is not to say,
however, that respondent is entitled to separation pay in addition to
backwages. We stress here that a finding of strained relations must
nonetheless still be supported by substantial evidence. 32
In the case at bar, respondent's decision to claim separation pay over
reinstatement had no legal effect, not only because there was no genuine
compliance by the employer to the reinstatement order but also because the
employer chose not to act on said claim. If it was PFIZER's position that
respondent's act amounted to a "resignation" it should have informed
respondent that it was accepting her resignation and that in view thereof she
was not entitled to separation pay. PFIZER did not respond to respondent's
demand at all. As it was, PFIZER's failure to effect reinstatement and accept
respondent's offer to terminate her employment relationship with the company
meant that, prior to the Court of Appeals' reversal in the November 23, 2005
Decision, PFIZER's liability for backwages continued to accrue for the period
not covered by the writ of execution dated May 24, 2005 until November 23,
2005.
Lastly, PFIZER exhorts the Court to re-examine the application
of Roquero with a view that a mechanical application of the same would
cause injustice since, in the present case, respondent was able to gain
pecuniary benefit notwithstanding the circumstance of reversal by the Court of
Appeals of the rulings of the Labor Arbiter and the NLRC thereby allowing
respondent to profit from the dishonesty she committed against PFIZER which
was the basis for her termination. In its stead, PFIZER proposes that the
Court apply the ruling in Genuino v. National Labor Relations
Commission 33 which it believes to be more in accord with the dictates of
fairness and justice. In that case, we canceled the award of salaries from the
date of the decision of the Labor Arbiter awarding reinstatement in light of our
subsequent ruling finding that the dismissal is for a legal and valid ground, to
wit:
Anent the directive of the NLRC in its September 3, 1994
Decision ordering Citibank "to pay the salaries due to the
complainant from the date it reinstated complainant in the payroll
(computed at P60,000.00 a month, as found by the Labor Arbiter) up
to and until the date of this decision," the Court hereby cancels
said award in view of its finding that the dismissal of Genuino is for
a legal and valid ground.
Ordinarily, the employer is required to reinstate the employee
during the pendency of the appeal pursuant to Art. 223, paragraph 3 of
the Labor Code,which states:
xxx xxx xxx
If the decision of the labor arbiter is later reversed on appeal
upon the finding that the ground for dismissal is valid, then the
employer has the right to require the dismissed employee on
payroll reinstatement to refund the salaries s/he received while the
case was pending appeal, or it can be deducted from the accrued
benefits that the dismissed employee was entitled to receive from
his/her employer under existing laws, collective bargaining
agreement provisions, and company practices. However, if the
employee was reinstated to work during the pendency of the appeal,
then the employee is entitled to the compensation received for actual
services rendered without need of refund.
Considering that Genuino was not reinstated to work or placed on
payroll reinstatement, and her dismissal is based on a just cause, then
she is not entitled to be paid the salaries stated in item no. 3 of
the fallo of the September 3, 1994 NLRC Decision. 34 (Emphases
supplied.)
Thus, PFIZER implores the Court to annul the award of backwages and
separation pay as well as to require respondent to refund the amount that she
was able to collect by way of garnishment from PFIZER as her accrued
salaries.
The contention cannot be given merit since this question has been
settled by the Court en banc.
 In the recent milestone case of Garcia v. Philippine Airlines, Inc., 35 the
Court wrotefinis to the stray posture in Genuino requiring the dismissed
employee placed on payroll reinstatement to refund the salaries in case a final
decision upholds the validity of the dismissal. In Garcia, we clarified the
principle of reinstatement pending appeal due to the emergence of differing
rulings on the issue, to wit:
On this score, the Court's attention is drawn to seemingly
divergent decisions concerning reinstatement pending appeal or,
particularly, the option of payroll reinstatement. On the one hand is the
jurisprudential trend as expounded in a line of cases including Air
Philippines Corp. v. Zamora, while on the other is the recent case
of Genuino v. National Labor Relations Commission. At the core of the
seeming divergence is the application of paragraph 3 of Article 223 of
the Labor Code . . . . 
DHACES

xxx xxx xxx

The view as maintained in a number of cases is that:
. . . [E]ven if the order of reinstatement of the Labor
Arbiter is reversed on appeal, it is obligatory on the part of
the employer to reinstate and pay the wages of the dismissed
employee during the period of appeal until reversal by the
higher court. On the other hand, if the employee has been
reinstated during the appeal period and such reinstatement order
is reversed with finality, the employee is not required to reimburse
whatever salary he received for he is entitled to such, more so if
he actually rendered services during the period. (Emphasis in the
original; italics and underscoring supplied)
In other words, a dismissed employee whose case was favorably
decided by the Labor Arbiter is entitled to receive wages pending appeal
upon reinstatement, which is immediately executory. Unless there is a
restraining order, it is ministerial upon the Labor Arbiter to implement the
order of reinstatement and it is mandatory on the employer to comply
therewith.
The opposite view is articulated in Genuino which states:
If the decision of the labor arbiter is later reversed on
appeal upon the finding that the ground for dismissal is valid,
then the employer has the right to require the dismissed
employee on payroll reinstatement  to refund the salaries [he]
received while the case was pending appeal, or it can be
deducted from the accrued benefits that the dismissed employee
was entitled to receive from [his] employer under existing laws,
collective bargaining agreement provisions, and company
practices. However, if the employee was reinstated to work during
 the pendency of the appeal, then the employee is entitled to the
compensation received for actual services rendered without need
of refund.
Considering that Genuino was not reinstated to work or
placed on payroll reinstatement, and her dismissal is based on a
just cause, then she is not entitled to be paid the salaries stated in
item no. 3 of the fallo of the September 3, 1994 NLRC Decision.
(Emphasis, italics and underscoring supplied)
It has thus been advanced that there is no point in releasing the
wages to petitioners since their dismissal was found to be valid, and to
do so would constitute unjust enrichment.
Prior to Genuino, there had been no known similar case
containing a dispositive portion where the employee was required to
refund the salaries received on payroll reinstatement. In fact, in a catena
of cases, the Court did not order the refund of salaries garnished or
received by payroll-reinstated employees despite a subsequent reversal
of the reinstatement order. 
The dearth of authority supporting Genuino is not difficult to
fathom for it would otherwise render inutile the rationale of reinstatement
pending appeal.
xxx xxx xxx
. . . Then, by and pursuant to the same power (police power), the
State may authorize an immediate implementation, pending appeal, of a
decision reinstating a dismissed or separated employee since that
saving act is designed to stop, although temporarily since the appeal
may be decided in favor of the appellant, a continuing threat or danger to
the survival or even the life of the dismissed or separated employee and
his family. 36
Furthermore, in Garcia, the Court went on to discuss the illogical and
unjust effects of the "refund doctrine" erroneously espoused in Genuino:
Even outside the theoretical trappings of the discussion and into
the mundane realities of human experience, the "refund doctrine" easily
demonstrates how a favorable decision by the Labor Arbiter could harm,
more than help, a dismissed employee. The employee, to make both
ends meet, would necessarily have to use up the salaries received
during the pendency of the appeal, only to end up having to refund the
sum in case of a final unfavorable decision. It is mirage of a stop-gap
leading the employee to a risky cliff of insolvency.
Advisably, the sum is better left unspent. It becomes more logical
and practical for the employee to refuse payroll reinstatement and simply
find work elsewhere in the interim, if any is available. Notably, the option
of payroll reinstatement belongs to the employer, even if the employee is
 able and raring to return to work. Prior to Genuino, it is unthinkable for
one to refuse payroll reinstatement. In the face of the grim possibilities,
the rise of concerned employees declining payroll reinstatement is on
the horizon.
Further, the Genuino ruling not only disregards the social justice
principles behind the rule, but also institutes a scheme unduly favorable
to management. Under such scheme, the salaries dispensed pendente
lite merely serve as a bond posted in installment by the employer. For in
the event of a reversal of the Labor Arbiter's decision ordering
reinstatement, the employer gets back the same amount without having
to spend ordinarily for bond premiums. This circumvents, if not directly
contradicts, the proscription that the "posting of a bond [even a cash
bond] by the employer shall not stay the execution for reinstatement."  aEDCSI

In playing down the stray posture in Genuino requiring the

dismissed employee on payroll reinstatement to refund the salaries in
case a final decision upholds the validity of the dismissal, the Court
realigns the proper course of the prevailing doctrine on reinstatement
pending appeal vis-à-vis the effect of a reversal on appeal.
xxx xxx xxx
The Court reaffirms the prevailing principle that even if the
order of reinstatement of the Labor Arbiter is reversed on appeal, it
is obligatory on the part of the employer to reinstate and pay the
wages of the dismissed employee during the period of appeal until
reversal by the higher court. . . . . 37 (Emphasis supplied.)
In sum, the Court reiterates the principle that reinstatement pending
appeal necessitates that it must be immediately self-executory without need
for a writ of execution during the pendency of the appeal, if the law is to serve
its noble purpose, and any attempt on the part of the employer to evade or
delay its execution should not be allowed. Furthermore, we likewise restate
our ruling that an order for reinstatement entitles an employee to receive his
accrued backwages from the moment the reinstatement order was issued up
to the date when the same was reversed by a higher court without fear of
refunding what he had received. It cannot be denied that, under our statutory
and jurisprudential framework, respondent is entitled to payment of her wages
for the period after December 5, 2003 until the Court of Appeals Decision
dated November 23, 2005, notwithstanding the finding therein that her
dismissal was legal and for just cause. Thus, the payment of such wages
cannot be deemed as unjust enrichment on respondent's part.
WHEREFORE, the petition is DENIED and the assailed Resolution
dated October 23, 2006 as well as the Resolution dated April 10, 2007 both
issued by the Court of Appeals in CA-G.R. SP No. 88987 are
hereby AFFIRMED.
 SO ORDERED.
|||  (Pfizer, Inc. v. Velaso, G.R. No. 177467, [March 9, 2011], 660 PHIL 434-455)

G.R. No. 207983. April 7, 2014.]

WENPHIL CORPORATION, petitioner, vs. ALMER R. ABING and

ANABELLE M. TUAZON, respondents.

DECISION

BRION, J  : p

We resolve this petition for review on certiorari 1 under Rule 45 of

the Rules of Court, challenging the August 31, 2012 decision 2 and the June 20,
2013 resolution 3 (assailed CA rulings) of the Court of Appeals (CA) in CA-G.R.
SP No. 117366.
These assailed CA rulings annulled and set aside the March 26, 2010
decision 4 and September 15, 2010 5 resolution (NLRC rulings) of the National
Labor Relations Commission (NLRC) in NLRC CA No. 02-8233-01 (R1-08).
The NLRC rulings, in turn, fully affirmed the November 16, 2007 order 6 of
the Labor Arbiter (LA) in NLRC-NCR Case Nos. 30-03-00993-00 and 30-03-
01020-00. The LA's order found that an illegal dismissal took place. Thus, the LA
directed petitioner Wenphil Corporation (Wenphil) to pay respondents Almer
Abing and Anabelle Tuazon (respondents) their backwages for the period from
February 15, 2002 to November 8, 2002, pursuant to the rule that an order of
reinstatement is immediately executory even pending appeal. 7

Factual Antecedents

This case stemmed from a complaint for illegal dismissal filed by the
respondents against Wenphil, docketed as NLRC NCR Case No. 30-03-00993-
00.  SaIHDA

On December 8, 2000, LA Geobel A. Bartolabac ruled 8 that the

respondents had been illegally dismissed by Wenphil. According to the LA, the
allegation of serious misconduct against the respondents had no factual and
legal basis. 9 Consequently, LA Bartolabac ordered Wenphil to immediately
reinstate the respondents to their respective positions or to equivalent ones,
whether actual or in the payroll. Also, the LA ordered Wenphil to pay the
respondents their backwages from February 3, 2000 until the date of their actual
reinstatement. 10
Because of the unfavorable LA decision, Wenphil appealed to the NLRC
on April 16, 2001. 11 In the meantime, the respondents moved for the immediate
execution of the LA's December 8, 2000 decision. 12
On October 29, 2001, Wenphil and the respondents entered into a
compromise agreement 13 before LA Bartolabac. They agreed to the
respondents' payroll reinstatement while Wenphil's appeal with the NLRC was
ongoing. Wenphil also agreed to pay the accumulated salaries of the
respondents for the payroll period from April 5, 2001 until October 15, 2001. 14 As
for the remaining payroll period starting October 16, 2001, Wenphil committed
itself to credit the respective salaries of the respondents to their ATM payroll
accounts until such time that the questioned decision of LA Bartolabac is
either modified, amended or reversed by the Honorable National Labor
Relations Commission. 15
On January 30, 2002, the NLRC issued a resolution 16 affirming LA
Bartolabac's decision with modifications. Instead of ordering the respondents'
reinstatement, the NLRC directed Wenphil to pay the respondents their
respective separation pay at the rate of one (1) month salary for every year of
service. Also, the NLRC found that while the respondents had been illegally
dismissed, they had not been illegally suspended. Thus, the period from
February 3 to February 28, 2000 during which the respondents were on
preventive suspension — was excluded by the NLRC in the computation of the
respondents' backwages. 17
Subsequently, Wenphil moved for the reconsideration 18 of the NLRC's
January 30, 2002 resolution, but the NLRC denied the motion in another
resolution dated September 24, 2002. 19
Wenphil thereafter went up to the CA via a petition for certiorari to question
the NLRC's January 30, 2002 and September 24, 2002 resolutions. 20 On August
27, 2003, the CA rendered its decision 21 reversing the NLRC's finding that the
respondents had been illegally dismissed. According to the CA, there was
enough evidence to show that the respondents had been guilty of serious
misconduct; thus, their dismissal was for a valid cause. 22 The respondents
moved for the reconsideration of the CA's decision. 23 In a resolution 24 dated
February 23, 2004, the CA denied the respondents' motion.
 On appeal to the Supreme Court (SC) via Rule 45 (docketed as G.R. No.
162447 25 and dated December 27, 2006), the SC denied the respondents
petition for review on certiorari 26 and affirmed the CA's August 27, 2003 decision
and February 23, 2004 resolution. The respondents did not file any motion for
reconsideration to question the SC's decision; thus, the decision became final
and executory on February 15, 2007. 27  cDTaSH

The Labor Arbitration Rulings

Sometime after the SC's decision in G.R. No. 162447 became final and
executory, the respondents filed with LA Bartolabac a motion for computation
and issuance of writ of execution. 28 The respondents asserted in this motion that
although the CA's ruling on the absence of illegal dismissal (as affirmed by the
SC) was adverse to them, under the law and settled jurisprudence, they were still
entitled to backwages from the time of their dismissal until the NLRC's decision
finding them to be illegally dismissed was reversed with finality. 29
LA Bartolabac granted the respondents' motion and, in an order dated
November 16, 2007, 30 directed Wenphil to pay each complainant their salaries
on reinstatement covering the period from February 15, 2002 (the date Wenphil
last paid the respondents' respective salaries) to November 8, 2002 (since the
NLRC's decision finding the respondents illegally dismissed became final and
executory on February 28, 2002).
Both parties appealed to the NLRC to question LA Bartolabac's November
16, 2007 order. 31 Wenphil argued that the respondents were no longer entitled
to payment of backwages in view of the compromise agreement they executed
on October 29, 2001. According to Wenphil, the compromise agreement provided
that Wenphil's obligation to pay the respondents' backwages should cease as
soon as LA Bartolabac's decision was "modified, amended or reversed" by the
NLRC. Since the NLRC modified the LA's ruling by ordering the payment of
separation pay in lieu of reinstatement, then the respondents, under the terms of
the compromise agreement, were entitled to backwages only up to the finality of
the NLRC decision. 32
The respondents questioned in their appeal the determined period for the
computation of their backwages; they posited that the period for payment should
end, not on November 8, 2002, but on February 14, 2007, since the SC's
decision which upheld the CA's ruling became final and executory on February
15, 2007. 33 
ETHIDa

The NLRC denied the parties' respective appeals in its decision dated
March 26, 2010 34 and affirmed in toto the LA's order. Both parties moved for the
reconsideration of the NLRC's decision but the NLRC denied their respective
motions in the resolution of September 15, 2010. 35
 The CA's Ruling

In its decision dated August 31, 2012, 36 the CA reversed the NLRC rulings
and prescribed a different computation period.
The CA ruled that the NLRC committed grave abuse of discretion when it
affirmed the LA's computed period which was from February 15, 2002 to
November 8, 2002. In arriving at this conclusion, the CA cited the case of Pfizer
v. Velasco 37 where this Court ruled that even if the order of reinstatement of the
Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to
reinstate and pay the dismissed employee's wages during the period of
appeal until reversal by the higher court. 38 The CA construed this "higher
court" to be the CA, not the SC.
The CA reasoned out that it was a "higher court" than the NLRC when it
reversed the NLRC's rulings; thus, the period for computation should end when it
promulgated its decision reversing that of the NLRC, and not on the date when
the SC affirmed its decision.
The CA likewise held that the compromise agreement did not contain any
waiver of rights for any award the respondents might have received when the
NLRC changed or modified the LA's award. 39

The Petition

In its petition for review with this Court, Wenphil maintained that the
respondents were no longer entitled to payment of backwages in view of the
modification of the LA's ruling by the NLRC pursuant with their October 29, 2001
compromise agreement.  aTEHIC

Wenphil argued that the CA utterly disregarded the terms of the parties'
compromise agreement whose terms were very clear; the agreement reads:
3.That for the payroll period from October 16-31 and thereafter, their
[respondents] salaries (net of withholding tax, SSS, Philhealth and
Pag-ibig) shall be credited every 10th and 25th of the succeeding
months through their respective ATM employee's account until such
time that the questioned decision of the Honorable Labor Arbiter
Geobel Bartolabac is modified, amended or reversed by the
Honorable Labor Relations Commission. 40 [emphasis ours]
It was Wenphil's assertion that since the NLRC's decision partly changed
the decision of LA Bartolabac by ordering payment of separation pay in lieu of
reinstatement, the NLRC decision was a "modification" that should operate to
remove Wenphil's obligation to pay the respondents' backwages for the period of
the CA's reversal of the NLRC's illegal dismissal ruling. 41 According to Wenphil,
the words of the compromise agreement left no room for interpretation as to the
parties' intentions; 42 as a valid agreement between the parties, it must be given
effect and respected by the court.
Wenphil also contended that the CA's cited Pfizer case cannot apply to the
present case since there was no compromise agreement in Pfizer where the
dismissed employee waived her entitlement to backwages. 43
Finally, Wenphil claimed that the reliefs of reinstatement and backwages
are only available to illegally dismissed employees. A ruling that the respondents
were still entitled to reinstatement pay notwithstanding the validity of their
dismissal, would amount to the court's tolerance of an unjust and equitable
situation. 44

The Court's Ruling

We resolve to DENY the petition.  cHDAIS

An order of reinstatement is
immediately executory even pending
appeal. The employer has the
obligation to reinstate and pay the
wages of the dismissed employee
during the period of appeal until
reversal by the higher court.

Under Article 223 of the Labor Code, "the decision of the Labor Arbiter
reinstating a dismissed or separated employee, insofar as the
reinstatement aspect is concerned, shall immediately be executory, even
pending appeal. The employee shall either be admitted back to work under the
same terms and conditions prevailing prior to his dismissal or separation, or at
the option of the employer, merely reinstated in the payroll. The posting of a bond
by the employer shall not stay the execution for reinstatement."
The Court discussed reason behind this legal policy in Aris v.
NLRC, 45 where it explained:
In authorizing execution pending appeal of the reinstatement
aspect of a decision of the Labor Arbiter reinstating a dismissed
or separated employee, the law itself has laid down a
compassionate policy which, once more, vivifies and enhances
the provisions of the 1987 Constitution on labor and the working-
man. These provisions are the quintessence of the aspirations of the
workingman for recognition of his role in the social and economic life of
the nation, for the protection of his rights, and the promotion of his
welfare. . . These duties and responsibilities of the State are imposed
 not so much to express sympathy for the workingman as to forcefully
and meaningfully underscore labor as a primary social and economic
force, which the Constitution also expressly affirms with equal intensity.
Labor is an indispensable partner for the nation's progress and
stability. [emphasis ours]
Since the decision is immediately executory, it is the duty of the employer
to comply with the order of reinstatement, which can be done either actually or
through payroll reinstatement. As provided under Article 223 of the Labor Code,
this immediately executory nature of an order of reinstatement is not affected by
the existence of an ongoing appeal. The employer has the duty to reinstate the
employee in the interim period until a reversal is decreed by a higher court or
tribunal.
In the case of payroll reinstatement, even if the employer's appeal turns
the tide in its favor, the reinstated employee has no duty to return or reimburse
the salary he received during the period that the lower court or tribunal's
governing decision was for the employee's illegal dismissal. Otherwise, the
situation would run counter to the immediately executory nature of an order of
reinstatement. The case of Garcia v. Philippine Airlines 46 is enlightening on this
point: 
aSTcCE

Even outside the theoretical trappings of the discussion and into the
mundane realities of human experience, the "refund doctrine" easily
demonstrates how a favorable decision by the Labor Arbiter could
harm, more than help, a dismissed employee. The employee, to make
both ends meet, would necessarily have to use up the salaries
received during the pendency of the appeal, only to end up having to
refund the sum in case of a final unfavorable decision. It is mirage of a
stop-gap leading the employee to a risky cliff of insolvency.
Advisably, the sum is better left unspent. It becomes more logical and
practical for the employee to refuse payroll reinstatement and simply
find work elsewhere in the interim, if any is available. Notably, the
option of payroll reinstatement belongs to the employer, even if the
employee is able and raring to return to work.
We see the situation discussed above to be present in the case before us
as Wenphil observed the mandate of Article 223 to immediately comply with the
order of reinstatement by the LA. On October 29, 2001, while Wenphil's appeal
with the NLRC was pending, it entered into a compromise agreement with the
respondents. In this agreement, Wenphil committed to reinstate the respondents
in its payroll. However, the commitment came with a condition: Wenphil
stipulated that its obligation to pay the wages due to the respondents would
cease if the decision of the LA would be "modified, amended or reversed" by the
NLRC. 47
 Thus, when the NLRC rendered its decision on the appeal affirming the
LA's finding that the respondents were illegally dismissed, but modifying the
award of reinstatement to payment of separation pay, Wenphil stopped paying
the respondents' wages.
The reinstatement salaries due to the respondents were, by their nature,
payment of unworked backwages. These were salaries due to the respondents
because they had been prevented from working despite the LA and the NLRC
findings that they had been illegally dismissed.
We point out that reinstatement and backwages are two separate reliefs
available to an illegally dismissed employee. The normal consequences of a
finding that an employee has been illegally dismissed are: first, that the
employee becomes entitled to reinstatement to his former position without loss of
seniority rights; and second, the payment of backwages covers the period
running from his illegal dismissal up to his actual reinstatement. 48 These two
reliefs are not inconsistent with one another and the labor arbiter can award both
simultaneously.
Moreover, the relief of separation pay may be granted in lieu of
reinstatement but it cannot be a substitute for the payment of backwages.
In instances where reinstatement is no longer feasible because of strained
relations between the employee and the employer, separation pay should be
granted. In effect, an illegally dismissed employee should be entitled to either
reinstatement — if viable, or separation pay if reinstatement is no longer be
viable, plus backwages in either instance. 49 The rationale for such policy of
distinction was vividly explained in Santos v. NLRC under these terms: 50
Though the grant of reinstatement commonly carries with it an award
of backwages, the inappropriateness or non-availability of one does
not carry with it the inappropriateness or non-availability of the other.
Separation pay was awarded in favor of petitioner
Lydia Santos because the NLRC found that her reinstatement was no
longer feasible or appropriate. As the term suggests, separation pay is
the amount that an employee receives at the time of his severance
from the service and, as correctly noted by the Solicitor General in his
Comment, is designed to provide the employee with "the wherewithal
during the period that he is looking for another employment." In the
instant case, the grant of separation pay was a substitute for
immediate and continued re-employment with the private
respondent Bank. The grant of separation pay did not redress the
injury that is intended to be relieved by the second remedy of
backwages, that is, the loss of earnings that would have accrued
to the dismissed employee during the period between dismissal
and reinstatement. Put a little differently, payment of backwages
is a form of relief that restores the income that was lost by reason
 of unlawful dismissal; separation pay, in contrast, is oriented
towards the immediate future, the transitional period the
dismissed employee must undergo before locating a replacement
job. It was grievous error amounting to grave abuse of discretion
on the part of the NLRC to have considered an award of
separation pay as equivalent to the aggregate relief constituted
by reinstatement plus payment of backwages under Article 280 of
the Labor Code. The grant of separation pay was a proper substitute
only for reinstatement; it could not be an adequate substitute both for
reinstatement and for backwages. In effect, the NLRC in its assailed
decision failed to give to petitioner the full relief to which she was
entitled under the statute. [emphasis ours] 
STADIH

Apparently, when the NLRC changed the LA's decision (specifically, the
order to award separation pay in lieu of reinstatement), Wenphil read this to
mean to be the "modification" envisioned in the compromise agreement, Wenphil
likewise effectively concluded that separation pay and backwages are the same
or are interchangeable reliefs. This conclusion can be deduced from Wenphil's
insistence not to pay the respondent's remaining backwages under its erroneous
reasoning that this was the effect of the NLRC's order to Wenphil to pay
separation pay in lieu of reinstatement.
We emphasize that the basis for the payment of backwages is different
from that of the award of separation pay. Separation pay is granted where
reinstatement is no longer advisable because of strained relations between the
employee and the employer. Backwages represent compensation that should
have been earned but were not collected because of the unjust dismissal. The
basis for computing separation pay is usually the length of the employee's past
service, while that for backwages is the actual period when the employee was
unlawfully prevented from working. 51
Had Wenphil really wanted to put a stop to the running of the period for the
payment of the respondents' backwages, then it should have immediately
complied with the NLRC's order to award the employees their separation pay in
lieu of reinstatement. This action would have immediately severed the employer-
employee relationship. However, the records are bereft of any evidence that
Wenphil actually paid the respondents' separation pay. Thus, the employer-
employee relationship between Wenphil and the respondents never ceased and
the employment status remained pending and uncertain until the CA actually
rendered its decision that the respondents had not been illegally dismissed. In
the context of the parties' agreement, it was only at this point that the payment of
backwages should have stopped.
 A compromise agreement should not
be contrary to law, morals, good
customs and public policy.

While it is true that a compromise agreement is binding between the

parties and becomes the law between them, 52 it is also a rule that to be valid, a
compromise agreement must not be contrary to law, morals, good customs and
public policy. 53
In the present case, the parties' compromise agreement simply provided
that Wenphil's obligation to pay the respondents' backwages shall end the
moment the NLRC modifies, amends or reverses the illegal dismissal decision of
LA Bartolabac. On its face, there is nothing invalid with such stipulation. Indeed,
had the NLRC reversed the LA, the obligation to pay backwages would have
stopped. The NLRC, however, did not decree a reversal of the finding of illegal
dismissal. In fact, it affirmed the illegal dismissal conclusion, confining itself
merely to a modification of the consequences of the illegal dismissal — from
reinstatement to the payment of separation pay.
This "modification" of course we cannot accept; the option under the legal
policy is solely limited to a ruling that the respondents had not been
illegally dismissed. Otherwise, we would be violating the Labor Code's policy
entitling illegally dismissed employees to their right to backwages even during the
period of appeal. As we held in the case of Garcia v. Philippine Airlines: 54
The Court reaffirms the prevailing principle that even if the order of
reinstatement of the Labor Arbiter is reversed on appeal, it is
obligatory on the part of the employer to reinstate and pay the
wages of the dismissed employee during the period of appeal
until reversal by the higher court. It settles the view that the Labor
Arbiter's order of reinstatement is immediately executory and the
employer has to either re-admit them to work under the same terms
and conditions prevailing prior to their dismissal, or to reinstate them in
the payroll, and that failing to exercise the options in the
alternative, employer must pay the employee's salaries. [emphasis
ours]
This ruling embodies a principle and policy of the law that cannot be
watered down by any lesser agreement except perhaps when backwages are
already earned entitlements that the employee chooses to surrender for a
valuable consideration (and even then, the consideration must at least be
equitable). This legal policy emphasizes, too, the rule that separation pay cannot
be a substitute for backwages but only for reinstatement. The award of
separation pay is not inconsistent with the payment of backwages. Thus, until a
higher court's or tribunal's reversal of the finding that an employee had been
illegally dismissed, the employee would be entitled to receive his reinstatement
salary or backwages during the period of appeal until such reversal. This is in line
with the Labor Code's policy that an order of reinstatement, which can either be
actual or through the payroll, is immediately executory and is not affected by the
period of appeal.

Period for Computation of

Backwages

The records show that the inconsistency between the labor arbitration
rulings and the CA's ruling was on the period for the computation of such
backwages and not on whether the respondents were still entitled to such
backwages during the period of appeal until the reversal of the finding of illegal
dismissal. 
aCTcDH

According to the LA, whose ruling the NLRC affirmed, the period for
computation should be from February 15, 2002 until November 8, 2002 since the
NLRC's decision which affirmed the LA's finding of illegal dismissal became final
and executory on November 8, 2002. The LA started the counting of the period
on February 15, 2002 since that was the day when Wenphil last paid the
respondents' backwages.
On the other hand, the CA, in setting aside the NLRC's rulings, relied on
the case of Pfizer v. Velasco where we ruled that the backwages of the
dismissed employee should be granted during the period of appeal until reversal
by a higher court. Since the first CA decision which found that the respondents
had not been illegally dismissed was promulgated on August 27, 2003, then the
reversal by the higher court was effectively made on August 27, 2003.
As against this view, the respondents argued that the period for payment
of their backwages should end on February 14, 2007 since the SC decision in
G.R. No. 162447 which affirmed the CA's findings that the respondents had not
been legally dismissed became final and executory on February 15, 2007.
Among these views, the commanding one is the rule in Pfizer, which
merely echoes the rulings we made in the cases of Roquero v. Philippine
Airlines 55 and Garcia v. Philippine Airlines 56 that the period for computing the
backwages due to the respondents during the period of appeal should end on the
date that a higher court reversed the labor arbitration ruling of illegal dismissal.
In this case, the higher court which first reversed the NLRC's ruling was not the
SC but rather the CA. In this light, the CA was correct when it found that that the
period of computation should end on August 27, 2003. The date when the SC's
decision became final and executory need not matter as the rule
in Roquero, Garcia and Pfizer merely referred to the date of reversal, not the
date of the ultimate finality of such reversal.
 As a last minor detail, we do not agree with the CA that the date of
computation should start on February 15, 2002. Rather, it should be on February
16, 2002. The respondents themselves admitted in their motion for computation
and issuance of writ of execution that the last date when they were paid their
backwages was on February 15, 2002. To start the computation on the same
date would result to a duplication of wages for this day; thus, computation should
start on the following date — February 16, 2002.
WHEREFORE, in light of these considerations, we hereby DENY the
petition. The Court of Appeals' decision dated August 31, 2012 and resolution
dated June 20, 2013, which annulled and set aside the March 26, 2010 decision
and September 15, 2010 resolution of the NLRC, are hereby AFFIRMED with
MODIFICATION. The period for the computation of backwages of respondents
Almer R. Abing and Anabelle M. Tuazon should be from February 16, 2002 until
August 27, 2003, when the Court of Appeals promulgated its decision reversing
the NLRC's finding of illegal dismissal. No costs.
SO ORDERED.
|||  (Wenphil Corp. v. Abing, G.R. No. 207983, [April 7, 2014])

G.R. No. 204646 April 15, 2015.]

SMART COMMUNICATIONS, INC., NAPOLEON L. NAZARENO,

and RICARDO P. ISLA, * petitioners, vs. JOSE LENI Z.
SOLIDUM, respondent.

DECISION

CARPIO, J  : p

The Case

This is a petition 1 for review on certiorari under Rule 45 of the Rules of

Court. Petitioners Smart Communications, Inc. (Smart), Napoleon L. Nazareno
and Ricardo P. Isla (Isla) challenge the Court of Appeals' 3 July 2012 Amended
Decision 2 and 23 November 2012 Resolution 3 in CA-G.R. SP No. 115794,
affirming the National Labor Relations Commission's (NLRC) 30 July 2010
Resolution. 4  CTEacH
 The Facts

On 26 April 2004, Smart hired respondent Jose Leni Z. Solidum (Solidum)

as Department Head for Smart Buddy Activation. Smart Buddy Activation is
under the Product Marketing Group which is headed by Isla. On 21 September
2005, Isla gave Solidum a memorandum 5 informing him of alleged acts of
dishonesty, directing him to explain why his employment should not be
terminated, and placing him under preventive suspension without pay for 30
days. On 28 September 2005, Solidum submitted his written explanation 6 in
response to the 21 September 2005 notice.
On 22 October 2005, Isla gave Solidum a memorandum 7 dated 21
October 2005 informing him of a modified set of alleged acts of dishonesty,
directing him to explain why his employment should not be terminated, extending
his preventive suspension by 10 days, and inviting him to the administrative
investigation scheduled on 26 October 2005.
On 11 November 2005, Isla gave Solidum a memorandum 8 dated 9
November 2005 terminating his employment "for fraud or willful breach of trust,
falsification, misrepresentation, conflict of interest, serious misconduct and
dishonesty-related offenses." 9
Solidum filed against Smart a complaint 10 for illegal dismissal, illegal
suspension, non-payment of salaries, actual, moral and exemplary damages,
and attorney's fees.
In his 3 July 2006 Decision, 11 the Labor Arbiter found that Solidum's
preventive suspension and dismissal were illegal and that he was entitled to full
back wages, moral and exemplary damages, and attorney's fees. The dispositive
portion of the Decision stated:
WHEREFORE, premises all considered, judgment is hereby
rendered in favor of complainant and against respondents, as follows:
1. Declaring the 20-day extended preventive suspension of complainant
from October 22, 2005 to November 10, 2005 illegal and
tantamount to constructive dismissal, and ordering respondents to
jointly and severally pay complainant his corresponding salaries,
benefits, privileges, allowances and other incentives/bonuses
during the period from October 22 to November 10, 2005, in the
amount of P236,061.94;  HTDcCE

2. Ordering respondents to jointly and severally pay the complainant's

unpaid salaries, benefits, privileges, allowances, and other
benefits/bonuses during the 30-day preventive suspension, in the
amount of P365,896.00;
 3. Declaring the dismissal of complainant effective November 11, 2005
as illegal, and ordering respondents to reinstate the complainant
to his former position, immediately upon receipt of this decision,
either physically or in the payroll, at the option of the former, and
failure to exercise their option within ten (10) days hereof, shall
place the complainant on payroll reinstatement, with payment of
accrued salaries, allowances, benefits/incentives and bonuses;
4. Ordering respondents to jointly and severally pay complainant his full
backwages, inclusive of all benefits bonuses, privileges,
incentives, allowances or their money equivalents, from date of
dismissal on November 11, 2005 until actual reinstatement,
partially computed as follows:
a. Backwages and benefits — P2,903,561.79
b. Quarterly performance bonus — P935,640.00
c. Monthly Gas allowance — P90,693.00
d. Monthly Rice allowance — P9,000.00
e. Monthly driver's allowance — P68,175.00
f. 13th month pay (pro-rata) — P265,569.68
g. Unpaid accumulated leaves 2004 & 2005 — P472,123.87
h. Smart incentive entitlement — P7,370,250.00[;]
5. Ordering respondents to jointly and severally pay complainant for the
foregone opportunity of pursuing studies in the United Kingdom
under the British Chevening Scholarship Award, in the sum of
20,189.00 British pounds or Peso 1,982,727.37[; and]  DIETHS

6. Ordering respondents to jointly and severally pay complainant moral

damages in the amount of P2 million, exemplary damages in the
amount of P2 million, and attorney's fees equivalent to 10% of the
judgment award.
SO ORDERED. 12
On 25 July 2006, Smart appealed to the NLRC. On 13 November 2006,
the Labor Arbiter issued a writ of execution ordering the sheriff to collect from
petitioners P1,440,667.93, representing Solidum's accrued salaries, allowances,
benefits, incentives and bonuses from 21 July to 20 October 2006. On 15 August
and 25 October 2007, 11 February, 28 April, 23 July and 11 November 2008, and
22 January 2009, the Labor Arbiter issued seven other alias writs of execution
ordering the sheriff to collect from petitioners Solidum's accrued salaries,
allowances, benefits, incentives and bonuses.
 In its 26 January 2009 Resolution, 13 the NLRC reversed the Labor
Arbiter's 3 July 2006 Decision and dismissed for lack of merit Solidum's
complaint. Solidum filed a motion 14 for reconsideration dated 9 February 2009.
On 4 May 2009, Solidum filed with the Labor Arbiter an ex-parte
motion 15 praying that an alias writ of execution be issued directing the sheriff to
collect from petitioners P1,440,667.93, representing Solidum's accrued salaries,
allowances, benefits, incentives and bonuses from 21 January to 20 April
2009. cITAaD

In its 29 May 2009 Decision, 16 the NLRC denied for lack of merit

Solidum's 9 February 2009 motion for reconsideration.

The Labor Arbiter's Ruling

In his 29 July 2009 Order, 17 the Labor Arbiter denied for lack of merit
Solidum's ex-parte motion praying that an alias writ of execution be issued
directing the sheriff to collect from petitioners P1,440,667.93, representing
Solidum's accrued salaries, allowances, benefits, incentives and bonuses from
21 January to 20 April 2009. The Labor Arbiter held that:
In the instant case, the NLRC promulgated its Decision dated
January 26, 2009 reversing this Office's Decision dated July 03, 2006.
Also, the NLRC in its Decision dated May 29, 2009 denied the
complainant's motion for reconsideration of its Decision dated January
26, 2009. This Office is mindful of the fact that the NLRC is tasked with
the review of decisions promulgated by this Office, as such, it is a higher
tribunal as contemplated by law.
Verily, the recent decision of the NLRC reversing the Decision of
this Office prevents any future issuance of any writ of execution on the
reinstatement aspect in line with Gracia, et al. vs. Philippine Airlines,
Inc. and International Container Terminal Services vs. NLRC. 18
Solidum appealed to the NLRC.

The NLRC's Ruling

In its 31 May 2010 Decision, 19 the NLRC reversed the Labor Arbiter's 29

July 2009 Order. The NLRC held that:
In the case at bar, records show that respondents appealed from
the Labor Arbiter's Decision to the Commission on July 25, 2006. The
Commission resolved respondents' appeal on January 26, 2009,
reversing the Decision of the Labor Arbiter dated July 3, 2006. Notably,
there is no showing in the records that respondents reinstated
complainant to his former position. Hence, pursuant to Article 223 of the
 Labor Code, as amended, relative to the reinstatement aspect of the
Labor Arbiter's Decision, respondents are obligated to pay complainant's
salaries and benefits, computed from July 13, 2006, when respondents
received a copy of the Labor Arbiter's Decision which, among others,
ordered the reinstatement of complainant, up to the date of finality of the
Commission's resolution reversing the Labor Arbiter's Decision, which,
for this purpose, is reckoned on May 29, 2009, when the Commission
denied complainant's Motion for Reconsideration.
Indeed, common sense dictates that complainant's entitlement to
reinstatement salaries/wages and benefits, emanating from the Labor
Arbiter's order of reinstatement, presupposes that said order of
reinstatement is still enforceable. Here, the Labor Arbiter's order of
reinstatement dated July 3, 2006 was no longer enforceable as of May
29, 2009 when the Commission's resolution reversing the Labor Arbiter's
order of reinstatement is deemed to have become final as hereinabove
discussed. Patently then, complainant is no longer entitled to
reinstatement salaries/wages and benefits after May 29, 2009.
Significantly, the Order of the Labor Arbiter being appealed from
by complainant, denied the latter's motion for issuance of alias writ of
execution for the collection of his reinstatement salaries and benefits for
the period covering January 21, 2009 to April 20, 2009. The Labor
Arbiter thus committed serious error in denying complainant's motion
with respect to his reinstatement salaries and benefits as he is entitled to
the same for the period starting July 13, 2006 to May 29, 2009. 20  ADTCaI

Solidum filed a motion 21 for partial reconsideration. Petitioners filed a

motion 22 for reconsideration. In its 30 July 2010 Resolution, the NLRC granted
Solidum's motion for partial reconsideration and denied for lack of merit
petitioners' motion for reconsideration. The NLRC held that:
Our Entry of Judgment dated June 01, 2010 clearly states that the
Decision promulgated by this Commission on May 29, 2009 had become
final and executory on August 10, 2009. Thus, We so hold that the date
of finality of Our Decision reversing the Labor Arbiter's Decision dated
July 3, 2006 is August 10, 2009, and the computation of complainant's
reinstatement or accrued salaries/wages and other benefits should be up
to August 10, 2009.
Anent respondents' Motion for Reconsideration, We find the same
unmeritorious. 23
Petitioners appealed to the Court of Appeals.
In his alias writ 24 of execution dated 22 October 2010, the Labor Arbiter
ordered the sheriff to collect from petitioners P1,440,667.93, representing
Solidum's accrued salaries, allowances, benefits, incentives and bonuses from
21 January to 20 April 2009.
 The Court of Appeals' Ruling

In its 25 January 2011 Decision, 25 the Court of Appeals granted

petitioners' petition for certiorari, prohibition and mandamus with prayer for the
issuance of a writ of preliminary injunction and/or temporary restraining order and
set aside the NLRC's 31 May 2010 Decision and 30 July 2010 Resolution. The
Court of Appeals held that:  EHScCA

The order of the Labor Arbiter denying Private Respondent's ex-

parte motion for issuance of Alias Writ of Execution is not a final order as
there was something else to be done, namely, the resolution of his
Complaint for Illegal Dismissal against Petitioners on the merits. The
subject Order of the Labor Arbiter did not put an end to the issues of
illegal suspension and illegal dismissal, and, thus, partakes the nature of
an interlocutory order. It is jurisprudential that an interlocutory order is
not appealable until after the rendition of the judgment on the merits for a
contrary rule would delay the administration of justice and unduly burden
the courts. Being interlocutory in nature, the subject Order could not
have been validly appealed.
Moreover, as correctly argued by the Petitioners, an appeal from
an interlocutory order is a prohibited pleading under Section 4 of the
2005 Revised Rules of Procedure of the NLRC. Consequently, the Labor
Arbiter's order being interlocutory and unappealable, Public Respondent
NLRC has no jurisdiction to rule on the appeal except to dismiss the
same. The assailed Decision and the Resolution, rendered in excess of
the Public Respondent NLRC's jurisdiction, are therefore null.
Besides and more importantly, records show that the Decision,
dated May 29, 2009, of the NLRC in the Illegal Dismissal Case which
effectively denied Private Respondent's Complaint for Illegal Dismissal
against Petitioners already attained finality on June 1, 2010. Indeed, an
Entry of Judgment was accordingly made. Clearly, Private Respondent
can neither pray nor cause this Court to grant his Ex-parte Motion for
Issuance of Writ of Execution to reinstate him since his dismissal by
Petitioners was finally ruled to be legal; hence, the denial of his
complaint for lack of merit. Ruling on Private Respondent's Ex-parte
motion shall also have an effect of reviewing a final judgment which the
law and the court abhor. It bears to stress that when a final judgment
becomes executory, it thereby becomes immutable and unalterable. 26
Solidum filed a motion 27 for reconsideration.
In his alias writ 28 of execution dated 18 May 2011, the Labor Arbiter
ordered the sheriff to collect from petitioners P1,440,667.93, representing
Solidum's accrued salaries, allowances, benefits, incentives and bonuses from
21 April to 20 July 2009. Petitioners filed with the Court of Appeals a motion 29 to
order Solidum to return P2,881,335.86, representing the total amount under the
22 October 2010 and 18 May 2011 alias writs of execution.
In its 3 July 2012 Amended Decision, the Court of Appeals partly granted
Solidum's motion for reconsideration and denied petitioners' motion to order the
return of P2,881,335.86. The Court of Appeals held that:
[T]here was a wrong appreciation of fact relative to the date of
finality of judgment. The true date when the May 29, 2009 NLRC
decision became final and executory was on August 10, 2009 and not on
June 1, 2010. (Rollo, page 1895) Conformably with the foregoing, the
involved portion of our ruling which is the subject of the discussion at
hand is hereby modified by changing the stated date therein from June
1, 2010 to August 10, 2009.  HCDAcE

xxx xxx xxx

On the last issue for consideration — refund of monetary award, We find
necessary to quote the following pronouncement of the High Court:
xxx xxx xxx
The Court reaffirms the prevailing principle that even if the
order of reinstatement of the Labor Arbiter is reversed on appeal,
it is obligatory on the part of the employer to reinstate and pay the
wages of the dismissed employee during the period of appeal
until reversal by the higher court. (Juanito A. Garcia vs. Philippine
Airlines, Inc., G.R. No. 164856, January 20, 2009)
In view thereof, no refund will thus be permitted by this
Court. 30
Petitioners filed a motion 31 for partial reconsideration with motion to order
the return of P2,881,335.86. In its 23 November 2012 Resolution, the Court of
Appeals held that:
The move to reconsider the January 26, 2009 decision of the NLRC
was denied on May 29, 2009. Thereafter, an Entry of Judgment was
issued which provides in particular the following: "this is to certify that
on May 29, 2009, a DECISION was rendered . . . and that the same
has, pursuant to Rules of the Commission, became [sic] final and
executory on Aug. 10, 2009". (Rollo, p. 1895) It appears therefore that
the situation contemplated in the last paragraph of the Section 14 had
been the case here. In view of this, We find no cogent reason to
reverse our earlier ruling that August 10, 2009 is the true date of finality
of subject decision.
xxx xxx xxx
In the light, however, of our earlier discussion on the true date of
finality of judgment, we cannot order the return of the amounts released
 by way of the 8th and 9th Alias Writ of Execution. The wages,
allowances, incentives/benefits and bonuses received through the said
writs covered the period from January 21, 2009 to July 20, 2009, thus,
the latter is not required to reimburse the same due to the fact that one is
entitled to such amounts until the day that the reinstatement order was
reversed with finality (which in this case falls on August 10, 2009).
(See Juanito A. Garcia vs. Philippine Airlines, Inc. G.R. No. 164856,
January 20, 2009) 32
Hence, the present petition.

The Issues

Petitioners raised as issues that the Court of Appeals erred in ruling that
(1) the NLRC's 29 May 2009 Decision became final and executory on 10 August
2009, and (2) Solidum was entitled to P2,881,335.86, representing the total
amount under the 22 October 2010 and 18 May 2011 alias writs of execution.

The Court's Ruling

The petition is unmeritorious.

The NLRC's 29 May 2009 Decision became final and executory on 10
August 2009 as shown on the entry of judgment. 33 The entry of judgment states:
This is to certify that on May 29, 2009, a DECISION was rendered in the
above-entitled case, the dispositive portion of which reads as follows: acTDCI

"WHEREFORE, premises considered, complainant's

motion for reconsideration, as well as respondents' motion for
injunction are hereby both DENIED for lack of merit. Accordingly,
Our January 26, 2009 Resolution is hereby REITERATED.
SO ORDERED."
and that the same has pursuant to the Rules of the Commission,
become final and executory on Aug. 10, 2009 and is hereby recorded
in the Book of Entries of Judgments.
Quezon City, Philippines, June 01, 2010. 34 (Boldfacing supplied)
Moreover, the certification 35 issued by the NLRC states that the NLRC's
29 May 2009 Decision became final and executory on 10 August 2009:
This is to certify that the Decision in NLRC Case No. 00-11-
09564-05/NLRC CA No. 049875-06, entitled: Jose Leni Z. Solidum vs.
Smart Communications, Inc., Napoleon L. Nazareno, and/or Ricky P.
Isla, was promulgated on 29 May 2009; the same was mailed on 11
June 2009 and in the absence of return cards, the decision had
 become final and executory on 10 August 2009, (after sixty (60)
calendar days from the date of mailing), and had been recorded in the
Book of Entries of Judgment, pursuant to Rule VII Section 14 of the 2005
Revised Rules of Procedure of the NLRC which provides: "The
Executive Clerk or Deputy Executive Clerk shall consider the decision,
resolution or order as final and executory after sixty (60) calendar days
from date of mailing in the absence of return cards, certifications from
the post office, or other proof of service to parties. 36 (Boldfacing
supplied)
Since the NLRC's 29 May 2009 Decision became final and executory on
10 August 2009, Solidum is entitled to P2,881,335.86, representing his accrued
salaries, allowances, benefits, incentives and bonuses for the period 21 January
to 20 July 2009.
In Bago v. NLRC, 37 the Court held that employees are entitled to their
accrued salaries, allowances, benefits, incentives and bonuses until the NLRC's
reversal of the labor arbiter's order of reinstatement becomes final and executory,
as shown on the entry of judgment. The Court held that:  CDAcIT

Finally, on Arlyn's claim that respondents "unilaterally withheld her

payroll reinstatement" after the NLRC reversed on September 27, 2004
the Labor Arbiter's decision, Article 223, paragraph 6 of the Labor Code
provides that the decision of the NLRC on appeals from decisions of the
Labor Arbiter "shall become final and executory after ten (10) calendar
days from receipt thereof by the parties." The 2002 New Rules of
Procedure of the NLRC provided:
RULE VII
xxx xxx xxx
SECTION 14. FINALITY OF DECISION OF THE
COMMISSION AND ENTRY OF JUDGMENT. — (a) Finality of
the Decisions, Resolutions or Orders of the Commission. Except
as provided in Rule XI, Section 9, the decisions, resolutions or
orders of the Commission/Division shall become executory after
ten (10) calendar days from receipt of the same.
(b) Entry of Judgment. — Upon the expiration of the ten
(10) calendar day period provided in paragraph (a) of this section,
the decision/resolution/order shall, as far as practicable, be
entered in a book of entries of judgment.
(c) Allowance for Delay of Mail in the Issuance of Entries of
Judgment. — In issuing entries of judgment, the Executive Clerk
of Court or the Deputy Executive Clerk, in the absence of a return
card or certification from the post office concerned, shall
determine the finality of the decision by making allowance for
 delay of mail, computed sixty (60) calendar days from the date of
mailing of the decision, resolution or order.
That the Court of Appeals may take cognizance of and resolve a
petition for certiorari for the nullification of the decisions of the NLRC on
jurisdictional and due process considerations does not affect the
statutory finality of the NLRC Decision. The 2002 New Rules of
Procedure of the NLRC so provided:  EAICTS

RULE VIII
xxx xxx xxx
SECTION 6. EFFECT OF FILING OF PETITION
FOR CERTIORARI ON EXECUTION. — A petition
for certiorari with the Court of Appeals or the Supreme Court shall
not stay the execution of the assailed decision unless a temporary
restraining order is issued by the Court of Appeals or the
Supreme Court.
In the case at bar, Arlyn received the September 27, 2004 NLRC
decision on October 25, 2004, and the January 31, 2005 NLRC
Resolution denying her Motion for Reconsideration on February 23,
2005. There is no showing that the Court of Appeals issued a temporary
restraining order to enjoin the execution of the NLRC decision, as
affirmed by its Resolution of January 31, 2005.
If above-quoted paragraph (a) of Section 14 of Rule VII of the
2002 NLRC New Rules of Procedure were followed, the decision of
the NLRC would have become final and executory on March 7,
2005, ten (10) calendar days from February 25, 2005. The NLRC,
however, issued on June 16, 2005 a Notice of Entry of Judgment
stating that the NLRC Resolution of January 31, 2005 became final
and executory on April 16, 2005, apparently following the above-
quoted last paragraph of Section 14 of Rule VII. No objection
having been raised by any of the parties to the declaration in the
Notice of Entry of Judgment of the date of finality of the NLRC
January 31, 2005 Resolution, Arlyn's payroll reinstatement ended
on April 16, 2005. . . .
WHEREFORE, the petition is, in light of the foregoing
discussions, DENIED and the questioned decision of the court a quo is
AFFIRMED with MODIFICATION in that respondent Standard
Insurance, Co., Inc. is ordered to pay the salaries due petitioner,
Arlyn Bago, from the time her payroll reinstatement was withheld
after the promulgation on September 27, 2004 of the decision of the
National Labor Relations Commission until April 16, 2005 when it
became final and executory. 38 (Boldfacing supplied)
 WHEREFORE, the petition is DENIED. The Court of Appeals' 3 July 2012
Amended Decision and 23 November 2012 Resolution in CA-G.R. SP No.
115794 are AFFIRMED.
SO ORDERED.
|||  (Smart Communications, Inc. v. Solidum, G.R. No. 204646 , [April 15, 2015])

G.R. No. 182915. December 12, 2011.]

MARIALY O. SY, VIVENCIA PENULLAR, AURORA

AGUINALDO, GINA ANIANO, * GEMMA DELA PEÑA,
EFREMIA * MATIAS, ROSARIO BALUNSAY, ROSALINDA
PARUNGAO, ARACELI * RUAZA, REGINA RELOX, TEODORA
VENTURA, AMELIA PESCADERO, LYDIA DE GUZMAN,
HERMINIA HERNANDEZ, OLIVIA ABUAN, CARMEN
PORTUGUEZ, LYDIA PENNULAR, * EMERENCIANA WOOD,
PRISCILLA * ESPINEDA, NANCY FERNANDEZ,
EVA * MANDURIAGA, CONSOLACION SERRANO, SIONY
CASILLAN, LUZVIMINDA GABUYA, MYRNA TAMIN, EVELYN
REYES, EVA AYENG, EDNA YAP, RIZA * DELA CRUZ ZUÑIGA,
TRINIDAD RELOX, MARLON FALLA, MARICEL OCON, and
ELVIRA MACAPAGAL, petitioners, vs. FAIRLAND KNITCRAFT
CO., INC., respondent.

[G.R. No. 189658. December 12, 2011.]

SUSAN T. DE LEON, petitioner, vs. FAIRLAND KNITCRAFT

CO., INC., MARIALY O. SY, VIVENCIA PENULLAR, AURORA
AGUINALDO, GINA ANIANO, GEMMA DELA PEÑA, EFREMIA
MATIAS, ROSARIO BALUNSAY, ROSALINDA PARUNGAO,
ARACELI RUAZA, REGINA RELOX, TEODORA VENTURA,
AMELIA PESCADERO, RICHON APARRE, LYDIA DE GUZMAN,
HERMINIA HERNANDEZ, OLIVIA ABUAN, CARMEN
PORTUGUEZ, LYDIA PENNULAR, EMERENCIANA WOOD,
PRISCILLA ESPINEDA, NANCY FERNANDEZ, EVA
MANDURIAGA, CONSOLACION SERRANO, SIONY CASILLAN,
LUZVIMINDA GABUYA, MYRNA TAMIN, EVELYN REYES, EVA
AYENG, EDNA YAP, RIZA DELA CRUZ ZUÑIGA, TRINIDAD
 RELOX, MARLON FALLA, MARICEL OCON, and ELVIRA
MACAPAGAL, respondents.

DECISION

DEL CASTILLO, J  : p

The issues of labor-only contracting and the acquisition of a labor

tribunal of jurisdiction over the person of a respondent are the matters up for
consideration in these consolidated Petitions for Review on Certiorari.
Assailed in G.R. No. 182915 is the May 9, 2008 Resolution 1 of the
Special Ninth Division of the Court of Appeals (CA) in CA-G.R. SP No. 93204
which reversed and set aside the July 25, 2007 Decision 2 of the CA's First
Division and ordered the exclusion of Fairland Knitcraft Co., Inc. (Fairland)
from the decisions of the labor tribunals. Said July 25, 2007 Decision, on the
other hand, affirmed the November 30, 2004 Decision 3 and August 26, 2005
Resolution 4 of the National Labor Relations Commission (NLRC) which, in
turn, reversed and set aside the November 26, 2003 Decision 5 of the Labor
Arbiter finding the dismissal as valid.
On the other hand, assailed in G.R. No. 189658 is the July 20, 2009
Decision 6 of the CA's Special Former Special Eighth Division in CA-G.R. SP
No. 93860, which affirmed the aforesaid November 30, 2004 Decision and
August 26, 2005 Resolution of the NLRC. Likewise assailed is the October 1,
2009 CA Resolution 7 denying the Motion for Reconsideration thereto.

Factual Antecedents

Fairland is a domestic corporation engaged in garments business, while

Susan de Leon (Susan) is the owner/proprietress of Weesan Garments
(Weesan). On the other hand, the complaining workers (the workers) are
sewers, trimmers, helpers, a guard and a secretary who were hired by
Weesan as follows:  AIHaCc

NAME DATE HIRED SALARIES

     
Marialy O. Sy 06-23-97 P1,500.00/week
Lydia Penullar 04-99 1,000.00/week
Lydia De Guzman 08-01-98 1,000.00/week
Olivia Abuan 08-95 1,300.00/week
Evelyn Reyes 11-2000 1,000.00/week
Myrna Tamin 11-2000 1,000.00/week
Elvira Macapagal 04-01-02 1,000.00/week
Edna Yap 10-24-99 700.00/week
Rosario Balunsay 01-21-98 1,400.00/week
Rosalinda P. Parungao 03-02-01 1,000.00/week
Gemma Dela Peña 11-24-99 1,000.00/week
Emerenciana Wood 01-98 1,400.00/week
Carmen Portuguez 11-2000 800.00/week
Gina G. Anano 09-98 1,500.00/week
Aurora Aguinaldo 01-2000 1,000.00/week
Amelia Pescadero 01-96 1,000.00/week
Siony Casillan 05-2002 1,000.00/week
Consolacion Serrano 10-2001 900.00/week
Teodora Ventura 01-2000 1,000.00/week
Regina Relox 05-97 1,500.00/week
Eufemia Matias 03-2000 1,000.00/week
Herminia Hernandez 08-95 1,000.00/week
Richon Aparre 07-99 1,200.00/week
Eve Manduriaga 02-2000 1,000.00/week
Priscila Espineda 11-2000 1,300.00/week
Aracelli Ruaza 03-2000 1,000.00/week
Nancy Fernandez 11-2000 1,400.00/week
Eva Ayeng 11-2000 1,000.00/week
Luzviminda Gabuya 11-2000 1,000.00/week
Liza Dela Cuz Zuñiga 10-2001 1,200.00/week
Vivencia Penullar 01-2000 1,500.00/week
Trinidad Relox 08-96 1,200.00/week
Marlon Falla 06-24-00 840.00/week
Maricel Ocon 01-15-01 1,500.00/week 8 
 On December 23, 2002, workers Marialy O. Sy, Vivencia Penullar,
Aurora Aguinaldo, Gina Aniano, Gemma dela Peña and Efremia Matias filed
with the Arbitration Branch of the NLRC a Complaint 9 for underpayment
and/or non-payment of wages, overtime pay, premium pay for holidays, 13th
month pay and other monetary benefits against Susan/Weesan. In January
2003, the rest of the aforementioned workers also filed similar complaints.
Eventually all the cases were consolidated as they involved the same causes
of action.
On February 5, 2003, Weesan filed before the Department of Labor and
Employment-National Capital Region (DOLE-NCR) a report on its temporary
closure for a period of not less than six months. As the workers were not
anymore allowed to work on that same day, they filed on February 18, 2003
an Amended Complaint, 10 and on March 13, 2003, another pleading entitled
Amended Complaints and Position Paper for Complainants, 11 to include the
charge of illegal dismissal and impleaded Fairland and its manager, Debbie
Manduabas (Debbie), as additional respondents.
A Notice of Hearing 12 was thereafter sent to Weesan requesting it to
appear before Labor Arbiter Ramon Valentin C. Reyes (Labor Arbiter Reyes)
on April 3, 2003, at 10:00 a.m. On said date and time, Atty. Antonio A.
Geronimo (Atty. Geronimo) appeared as counsel for Weesan and requested
for an extension of time to file his client's position paper. 13 On the next
hearing on April 28, 2003, Atty. Geronimo also entered his appearance for
Fairland and again requested for an extension of time to file position paper. 14
On May 16, 2003, Atty. Geronimo filed two separate position papers —
one for Fairland 15 and another for Susan/Weesan. 16 The Position Paper for
Fairland was verified by Debbie while the one for Susan/Weesan was verified
by Susan. To these pleadings, the workers filed a Reply. 17
Atty. Geronimo then filed a Consolidated Reply 18 verified 19 both by
Susan and Debbie.
On November 25, 2003, the workers submitted their Rejoinder. 20

Ruling of the Labor Arbiter

On November 26, 2003, Labor Arbiter Reyes rendered his

Decision, 21 the dispositive portion of which reads:
WHEREFORE, premises all considered, judgment is hereby
rendered, as follows:
Dismissing the complaint for lack of merit; and ordering the
respondents to pay each complainant P5,000.00 by way of financial
assistance. 
HcSaTI
 SO ORDERED. 22

Ruling of the National Labor Relations Commission

The workers filed their appeal which was granted by the NLRC. The
dispositive portion of the NLRC Decision 23 reads:
WHEREFORE, premises considered, the appealed decision is
hereby set aside and the dismissal of complainants is declared illegal.
Respondents are, therefore, ordered to reinstate complainants to
their original or equivalent position with full backwages with legal
interests thereon from February 5, 2003, until actually reinstated and
fully paid, with retention of seniority rights and are further ordered to pay
solidarily to the complainants the difference of their underpaid/unpaid
wages, unpaid holidays, unpaid 13th month pays and unpaid service
incentive leaves with legal interests thereon, to wit:
xxx xxx xxx
In the event that reinstatement is not possible, respondents are
ordered to pay solidarily to complainants their respective separation
pays computed as follows:
xxx xxx xxx
Respondents are likewise ordered to pay ten (10%) percent of the
gross award as and by way of attorney's fees.
SO ORDERED. 24
Hence, Atty. Geronimo filed a Motion for Reconsideration. 25 However,
Fairland filed another Motion for Reconsideration 26 through Atty. Melina O.
Tecson (Atty. Tecson) assailing the jurisdiction of the Labor Arbiter and the
NLRC over it, claiming that it was never summoned to appear, attend or
participate in all the proceedings conducted therein. It also denied that it
engaged the services of Atty. Geronimo.
The NLRC however, denied both motions for lack of merit. 27
Fairland and Susan thus filed their separate Petitions
for Certiorari before the CA docketed as CA-G.R. SP No. 93204 and CA-G.R.
SP No. 93860, respectively.

Ruling of the Court of Appeals in CA-G.R. SP No. 93204

On July 25, 2007, the CA's First Division denied Fairland's petition. 28 It
affirmed the NLRC's ruling that the workers were illegally dismissed and that
Weesan and Fairland are solidarily liable to them as labor-only contractor and
principal, respectively.
 Fairland filed its Motion for Reconsideration 29 as well as a Motion for
Voluntary Inhibition 30 of Associate Justices Celia C. Librea-Leagogo and
Regalado E. Maambong from handling the case. As the Motion for Voluntary
Inhibition was granted through a Resolution 31 dated November 8, 2007, the
case was transferred to the CA's Special Ninth Division for resolution of
Fairland's Motion for Reconsideration. 32
On May 9, 2008, the CA's Special Ninth Division reversed 33 the First
Division's ruling. It held that the labor tribunals did not acquire jurisdiction over
the person of Fairland, and even assuming they did, Fairland is not liable to
the workers since Weesan is not a mere labor-only contractor but a bona
fide independent contractor. The Special Ninth Division thus annulled and set
aside the assailed NLRC Decision and Resolution insofar as Fairland is
concerned and excluded the latter therefrom. The dispositive portion of said
Resolution reads:
WHEREFORE, the Motion for Reconsideration filed by the
movant is GRANTED. 
The July 25, 2007 Decision of the First Division of this Court
finding that the NLRC did not act with grave abuse of discretion
amounting to lack or excess of jurisdiction and denying the Petition is
REVERSED and SET ASIDE.
Consequently, the Decision and Resolution issued by the public
respondent on November 30, 2004 and August 26, 2005, respectively,
are hereby ANNULLED and SET ASIDE insofar as [it] concerns the
petitioner Fairland Knitcraft Co., Inc. [which] is hereby ordered dropped
and excluded therefrom.
SO ORDERED. 34
Aggrieved, the workers filed before us their Petition for Review
on Certiorari docketed as G.R. No. 182915.  TAHCEc

Ruling of the Court of Appeals in CA-G.R. SP No. 93860

With regard to Susan's petition, the CA Special Ninth Division issued on

May 11, 2006 a Resolution 35 temporarily restraining the NLRC from enforcing
its assailed November 30, 2004 Decision and thereafter the CA Special
Eighth Division issued a writ of preliminary prohibitory injunction. 36 On July
20, 2009, the Special Former Special Eighth Division of the CA resolved the
case through a Decision, 37 the dispositive portion of which reads:
WHEREFORE, premises considered, the present petition is
hereby DENIED DUE COURSE and accordingly DISMISSED for lack of
merit. The Decision dated November 30, 2004 and Resolution dated
August 26, 2005 of the National Labor Relations Commission (NLRC) in
 CA No. 039375-04 (NLRC NCR 00-12-11294-02, 00-01-00027-03, 00-
01-00131-03, 00-01-00820-03 and 00-01-01249-03) are hereby
AFFIRMED and UPHELD.
The writ of preliminary prohibitory injunction issued by this Court
on July 13, 2006 is hereby LIFTED and SET ASIDE.
With cost against petitioner.
SO ORDERED. 38
Susan moved for reconsideration 39 which was denied by the CA in its
October 1, 2009 Resolution. 40
Hence, she filed before this Court a Petition for Review
on Certiorari docketed as G.R. No. 189658 which was denied in this Court's
December 16, 2009 Resolution 41 on technicality and for failure to sufficiently
show any reversible error in the assailed judgment.
Susan and Fairland filed their respective Motions for
Reconsideration. 42 But before said motions could be resolved, the Court
ordered the consolidation of Susan's petition with that of the workers. 43

Susan's Motion for Reconsideration of

this Court's December 16, 2009
Resolution in G.R. No. 189658 is
granted. Consequently, her Petition for
Review on Certiorari is reinstated.

With Susan and Fairland's respective Motions for Reconsideration still

unresolved, this Court shall first address them.
One of the grounds for the denial of Susan's petition was her failure to
indicate the date of filing her Motion for Reconsideration with the CA as
required under Section 4 (b), 44 Rule 45 of the Rules of Court. However,
"failure to comply with the rule on a statement of material [date] in the petition
may be excused [if] the [date is] evident from the records." 45 In the case of
Susan, records show that she received the copy of the Decision of the CA on
July 24, 2009. She then timely filed her Motion for
Reconsideration via registered mail on August 7, 2009 as shown by the
envelope 46 with stamped receipt of the Batangas City Post Office bearing the
date August 7, 2009. The fact of such filing was also stated in the Motion for
Extension of Time to File Petition for Review 47 that she filed before this Court
which forms part of the records of this case. Hence, it is clear that Susan
seasonably filed her Motion for Reconsideration.
Moreover, while we note that Susan's petition was also denied on the
ground of no reversible error committed by the CA, we deem it proper, in the
interest of justice, to take a second look on the merits of Susan's petition and
reinstate G.R. No. 189658. This is also to harmonize our ruling in these
consolidated petitions and avoid confusion that may arise in their execution.
Hence, we grant Susan's Motion for Reconsideration and consequently,
reinstate her Petition for Review on Certiorari.
As to Fairland's Motion for Reconsideration, we shall treat the same as
its comment to Susan's petition, Fairland being one of the respondents
therein.

Issues

In G.R. No. 189658, Susan imputes upon the CA the following errors:
I.
THE COURT OF APPEALS ERRED IN FINDING THAT PETITIONER IS
A LABOR-ONLY CONTRACTOR ACTING AS AN AGENT OF
RESPONDENT FAIRLAND.  aDATHC

II.
THE COURT OF APPEALS ERRED IN FINDING THAT THE
INDIVIDUAL PRIVATE RESPONDENTS WERE ILLEGALLY
DISMISSED.
III.
THE COURT OF APPEALS ERRED IN NOT RESOLVING THE ISSUE
RAISED BY PETITIONER IN HER REPLY DATED JULY 8, 2006
REGARDING THE PROPRIETY OF THE APPEAL TAKEN BY
PRIVATE RESPONDENT RICHON CAINOY APARRE WHO WAS
ALREADY DEAD PRIOR TO THE FILING OF THE MEMORANDUM OF
APPEAL BEFORE THE NLRC. 48

Susan's Arguments

Susan insists that the CA erred in ruling that Weesan is a labor-only

contractor based on the finding that its workplace is owned by Fairland. She
maintains that the place is owned by De Luxe Shirt Factory, Inc. (De Luxe)
and not by Fairland as shown by the Contracts of Lease between Weesan
and De Luxe.
Susan also avers that the CA erred in ruling that Weesan was guilty of
illegal dismissal. She maintains that the termination of the workers was due to
financial losses suffered by Weesan as shown by various documents
submitted by the latter to the tribunals below. In fact, Weesan submitted its
Establishment Termination Report with the DOLE-NCR and same was duly
received by the latter.
Lastly, Susan argues that the appeal of one of the workers, Richon
Cainoy Aparre (Richon), should not have been given due course because in
the Notice of Appeal with Appeal Memorandum filed with the NLRC, a certain
Luzvilla A. Rayon (Luzvilla), whose identity was never established, signed for
and on his behalf. However, there is no information submitted before the
NLRC that Richon is already dead, and in any event, no proper substitution
was ever made.

The Workers' Arguments

The workers claim that Weesan is a labor-only contractor because it

does not have substantial capital or investment in the form of tools,
equipment, machineries, and work premises, among others, and that the
workers it recruited are performing activities which are directly related to the
garments business of Fairland. Hence, Weesan should be considered as a
mere agent of Fairland, who shall be responsible to the workers as if they
were directly employed by it (Fairland). 49
The workers also allege that the temporary suspension of operations of
Weesan was motivated not by a desire to prevent further losses, but to
discourage the workers from ventilating their claims for non-
payment/underpayment of wages and benefits. The fact that Weesan was
experiencing serious business losses was not sufficiently established and
therefore the termination of the workers due to alleged business losses is
invalid. 50

Fairland's Arguments

Fairland maintains that it was never served with summons to appear in

the proceedings before the Labor Arbiter nor furnished copies of the Labor
Arbiter's Decision and Resolution on the workers' complaints for illegal
dismissal; that it never voluntarily appeared before the labor tribunals through
Atty. Geronimo; 51 that it is a separate and distinct business entity from
Weesan; that Weesan is a legitimate job contractor, hence, the workers were
actually its (Weesan's) employees; and that, consequently, the workers have
no cause of action against Fairland. 52 
IcaHCS

At any rate, assuming that the workers have a cause of action against
Fairland, their claims are already barred by prescription. Of the 34 individual
complainants (the workers), only six were employees of Weesan during the
period of its contractual relationship with Fairland in 1996 and 1997. They
were Marialy Sy, Olivia Abuan, Amelia Pescadero, Regina Relox, Hermina
Hernandez and Trinidad Relox. These workers filed their complaints in
December 2002 and January 2003 or more than four years from the
expiration of Weesan's contractual arrangement with Fairland in 1997. Article
291 of the Labor Code provides that all money claims arising from employer-
employee relationship shall be filed within three years from the time the cause
of action accrued; otherwise, they shall be forever barred. Illegal dismissal
prescribes in four years and damages due to separation from employment for
alleged unjustifiable causes injuring a plaintiff's right must likewise be brought
within four years under the Civil Code. Clearly, the claims of said six
employees are already barred by prescription. 53
In G.R. No. 182915, the workers advance the following issues:
I.
Whether . . . the National Labor Relations Commission acquired
jurisdiction over the [person of the] respondent[;]
II.
Whether . . . the decision of the National Labor Relations Commission
became final and executory[; and]
III.
Whether . . . respondent is solidarily liable with WEESAN
GARMENT/SUSAN DE LEON[.] 54

The Workers' Arguments

The workers contend that the Labor Arbiter and the NLRC properly
acquired jurisdiction over the person of Fairland because the latter voluntarily
appeared and actively participated in the proceedings below when Atty.
Geronimo submitted on its behalf a Position Paper verified by its manager,
Debbie. As manager, Debbie knew of all the material and significant events
which transpired in Fairland since she had constant contact with the people in
the day-to-day operations of the company. Thus, the workers maintain that
the Labor Arbiter and the NLRC acquired jurisdiction over the person of
Fairland and the Decisions rendered by the said tribunals are valid and
binding upon it.
Lastly, the workers aver that Fairland is solidarily liable with
Susan/Weesan because it was shown that the latter was indeed the sewing
arm of the former and is a mere "labor-only contractor".

Fairland's Arguments

 
 In gist, Fairland contests the labor tribunals' acquisition of jurisdiction
over its person either through service of summons or voluntary appearance. It
denies that it engaged the services of Atty. Geronimo and asserts that it has
its own legal counsel, Atty. Tecson, who would have represented it had it
known of the pendency of the complaints against Fairland.
Fairland likewise emphasizes that when it filed its Motion for
Reconsideration with the NLRC, it made an express reservation that the same
was without prejudice to its right to question the jurisdiction over its person
and the binding effect of the assailed decision. In the absence, therefore, of a
valid service of summons or voluntary appearance, the proceedings
conducted and the judgment rendered by the labor tribunals are null and void
as against it. Hence, Fairland cannot be held solidarily liable with
Susan/Weesan.

Our Ruling

We grant the workers' petition (G.R. No. 182915) but deny the petition
of Susan (G.R. No. 189658).

G.R. No. 189658

Susan/Weesan is a mere labor-only

contractor.

"There is labor-only contracting when the contractor or

subcontractor merely recruits, supplies or places workers to perform a
job, work or service for a principal. In labor-only contracting, the following
elements are present:
(a) The person supplying workers to an employer does not have
substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others; and  IDESTH

(b) The workers recruited and placed by such person are performing

activities which are directly related to the principal business of the
employer." 55
Here, there is no question that the workers, majority of whom are
sewers, were recruited by Susan/Weesan and that they performed activities
which are directly related to Fairland's principal business of garments. What
must be determined is whether Susan/Weesan has substantial capital or
investment in the form of tools, equipment, machineries, work premises,
among others.
We have examined the records but found nothing therein to show that
Weesan has investment in the form of tools, equipment or machineries. The
records show that Fairland has to furnish Weesan with sewing machines for it
to be able to provide the sewing needs of the former. 56 Also, save for the
Balance Sheets 57 purportedly submitted by Weesan to the Bureau of Internal
Revenue (BIR) indicating its fixed assets (factory equipment) in the amount of
P243,000.00, Weesan was unable to show that apart from the borrowed
sewing machines, it owned and possessed any other tools, equipment, and
machineries necessary to its being a contractor or sub-contractor for
garments. Neither was Weesan able to prove that it has substantial capital for
its business.
Likewise significant is the fact that there is doubt as to who really owns
the work premises occupied by Weesan. As may be recalled, the workers
emphasized in their Appeal Memorandum 58 filed with the NLRC that
Susan/Weesan was a labor-only contractor and that Fairland was its principal.
To buttress this, they alleged that the work premises utilized by Weesan is
owned by Fairland, which significantly, was not in the business of renting
properties. They also advanced that there was no showing that
Susan/Weesan paid any rentals for the use of the premises. They contended
that all that Susan had was a Mayor's Permit for Weesan indicating 715
Ricafort Street, Tondo, Manila as its address.
Susan failed to refute these allegations before the NLRC and attributed
such failure to her former counsel, Atty. Geronimo. But when Susan's petition
for certiorari was given due course by the CA, she finally had the chance to
answer the same by denying that Fairland owned the work premises. Susan
instead claimed that Weesan rented the premises from another entity, De
Luxe. To support this, she attached to her petition two Contracts of
Lease 59 purportedly entered into by her and De Luxe for the lease of the
premises covering the periods August 1, 1997 to July 31, 2000 and January 1,
2001 to December 31, 2004.
On the other hand, the workers in their Comment 60 filed in CA-G.R. SP
No. 93204 (Fairland's petition for certiorari before the CA), pointed out that in
Fairland's Amended Articles of Incorporation, 61 five out of the seven
incorporators listed therein appeared to be residents of the same 715 Ricafort
St., Tondo, Manila. To the workers, this is a clear indication that Fairland
indeed owned Weesan's work premises. Fairland, for its part, tried to explain
this by saying that its incorporators, just like Weesan, were also mere lessees
of a portion of the multi-storey building owned by De Luxe located at 715
Ricafort St., Tondo, Manila. It also claimed that two years prior to Weesan's
occupation of said premises in 1996, the five incorporators alluded to already
transferred. 62
 We cannot, however, ignore the apt observation on the matter made by
the CA's Special Former Special Eighth Division in its Decision in CA-G.R. SP
No. 93860, viz.:
The work premises are likewise owned by Fairland, which
petitioner tried to disprove by presenting a purported Contract of Lease
with another entity, De Luxe Shirt Factory Co., Inc. However, there is
no competent proof it paid the supposed rentals to said 'owner'.
Curiously, under the item 'Rent Expenses' in its audited financial
statement, only equipment rental was listed therein without any
disbursement/expense for rental of factory premises, which only
buttressed the claim of private respondents that the place where they
reported to and performed sewing jobs for petitioner [Susan] and
Fairland at No. 715 Ricafort St., Tondo, Manila, belonged to
Fairland. 63 (Emphasis supplied.) 
cHaICD

Susan contests this pronouncement by pointing out that although only

sewing machines were specified under the entry "Rent Expenses" in its
financial statement, the rent for the factory premises is already deemed
included therein since the contracts of lease she entered into with De Luxe
referred to both the factory premises and machineries.
We, however, find this contention implausible.
We went over the said contracts of lease and noted that same were
principally for the lease of the premises in 715 Ricafort St., Tondo, Manila.
Only incidental thereto is the inclusion therein of the equipment found in said
premises. Hence, we cannot see why the rentals for the work premises, for
which Susan even went to the extent of executing a contract with the
purported lessor, was not included in the entry for rent expenses in Weesan's
financial statement. Even if we are to concede to Susan's claim that the entry
for rent expenses already includes the rentals for the work premises, we
wonder why the rental expenses for the year 2000 which was P396,000.00 is
of the same amount with the rental expenses for the year 2001. As borne out
by the Contract of Lease covering the period August 1, 1997 to July 31, 2000,
the monthly rent for the work premises was pegged at
P25,000.00. 64 However, in January to December 2001, same was increased
to P27,500.00. 65 There being an increase in the rentals for the work
premises, how come that Weesan's rental expenses for the year 2001 is still
P396,000.00? This could only mean that said entry really only refers to the
rentals of sewing machines and does not include the rentals for the work
premises. Moreover, we note that Susan could have just simply submitted
receipts for her payments of rentals to De Luxe. However, she failed to
present even a single receipt evidencing such payment.
 In an attempt to prove that it is De Luxe and not Fairland which owned
the work premises, Susan attached to her petition the following: (1) a plain
copy of Transfer Certificate of Title (TCT) No. 139790 66 and Declaration of
Real Property 67 both under the name of De Luxe; and, (2) Real Property Tax
receipts issued to De Luxe for the years 2000-2004. 68 However, the Court
finds these documents wanting. Nowhere from the said TCT and Declaration
of Real Property can it be inferred that the property they refer to is the same
property as that located at 715 Ricafort St., Tondo, Manila. Although in said
Declaration, 715 Ricafort St., Tondo is the indicated address of the declarant
(De Luxe), the address of the property declared is merely "Ricafort, Tondo I-
A". The same thing can also be said with regard to the real property tax
receipts. The entry under the box Location of Property in the receipt for 2001
is "I - 718 Ricafort" and in the receipts for 2002, 2003, and 2004, the entries
are either "I — Ricafort St., Tondo" or merely "I-Ricafort St."
In sum, the Court finds that Susan's effort to negate Fairland's
ownership of the work premises is futile. The logical conclusion now is that
Weesan does not have its own workplace and is only utilizing the workplace
of Fairland to whom it supplied workers for its garment business.
Suffice it to say that "[t]he presumption is that a contractor is a labor-
only contractor unless such contractor overcomes the burden of proving that it
has substantial capital, investment, tools and the like." 69 As Susan/Weesan
was not able to adduce evidence that Weesan had any substantial capital,
investment or assets to perform the work contracted for, the presumption that
Weesan is a labor-only contractor stands. 70

The National Labor Relations

Commission and the Court of Appeals
did not err in their findings of illegal
dismissal.

To negate illegal dismissal, Susan relies on the due closure of Weesan

pursuant to the Establishment Termination Report it submitted to the DOLE-
NCR.
Indeed, Article 283 71 of the Labor Code allows as a mode of
termination of employment the closure or termination of business. "Closure or
cessation of business is the complete or partial cessation of the operations
and/or shut-down of the establishment of the employer. It is carried out to
either stave off the financial ruin or promote the business interest of the
employer." 72 "The decision to close business [or to temporarily suspend
operation] is a management prerogative exclusive to the employer, the
exercise of which no court or tribunal can meddle with, except only when the
employer fails to prove compliance with the requirements of Art. 283, to wit: a)
that the closure/cessation of business is bona fide, i.e., its purpose is to
advance the interest of the employer and not to defeat or circumvent the
rights of employees under the law or a valid agreement; b) that written notice
was served on the employees and the DOLE at least one month before the
intended date of closure or cessation of business; and c) in case of
closure/cessation of business not due to financial losses, that the employees
affected have been given separation pay equivalent to 1/2 month pay for
every year of service or one month pay, whichever is higher." 73  AcTHCE 

Here, Weesan filed its Establishment Termination Report 74 allegedly

due to serious business losses and other economic reasons. However, we are
mindful of the doubtful character of Weesan's application for closure given the
circumstances surrounding the same.
First, workers Marialy Sy, Vivencia Penullar, Aurora Aguinaldo, Gina
Aniano, Gemma Dela Peña and Efremia Matias filed before the Labor Arbiter
their complaint for underpayment of salary, non-payment of benefits,
damages and attorney's fees against Weesan on December 23,
2002. 75 Summons 76 was accordingly issued and same was received by
Susan on January 15, 2003. 77 Meanwhile, other workers followed suit and
filed their respective complaints on January 2, 6, 17 and 28, 2003. 78 Shortly
thereafter or merely eight days after the filing of the last complaint, Weesan
filed with the DOLE-NCR its Establishment Termination Report.
Second, the Income Tax Returns 79 for the years 2000, 2001 and 2002
attached to the Establishment Termination Report, although bearing the
stamped receipt of the Revenue District Office where they were purportedly
filed, contain no signature or initials of the receiving officer. The same holds
true with Weesan's audited financial statements. 80 This engenders doubt as
to whether these documents were indeed filed with the proper authorities.
Third, there was no showing that Weesan served upon the workers
written notice at least one month before the intended date of closure of
business, as required under Art. 283 of the Labor Code.In fact, the workers
alleged that when Weesan filed its Establishment Termination Report on
February 5, 2003, it already closed the work premises and did not anymore
allow them to report for work. This is the reason why the workers on February
18, 2003 amended their complaint to include the charge of illegal dismissal. 81
It bears stressing that "[t]he burden of proving that . . . a temporary
suspension is bona fide falls upon the employer." 82 Clearly here,
Susan/Weesan was not able to discharge this burden. The documents
Weesan submitted to support its claim of severe business losses cannot be
considered as proof of financial crisis to justify the temporary suspension of its
operations since they clearly appear to have not been duly filed with the BIR.
Weesan failed to satisfactorily explain why the Income Tax Returns and
financial statements it submitted do not bear the signature of the receiving
officers. Also hard to ignore is the absence of the mandatory 30-day prior
notice to the workers.
Hence, the Court finds that Susan failed to prove that the suspension of
operations of Weesan was bona fide and that it complied with the mandatory
requirement of notice under the law. Susan likewise failed to discharge her
burden of proving that the termination of the workers was for a lawful cause.
Therefore, the NLRC and the CA, in CA-G.R. SP No. 93860, did not err in
their findings that the workers were illegally dismissed by Susan/Weesan.

The formal substitution of the deceased

worker Richon Aparre is not necessary
as his heir voluntarily appeared and
participated in the proceedings before
the National Labor Relations
Commission.

In Sarsaba v. Fe Vda. de Te, we held that: 83

The rule on substitution of parties is governed by Section
16, 84 Rule 3 of the [Rules of Court].
Strictly speaking, the rule on substitution by heirs is not a matter
of jurisdiction, but a requirement of due process. The rule on substitution
was crafted to protect every party's right to due process. It was designed
to ensure that the deceased party would continue to be properly
represented in the suit through his heirs or the duly appointed legal
representative of his estate. Moreover, non-compliance with the Rules
results in the denial of the right to due process for the heirs who, though
not duly notified of the proceedings, would be substantially affected by
the decision rendered therein. Thus, it is only when there is a denial of
due process, as when the deceased is not represented by any legal
representative or heir, that the court nullifies the trial proceedings and
the resulting judgment therein.
Here, the lack of formal substitution of the deceased worker Richon did
not result to denial of due process as to affect the validity of the proceedings
before the NLRC since his heir, Luzvilla, was aware of the proceedings
therein. In fact, she is considered to have voluntarily appeared before the said
tribunal when she signed the workers' Memorandum of Appeal filed therewith.
"This Court has ruled that formal substitution of parties is not necessary when
the heirs themselves voluntarily appeared, participated, and presented
evidence during the proceedings." 85 Hence, the NLRC did not err in giving
due course to the appeal with respect to Richon.  cDIaAS
Fairland's claim of prescription
deserves scant consideration.

Fairland asserts that assuming that the workers have valid claims
against it, same only pertain to six out of the 34 workers-complainants.
According to Fairland, these six workers were the only ones who were in the
employ of Weesan at the time Fairland and Weesan had existing contractual
relationship in 1996 to 1997. But then, Fairland contends that the claims of
these six workers have already been barred by prescription as they filed their
complaint more than four years from the expiration of the alleged contractual
relationship in 1997. However, the Court notes that the records are bereft of
anything that provides for such alleged contractual relationship and the period
covered by it. Absent anything to support Fairland's claim, same deserves
scant consideration.
Interestingly, we noticed Fairland's letter 86 dated January 31, 2003
informing Weesan that it would temporarily not be availing of the latter's
sewing services and at the same time requesting for the return of the sewing
machines it lent to Weesan. Assuming said letter to be true, why was Fairland
terminating Weesan's services only on January 31, 2003 when it is now
claiming that its contractual relationship with the latter only lasted until 1997?
Thus, we find the contentions rather abstruse.

G.R. No. 182915

"It is basic that the Labor Arbiter cannot acquire jurisdiction over the
person of the respondent without the latter being served with
summons." 87 However, "if there is no valid service of summons, the court can
still acquire jurisdiction over the person of the defendant by virtue of the
latter's voluntary appearance." 88

Although not served with summons, jurisdiction

over Fairland and Debbie was acquired
through their voluntary appearance.

It can be recalled that the workers' original complaints for non-

payment/underpayment of wages and benefits were only against
Susan/Weesan. For these complaints, the Labor Arbiter issued summons 89 to
Susan/Weesan which was received by the latter on January 15, 2003. 90 The
workers thereafter amended their then already consolidated complaints to
include illegal dismissal as an additional cause of action as well as Fairland
and Debbie as additional respondents. We have, however, scanned the
records but found nothing to indicate that summons with respect to the said
amended complaints was ever served upon Weesan, Susan, or Fairland. True
to their claim, Fairland and Debbie were indeed never summoned by the
Labor Arbiter.
The crucial question now is: Did Fairland and Debbie voluntarily appear
before the Labor Arbiter as to submit themselves to its jurisdiction?
Fairland argued before the CA that it did not engage Atty. Geronimo as
its counsel. However, the Court held in Santos v. National Labor Relations
Commission, 91 viz.:
In the instant petition for certiorari, petitioner Santos reiterates
that he should not have been adjudged personally liable by public
respondents, the latter not having validly acquired jurisdiction over his
person whether by personal service of summons or by substituted
service under Rule 19 of the Rules of Court.
Petitioner's contention is unacceptable. The fact that Atty. Romeo
B. Perez has been able to timely ask for a deferment of the initial hearing
on 14 November 1986, coupled with his subsequent active participation
in the proceedings, should disprove the supposed want of service of
legal processes. Although as a rule, modes of service of summons are
strictly followed in order that the court may acquire jurisdiction over the
person of a defendant, such procedural modes, however, are liberally
construed in quasi-judicial proceedings, substantial compliance with the
same being considered adequate. Moreover, jurisdiction over the person
of the defendant in civil cases is acquired not only by service of
summons but also by voluntary appearance in court and submission to
its authority. 'Appearance' by a legal advocate is such 'voluntary
submission to a court's jurisdiction'. It may be made not only by actual
physical appearance but likewise by the submission of pleadings in
compliance with the order of the court or tribunal. AHcaDC

To say that petitioner did not authorize Atty. Perez to represent

him in the case is to unduly tax credulity. Like the Solicitor General, the
Court likewise considers it unlikely that Atty. Perez would have been so
irresponsible as to represent petitioner if he were not, in fact, authorized.
Atty. Perez is an officer of the court, and he must be presumed to have
acted with due propriety. The employment of a counsel or the authority
to employ an attorney, it might be pointed out, need not be proved in
writing; such fact could [be] inferred from circumstantial
evidence. . . . 92 (Citations omitted.)
From the records, it appears that Atty. Geronimo first entered his
appearance on behalf of Susan/Weesan in the hearing held on April 3,
2003. 93 Being then newly hired, he requested for an extension of time within
which to file a position paper for said respondents. On the next scheduled
hearing on April 28, 2003, Atty. Geronimo again asked for another extension
to file a position paper for all the respondents considering that he likewise
entered his appearance for Fairland. 94 Thereafter, said counsel filed
pleadings such as Respondents' Position Paper 95 and Respondents'
Consolidated Reply 96 on behalf of all the respondents namely,
Susan/Weesan, Fairland and Debbie. The fact that Atty. Geronimo entered
his appearance for Fairland and Debbie and that he actively defended them
before the Labor Arbiter raised the presumption that he is authorized to
appear for them. As held in Santos, it is unlikely that Atty. Geronimo would
have been so irresponsible as to represent Fairland and Debbie if he were not
in fact authorized. As an officer of the Court, Atty. Geronimo is presumed to
have acted with due propriety. Moreover, "[i]t strains credulity that a counsel
who has no personal interest in the case would fight for and defend a case
with persistence and vigor if he has not been authorized or employed by the
party concerned." 97  
We do not agree with the reasons relied upon by the CA's Special Ninth
Division in its May 9, 2008 Resolution in CA-G.R. No. 93204 when it ruled that
Fairland, through Atty. Geronimo, did not voluntarily submit itself to the Labor
Arbiter's jurisdiction.
In so ruling, the CA noted that Atty. Geronimo has no prior authorization
from the board of directors of Fairland to handle the case. Also, the alleged
verification signed by Debbie, who is not one of Fairland's duly authorized
directors or officers, is defective as no board resolution or secretary's
certificate authorizing her to sign the same was attached thereto. Because of
these, the Special Ninth Division held that the Labor Arbiter committed grave
abuse of discretion in not requiring Atty. Geronimo to show his proof of
authority to represent Fairland considering that the latter is a corporation.
The presumption of authority of counsel to appear on behalf of a client
is found both in the Rules of Court and in the New Rules of Procedure of the
NLRC. 98
Sec. 21, Rule 138 of the Rules of Court provides:
Sec. 21. Authority of attorney to appear. — An attorney is
presumed to be properly authorized to represent any cause in which he
appears, and no written power of attorney is required to authorize him to
appear in court for his client, but the presiding judge may, on motion of
either party and reasonable grounds therefor being shown, require any
attorney who assumes the right to appear in a case to produce or prove
the authority under which he appears, and to disclose whenever
pertinent to any issue, the name of the person who employed him, and
may thereupon make such order as justice requires. An attorney willfully
appearing in court for a person without being employed, unless by leave
of the court, may be punished for contempt as an officer of the court who
has misbehaved in his official transactions.
 On the other hand, Sec. 8, Rule III of the New Rules of Procedure of
the NLRC, 99 which is the rules prevailing at that time, states in part:
SECTION 8. APPEARANCES. — An attorney appearing for a
party is presumed to be properly authorized for that purpose. However,
he shall be required to indicate in his pleadings his PTR and IBP
numbers for the current year.
Between the two provisions providing for such authority of counsel to
appear, the Labor Arbiter is primarily bound by the latter one, the NLRC
Rules of Procedure being specifically applicable to labor cases. As Atty.
Geronimo consistently indicated his PTR and IBP numbers in the pleadings
he filed, there is no reason for the Labor Arbiter not to extend to Atty.
Geronimo the presumption that he is authorized to represent Fairland.  aIETCA

Even if we are to apply Sec. 21, Rule 138 of the Rules of Court, the
Labor Arbiter cannot be expected to require Atty. Geronimo to prove his
authority under said provision since there was no motion to that effect from
either party showing reasonable grounds therefor. Moreover, the fact that
Debbie signed the verification attached to the position paper filed by Atty.
Geronimo, without a secretary's certificate or board resolution attached
thereto, is not sufficient reason for the Labor Arbiter to be on his guard and
require Atty. Geronimo to prove his authority. Debbie, as General Manager of
Fairland is one of the officials of the company who can sign the verification
without need of a board resolution because as such, she is in a position to
verify the truthfulness and correctness of the allegations in the petition. 100
Although we note that Fairland filed a disbarment case against Atty.
Geronimo due to the former's claim of unauthorized appearance, we hold that
same is not sufficient to overcome the presumption of authority. Such mere
filing is not proof of Atty. Geronimo's alleged unauthorized appearance.
Suffice it to say that an attorney's presumption of authority is a strong
one. 101 "A mere denial by a party that he authorized an attorney to appear for
him, in the absence of a compelling reason, is insufficient to overcome the
presumption, especially when the denial comes after the rendition of an
adverse judgment," 102 such as in the present case.
Citing PNOC Dockyard and Engineering Corporation v. National Labor
Relations Commission, 103 the CA likewise emphasized that in labor cases,
both the party and his counsel must be duly served their separate copies of
the order, decision or resolution unlike in ordinary proceedings where notice
to counsel is deemed notice to the party. It then quoted Article 224 of
the Labor Code as follows:
ARTICLE 224.Execution of decisions, orders or awards. — (a) the
Secretary of Labor and Employment or any Regional Director, the
Commission or any Labor Arbiter, or med-arbiter or voluntary arbitrator
 may, motu proprio or on motion of any interested party, issue a writ of
execution on a judgment within five (5) years from the date it becomes
final and executory, requiring a sheriff or a duly deputized officer to
execute or enforce final decisions, orders or awards of the Secretary of
Labor and Employment or [R]egional Director, the Commission, the
Labor Arbiter or Med-Arbiter, or Voluntary Arbitrators. In any case, it
shall be the duty of the responsible officer to separately furnish
immediately the counsels of record and the parties with copies of
said decision, orders or awards. Failure to comply with the duty
prescribed herein shall subject such responsible officer to appropriate
administrative sanctions . . . (Emphasis in the original). 104
The CA then concluded that since Fairland and its counsel were not
separately furnished with a copy of the August 26, 2005 NLRC Resolution
denying the motions for reconsideration of its November 30, 2004 Decision,
said Decision cannot be enforced against Fairland. The CA likewise
concluded that because of this, said November 30, 2004 Decision which held
Susan/Weesan and Fairland solidarily liable to the workers, has not attained
finality.
We cannot agree. In Ginete v. Sunrise Manning Agency 105 we held
that:
The case of PNOC Dockyard and Engineering Corporation vs.
NLRC cited by petitioner enunciated that 'in labor cases, both the party
and its counsel must be duly served their separate copies of the order,
decision or resolution; unlike in ordinary judicial proceedings where
notice to counsel is deemed notice to the party.' Reference was made
therein to Article 224 of the Labor Code.But, as correctly pointed out by
private respondent in its Comment to the petition, Article 224 of
the Labor Code does not govern the procedure for filing a petition
for certiorari with the Court of Appeals from the decision of the NLRC but
rather, it refers to the execution of 'final decisions, orders or awards' and
requires the sheriff or a duly deputized officer to furnish both the parties
and their counsel with copies of the decision or award for that purpose.
There is no reference, express or implied, to the period to appeal or to
file a petition for certiorari as indeed the caption is 'execution of
decisions, orders or awards'. Taken in proper context, Article 224
contemplates the furnishing of copies of 'final decisions, orders or
awards' and could not have been intended to refer to the period for
computing the period for appeal to the Court of Appeals from a non-final
judgment or order. The period or manner of 'appeal' from the NLRC to
the Court of Appeals is governed by Rule 65 pursuant to the ruling of the
Court in the case of St. Martin Funeral Homes vs. NLRC. Section 4 of
Rule 65, as amended, states that the 'petition may be filed not later than
sixty (60) days from notice of the judgment, or resolution sought to be
assailed'.
 Corollarily, Section 4, Rule III of the New Rules of Procedure of
the NLRC expressly mandates that '(F)or the purposes of computing the
period of appeal, the same shall be counted from receipt of such
decisions, awards or orders by the counsel of record.' Although this rule
explicitly contemplates an appeal before the Labor Arbiter and the
NLRC, we do not see any cogent reason why the same rule should not
apply to petitions for certiorari filed with the Court of Appeals from
decisions of the NLRC. This procedure is in line with the established
rule that notice to counsel is notice to party and when a party is
represented by counsel, notices should be made upon the counsel
of record at his given address to which notices of all kinds
emanating from the court should be sent. It is to be noted also that
Section 7 of the NLRC Rules of Procedure provides that
'(A)ttorneys and other representatives of parties shall have
authority to bind their clients in all matters of procedure'' a
provision which is similar to Section 23, Rule 138 of the Rules of
Court. More importantly, Section 2, Rule 13 of the 1997 Rules of
Civil Procedure analogously provides that if any party has
appeared by counsel, service upon him shall be made upon his
counsel. (Citations omitted; emphasis supplied) DIETcH

To stress, Article 224 contemplates the furnishing of copies of final

decisions, orders or awards both to the parties and their counsel in connection
with the execution of such final decisions, orders or awards. However, for the
purpose of computing the period for filing an appeal from the NLRC to the CA,
same shall be counted from receipt of the decision, order or award by the
counsel of record pursuant to the established rule that notice to counsel is
notice to party. And since the period for filing of an appeal is reckoned from
the counsel's receipt of the decision, order or award, it necessarily follows that
the reckoning period for their finality is likewise the counsel's date of receipt
thereof, if a party is represented by counsel. Hence, the date of receipt
referred to in Sec. 14, Rule VII of the then in force New Rules of Procedure of
the NLRC 106 which provides that decisions, resolutions or orders of the NLRC
shall become executory after 10 calendar days from receipt of the same,
refers to the date of receipt by counsel. Thus contrary to the CA's conclusion,
the said NLRC Decision became final, as to Fairland, 10 calendar days after
Atty. Tecson's receipt 107 thereof. 108 In sum, we hold that the Labor Arbiter
had validly acquired jurisdiction over Fairland and its manager, Debbie,
through the appearance of Atty. Geronimo as their counsel and likewise,
through the latter's filing of pleadings on their behalf. 

Fairland is Weesan's principal.

In addition to our discussion in G.R. No. 189658 with respect to the

finding that Susan/Weesan is a mere labor-only contractor which we find to be
 likewise significant here, a careful examination of the records reveals other
telling facts that Fairland is Susan/Weesan's principal, to wit: (1) aside from
sewing machines, Fairland also lent Weesan other equipment such as fire
extinguishers, office tables and chairs, and plastic chairs; 109 (2) no proof
evidencing the contractual arrangement between Weesan and Fairland was
ever submitted by Fairland; (3) while both Weesan and Fairland assert that
the former had other clients aside from the latter, no proof of Weesan's
contractual relationship with its other alleged client is extant on the records;
and (4) there is no showing that any of the workers were assigned to other
clients aside from Fairland. Moreover, as found by the NLRC and affirmed by
both the Special Former Special Eighth Division in CA-G.R. SP No. 93860
and the First Division in CA-G.R. SP No. 93204, the activities, the manner of
work and the movement of the workers were subject to Fairland's control. It
bears emphasizing that "factual findings of quasi-judicial agencies like the
NLRC, when affirmed by the Court of Appeals, as in the present case, are
conclusive upon the parties and binding on this Court." 110
Viewed in its entirety, we thus declare that Fairland is the principal of
the labor-only contractor, Weesan.
Fairland, therefore, as the principal employer, is solidarily liable with
Susan/Weesan, the labor-only contractor, for the rightful claims of the
employees. Under this set-up, Susan/Weesan, as the "labor-only" contractor,
is deemed an agent of the principal, Fairland, and the law makes the principal
responsible to the employees of the "labor-only" contractor as if the principal
itself directly hired or employed the employees. 111
WHEREFORE, the Court,
1)in G.R. No. 189658, DENIES the Petition for Review on Certiorari.
The assailed Decision dated July 20, 2009 and Resolution dated October 1,
2009 of the Special Former Special Eighth Division of the Court of Appeals in
CA-G.R. No. 93860 are AFFIRMED.
2)in G.R. No. 182915, GRANTS the Petition for Review on Certiorari.
The assailed Resolution dated May 9, 2008 of the Special Ninth Division of
the Court of Appeals in CA-G.R. No. 93204 is hereby REVERSED and SET
ASIDE and the Decision dated July 25, 2007 of the First Division of the Court
of Appeals is REINSTATED and AFFIRMED.
SO ORDERED.  SIaHDA

 (Sy v. Fairland Knitcraft Co., Inc., G.R. Nos. 182915 & 189658, [December 12,
|||

2011], 678 PHIL 265-304)

 G.R. No. 126322. January 16, 2002.]

YUPANGCO COTTON MILLS, INC., petitioner, vs. COURT OF

APPEALS, HON. URBANO C. VICTORIO, SR., Presiding Judge,
RTC Branch 50, Manila, RODRIGO SY MENDOZA, SAMAHANG
MANGGAGAWA NG ARTEX (SAMAR-ANGLO) represented by
its Local President RUSTICO CORTEZ, and WESTERN
GUARANTY CORPORATION, respondents.

 (Yupangco Cotton Mills, Inc. v. Court of Appeals, G.R. No. 126322, [January
|||

16, 2002], 424 PHIL 469-481)

PARDO, J  : p

The Case

The case is a petition for review on certiorari of the decision of the Court of
Appeals 1 dismissing the petition ruling that petitioner was guilty of forum
shopping and that the proper remedy was appeal in due course,
not certiorari or mandamus.
In its decision, the Court of Appeals sustained the trial court's ruling that
the remedies granted under Section 17, Rule 39 of the Rules of Court are not
available to the petitioner because the Manual of Instructions for Sheriffs of the
NLRC does not include the remedy of an independent action by the owner to
establish his right to his property.

The Facts

The facts, as found by the Court of Appeals, are as follows:

"From the records before us and by petitioner's own allegations
and admission, it has taken the following actions in connection with its
claim that a sheriff of the National Labor Relations Commission
"erroneously and lawfully levied" upon certain properties which it claims
as its own.
"1. It filed a notice of third-party claim with the Labor Arbiter on
May 4, 1995.
"2. It filed an Affidavit of Adverse Claim with the National Labor
Relations Commission (NLRC) on July 4, 1995, which was dismissed on
August 30, 1995, by the Labor Arbiter.
 "3. It filed a petition for certiorari and prohibition with the Regional
Trial Court of Manila, Branch 49, docketed as Civil Case No. 95-75628
on October 6, 1995. The Regional Trial Court dismissed the case on
October 11, 1995 for lack of merit.
"4. It appealed to the NLRC the order of the Labor Arbiter dated
August 13, 1995 which dismissed the appeal for lack of merit on
December 8, 1995.
"5. If filed an original petition for mandatory injunction with the
NLRC on November 16, 1995. This was docketed as Case No. NLRC-
NCR-IC. 0000602-95. This case is still pending with that Commission.
"6. It filed a complaint in the Regional Trial Court in Manila which
was docketed as Civil Case No. 95-76395. The dismissal of this case by
public respondent triggered the filing of the instant petition.
"In all of the foregoing actions, petitioner raised a common issue,
which is that it is the owner of the properties located in the compound
and buildings of Artex Development Corporation, which were
erroneously levied upon by the sheriff of the NLRC as a consequence of
the decision rendered by the said Commission in a labor case docketed
as NLRC-NCR Case No. 00-05-02960-90." 2
On March 29, 1996, the Court of Appeals promulgated a
decision 3 dismissing the petition on the ground of forum shopping and that
petitioner's remedy was to seek relief from this Court.
On April 18, 1996, petitioner filed with the Court of Appeals a motion for
reconsideration of the decision. 4 Petitioner argued that the filing of a complaint
for accion reivindicatoria with the Regional Trial Court was proper because it is a
remedy specifically granted to an owner (whose properties were subjected to a
writ of execution to enforce a decision rendered in a labor dispute in which it was
not a party) by Section 17 (now 16), Rule 39, Revised Rules of Court and by the
doctrines laid down in Sy v. Discaya, 5 Santos v. Bayhon 6 and Manliguez v.
Court of Appeals. 7
In addition, petitioner argued that the reliefs sought and the issues involved
in the complaint for recovery of property and damages filed with the Regional
Trial Court of Manila, presided over by respondent judge, were entirely distinct
and separate from the reliefs sought and the issues involved in the proceedings
before the Labor Arbiter and NLRC. Besides, petitioner pointed out that neither
the NLRC nor the Labor Arbiter is empowered to adjudicate matters involving
ownership of properties.  AECacS

On August 27, 1996, the Court of Appeals denied petitioner's motion for
reconsideration. 8
Hence, this appeal. 9
 The Issues

The issues raised are (1) whether the Court of Appeals erred in ruling that
petitioner was guilty of forum shopping, and (2) whether the Court of Appeals
erred in dismissing the petitioner's accion reivindicatoria on the ground of lack of
jurisdiction of the trial court.

The Court's Ruling

On the first issue raised, we rule that there was no forum shopping.
In Golangco v. Court of Appeals, 10 we held:
"What is truly important to consider in determining whether forum
shopping exists or not is the vexation caused the courts and parties-
litigant by a party who asks different courts and/or administrative
agencies to rule on the same or related causes and/or grant the same or
substantially the same reliefs, in the process creating possibility of
conflicting decisions being rendered by the different for a upon the same
issues.
"xxx xxx xxx
"There is no forum-shopping where two different orders were
questioned, two distinct causes of action and issues were raised, and
two objectives were sought." (Italics ours)
In the case at bar, there was no identity of parties, rights and causes of
action and reliefs sought.
The case before the NLRC where Labor Arbiter Reyes issued a writ of
execution on the property of petitioner was a labor dispute between Artex and
Samar-Anglo. Petitioner was not a party to the case. The only issue petitioner
raised before the NLRC was whether or not the writ of execution issued by the
labor arbiter could be satisfied against the property of petitioner, not a party to
the labor case.
On the other hand, the accion reivindicatoria filed by petitioner in the trial
court was to recover the property illegally levied upon and sold at auction. Hence,
the causes of action in these cases were different.
The rule is that "for forum-shopping to exist both actions must involve the
same transactions, the same circumstances. The actions must also raise
identical causes of action, subject matter and issues." 11
In Chemphil Export & Import Corporation v. Court of Appeals, 12 we ruled
that:
 "Forum-shopping or the act of a party against whom an adverse
judgment has been rendered in one forum, of seeking another (and
possible) opinion in another forum (other than by appeal or the special
civil action of certiorari), or the institution of two (2) or more actions or
proceedings grounded on the same cause on the supposition that one or
the other would make a favorable disposition."
On the second issue, a third party whose property has been levied upon by
a sheriff to enforce a decision against a judgment debtor is afforded with several
alternative remedies to protect its interests. The third party may avail himself of
alternative remedies cumulatively, and one will not preclude the third party from
availing himself of the other alternative remedies in the event he failed in the
remedy first availed of.
Thus, a third party may avail himself of the following alternative remedies:
a) File a third party claim with the sheriff of the Labor Arbiter, and
b) If the third party claim is denied, the third party may appeal the
denial to the NLRC. 13
Even if a third party claim was denied, a third party may still file a proper
action with a competent court to recover ownership of the property illegally
seized by the sheriff. This finds support in Section 17 (now 16), Rule 39, Revised
Rules of Court, to wit:
"SEC. 17 (now 16).  Proceedings where property claimed by third
person. — If property claimed by any other person than the judgment
debtor or his agent, and such person makes an affidavit of his title
thereto or right to the possession thereof, stating the grounds of such
right or title, and serve the same upon the officer making the levy, and a
copy thereof upon the judgment creditor, the officer shall not be bound to
keep the property, unless such judgment creditor or his agent, on
demand of the officer, indemnify the officer against such claim by a bond
in a sum not greater than the value of the property levied on. In case of
disagreement as to such value, the same shall be determined by the
court issuing the writ of execution.
"The officer is not liable for damages, for the taking or keeping of
the property, to any third-party claimant unless a claim is made by the
latter and unless an action for damages is brought by him against the
officer within one hundred twenty (120) days from the date of the filing of
the bond. But nothing herein contained shall prevent such claimant or
any third person from vindicating his claim to the property by any proper
action.
"When the party in whose favor the writ of execution runs, is the
Republic of the Philippines, or any officer duly representing it, the filing of
such bond shall not be required, and in case the sheriff or levying officer
 is sued for damages as a result of the levy, he shall be represented by
the Solicitor General and if held liable therefor, the actual damages
adjudged by the court shall be paid by the National Treasurer out of such
funds as may be appropriated for the purpose." (Italics ours)
In Sy v. Discaya, 14 we ruled that:
"The right of a third-party claimant to file an independent action to
vindicate his claim of ownership over the properties seized is reserved
by Section 17 (now 16), Rule 39 of the Rules of Court, . . .:

"xxx xxx xxx

"As held in the case of Ong v. Tating, et. al., construing the

aforecited rule, a third person whose property was seized by a sheriff to
answer for the obligation of a judgment debtor may invoke the
supervisory power of the court which authorized such execution. Upon
due application by the third person and after summary hearing, the court
may command that the property be released from the mistaken levy and
restored to the rightful owner or possessor. What said court do in these
instances, however, is limited to a determination of whether the sheriff
has acted rightly or wrongly in the performance of his duties in the
execution of judgment, more specifically, if he has indeed taken hold of
property not belonging to the judgment debtor. The court does not and
cannot pass upon the question of title to the property, with any character
of finality. It can treat of the matter only insofar as may be necessary to
decide if the sheriff has acted correctly or not. It can require the sheriff to
restore the property to the claimant's possession if warranted by the
evidence. However, if the claimant's proof do not persuade the court of
the validity of his title or right of possession thereto, the claim will be
denied.
"Independent of the above-stated recourse, a third-party claimant
may also avail of the remedy known as 'terceria,' provided in Section 17
(now 16), Rule 39, by serving on the officer making the levy an affidavit
of his title and a copy thereof upon the judgment creditor. The officer
shall not be bound to keep the property, unless such judgment creditor
or his agent, on demand of the officer, indemnifies the officer against
such claim by a bond in a sum not greater than the value of the property
levied on. An action for damages may be brought against the sheriff
within one hundred twenty (120) days from the filing of the bond.
"The aforesaid remedies are nevertheless without prejudice to
'any proper action' that a third-party claimant may deem suitable to
vindicate 'his claim to the property.' Such a 'proper action' is, obviously,
entirely distinct from that explicitly prescribed in Section 17 of Rule 39,
which is an action for damages brought by a third-party claimant against
the officer within one hundred twenty (120) days from the date of the
 filing of the bond for the taking or keeping of the property subject of the
'terceria.'
"Quite obviously, too, this 'proper action' would have for its object
the recovery of ownership or possession of the property seized by the
sheriff, as well as damages resulting from the allegedly wrongful seizure
and detention thereof despite the third-party claim; and it may be brought
against the sheriff and such other parties as may be alleged to have
colluded with him in the supposedly wrongful execution proceedings,
such as the judgment creditor himself. Such 'proper action,' as above
pointed out, is and should be an entirely separate and distinct action
from that in which execution has issued, if instituted by a stranger to the
latter suit.
"The remedies above mentioned are cumulative and may be
resorted to by a third-party claimant independent of or separately from
and without need of availing of the others. If a third-party claimant opted
to file a proper action to vindicate his claim of ownership, he must
institute an action, distinct and separate from that in which the judgment
is being enforced, with the court of competent jurisdiction even before or
without need of filing a claim in the court which issued the writ, the latter
not being a condition sine qua non for the former. In such proper action,
the validity and sufficiency of the title of the third-party claimant will be
resolved and a writ of preliminary injunction against the sheriff may be
issued." (Emphasis and italics supplied)
In light of the above, the filing of a third party claim with the Labor Arbiter
and the NLRC did not preclude the petitioner from filing a subsequent action for
recovery of property and damages with the Regional Trial Court. And, the
institution of such complaint will not make petitioner guilty of forum shopping. 15
In Santos v. Bayhon, 16 wherein Labor Arbiter Ceferina Diosana rendered
a decision in NLRC NCR Case No. 1-313-85 in favor of Kamapi, the NLRC
affirmed the decision. Thereafter, Kamapi obtained a writ of execution against the
properties of Poly-Plastic products or Anthony Ching. However, respondent
Priscilla Carrera filed a third-party claim alleging that Anthony Ching had sold the
property to her. Nevertheless, upon posting by the judgment creditor of an
indemnity bond, the NLRC Sheriff proceeded with the public auction sale.
Consequently, respondent Carrera filed with Regional Trial Court, Manila an
action to recover the levied property and obtained a temporary restraining order
against Labor Arbiter Diosana and the NLRC Sheriff from issuing a certificate of
sale over the levied property. Eventually, Labor Arbiter Santos issued an order
allowing the execution to proceed against the property of Poly-Plastic Products.
Also, Labor Arbiter Santos and the NLRC Sheriff filed a motion to dismiss the
civil case instituted by respondent Carrera on the ground that the Regional Trial
Court did not have jurisdiction over the labor case. The trial court issued an order
enjoining the enforcement of the writ of execution over the properties claimed by
respondent Carrera pending the determination of the validity of the sale made in
her favor by the judgment debtor Poly-Plastic Products and Anthony Ching.
In dismissing the petition for certiorari filed by Labor Arbiter Santos, we
ruled that:
". . .. The power of the NLRC to execute its judgments extends
only to properties unquestionably belonging to the judgment debtor
(Special Servicing Corp. v. Centro La Paz, 121 SCRA 748).
"The general rule that no court has the power to interfere by
injunction with the judgments or decrees of another court with concurrent
or coordinate jurisdiction possessing equal power to grant injunctive
relief, applies only when no third-party claimant is involved (Traders
Royal Bank v. Intermediate Appellate Court, 133 SCRA 141
[1984]). When a third-party, or a stranger to the action, asserts a claim
over the property levied upon, the claimant may vindicate his claim by
an independent action in the proper civil court which may stop the
execution of the judgment on property not belonging to the judgment
debtor." (Italics ours)
In Consolidated Bank and Trust Corp. v. Court of Appeals, 193 SCRA 158
[1991], we ruled that:
"The well-settled doctrine is that a 'proper levy' is indispensable to
a valid sale on execution. A sale unless preceded by a valid levy is void.
Therefore, since there was no sufficient levy on the execution in
question, the private respondent did not take any title to the properties
sold thereunder . . ..
"A person other than the judgment debtor who claims ownership
or right over the levied properties is not precluded, however, from taking
other legal remedies." (Italics ours)
Jurisprudence is likewise replete with rulings that since the third-party
claimant is not one of the parties to the action, he could not, strictly speaking,
appeal from the order denying his claim, but should file a separate reivindicatory
action against the execution creditor or the purchaser of the property after the
sale of public auction, or a complaint for damages against the bond filed by the
judgment creditor in favor of the sheriff. 17
And in Lorenzana v. Cayetano, 18 we ruled that:
"The rights of a third-party claimant should not be decided in the
action where the third-party claim has been presented, but in a separate
action to be instituted by the third person. The appeal that should be
interposed if the term 'appeal' may properly be employed, is a separate
reivindicatory action against the execution creditor or the purchaser of
the property after the sale at public auction, or compliant for damages to
 be charged against the bond filed by the judgment creditor in favor of the
sheriff. Such reivindicatory action is reserved to the third-party claimant."
A separate civil action for recovery of ownership of the property would not
constitute interference with the powers or processes of the Arbiter and the NLRC
which rendered the judgment to enforce and execute upon the levied properties.
The property levied upon being that of a stranger is not subject to levy. Thus, a
separate action for recovery, upon a claim and prima-facie showing of ownership
by the petitioner, cannot be considered as interference.

The Fallo

WHEREFORE, the Court REVERSES the decision of the Court of Appeals

and the resolution denying reconsideration. 19 In lieu thereof, the Court renders
judgment ANNULLING the sale on execution of the subject property conducted
by NLRC Sheriff Anam Timbayan in favor of respondent SAMAR-ANGLO and
the subsequent sale of the same to Rodrigo Sy Mendoza. The Court declares the
petitioner to be the rightful owner of the property involved and remands the case
to the trial court to determine the liability of respondents SAMAR-ANGLO,
Rodrigo Sy Mendoza, and WESTERN GUARANTY CORPORATION to pay
actual damages that petitioner claimed.
Costs against respondents, except the Court of Appeals.
SO ORDERED.
 (Yupangco Cotton Mills, Inc. v. Court of Appeals, G.R. No. 126322, [January
|||

16, 2002], 424 PHIL 469-481)

G.R. No. 184007. February 16, 2011.]

PAQUITO V. ANDO, petitioner, vs. ANDRESITO Y. CAMPO, ET

AL., respondents.

DECISION

NACHURA, J  : p

Before this Court is a Petition for Review on Certiorari 1 under Rule 45

of the Rules of Court. Petitioner Paquito V. Ando (petitioner) is assailing the
Decision 2 dated February 21, 2008 and the Resolution 3 dated July 25, 2008
of the Court of Appeals (CA) in CA-G.R. CEB-SP. No. 02370.
Petitioner was the president of Premier Allied and Contracting Services,
Inc. (PACSI), an independent labor contractor. Respondents were hired by
PACSI as pilers or haulers tasked to manually carry bags of sugar from the
warehouse of Victorias Milling Company and load them on trucks. 4 In June
1998, respondents were dismissed from employment. They filed a case for
illegal dismissal and some money claims with the National Labor Relations
Commission (NLRC), Regional Arbitration Branch No. VI, Bacolod City. 5
On June 14, 2001, Labor Arbiter Phibun D. Pura (Labor Arbiter)
promulgated a decision, ruling in respondents' favor. 6 PACSI and petitioner
were directed to pay a total of P422,702.28, representing respondents'
separation pay and the award of attorney's fees. 7
Petitioner and PACSI appealed to the NLRC. In a decision 8 dated
October 20, 2004, the NLRC ruled that petitioner failed to perfect his appeal
because he did not pay the supersedeas bond. It also affirmed the Labor
Arbiter's decision with modification of the award for separation pay to four
other employees who were similarly situated. Upon finality of the decision,
respondents moved for its execution. 9
To answer for the monetary award, NLRC Acting Sheriff Romeo
Pasustento issued a Notice of Sale on Execution of Personal Property 10 over
the property covered by Transfer Certificate of Title (TCT) No. T-140167 in the
name of "Paquito V. Ando . . . married to Erlinda S. Ando."
This prompted petitioner to file an action for prohibition and damages
with prayer for the issuance of a temporary restraining order (TRO) before the
Regional Trial Court (RTC), Branch 50, Bacolod City. Petitioner claimed that
the property belonged to him and his wife, not to the corporation, and, hence,
could not be subject of the execution sale. Since it is the corporation that was
the judgment debtor, execution should be made on the latter's
properties. 11 
HAaECD

On December 27, 2006, the RTC issued an Order 12 denying the prayer

for a TRO, holding that the trial court had no jurisdiction to try and decide the
case. The RTC ruled that, pursuant to the NLRC Manual on the Execution of
Judgment, petitioner's remedy was to file a third-party claim with the NLRC
Sheriff. Despite lack of jurisdiction, however, the RTC went on to decide the
merits of the case.
Petitioner did not file a motion for reconsideration of the RTC Order.
Instead, he filed a petition for certiorari under Rule 65 13 before the CA. He
contended that the RTC acted without or in excess of jurisdiction or with grave
abuse of discretion amounting to lack or excess of jurisdiction in issuing the
Order. Petitioner argued that the writ of execution was issued improvidently or
without authority since the property to be levied belonged to him — in his
personal capacity — and his wife. The RTC, respondent contended, could
stay the execution of a judgment if the same was unjust. 14 He also contended
that, pursuant to a ruling of this Court, a third party who is not a judgment
creditor may choose between filing a third-party claim with the NLRC sheriff or
filing a separate action with the courts. 15
In the Decision now assailed before this Court, the CA affirmed the
RTC Order in so far as it dismissed the complaint on the ground that it had no
jurisdiction over the case, and nullified all other pronouncements in the same
Order. Petitioner moved for reconsideration, but the motion was denied.
Petitioner then filed the present petition seeking the nullification of the
CA Decision. He argues that he was never sued in his personal capacity, but
in his representative capacity as president of PACSI. Neither was there any
indication in the body of the Decision that he was solidarily liable with the
corporation. 16 He also concedes that the Labor Arbiter's decision has become
final. Hence, he is not seeking to stop the execution of the judgment against
the properties of PACSI. He also avers, however, that there is no evidence
that the sheriff ever implemented the writ of execution against the properties
of PACSI. 17
Petitioner also raises anew his argument that he can choose between
filing a third-party claim with the sheriff of the NLRC or filing a separate
action. 18 He maintains that this special civil action is purely civil in nature
since it "involves the manner in which the writ of execution in a labor case will
be implemented against the property of petitioner which is not a corporate
property of PACSI." 19 What he is seeking to be restrained, petitioner
maintains, is not the Decision itself but the manner of its execution. 20 Further,
he claims that the property levied has been constituted as a family home
within the contemplation of the Family Code. 21
The petition is meritorious.
Initially, we must state that the CA did not, in fact, err in upholding the
RTC's lack of jurisdiction to restrain the implementation of the writ of
execution issued by the Labor Arbiter.
The Court has long recognized that regular courts have no jurisdiction
to hear and decide questions which arise from and are incidental to the
enforcement of decisions, orders, or awards rendered in labor cases by
appropriate officers and tribunals of the Department of Labor and
Employment. To hold otherwise is to sanction splitting of jurisdiction which is
obnoxious to the orderly administration of justice. 22
 Thus, it is, first and foremost, the NLRC Manual on the Execution of
Judgment that governs any question on the execution of a judgment of that
body. Petitioner need not look further than that. The Rules of Court apply only
by analogy or in a suppletory character. 23
Consider the provision in Section 16, Rule 39 of the Rules of Court on
third-party claims: 
EcICDT

SEC. 16. Proceedings where property claimed by third person. —

If the property levied on is claimed by any person other than the
judgment obligor or his agent, and such person makes an affidavit of his
title thereto or right to the possession thereof, stating the grounds of
such right or title, and serves the same upon the officer making the levy
and a copy thereof upon the judgment obligee, the officer shall not be
bound to keep the property, unless such judgment obligee, on demand
of the officer, files a bond approved by the court to indemnify the third-
party claimant in a sum not less than the value of the property levied on.
In case of disagreement as to such value, the same shall be determined
by the court issuing the writ of execution. No claim for damages for the
taking or keeping of the property may be enforced against the bond
unless the action therefor is filed within one hundred twenty (120) days
from the date of the filing of the bond.
The officer shall not be liable for damages for the taking or
keeping of the property, to any third-party claimant if such bond is filed.
Nothing herein contained shall prevent such claimant or any third person
from vindicating his claim to the property in a separate action, or prevent
the judgment obligee from claiming damages in the same or a separate
action against a third-party claimant who filed a frivolous or plainly
spurious claim.
When the writ of execution is issued in favor of the Republic of the
Philippines, or any officer duly representing it, the filing of such bond
shall not be required, and in case the sheriff or levying officer is sued for
damages as a result of the levy, he shall be represented by the Solicitor
General and if held liable therefor, the actual damages adjudged by the
court shall be paid by the National Treasurer out of such funds as may
be appropriated for the purpose.
On the other hand, the NLRC Manual on the Execution of
Judgment deals specifically with third-party claims in cases brought before
that body. It defines a third-party claim as one where a person, not a party to
the case, asserts title to or right to the possession of the property levied
upon. 24 It also sets out the procedure for the filing of a third-party claim, to
wit:
SECTION 2.  Proceedings. — If property levied upon be claimed
by any person other than the losing party or his agent, such person shall
 make an affidavit of his title thereto or right to the possession thereof,
stating the grounds of such right or title and shall file the same with the
sheriff and copies thereof served upon the Labor Arbiter or proper officer
issuing the writ and upon the prevailing party. Upon receipt of the third
party claim, all proceedings with respect to the execution of the property
subject of the third party claim shall automatically be suspended and the
Labor Arbiter or proper officer issuing the writ shall conduct a hearing
with due notice to all parties concerned and resolve the validity of the
claim within ten (10) working days from receipt thereof and his decision
is appealable to the Commission within ten (10) working days from
notice, and the Commission shall resolve the appeal within same period.
There is no doubt in our mind that petitioner's complaint is a third-party
claim within the cognizance of the NLRC. Petitioner may indeed be
considered a "third party" in relation to the property subject of the execution
vis-à-vis the Labor Arbiter's decision. There is no question that the property
belongs to petitioner and his wife, and not to the corporation. It can be said
that the property belongs to the conjugal partnership, not to petitioner alone.
Thus, the property belongs to a third party, i.e., the conjugal partnership. At
the very least, the Court can consider that petitioner's wife is a third party
within contemplation of the law. 
The Court's pronouncements in Deltaventures Resources, Inc. v. Hon.
Cabato 25 are instructive:
Ostensibly the complaint before the trial court was for the
recovery of possession and injunction, but in essence it was an action
challenging the legality or propriety of the levy vis-a-vis the alias writ of
execution, including the acts performed by the Labor Arbiter and the
Deputy Sheriff implementing the writ. The complaint was in effect a
motion to quash the writ of execution of a decision rendered on a case
properly within the jurisdiction of the Labor Arbiter, to wit: Illegal
Dismissal and Unfair Labor Practice. Considering the factual setting, it is
then logical to conclude that the subject matter of the third party claim is
but an incident of the labor case, a matter beyond the jurisdiction of
regional trial courts. 
IATSHE

xxx xxx xxx

. . . . Whatever irregularities attended the issuance an execution
of the alias writ of execution should be referred to the same
administrative tribunal which rendered the decision. This is because any
court which issued a writ of execution has the inherent power, for the
advancement of justice, to correct errors of its ministerial officers and to
control its own processes.
The broad powers granted to the Labor Arbiter and to the National
Labor Relations Commission by Articles 217, 218 and 224 of the Labor
 Code can only be interpreted as vesting in them jurisdiction over
incidents arising from, in connection with or relating to labor disputes, as
the controversy under consideration, to the exclusion of the regular
courts. 26
There is no denying that the present controversy arose from the
complaint for illegal dismissal. The subject matter of petitioner's complaint is
the execution of the NLRC decision. Execution is an essential part of the
proceedings before the NLRC. Jurisdiction, once acquired, continues until the
case is finally terminated, 27 and there can be no end to the controversy
without the full and proper implementation of the commission's directives.
Further underscoring the RTC's lack of jurisdiction over petitioner's
complaint is Article 254 of the Labor Code,to wit:
ART. 254. INJUNCTION PROHIBITED. — No temporary or
permanent injunction or restraining order in any case involving or
growing out of labor disputes shall be issued by any court or other entity,
except as otherwise provided in Articles 218 and 264 of this Code.
That said, however, we resolve to put an end to the controversy right
now, considering the length of time that has passed since the levy on the
property was made.
Petitioner claims that the property sought to be levied does not belong
to PACSI, the judgment debtor, but to him and his wife. Since he was sued in
a representative capacity, and not in his personal capacity, the property could
not be made to answer for the judgment obligation of the corporation.
The TCT 28 of the property bears out that, indeed, it belongs to
petitioner and his wife. Thus, even if we consider petitioner as an agent of the
corporation — and, therefore, not a stranger to the case — such that the
provision on third-party claims will not apply to him, the property was
registered not only in the name of petitioner but also of his wife. She stands to
lose the property subject of execution without ever being a party to the case.
This will be tantamount to deprivation of property without due process.
Moreover, the power of the NLRC, or the courts, to execute its
judgment extends only to properties unquestionably belonging to the
judgment debtor alone. 29 A sheriff, therefore, has no authority to attach the
property of any person except that of the judgment debtor. 30 Likewise, there
is no showing that the sheriff ever tried to execute on the properties of the
corporation.
In sum, while petitioner availed himself of the wrong remedy to
vindicate his rights, nonetheless, justice demands that this Court look beyond
his procedural missteps and grant the petition.
 WHEREFORE, the foregoing premises considered, the petition
is GRANTED. The Decision dated February 21, 2008 and the Resolution
dated July 25, 2008 of the Court of Appeals in CA-G.R. CEB-SP. No. 02370
are hereby REVERSED and SET ASIDE, and a new one is entered
declaring NULL and VOID (1) the Order of the Regional Trial Court of Negros
Occidental dated December 27, 2006 in Civil Case No. 06-12927; and (2) the
Notice of Sale on Execution of Personal Property dated December 4, 2006
over the property covered by Transfer Certificate of Title No. T-140167,
issued by the Acting Sheriff of the National Labor Relations Commission. DaHcAS

SO ORDERED.
|||  (Ando v. Campo, G.R. No. 184007, [February 16, 2011], 658 PHIL 636-646)

G.R. No. 213729. September 2, 2015.]

PHILIPPINE AIRLINES, INC., petitioner, vs. ALEXANDER P.

BICHARA, respondent.

DECISION

PERLAS-BERNABE, J  : p

Assailed in this petition for review on certiorari 1 are the

Decision 2 dated January 24, 2014 and the Resolution 3 dated July 30, 2014
rendered by the Court of Appeals (CA) in CA-G.R. SP. No. 118777, which
reversed and set aside the Decision 4 dated November 23, 2010 and the
Resolution 5 dated January 21, 2011 of the National Labor Relations
Commission (NLRC) in NLRC NCR 00-04-03414-94 (CA No. 013528-97) (AE-
03-09), and thereby, ordered petitioner Philippine Airlines, Inc. (PAL) to pay
respondent Alexander P. Bichara (Bichara) salary differentials, backwages,
and retirement benefits.
The Facts
On October 28, 1968, PAL hired Bichara as a flight attendant.
Sometime in 1971, PAL implemented a retrenchment program. By April of that
year, Bichara voluntarily resigned. On May 15, 1975, he was rehired. 6
In August 1993, Bichara was included in PAL's Purser Upgrading
Program in which he graduated on December 13, 1993. As flight purser, he
was required to take five (5) check rides for his performance evaluation and
earn at least an 85% rating for each ride. However, Bichara failed in the two
(2) check rides with ratings of 83.46% and 80.63%. Consequently, on March
21, 1994, Bichara was demoted to the position of flight steward. 7
On March 22, 1994, Bichara appealed his demotion to PAL, but no
action was taken; hence, he filed a complaint for illegal demotion against
PAL 8 before the NLRC-Regional Arbitration Branch, docketed as NLRC NCR
04-03414-94 (illegal demotion case). Eventually, or on June 16, 1997, Labor
Arbiter Ricardo C. Nora (LA Nora) issued a Decision 9 (June 16, 1997
Decision) declaring Bichara's demotion as illegal, and accordingly, ordered
PAL to reinstate Bichara to his position as flight purser. 10 PAL filed an appeal
before the NLRC and later before the CA, both of which, however, upheld LA
Nora's finding. PAL no longer appealed to the Court, thus, it rendered the
June 16, 1997 Decision final and executory on February 5, 2004. 11  caITAC

During the pendency of the illegal demotion case 12 before the CA,

however, or on July 15, 1998, PAL implemented another retrenchment
program that resulted in the termination of Bichara's employment. 13 This
prompted him, along with more than 1,400 other retrenched flight attendants,
represented by the Flight Attendants and Stewards Association of the
Philippines (FASAP), to file on June 22, 1998, a separate complaint for unfair
labor practice, illegal retrenchment with claims for reinstatement and payment
of salaries, allowances, backwages, and damages 14 against PAL, docketed
as NLRC-NCR Case No. 06-05100-98 15 (illegal retrenchment case). 16 This
case was appealed all the way to this Court, docketed as G.R. No. 178083
entitled "Flight Attendants and Stewards Assn. of the Phils. v. PAL, Patria T.
Chiong, and CA" (FASAP case), which remains pending as of this time. 17
On July 9, 2005, Bichara reached the 60 year-old compulsory
retirement age under the PAL-FASAP Collective Bargaining Agreement
(CBA). 18
On January 31, 2008, Bichara filed a motion for execution of LA Nora's
June 16, 1997 Decision, 19 which PAL opposed 20 by arguing that the
"complaint for illegal demotion . . . was overtaken by supervening events, i.e.,
the retrenchment of [Bichara] in 1998 and his having reached [the]
compulsory retirement age in 2005." 21
The LA Ruling
In an Order 22 dated February 4, 2009 (February 4, 2009 Order), Labor
Arbiter Antonio R. Macam (LA Macam) granted Bichara's motion for
execution, thus, directing the issuance of a writ of execution against PAL
and/or a certain Jose Garcia to jointly and severally pay
Bichara: (a) separation pay in lieu of reinstatement equivalent to one (1)
month's pay for every year of service counting from October 28, 1968 up to
the present, excluding the period from April 1, 1971 until May 15, 1975, or a
period of 35 years; and (b) attorney's fees in the amount of P20,000.00. 23
LA Macam declared that, notwithstanding the pendency before this
Court of the illegal retrenchment case, i.e., FASAP case, Bichara's termination
was invalid, given that: (a) PAL did not use a fair and reasonable criteria in
effecting the retrenchment; (b) PAL disregarded the labor arbiters' rulings in
the illegal demotion and illegal retrenchment cases which were both
immediately executory; and (c) retrenchment was made during the pendency
of the illegal demotion case without the permission of the court where the
case was pending. 24 For these reasons, Bichara was entitled to
reinstatement to his position as flight purser. However, since Bichara may no
longer be reinstated in view of his compulsory retirement in accordance with
the CBA, LA Macam, instead, ordered PAL to pay Bichara separation pay with
the salary base of a flight purser. 25
Aggrieved, PAL appealed to the NLRC.
The NLRC Ruling
In a Decision 26 dated November 23, 2010, the NLRC reversed and set
aside LA Macam's February 4, 2009 Order and denied the motion for
execution for being moot and academic, considering Bichara's compulsory
retirement in 2005, 27 without prejudice to the latter's entitlement to
backwages and retirement benefits of a flight steward pursuant to this Court's
final decision in the FASAP case. 28
At the outset, the NLRC ruled that Bichara's reinstatement could have
taken effect, if at all, only on January 31, 2008 when he sought the execution
of the said relief. 29 In this light, his reinstatement and corresponding
backwages prior to said date must therefore be based on the salary rate and
other benefits attached to the position of flight steward to which he was
demoted/reverted. 30 However, it declared that reinstatement is no longer
possible as the same was rendered moot and academic when he
compulsorily retired in 2005. 31 On the other hand, the NLRC concluded that
the matter of payment of monetary benefits is not for it to order since it is a
relief pertaining to the pending FASAP case; as such, Bichara should pursue
payment of backwages when the decision in the FASAP case is due for
execution. In this relation, the NLRC remarked that LA Macam exceeded his
authority in awarding separation pay in lieu of reinstatement, since such relief
is not contemplated in the decision sought to be executed, i.e., the June 16,
1997 Decision. 32
Both parties moved for reconsideration, which were, however, denied in
a Resolution 33 dated January 21, 2011. Dissatisfied, Bichara elevated the
case to the CA through a petition for review on certiorari.
 The CA Ruling
In a Decision 34 dated January 24, 2014, the CA reversed and set aside
the NLRC's ruling. It did not find LA Macam to have exceeded his authority in
ordering the payment of separation pay in lieu of reinstatement since, in a
long line of cases, this Court has consistently held that when reinstatement is
not possible due to over age, payment of separation pay is in place. 35 The
CA, however, observed that since Bichara was one of the retrenched
employees involved in the FASAP case, this Court's Decision dated October
2, 2009, wherein it ruled that the retrenchment was illegal and thereby stated
that "[f]light attendants who have reached their compulsory retirement age of
retirement shall receive backwages up to the date of their retirement
only," 36 should be made to apply. Thus, instead of separation pay, Bichara is
entitled to backwages from the time of his retrenchment up to the time he
reached the compulsory retirement age of 60. In addition, since the June 16,
1997 Decision, rendered in the illegal demotion case, had already become
final and executory, he is entitled to salary differentials of a flight purser from a
flight attendant from March 21, 1994, i.e., the date of his demotion, up to the
time of his retrenchment in July 1998. 37 He is also entitled to retirement
benefits in accordance with the existing CBA at the time of his
retirement. 38 
ICHDca

PAL moved for reconsideration 39 which was denied in a

Resolution 40 dated July 30, 2014; hence, this petition.
The Issue Before the Court
The essential issue to be resolved is whether or not the CA erred in
reversing the NLRC's Decision and thereby awarding Bichara the
aforementioned monetary awards.
The Court's Ruling
The petition is partly meritorious.
A judgment should be implemented according to the terms of its
dispositive portion is a long and well-established rule. 41 As such, where the
writ of execution is not in harmony with and exceeds the judgment
which gives it life, the writ has pro tanto no validity. 42
A companion to this rule is the principle of immutability of final
judgments, which states that a final judgment may no longer be altered,
amended or modified, even if the alteration, amendment or modification is
meant to correct what is perceived to be an erroneous conclusion of fact or
law and regardless of what court renders it. Any attempt to insert, change or
add matters not clearly contemplated in the dispositive portion violates the
rule on immutability of judgments. 43 But like any other rule, this principle has
exceptions, namely: (1) the correction of clerical errors; (2) the so-called nunc
pro tunc entries which cause no prejudice to any party; (3) void judgments;
and (4) whenever circumstances transpire after the finality of the
decision rendering its execution unjust and inequitable. 44
In this case, the final judgment sought to be executed is LA Nora's June
16, 1997 Decision, which was confined to the directive that PAL reinstate
Bichara as a flight purser in view of his illegal demotion to the position of
flight attendant:
IN VIEW OF ALL THE FOREGOING, judgment is hereby
rendered declaring the illegality of complainant's [Bichara]
demotion/reversion to Flight Steward and ordering the respondents
[PAL] to reinstate the complainant to his position as Flight Purser
within ten (10) days from receipt of this Decision.
The claim for damages is dismissed for lack of merit.
SO ORDERED. 45
Evidently, LA Macam went beyond the terms of the June 16, 1997
Decision when he, in his February 4, 2009 Order, directed the issuance of a
writ of execution ordering the payment of separation pay in lieu of
reinstatement:
WHEREFORE, finding merit in the complainant's [Bichara]
Motion for Execution, the same is hereby GRANTED. Let a Writ of
Execution be issued ordering the respondents Philippine Airlines, Inc.
and/or Jose Garcia, in lieu of reinstating the complainant to the position
of Flight Purser, to jointly and severally PAY to the complainant his
separation pay equivalent to one (1) month's pay for every year of
service counting from October 28, 1968 up to the present, excluding
the period from April 1, 1971 until May 15, 1975, or a period of thirty-
five (35) years and to pay the complainant the sum of Twenty
Thousand Pesos (P20,000.00) for and as attorney's fees.
SO ORDERED. 46
Unlike the cases 47 cited by the CA, which all involved illegal dismissal
cases, it would not be proper to accord such relief in this case since, in those
cases, the awards of separation pay in lieu of reinstatement were all hinged
on the validity of the employee's dismissal. Here, the validity of Bichara's
termination is the subject matter of a separate case, i.e., the FASAP case,
which is still pending before this Court, and is also beyond the ambit of the
illegal demotion proceedings. Hence, LA Macam exceeded his authority when
he ruled on this issue and directed PAL to pay Bichara separation pay in lieu
of reinstatement.
PAL's supervening retrenchment of its employees, which included
Bichara, in July 1998, and his compulsory retirement in July 2005, however,
prevent the enforcement of the reinstatement of Bichara to the position of
flight purser under the June 16, 1997 Decision. Nonetheless, since this
Decision had already settled the illegality of Bichara's demotion with
finality, this Court finds that Bichara should, instead, be awarded the salary
differential of a flight purser from a flight steward from the time of his illegal
demotion on March 21, 1994 up until the time he was retrenched in July 1998.
Notably, unlike LA Macam's award of separation pay in lieu of reinstatement,
the award of salary differential is not dependent on the validity of his
termination, as it is, in fact, intrinsically linked to the illegality of Bichara's
demotion. Hence, with this direct relation, there should be no obstacle in
rendering this award.
Further, it should be pointed out that the principle of immutability of
judgments, from which the above-stated rule on writ of executions proceed,
allow courts, as an exception, to recognize circumstances that transpire after
the finality of the decision which would render its execution unjust and
inequitable and act accordingly. Thus, in view of the supervening events
above-mentioned, this Court deems the award of salary differential to be the
just and equitable award under the circumstances herein prevailing.
Jurisprudence holds that courts may modify or alter the judgment to
harmonize the same with justice and the facts when after judgment has been
rendered and the latter has become final, facts and circumstances transpire
which render its execution impossible or unjust, 48 as in this case. TCAScE

As a last point, it deserves mentioning that since Bichara's illegal

demotion has been finally decreed, he should be entitled to (a) backwages, at
the salary rate of a flight purser, from the time of retrenchment in July 1998
up until his compulsory retirement in July 2005; (b) retirement benefits of
a flight purser in accordance with the existing CBA at the time of Bichara's
retirement; and (c) attorney's fees, moral, and exemplary damages, if any, but
only if this Court, in the FASAP case, finally rules that the subject
retrenchment is invalid. Otherwise, he should only be entitled to the above-
stated salary differential, as well as the corresponding separation pay required
under the relevant CBA, or Article 297 49 (formerly Article 283) of the Labor
Code if no such CBA provision exists. The awards of backwages, and
retirement benefits, including attorney's fees, moral, and exemplary damages,
if any, cannot, however, be executed in these proceedings since they are
incidents which pertain to the illegal retrenchment case, hence, executable
only when the FASAP case is finally concluded.
WHEREFORE, the petition is PARTLY GRANTED. The Decision dated
January 24, 2014 and the Resolution dated July 30, 2014 of Court of Appeals
in CA-G.R. SP. No. 118777 are hereby REVERSED and SET ASIDE. A new
one is entered ORDERING petitioner Philippine Airlines, Inc. to pay
respondent Alexander P. Bichara the salary differential of a flight purser from
 a flight attendant from the time of his illegal demotion on March 21, 1994 up
until the time he was retrenched on July 15, 1998.
SO ORDERED.
 (Philippine Airlines, Inc. v. Bichara, G.R. No. 213729, [September 2, 2015], 768
|||

PHIL 456-468)

G.R. No. 198967. March 7, 2016.]

JOSE EMMANUEL P. GUILLERMO, petitioner, vs. CRISANTO P.

USON, respondent.

DECISION

PERALTA, J  : p

Before the Court is a petition for review on certiorari under Rule 45 of

the Rules of Court seeking to annul and set aside the Court of Appeals
Decision 1 dated June 8, 2011 and Resolution 2 dated October 7, 2011 in CA-
G.R. SP No. 115485, which affirmed in toto the decision of the National Labor
Relations Commission (NLRC).
The facts of the case follow.
On March 11, 1996, respondent Crisanto P. Uson (Uson) began his
employment with Royal Class Venture Phils., Inc. (Royal Class Venture) as
an accounting clerk. 3 Eventually, he was promoted to the position of
accounting supervisor, with a salary of Php13,000.00 a month, until he was
allegedly dismissed from employment on December 20, 2000. 4
On March 2, 2001, Uson filed with the Sub-Regional Arbitration Branch
No. 1, Dagupan City, of the NLRC a Complaint for Illegal Dismissal, with
prayers for backwages, reinstatement, salaries and 13th month pay, moral
and exemplary damages and attorney's fees against Royal Class Venture. 5
Royal Class Venture did not make an appearance in the case despite
its receipt of summons. 6
On May 15, 2001, Uson filed his Position Paper 7 as complainant.
 On October 22, 2001, Labor Arbiter Jose G. De Vera rendered a
Decision 8 in favor of the complainant Uson and ordering therein respondent
Royal Class Venture to reinstate him to his former position and pay his
backwages, 13th month pay as well as moral and exemplary damages and
attorney's fees.
Royal Class Venture, as the losing party, did not file an appeal of the
decision. 9 Consequently, upon Uson's motion, a Writ of Execution 10 dated
February 15, 2002 was issued to implement the Labor Arbiter's decision.
On May 17, 2002, an Alias Writ of Execution 11 was issued. But with the
judgment still unsatisfied, a Second Alias Writ of Execution 12 was issued on
September 11, 2002.
Again, it was reported in the Sheriff's Return that the Second Alias Writ
of Execution dated September 11, 2002 remained "unsatisfied." Thus, on
November 14, 2002, Uson filed a Motion for Alias Writ of Execution and to
Hold Directors and Officers of Respondent Liable for Satisfaction of the
Decision. 13 The motion quoted from a portion of the Sheriff's Return, which
states:
On September 12, 2002, the undersigned proceeded at the
stated present business office address of the respondent which is at
Minien East, Sta. Barbara, Pangasinan to serve the writ of execution.
Upon arrival, I found out that the establishment erected thereat is not
[in] the respondent's name but JOEL and SONS CORPORATION, a
family corporation owned by the Guillermos of which, Jose Emmanuel
F. Guillermo the General Manager of the respondent, is one of the
stockholders who received the writ using his nickname "Joey," [and
who] concealed his real identity and pretended that he [was] the
brother of Jose, which [was] contrary to the statement of the guard-on-
duty that Jose and Joey [were] one and the same person. The former
also informed the undersigned that the respondent's (sic) corporation
has been dissolved.
On the succeeding day, as per [advice] by the [complainant's]
counsel that the respondent has an account at the Bank of the
Philippine Islands Magsaysay Branch, A.B. Fernandez Ave., Dagupan
City, the undersigned immediately served a notice of garnishment,
thus, the bank replied on the same day stating that the respondent
[does] not have an account with the branch. 14
On December 26, 2002, Labor Arbiter Irenarco R. Rimando issued an
Order 15 granting the motion filed by Uson. The order held that officers of a
corporation are jointly and severally liable for the obligations of the corporation
to the employees and there is no denial of due process in holding them so
even if the said officers were not parties to the case when the judgment in
favor of the employees was rendered. 16 Thus, the Labor Arbiter pierced the
veil of corporate fiction of Royal Class Venture and held herein petitioner Jose
Emmanuel Guillermo (Guillermo), in his personal capacity, jointly and
severally liable with the corporation for the enforcement of the claims of
Uson. 17 CAIHTE

Guillermo filed, by way of special appearance, a Motion for

Reconsideration/To Set Aside the Order of December 26, 2002. 18 The same,
however, was not granted as, this time, in an Order dated November 24,
2003, Labor Arbiter Niña Fe S. Lazaga-Rafols sustained the findings of the
labor arbiters before her and even castigated Guillermo for his unexplained
absence in the prior proceedings despite notice, effectively putting
responsibility on Guillermo for the case's outcome against him. 19
On January 5, 2004, Guillermo filed a Motion for Reconsideration of the
above Order, 20 but the same was promptly denied by the Labor Arbiter in an
Order dated January 7, 2004. 21
On January 26, 2004, Uson filed a Motion for Alias Writ of
Execution, 22 to which Guillermo filed a Comment and Opposition on April 2,
2004. 23
On May 18, 2004, the Labor Arbiter issued an Order 24 granting Uson's
Motion for the Issuance of an Alias Writ of Execution and rejecting Guillermo's
arguments posed in his Comment and Opposition.
Guillermo elevated the matter to the NLRC by filing a Memorandum of
Appeal with Prayer for a (Writ of) Preliminary Injunction dated June 10,
2004. 25
In a Decision 26 dated May 11, 2010, the NLRC dismissed Guillermo's
appeal and denied his prayers for injunction.
On August 20, 2010, Guillermo filed a Petition for Certiorari 27 before
the Court of Appeals, assailing the NLRC decision.
On June 8, 2011, the Court of Appeals rendered its assailed
Decision 28 which denied Guillermo's petition and upheld all the findings of the
NLRC.
The appellate court found that summons was in fact served on
Guillermo as President and General Manager of Royal Class Venture, which
was how the Labor Arbiter acquired jurisdiction over the company. 29 But
Guillermo subsequently refused to receive all notices of hearings and
conferences as well as the order to file Royal Class Venture's position
paper. 30 Then, it was learned during execution that Royal Class Venture had
been dissolved. 31 However, the Court of Appeals held that although the
judgment had become final and executory, it may be modified or altered "as
when its execution becomes impossible or unjust." 32 It also noted that the
motion to hold officers and directors like Guillermo personally liable, as well as
the notices to hear the same, was sent to them by registered mail, but no
pleadings were submitted and no appearances were made by anyone of them
during the said motion's pendency. 33 Thus, the court held Guillermo liable,
citing jurisprudence that hold the president of the corporation liable for the
latter's obligation to illegally dismissed employees. 34 Finally, the court
dismissed Guillermo's allegation that the case is an intra-corporate
controversy, stating that jurisdiction is determined by the allegations in the
complaint and the character of the relief sought. 35
From the above decision of the appellate court, Guillermo filed a Motion
for Reconsideration 36 but the same was again denied by the said court in the
assailed Resolution 37 dated October 7, 2011.
Hence, the instant petition.
Guillermo asserts that he was impleaded in the case only more than a
year after its Decision had become final and executory, an act which he
claims to be unsupported in law and jurisprudence. 38 He contends that the
decision had become final, immutable and unalterable and that any
amendment thereto is null and void. 39 Guillermo assails the so-called
"piercing the veil" of corporate fiction which allegedly discriminated against
him when he alone was belatedly impleaded despite the existence of other
directors and officers in Royal Class Venture. 40 He also claims that the Labor
Arbiter has no jurisdiction because the case is one of an intra-corporate
controversy, with the complainant Uson also claiming to be a stockholder and
director of Royal Class Venture. 41
In his Comment, 42 Uson did not introduce any new arguments but
merely cited verbatim the disquisitions of the Court of Appeals to counter
Guillermo's assertions in his petition.
To resolve the case, the Court must confront the issue of whether an
officer of a corporation may be included as judgment obligor in a labor case
for the first time only after the decision of the Labor Arbiter had become final
and executory, and whether the twin doctrines of "piercing the veil of
corporate fiction" and personal liability of company officers in labor cases
apply.
The petition is denied.
In the earlier labor cases of Claparols v. Court of Industrial
Relations 43 and A.C. Ransom Labor Union-CCLU v. NLRC, 44 persons who
were not originally impleaded in the case were, even during execution, held to
be solidarily liable with the employer corporation for the latter's unpaid
obligations to complainant-employees. These included a newly-formed
corporation which was considered a mere conduit or alter ego of the originally
impleaded corporation, and/or the officers or stockholders of the latter
corporation. 45 Liability attached, especially to the responsible officers, even
after final judgment and during execution, when there was a failure to collect
from the employer corporation the judgment debt awarded to its
workers. 46 In Naguiat v. NLRC, 47 the president of the corporation was found,
for the first time on appeal, to be solidarily liable to the dismissed employees.
Then, in Reynoso v. Court of Appeals, 48 the veil of corporate fiction was
pierced at the stage of execution, against a corporation not previously
impleaded, when it was established that such corporation had dominant
control of the original party corporation, which was a smaller company, in
such a manner that the latter's closure was done by the former in order to
defraud its creditors, including a former worker. DETACa

The rulings of this Court in A.C. Ransom, Naguiat, and Reynoso,

however, have since been tempered, at least in the aspects of the lifting of the
corporate veil and the assignment of personal liability to directors, trustees
and officers in labor cases. The subsequent cases of McLeod v.
NLRC, 49 Spouses Santos v. NLRC 50 and Carag v. NLRC, 51 have all
established, save for certain exceptions, the primacy of Section 31 52 of
the Corporation Code in the matter of assigning such liability for a
corporation's debts, including judgment obligations in labor cases. According
to these cases, a corporation is still an artificial being invested by law with a
personality separate and distinct from that of its stockholders and from that of
other corporations to which it may be connected. 53 It is not in every instance
of inability to collect from a corporation that the veil of corporate fiction is
pierced, and the responsible officials are made liable. Personal liability
attaches only when, as enumerated by the said Section 31 of the Corporation
Code, there is a wilfull and knowing assent to patently unlawful acts of the
corporation, there is gross negligence or bad faith in directing the affairs of the
corporation, or there is a conflict of interest resulting in damages to the
corporation. 54 Further, in another labor case, Pantranco Employees
Association (PEA-PTGWO), et al. v. NLRC, et al., 55 the doctrine of piercing
the corporate veil is held to apply only in three (3) basic areas, namely: (1)
defeat of public convenience as when the corporate fiction is used as a
vehicle for the evasion of an existing obligation; (2) fraud cases or when the
corporate entity is used to justify a wrong, protect fraud, or defend a crime; or
(3) alter ego cases, where a corporation is merely a farce since it is a mere
alter ego or business conduit of a person, or where the corporation is so
organized and controlled and its affairs are so conducted as to make it merely
an instrumentality, agency, conduit or adjunct of another corporation. In the
absence of malice, bad faith, or a specific provision of law making a corporate
officer liable, such corporate officer cannot be made personally liable for
corporate liabilities. 56 Indeed, in Reahs Corporation v. NLRC, 57 the
conferment of liability on officers for a corporation's obligations to labor is held
to be an exception to the general doctrine of separate personality of a
corporation.
It also bears emphasis that in cases where personal liability attaches,
not even all officers are made accountable. Rather, only the "responsible
officer," i.e., the person directly responsible for and who "acted in bad faith" in
committing the illegal dismissal or any act violative of the Labor Code, is held
solidarily liable, in cases wherein the corporate veil is pierced. 58 In other
instances, such as cases of so-called corporate tort of a close corporation, it
is the person "actively engaged" in the management of the corporation who is
held liable. 59 In the absence of a clearly identifiable officer(s) directly
responsible for the legal infraction, the Court considers the president of the
corporation as such officer. 60
The common thread running among the aforementioned cases,
however, is that the veil of corporate fiction can be pierced, and responsible
corporate directors and officers or even a separate but related corporation,
may be impleaded and held answerable solidarily in a labor case, even after
final judgment and on execution, so long as it is established that such persons
have deliberately used the corporate vehicle to unjustly evade the judgment
obligation, or have resorted to fraud, bad faith or malice in doing so. When the
shield of a separate corporate identity is used to commit wrongdoing and
opprobriously elude responsibility, the courts and the legal authorities in a
labor case have not hesitated to step in and shatter the said shield and deny
the usual protections to the offending party, even after final judgment. The key
element is the presence of fraud, malice or bad faith. Bad faith, in this
instance, does not connote bad judgment or negligence but imports a
dishonest purpose or some moral obliquity and conscious doing of wrong; it
means breach of a known duty through some motive or interest or ill will; it
partakes of the nature of fraud. 61
As the foregoing implies, there is no hard and fast rule on when
corporate fiction may be disregarded; instead, each case must be evaluated
according to its peculiar circumstances. 62 For the case at bar, applying the
above criteria, a finding of personal and solidary liability against a corporate
officer like Guillermo must be rooted on a satisfactory showing of fraud, bad
faith or malice, or the presence of any of the justifications for disregarding the
corporate fiction. As stated in McLeod, 63 bad faith is a question of fact and is
evidentiary, so that the records must first bear evidence of malice before a
finding of such may be made.
It is our finding that such evidence exists in the record. Like the A.C.
Ransom, and Naguiat cases, the case at bar involves an apparent family
corporation. As in those two cases, the records of the present case bear
allegations and evidence that Guillermo, the officer being held liable, is the
person responsible in the actual running of the company and for the malicious
and illegal dismissal of the complainant; he, likewise, was shown to have a
role in dissolving the original obligor company in an obvious "scheme to avoid
liability" which jurisprudence has always looked upon with a suspicious eye in
order to protect the rights of labor. 64
Part of the evidence on record is the second page of the verified
Position Paper of complainant (herein respondent) Crisanto P. Uson, where it
was clearly alleged that Uson was "illegally dismissed by the
President/General Manager of respondent corporation (herein petitioner) Jose
Emmanuel P. Guillermo when Uson exposed the practice of the said
President/General Manager of dictating and undervaluing the shares of stock
of the corporation." 65 The statement is proof that Guillermo was the
responsible officer in charge of running the company as well as the one who
dismissed Uson from employment. As this sworn allegation is uncontroverted
— as neither the company nor Guillermo appeared before the Labor Arbiter
despite the service of summons and notices — such stands as a fact of the
case, and now functions as clear evidence of Guillermo's bad faith in his
dismissal of Uson from employment, with the motive apparently being anger
at the latter's reporting of unlawful activities. 
aDSIHc

Then, it is also clearly reflected in the records that it was Guillermo

himself, as President and General Manager of the company, who received the
summons to the case, and who also subsequently and without justifiable
cause refused to receive all notices and orders of the Labor Arbiter that
followed. 66 This makes Guillermo responsible for his and his company's
failure to participate in the entire proceedings before the said office. The fact
is clearly narrated in the Decision and Orders of the Labor Arbiter, Uson's
Motions for the Issuance of Alias Writs of Execution, as well as in the Decision
of the NLRC and the assailed Decision of the Court of Appeals, 67 which
Guillermo did not dispute in any of his belated motions or pleadings, including
in his petition for certiorari before the Court of Appeals and even in the
petition currently before this Court. 68 Thus, again, the same now stands as a
finding of fact of the said lower tribunals which binds this Court and which it
has no power to alter or revisit. 69 Guillermo's knowledge of the case's filing
and existence and his unexplained refusal to participate in it as the
responsible official of his company, again is an indicia of his bad faith and
malicious intent to evade the judgment of the labor tribunals.
Finally, the records likewise bear that Guillermo dissolved Royal Class
Venture and helped incorporate a new firm, located in the same address as
the former, wherein he is again a stockholder. This is borne by the Sheriff's
Return which reported: that at Royal Class Venture's business address at
Minien East, Sta. Barbara, Pangasinan, there is a new establishment named
"Joel and Sons Corporation," a family corporation owned by the Guillermos in
which Jose Emmanuel F. Guillermo is again one of the stockholders; that
Guillermo received the writ of execution but used the nickname "Joey" and
denied being Jose Emmanuel F. Guillermo and, instead, pretended to be
Jose's brother; that the guard on duty confirmed that Jose and Joey are one
and the same person; and that the respondent corporation Royal Class
Venture had been dissolved. 70 Again, the facts contained in the Sheriff's
Return were not disputed nor controverted by Guillermo, either in the hearings
of Uson's Motions for Issuance of Alias Writs of Execution, in subsequent
motions or pleadings, or even in the petition before this Court. Essentially,
then, the facts form part of the records and now stand as further proof of
Guillermo's bad faith and malicious intent to evade the judgment obligation.
The foregoing clearly indicate a pattern or scheme to avoid the
obligations to Uson and frustrate the execution of the judgment award, which
this Court, in the interest of justice, will not countenance. 
ATICcS

As for Guillermo's assertion that the case is an intra-corporate

controversy, the Court sustains the finding of the appellate court that the
nature of an action and the jurisdiction of a tribunal are determined by the
allegations of the complaint at the time of its filing, irrespective of whether or
not the plaintiff is entitled to recover upon all or some of the claims asserted
therein. 71 Although Uson is also a stockholder and director of Royal Class
Venture, it is settled in jurisprudence that not all conflicts between a
stockholder and the corporation are intra-corporate; an examination of the
complaint must be made on whether the complainant is involved in his
capacity as a stockholder or director, or as an employee. 72 If the latter is
found and the dispute does not meet the test of what qualifies as an intra-
corporate controversy, then the case is a labor case cognizable by the NLRC
and is not within the jurisdiction of any other tribunal. 73 In the case at bar,
Uson's allegation was that he was maliciously and illegally dismissed as an
Accounting Supervisor by Guillermo, the Company President and General
Manager, an allegation that was not even disputed by the latter nor by Royal
Class Venture. It raised no intra-corporate relationship issues between him
and the corporation or Guillermo; neither did it raise any issue regarding the
regulation of the corporation. As correctly found by the appellate court, Uson's
complaint and redress sought were centered alone on his dismissal as an
employee, and not upon any other relationship he had with the company or
with Guillermo. Thus, the matter is clearly a labor dispute cognizable by the
labor tribunals.
WHEREFORE, the petition is DENIED. The Court of Appeals Decision
dated June 8, 2011 and Resolution dated October 7, 2011 in CA-G.R. SP No.
115485 are AFFIRMED.
 SO ORDERED.
|||  (Guillermo v. Uson, G.R. No. 198967, [March 7, 2016], 782 PHIL 215-229)

G.R. No. 210032. April 25, 2017.]

DUTCH MOVERS, INC., CESAR LEE and YOLANDA

LEE, petitioners, vs. EDILBERTO 1 LEQUIN, CHRISTOPHER R.
SALVADOR, REYNALDO 2 L. SINGSING, and RAFFY B.
MASCARDO, respondents.

DECISION

DEL CASTILLO, J  : p

Before the Court is a Petition for Review on Certiorari assailing the July

1, 2013 Decision 3 of the Court of Appeals in CA-G.R. SP No. 113774. The
CA reversed and set aside the October 29, 2009 4 and January 29,
2010 5 Resolutions of the National Labor Relations Commission (NLRC),
which in turn reversed and set aside the Order 6 dated September 4, 2009 of
Labor Arbiter Lilia S. Savari (LA Savari). 
HTcADC

Also challenged is the November 13, 2013 CA Resolution, 7 which

denied the Motion for Reconsideration on the assailed Decision.
Factual Antecedents
This case is an offshoot of the illegal dismissal Complaint 8 filed by
Edilberto Lequin (Lequin), Christopher Salvador, Reynaldo Singsing, and
Raffy Mascardo (respondents) against Dutch Movers, Inc. (DMI), and/or
spouses Cesar Lee and Yolanda Lee (petitioners), its alleged
President/Owner, and Manager respectively.
In their Amended Complaint and Position Paper, 9 respondents stated
that DMI, a domestic corporation engaged in hauling liquefied petroleum gas,
employed Lequin as truck driver, and the rest of respondents as helpers; on
December 28, 2004, Cesar Lee, through the Supervisor Nazario Furio,
informed them that DMI would cease its hauling operation for no reason; as
such, they requested DMI to issue a formal notice regarding the matter but to
no avail. Later, upon respondents' request, the DOLE NCR 10 issued a
certification 11 revealing that DMI did not file any notice of business closure.
Thus, respondents argued that they were illegally dismissed as their
termination was without cause and only on the pretext of closure.
On October 28, 2005, LA Aliman D. Mangandog dismissed 12 the case
for lack of cause of action.
On November 23, 2007, the NLRC reversed and set aside the LA
Decision. It ruled that respondents were illegally dismissed because DMI
simply placed them on standby, and no longer provide them with work. The
dispositive portion of the NLRC Decision 13 reads:
WHEREFORE, the Decision dated October 28, 2005 is hereby
REVERSED and SET ASIDE and a new judgment is hereby rendered
ordering respondent Dutch Movers, Inc. to reinstate complainants to
their former positions without loss of seniority rights and other
privileges. Respondent corporation is also hereby ordered to pay
complainants their full backwages from the time they were illegally
dismissed up to the date of their actual reinstatement and ten (10%)
percent of the monetary award as for attorney's fees.
SO ORDERED. 14
The NLRC Decision became final and executory on December 30,
2007. 15 And, on February 14, 2008, the NLRC issued an Entry of
Judgment 16 on the case.
Consequently, respondents filed a Motion for Writ of Execution. 17 Later,
they submitted a Reiterating Motion for Writ of Execution with Updated
Computation of Full Backwages. 18 Pending resolution of these motions,
respondents filed a Manifestation and Motion to Implead 19 stating that upon
investigation, they discovered that DMI no longer operates. They,
nonetheless, insisted that petitioners — who managed and operated DMI, and
consistently represented to respondents that they were the owners of DMI —
continue to work at Toyota Alabang, which they (petitioners) also own and
operate. They further averred that the Articles of Incorporation (AOI) of DMI
ironically did not include petitioners as its directors or officers; and those
named directors and officers were persons unknown to them. They likewise
claimed that per inquiry with the SEC 20 and the DOLE, they learned that DMI
did not file any notice of business closure; and the creation and operation of
DMI was attended with fraud making it convenient for petitioners to evade
their legal obligations to them. 
CAIHTE

Given these developments, respondents prayed that petitioners, and

the officers named in DMI's AOI, which included Edgar N. Smith and Millicent
C. Smith (spouses Smith), be impleaded, and be held solidarily liable with
DMI in paying the judgment awards.
 In their Opposition to Motion to Implead, 21 spouses Smith alleged that
as part of their services as lawyers, they lent their names to petitioners to
assist them in incorporating DMI. Allegedly, after such undertaking, spouses
Smith promptly transferred their supposed rights in DMI in favor of petitioners.
Spouses Smith stressed that they never participated in the
management and operations of DMI, and they were not its stockholders,
directors, officers, or managers at the time respondents were terminated.
They further insisted that they were not afforded due process as they were not
impleaded from the inception of the illegal dismissal case; and hence, they
cannot be held liable for the liabilities of DMI.
On April 1, 2009, LA Savari issued an Order 22 holding petitioners liable
for the judgment awards. LA Savari decreed that petitioners represented
themselves to respondents as the owners of DMI; and were the ones who
managed the same. She further noted that petitioners were afforded due
process as they were impleaded from the beginning of this case.
Later, respondents filed anew a Reiterating Motion for Writ of Execution
and Approve[d] Updated Computation of Full Backwages. 23
On July 31, 2009, LA Savari issued a Writ of Execution, the pertinent
portion of which reads:
NOW THEREFORE, you [Deputy Sheriff] are commanded to
proceed to respondents DUTCH MOVERS and/or CESAR LEE and
YOLANDA LEE with address at c/o Toyota Alabang, Alabang Zapote
Road, Las Piñas City or wherever they may be found within the
jurisdiction of the Republic of the Philippines and collect from said
respondents the amount of THREE MILLION EIGHT HUNDRED
EIGHTEEN THOUSAND ONE HUNDRED EIGHTY SIX PESOS &
66/100 (Php3,818,186.66) representing Complainants' awards plus
10% Attorney's fees in the amount of THREE HUNDRED EIGHTY
ONE THOUSAND EIGHT HUNDRED EIGHTEEN PESOS & 66/100
(Php381,818.66) and execution fee in the amount of FORTY
THOUSAND FIVE HUNDRED PESOS (Php40,500.00) or a total of
FOUR MILLION TWO HUNDRED FORTY THOUSAND FIVE
HUNDRED FIVE PESOS & 32/100 (Php4,240,505.32) x x x 24  aScITE

Petitioners moved 25 to quash the Writ of Execution contending that the

April 1, 2009 LA Order was void because the LA has no jurisdiction to modify
the final and executory NLRC Decision, and the same cannot anymore be
altered or modified since there was no finding of bad faith against them.
Ruling of the Labor Arbiter
On September 4, 2009, LA Savari denied petitioners' Motion to Quash
because it did not contain any ground that must be set forth in such motion.
 Thus, petitioners appealed to the NLRC.
Ruling of the National Labor Relations Commission
On October 29, 2009, the NLRC quashed the Writ of Execution insofar
as it held petitioners liable to pay the judgment awards. The decretal portion
of the NLRC Resolution reads:
WHEREFORE, in view of the foregoing, the assailed Order
dated September 4, 2009 denying respondents' Motion to Quash Writ
is hereby REVERSED and SET ASIDE. The Writ of Execution dated
July 13, 26 2009 is hereby QUASHED insofar as it holds individual
respondents Cesar Lee and Yolanda Lee liable for the judgment award
against the complainants.
Let the entire record of the case be forwarded to the Labor
Arbiter of origin for appropriate proceedings.
SO ORDERED. 27
The NLRC ruled that the Writ of Execution should only pertain to DMI
since petitioners were not held liable to pay the awards under the final and
executory NLRC Decision. It added that petitioners could not be sued
personally for the acts of DMI because the latter had a separate and distinct
personality from the persons comprising it; and, there was no showing that
petitioners were stockholders or officers of DMI; or even granting that they
were, they were not shown to have acted in bad faith against respondents.
On January 29, 2010, the NLRC denied respondents' Motion for
Reconsideration. DETACa

Undaunted, respondents filed a Petition for Certiorari with the CA

ascribing grave abuse of discretion against the NLRC in quashing the Writ of
Execution insofar as it held petitioners liable to pay the judgment awards.
Ruling of the Court of Appeals
On July 1, 2013, the CA reversed and set aside the NLRC Resolutions,
and accordingly affirmed the Writ of Execution impleading petitioners as party-
respondents liable to answer for the judgment awards.
The CA ratiocinated that as a rule, once a judgment becomes final and
executory, it cannot anymore be altered or modified; however, an exception to
this rule is when there is a supervening event, which renders the execution of
judgment unjust or impossible. It added that petitioners were afforded due
process as they were impleaded from the beginning of the case; and,
respondents identified petitioners as the persons who hired them, and were
the ones behind DMI. It also noted that such participation of petitioners was
confirmed by DMI's two incorporators who attested that they lent their names
to petitioners to assist the latter in incorporating DMI; and, after their
undertaking, these individuals relinquished their purported interests in DMI in
favor of petitioners.
On November 13, 2013, the CA denied the Motion for Reconsideration
on the assailed Decision.
Thus, petitioners filed this Petition raising the following grounds:
THE HONORABLE COURT OF APPEALS COMMITTED A
REVERSIBLE ERROR IN RULING THAT RESPONDENTS SHOULD
BE LIABLE FOR THE JUDGMENT AWARD TO RESPONDENTS
BASED ON THE FOLLOWING:
I
THE VALDERAMA VS. NLRC AND DAVID VS. CA ARE NOT
APPLICABLE IN THE INSTANT CASE.
II
THERE IS NO LEGAL BASIS TO PIERCE THE VEIL OF
CORPORATE FICTION OF DUTCH MOVERS, INC. 28
Petitioners argue that the circumstances in Valderrama v. National
Labor Relations Commission 29 differ with those of the instant case. They
explain that in Valderrama, the LA therein granted a motion for clarification. In
this case, however, the LA made petitioners liable through a mere
manifestation and motion to implead filed by respondents. They further stated
that in Valderrama, the body of the decision pointed out the liability of the
individual respondents therein while here, there was no mention in the
November 23, 2007 NLRC Decision regarding petitioners' liability. As such,
they posit that they cannot be held liable under said NLRC Decision.  HEITAD

In addition, petitioners claim that there is no basis to pierce the veil of

corporate fiction because DMI had a separate and distinct personality from
the officers comprising it. They also insist that there was no showing that the
termination of respondents was attended by bad faith.
In fine, petitioners argue that despite the allegation that they operated
and managed the affairs of DMI, they cannot be held accountable for its
liability in the absence of any showing of bad faith on their part.
Respondents, on their end, counter that petitioners were identified as
the ones who owned and managed DMI and therefore, they should be held
liable to pay the judgment awards. They also stress that petitioners were
consistently impleaded since the filing of the complaint and thus, they were
given the opportunity to be heard.
Issue
Whether petitioners are personally liable to pay the judgment awards in
favor of respondents
Our Ruling
The Court denies the Petition.
To begin with, the Court is not a trier of facts and only questions of law
may be raised in a petition under Rule 45 of the Rules of Court. This rule,
nevertheless, allows certain exceptions, which include such instance where
the factual findings of the CA are contrary to those of the lower court or
tribunal. Considering the divergent factual findings of the CA and the NLRC in
this case, the Court deems it necessary to examine, review and evaluate
anew the evidence on record. 30
Moreover, after a thorough review of the records, the Court finds that
contrary to petitioners' claim, Valderrama v. National Labor Relations
Commission, 31 and David v. Court of Appeals  32 are applicable here. In said
cases, the Court held that the principle of immutability of judgment, or the rule
that once a judgment has become final and executory, the same can no
longer be altered or modified and the court's duty is only to order its
execution, is not absolute. One of its exceptions is when there is a
supervening event occurring after the judgment becomes final and executory,
which renders the decision unenforceable. 33
To note, a supervening event refers to facts that transpired after a
judgment has become final and executory, or to new situation that developed
after the same attained finality. Supervening events include matters that the
parties were unaware of before or during trial as they were not yet existing
during that time. 34 
aDSIHc

In Valderrama, the supervening event was the closure of Commodex,

the company therein, after the decision became final and executory, and
without any showing that it filed any proceeding for bankruptcy. The Court
held that therein petitioner, the owner of Commodex, was personally liable for
the judgment awards because she controlled the company.
Similarly, supervening events transpired in this case after the NLRC
Decision became final and executory, which rendered its execution impossible
and unjust. Like in Valderrama, during the execution stage, DMI ceased its
operation, and the same did not file any formal notice regarding it. Added to
this, in their Opposition to the Motion to Implead, spouses Smith revealed that
they only lent their names to petitioners, and they were included as
incorporators just to assist the latter in forming DMI; after such undertaking,
spouses Smith immediately transferred their rights in DMI to petitioners, which
proved that petitioners were the ones in control of DMI, and used the same in
furthering their business interests.
 In considering the foregoing events, the Court is not unmindful of the
basic tenet that a corporation has a separate and distinct personality from its
stockholders, and from other corporations it may be connected with. However,
such personality may be disregarded, or the veil of corporate fiction may be
pierced attaching personal liability against responsible person if the
corporation's personality "is used to defeat public convenience, justify wrong,
protect fraud or defend crime, or is used as a device to defeat the labor laws x
x x." 35 By responsible person, we refer to an individual or entity responsible
for, and who acted in bad faith in committing illegal dismissal or in violation of
the Labor Code; or one who actively participated in the management of the
corporation. Also, piercing the veil of corporate fiction is allowed where a
corporation is a mere alter ego or a conduit of a person, or another
corporation. 36
Here, the veil of corporate fiction must be pierced and accordingly,
petitioners should be held personally liable for judgment awards because the
peculiarity of the situation shows that they controlled DMI; they actively
participated in its operation such that DMI existed not as a separate entity but
only as business conduit of petitioners. As will be shown below, petitioners
controlled DMI by making it appear to have no mind of its own, 37 and used
DMI as shield in evading legal liabilities, including payment of the judgment
awards in favor of respondents. 38  ATICcS

First, petitioners and DMI jointly filed their Position

Paper, 39 Reply, 40 and Rejoinder 41 in contesting respondents' illegal
dismissal. Perplexingly, petitioners argued that they were not part of DMI and
were not privy to its dealings; 42 yet, petitioners, along with DMI, collectively
raised arguments on the illegal dismissal case against them.
Stated differently, petitioners denied having any participation in the
management and operation of DMI; however, they were aware of and
disclosed the circumstances surrounding respondents' employment, and
propounded arguments refuting that respondents were illegally dismissed.
To note, petitioners revealed the annual compensation of respondents
and their length of service; they also set up the defense that respondents
were merely project employees, and were not terminated but that DMI's
contract with its client was discontinued resulting in the absence of hauling
projects for respondents.
If only to prove that they were not part of DMI, petitioners could have
revealed who operated it, and from whom they derived the information
embodied in their pleadings. Such failure to reveal thus gives the Court
reasons to give credence to respondents' firm stand that petitioners are no
strangers to DMI, and that they were the ones who managed and operated it.
 Second, the declarations made by spouses Smith further bolster that
petitioners and no other controlled DMI, to wit:
Complainants [herein respondents] in their own motion admit
that they never saw [spouses Smith] at the office of [DMI], and do not
know them at all. This is because [spouses Smith's] services as
lawyers had long been dispensed by the Spouses Lee and had no
hand whatsoever in the management of the company. The Smiths, as
counsel of the spouses at [that] time, [lent] their names as
incorporators to facilitate the [incorporation of DMI.] Respondent
Edgard Smith was then counsel of Toyota Alabang and acts as its
corporate secretary and as favor to his former client and employer,
Respondent Cesar Lee, agreed to help incorporate [DMI] and even
asked his wife Respondent, Millicent Smith, to act as incorporator also
[to] complete the required 5 man incorporators. After the incorporation
they assigned and transferred all their purported participation in the
company to the Respondents Spouses Cesar and Yolanda Lee, who
acted as managers and are the real owners of the corporation. Even at
the time complainant[s were] fired from [their] employment
respondents Spouses Smith had already given up their shares. The
failure to amend the Articles of Incorporation of [DMI], and to apply for
closure is the fault of the new board, if any was constituted
subsequently, and not of Respondents Smiths. Whatever fraud
committed was not committed by the Respondents Smiths, hence they
could not be made solidarily liable with Respondent Corporation or with
the spouses Lee. If bad faith or fraud did attend the termination of
complainant[s], respondents Smiths would know nothing of it because
they had ceased any connection with [DMI] even prior to such time.
And they had at the inception of the corporation never exercised
management prerogatives in the selection, hiring, and firing of
employees of [DMI]. 43 ETHIDa

Spouses Smith categorically identified petitioners as the owners and

managers of DMI. In their Motion to Quash, however, petitioners neither
denied the allegation of spouses Smith nor adduced evidence to establish that
they were not the owners and managers of DMI. They simply insisted that
they could not be held personally liable because of the immutability of the final
and executory NLRC Decision, and of the separate and distinct personality of
DMI.
Furthermore, the assailed CA Decision heavily relied on the
declarations of spouses Smith but still petitioners did not address the matters
raised by spouses Smith in the instant Petition with the Court.
Indeed, despite sufficient opportunity to clarify matters and/or to refute
them, petitioners simply brushed aside the allegations of spouses Smith that
petitioners owned and managed DMI. Petitioners just maintain that they did
not act in bad faith; that the NLRC Decision is final and executory; and that
DMI has a distinct and separate personality. Hence, for failure to address,
clarify, or deny the declarations of spouses Smith, the Court finds
respondents' position that petitioners owned, and operated DMI with merit.
Third, piercing the veil of corporate fiction is allowed, and responsible
persons may be impleaded, and be held solidarily liable even after final
judgment and on execution, provided that such persons deliberately used the
corporate vehicle to unjustly evade the judgment obligation, or resorted to
fraud, bad faith, or malice in evading their obligation. 44
In this case, petitioners were impleaded from the inception of this case.
They had ample opportunity to debunk the claim that they illegally dismissed
respondents, and that they should be held personally liable for having
controlled DMI and actively participated in its management, and for having
used it to evade legal obligations to respondents.
While it is true that one's control does not by itself result in the disregard
of corporate fiction; however, considering the irregularity in the incorporation
of DMI, then there is sufficient basis to hold that such corporation was used
for an illegal purpose, including evasion of legal duties to its employees, and
as such, the piercing of the corporate veil is warranted. The act of hiding
behind the cloak of corporate fiction will not be allowed in such situation
where it is used to evade one's obligations, which "equitable piercing doctrine
was formulated to address and prevent." 45  TIADCc

Clearly, petitioners should be held liable for the judgment awards as

they resorted to such scheme to countermand labor laws by causing the
incorporation of DMI but without any indication that they were part thereof.
While such device to defeat labor laws may be deemed ingenious and
imaginative, the Court will not hesitate to draw the line, and protect the right of
workers to security of tenure, including ensuring that they will receive the
benefits they deserve when they fall victims of illegal dismissal. 46
Finally, it appearing that respondents' reinstatement is no longer
feasible by reason of the closure of DMI, then separation pay should be
awarded to respondents instead. 47
WHEREFORE, the Petition is DENIED. The July 1, 2013 Decision and
November 13, 2013 Resolution of the Court of Appeals in CA-G.R. SP
113774 are AFFIRMED with MODIFICATION that instead of reinstatement,
Dutch Movers, Inc. and spouses Cesar Lee and Yolanda Lee are solidarily
liable to pay respondents' separation pay for every year of service.
SO ORDERED.
 (Dutch Movers, Inc. v. Lequin, G.R. No. 210032, [April 25, 2017], 809 PHIL
|||

438-453)

G.R. No. 162943. December 6, 2010.]

EMPLOYEES UNION OF BAYER PHILS., FFW and JUANITO S.

FACUNDO, in his capacity as President, petitioners, vs. BAYER
PHILIPPINES, INC., DIETER J. LONISHEN (President),
ASUNCION AMISTOSO (HRD Manager), AVELINA REMIGIO
AND ANASTACIA VILLAREAL, respondents.

DECISION

VILLARAMA, JR., J  : p

This petition for review on certiorari assails the Decision 1 dated

December 15, 2003 and Resolution 2 dated March 23, 2004 of the Court of
Appeals (CA) in CA-G.R. SP No. 73813.
Petitioner Employees Union of Bayer Philippines 3 (EUBP) is the
exclusive bargaining agent of all rank-and-file employees of Bayer Philippines
(Bayer), and is an affiliate of the Federation of Free Workers (FFW). In 1997,
EUBP, headed by its president Juanito S. Facundo (Facundo), negotiated
with Bayer for the signing of a collective bargaining agreement (CBA). During
the negotiations, EUBP rejected Bayer's 9.9% wage-increase proposal
resulting in a bargaining deadlock. Subsequently, EUBP staged a strike,
prompting the Secretary of the Department of Labor and Employment (DOLE)
to assume jurisdiction over the dispute.
In November 1997, pending the resolution of the dispute, respondent
Avelina Remigio (Remigio) and 27 other union members, without any
authority from their union leaders, accepted Bayer's wage-increase proposal.
EUBP's grievance committee questioned Remigio's action and reprimanded
Remigio and her allies. On January 7, 1998, the DOLE Secretary issued an
arbitral award ordering EUBP and Bayer to execute a CBA retroactive to
January 1, 1997 and to be made effective until December 31, 2001. The said
CBA 4 was registered on July 8, 1998 with the Industrial Relations Division of
the DOLE-National Capital Region (NCR). 5
Meanwhile, the rift between Facundo's leadership and Remigio's group
broadened. On August 3, 1998, barely six months from the signing of the new
CBA, during a company-sponsored seminar, 6 Remigio solicited signatures
from union members in support of a resolution containing the decision of the
signatories to: (1) disaffiliate from FFW, (2) rename the union as Reformed
Employees Union of Bayer Philippines (REUBP), (3) adopt a new constitution
and by-laws for the union, (4) abolish all existing officer positions in the union
and elect a new set of interim officers, and (5) authorize REUBP to administer
the CBA between EUBP and Bayer. 7 The said resolution was signed by 147
of the 257 local union members. A subsequent resolution was also issued
affirming the first resolution. 8
A tug-of-war then ensued between the two rival groups, with both
seeking recognition from Bayer and demanding remittance of the union dues
collected from its rank-and-file members. On September 8, 1998, Remigio's
splinter group wrote Facundo, FFW and Bayer informing them of the decision
of the majority of the union members to disaffiliate from FFW. 9 This was
followed by another letter informing Facundo, FFW and Bayer that an interim
set of REUBP executive officers and board of directors had been appointed,
and demanding the remittance of all union dues to REUBP. Remigio also
asked Bayer to desist from further transacting with EUBP. Facundo,
meanwhile, sent similar requests to Bayer 10 requesting for the remittance of
union dues in favor of EUBP and accusing the company of interfering with
purely union matters. 11 Bayer responded by deciding not to deal with either of
the two groups, and by placing the union dues collected in a trust account
until the conflict between the two groups is resolved. 12 
IDCcEa

On September 15, 1998, EUBP filed a complaint for unfair labor

practice (first ULP complaint) against Bayer for non-remittance of union dues.
The case was docketed as NLRC-NCR-Case No. 00-09-07564-98. 13
EUBP later sent a letter dated November 5, 1998 to Bayer asking for a
grievance conference. 14 The meeting was conducted by the management on
November 11, 1998, with all REUBP officers including their lawyers present.
Facundo did not attend the meeting, but sent two EUBP officers to inform
REUBP and the management that a preventive mediation conference
between the two groups has been scheduled on November 12, 1998 before
the National Conciliation and Mediation Board (NCMB). 15
Apparently, the two groups failed to settle their issues as Facundo
again sent respondent Dieter J. Lonishen two more letters, dated January 14,
1999 16 and September 2, 1999, 17 asking for a grievance meeting with the
management to discuss the failure of the latter to comply with the terms of
their CBA. Both requests remained unheeded.
On February 9, 1999, while the first ULP case was still pending and
despite EUBP's repeated request for a grievance conference, Bayer decided
to turn over the collected union dues amounting to P254,857.15 to respondent
Anastacia Villareal, Treasurer of REUBP.
Aggrieved by the said development, EUBP lodged a complaint 18 on
March 4, 1999 against Remigio's group before the Industrial Relations
Division of the DOLE praying for their expulsion from EUBP for commission of
"acts that threaten the life of the union."
On June 18, 1999, Labor Arbiter Jovencio Ll. Mayor, Jr. dismissed
the first ULP complaint for lack of jurisdiction. 19 The Arbiter explained that the
root cause for Bayer's failure to remit the collected union dues can be traced
to the intra-union conflict between EUBP and Remigio's group 20 and that the
charges imputed against Bayer should have been submitted instead to
voluntary arbitration. 21 EUBP did not appeal the said decision. 22
On December 14, 1999, petitioners filed a second ULP complaint
against herein respondents docketed as NLRC-RAB-IV Case No. 12-11813-
99-L. Three days later, petitioners amended the complaint charging the
respondents with unfair labor practice committed by organizing a company
union, gross violation of the CBA and violation of their duty to
bargain. 23 Petitioners complained that Bayer refused to remit the collected
union dues to EUBP despite several demands sent to the
management. 24 They also alleged that notwithstanding the requests sent to
Bayer for a renegotiation of the last two years of the 1997-2001 CBA between
EUBP and Bayer, the latter opted to negotiate instead with Remigio's
group. 25
On even date, REUBP and Bayer agreed to sign a new CBA. Remigio
immediately informed her allies of the management's decision. 26
In response, petitioners immediately filed an urgent motion for the
issuance of a restraining order/injunction 27 before the National Labor
Relations Commission (NLRC) and the Labor Arbiter against respondents.
Petitioners asserted their authority as the exclusive bargaining representative
of all rank-and-file employees of Bayer and asked that a temporary restraining
order be issued against Remigio's group and Bayer to prevent the employees
from ratifying the new CBA. Later, petitioners filed a second amended
complaint 28 to include in its complaint the issue of gross violation of the CBA
for violation of the contract bar rule following Bayer's decision to negotiate and
sign a new CBA with Remigio's group.
Meanwhile, on January 26, 2000, the Regional Director of the Industrial
Relations Division of DOLE issued a decision dismissing the issue on
expulsion filed by EUBP against Remigio and her allies for failure to exhaust
reliefs within the union and ordering the conduct of a referendum to determine
which of the two groups should be recognized as union officers. 29 EUBP
seasonably appealed the said decision to the Bureau of Labor Relations
(BLR). 30 On June 16, 2000, the BLR reversed the Regional Director's ruling
and ordered the management of Bayer to respect the authority of the duly-
elected officers of EUBP in the administration of the prevailing CBA. 31
Unfortunately, the said BLR ruling came late since Bayer had already
signed a new CBA 32 with REUBP on February 21, 2000. The said CBA was
eventually ratified by majority of the bargaining unit. 33  IaESCH

On June 2, 2000, Labor Arbiter Waldo Emerson R. Gan dismissed

EUBP's second ULP complaint for lack of jurisdiction. 34 The Labor Arbiter
explained the dismissal as follows:
All told, were it not for the fact that there were two (2) [groups] of
employees, the Union led by its President Juanito Facundo and the
members who decided to disaffiliate led by Ms. Avelina Remigio,
claiming to be the rightful representative of the rank and file employees,
the Company would not have acted the way it did and the Union would
not have filed the instant case.
Clearly then, as the case involves intra-union disputes, this Office
is bereft of any jurisdiction pursuant to Article 226 of the Labor Code, as
amended, which provides pertinently in part, thus:
"Bureau of Labor Relations — The Bureau of Labor
Relations and the Labor Relations Divisions in the regional offices
of the Department of Labor and Employment shall have original
and exclusive authority to act, at their own initiative or upon
request of either or both parties, on all inter-union and intra-union
conflicts, and all disputes, grievances or problems arising from or
affecting labor-management relations in all workplaces whether
agricultural or non-agricultural, except those arising from the
implementation or interpretation of collective bargaining
agreements which shall be the subject of grievance procedure
and/or voluntary arbitration."
Specifically, with respect to the union dues, the authority is the
case of Cebu Seamen's Association[,] Inc. vs. Ferrer-Calleja, (212
SCRA 51), where the Supreme Court held that when the issue calls for
the determination of which between the two groups within a union is
entitled to the union dues, the same cannot be taken cognizance of by
the NLRC.
xxx xxx xxx
WHEREFORE, premises considered, the instant complaint is
hereby DISMISSED on the ground of lack of jurisdiction. 
SO ORDERED. 35
 On June 28, 2000, the NLRC resolved to dismiss 36 petitioners' motion
for a restraining order and/or injunction stating that the subject matter involved
an intra-union dispute, over which the said Commission has no jurisdiction. 37
Aggrieved by the Labor Arbiter's decision to dismiss the second ULP
complaint, petitioners appealed the said decision, but the NLRC denied the
appeal. 38 EUBP's motion for reconsideration was likewise denied. 39
Thus, petitioners filed a Rule 65 petition to the CA. On December 15,
2003, the CA sustained both the Labor Arbiter and the NLRC's rulings. The
appellate court explained,
A cursory reading of the three pleadings, to wit: the Complaint
(Vol. I, Rollo, p[p]. 166-167); the Amended Complaint (Vol. I, Rollo[,] pp.
168-172) and the Second Amended Complaint dated March 8, 2000
(Vol. II, Rollo, pp. 219-225) will readily show that the instant case was
brought about by the action of the Group of REM[I]GIO to disaffiliate
from FFW and to organized (sic) REUBP under the tutelage of
REM[I]GIO and VILLAREAL. At first glance of the case at bar, it involves
purely an (sic) inter-union and intra-union conflicts or disputes between
EUBP-FFW and REUBP which issue should have been resolved by the
Bureau of Labor Relations under Article 226 of the Labor Code.
However, since no less than petitioners who admitted that respondents
committed gross violations of the CBA, then the BLR is divested of
jurisdiction over the case and the issue should have been referred to the
Grievance Machinery and Voluntary Arbitrator and not to the Labor
Arbiter as what petitioners did in the case at bar. . . .
xxx xxx xxx
Furthermore, the CBA entered between BAYER and EUBP-FFW
[has] a life span of only five years and after the said period, the
employees have all the right to change their bargaining unit who will
represent them. If there exist[s] two opposing unions in the same
company, the remedy is not to declare that such act is considered unfair
labor practice but rather they should conduct a certification election
provided [that] it should be conducted within 60 days of the so[-]called
freedom period before the expiration of the CBA.
WHEREFORE, premises considered, this Petition is DENIED and
the assailed Decision dated September 27, 2001 as well as the Order
dated June 21, 2002, denying the motion for reconsideration, by the
National Labor Relations Commission, First Division, in NLRC Case No.
RAB-IV-12-11813-99-L, are hereby AFFIRMED in toto. Costs against
petitioners. 
HAICcD

SO ORDERED. 40
 Undaunted, petitioners filed this Rule 45 petition before this Court.
Initially, the said petition was denied for having been filed out of time and for
failure to comply with the requirements provided in the 1997 Rules of Civil
Procedure, as amended. 41 Upon petitioners' motion, however, we decided to
reinstate their appeal.
The following are the issues raised by petitioners, to wit:
I. WHETHER OR NOT THE HONORABLE COURT OF APPEALS, IN
ARRIVING AT THE DECISION PROMULGATED ON 15
DECEMBER 2003 AND RESOLUTION PROMULGATED ON 23
MARCH 2004, DECIDED THE CASE IN ACCORDANCE WITH
LAW AND JURISPRUDENCE; AND
II. WHETHER OR NOT THE HONORABLE COURT OF APPEALS, IN
ARRIVING AT THE DECISION PROMULGATED ON 15
DECEMBER 2003 AND RESOLUTION PROMULGATED ON 23
MARCH 2004, GRAVELY ABUSE[D] ITS DISCRETION IN ITS
FINDINGS AND CONCLUSION THAT:
THE ACTS OF ABETTING OR ASSISTING IN THE
CREATION OF ANOTHER UNION, NEGOTIATING OR
BARGAINING WITH SUCH UNION, WHICH IS NOT THE
SOLE AND EXCLUSIVE BARGAINING AGENT,
VIOLATING THE DUTY TO BARGAIN COLLECTIVELY,
REFUSAL TO PROCESS GRIEVABLE ISSUES IN THE
GRIEVANCE MACHINERY AND/OR REFUSAL TO DEAL
WITH THE SOLE AND EXCLUSIVE BARGAINING
AGENT ARE ACTS CONSTITUTING OR TANTAMOUNT
TO UNFAIR LABOR PRACTICE. 42
Respondents Bayer, Lonishen and Amistoso, meanwhile, identify the
issues as follows:
I. WHETHER OR NOT THE UNIFORM FINDINGS OF THE COURT OF
APPEALS, THE NLRC AND THE LABOR ARBITER ARE
BINDING ON THIS HONORABLE COURT;
II. WHETHER OR NOT THE LABOR ARBITER AND THE NLRC HAVE
JURISDICTION OVER THE INSTANT CASE;
III. WHETHER OR NOT THE INSTANT CASE INVOLVES AN INTRA-
UNION DISPUTE;
IV. WHETHER OR NOT RESPONDENTS COMPANY, LONISHEN AND
AMISTOSO COMMITTED AN ACT OF UNFAIR LABOR
PRACTICE; AND
V. WHETHER OR NOT THE INSTANT CASE HAS BECOME MOOT
AND ACADEMIC. 43
 Essentially, the issue in this petition is whether the act of the
management of Bayer in dealing and negotiating with Remigio's splinter group
despite its validly existing CBA with EUBP can be considered unfair labor
practice and, if so, whether EUBP is entitled to any relief.
Petitioners argue that the subject matter of their complaint, as well as
the subsequent amendments thereto, pertain to the unfair labor practice act of
respondents Bayer, Lonishen and Amistoso in dealing with Remigio's splinter
union. They contend that (1) the acts of abetting or assisting in the creation of
another union is among those considered by the Labor Code, as amended,
specifically under Article 248 (d) 44 thereof, as unfair labor practice; (2) the act
of negotiating with such union constitutes a violation of Bayer's duty to bargain
collectively; and (3) Bayer's unjustified refusal to process EUBP's grievances
and to recognize the said union as the sole and exclusive bargaining agent
are tantamount to unfair labor practice. 45
Respondents Bayer, Lonishen and Amistoso, on the other hand,
contend that there can be no unfair labor practice on their part since the
requisites for unfair labor practice — i.e., that the violation of the CBA should
be gross, and that it should involve violation in the economic provisions of the
CBA — were not satisfied. Moreover, they cite the ruling of the Labor Arbiter
that the issues raised in the complaint should have been ventilated and
threshed out before the voluntary arbitrators as provided in Article 261 of
the Labor Code, as amended. 46 Respondents Remigio and Villareal,
meanwhile, point out that the case should be dismissed as against them since
they are not real parties in interest in the ULP complaint against Bayer, 47 and
since there are no specific or material acts imputed against them in the
complaint. 48
The petition is partly meritorious.
An intra-union dispute refers to any conflict between and among union
members, including grievances arising from any violation of the rights and
conditions of membership, violation of or disagreement over any provision of
the union's constitution and by-laws, or disputes arising from chartering or
disaffiliation of the union. 49 Sections 1 and 2, Rule XI of Department Order
No. 40-03, Series of 2003 of the DOLE enumerate the following
circumstances as inter/intra-union disputes, viz.:  IDEHCa

RULE XI
INTER/INTRA-UNION DISPUTES AND
OTHER RELATED LABOR RELATIONS DISPUTES
SECTION 1.  Coverage. — Inter/intra-union disputes shall
include:
 (a) cancellation of registration of a labor organization filed by its
members or by another labor organization;
(b) conduct of election of union and workers' association
officers/nullification of election of union and workers'
association officers;
(c) audit/accounts examination of union or workers' association
funds;
(d) deregistration of collective bargaining agreements;
(e) validity/invalidity of union affiliation or disaffiliation;
(f) validity/invalidity of acceptance/non-acceptance for union
membership;
(g) validity/invalidity of impeachment/expulsion of union and
workers' association officers and members;
(h) validity/invalidity of voluntary recognition;
(i) opposition to application for union and CBA registration;
(j) violations of or disagreements over any provision in a union or
workers' association constitution and by-laws;
(k) disagreements over chartering or registration of labor
organizations and collective bargaining agreements;
(l) violations of the rights and conditions of union or workers'
association membership;
(m) violations of the rights of legitimate labor organizations,
except interpretation of collective bargaining agreements;
(n) such other disputes or conflicts involving the rights to self-
organization, union membership and collective bargaining
—
(1) between and among legitimate labor organizations;
(2) between and among members of a union or workers'
association.
SECTION 2.  Coverage. — Other related labor relations disputes
shall include any conflict between a labor union and the employer or any
individual, entity or group that is not a labor organization or workers'
association. This includes: (1) cancellation of registration of unions and
workers' associations; and (2) a petition for interpleader.
It is clear from the foregoing that the issues raised by petitioners do not
fall under any of the aforementioned circumstances constituting an intra-union
dispute. More importantly, the petitioners do not seek a determination of
whether it is the Facundo group (EUBP) or the Remigio group (REUBP) which
is the true set of union officers. Instead, the issue raised pertained only to the
validity of the acts of management in light of the fact that it still has an existing
CBA with EUBP. Thus as to Bayer, Lonishen and Amistoso the question was
whether they were liable for unfair labor practice, which issue was within the
jurisdiction of the NLRC. The dismissal of the second ULP complaint was
therefore erroneous.
However, as to respondents Remigio and Villareal, we find that
petitioners' complaint was validly dismissed.
Petitioners' ULP complaint cannot prosper as against respondents
Remigio and Villareal because the issue, as against them, essentially involves
an intra-union dispute based on Section 1 (n) of DOLE Department Order No.
40-03. To rule on the validity or illegality of their acts, the Labor Arbiter and
the NLRC will necessarily touch on the issues respecting the propriety of their
disaffiliation and the legality of the establishment of REUBP — issues that are
outside the scope of their jurisdiction. Accordingly, the dismissal of the
complaint was validly made, but only with respect to these two respondents. 
But are Bayer, Lonishen and Amistoso liable for unfair labor practice?
On this score, we find that the evidence supports an answer in the affirmative.
It must be remembered that a CBA is entered into in order to foster
stability and mutual cooperation between labor and capital. An employer
should not be allowed to rescind unilaterally its CBA with the duly certified
bargaining agent it had previously contracted with, and decide to bargain
anew with a different group if there is no legitimate reason for doing so and
without first following the proper procedure. If such behavior would be
tolerated, bargaining and negotiations between the employer and the union
will never be truthful and meaningful, and no CBA forged after arduous
negotiations will ever be honored or be relied upon. Article 253 of the Labor
Code, as amended, plainly provides:  HICSaD

ART. 253. Duty to bargain collectively when there exists a

collective bargaining agreement. — Where there is a collective
bargaining agreement, the duty to bargain collectively shall also
mean that neither party shall terminate or modify such agreement
during its lifetime. However, either party can serve a written notice to
terminate or modify the agreement at least sixty (60) days prior to its
expiration date. It shall be the duty of both parties to keep the status
quo and to continue in full force and effect the terms and conditions of
the existing agreement during the 60-day period and/or until a new
agreement is reached by the parties. (Emphasis supplied.)
This is the reason why it is axiomatic in labor relations that a CBA
entered into by a legitimate labor organization that has been duly certified as
the exclusive bargaining representative and the employer becomes the law
between them. Additionally, in the Certificate of Registration 50 issued by the
DOLE, it is specified that the registered CBA serves as the covenant between
the parties and has the force and effect of law between them during the period
of its duration. Compliance with the terms and conditions of the CBA is
mandated by express policy of the law primarily to afford protection to
labor 51 and to promote industrial peace. Thus, when a valid and binding CBA
had been entered into by the workers and the employer, the latter is
behooved to observe the terms and conditions thereof bearing on union dues
and representation. 52 If the employer grossly violates its CBA with the duly
recognized union, the former may be held administratively and criminally
liable for unfair labor practice. 53
Respondents Bayer, Lonishen and Amistoso, contend that their acts
cannot constitute unfair labor practice as the same did not involve gross
violations in the economic provisions of the CBA, citing the provisions of
Articles 248 (1) and 261 54 of the Labor Code, as amended. 55 Their argument
is, however, misplaced.
Indeed, in Silva v. National Labor Relations Commission, 56 we
explained the correlations of Article 248 (1) and Article 261 of the Labor
Code to mean that for a ULP case to be cognizable by the Labor Arbiter, and
for the NLRC to exercise appellate jurisdiction thereon, the allegations in the
complaint must show prima facie the concurrence of two things, namely: (1)
gross violation of the CBA; and (2) the violation pertains to the economic
provisions of the CBA. 57
This pronouncement in Silva, however, should not be construed to
apply to violations of the CBA which can be considered as gross
violations per se, such as utter disregard of the very existence of the CBA
itself, similar to what happened in this case. When an employer proceeds to
negotiate with a splinter union despite the existence of its valid CBA with the
duly certified and exclusive bargaining agent, the former indubitably abandons
its recognition of the latter and terminates the entire CBA.
Respondents cannot claim good faith to justify their acts. They knew
that Facundo's group represented the duly-elected officers of EUBP.
Moreover, they were cognizant of the fact that even the DOLE Secretary
himself had recognized the legitimacy of EUBP's mandate by rendering an
arbitral award ordering the signing of the 1997-2001 CBA between Bayer and
EUBP. Respondents were likewise well-aware of the pendency of the intra-
union dispute case, yet they still proceeded to turn over the collected union
dues to REUBP and to effusively deal with Remigio. The totality of
respondents' conduct, therefore, reeks with anti-EUBP animus.
 Bayer, Lonishen and Amistoso argue that the case is already moot and
academic following the lapse of the 1997-2001 CBA and their renegotiation
with EUBP for the 2006-2007 CBA. They also reason that the act of the
company in negotiating with EUBP for the 2006-2007 CBA is an obvious
recognition on their part that EUBP is now the certified collective bargaining
agent of its rank-and-file employees. 58
We do not agree. First, a legitimate labor organization cannot be
construed to have abandoned its pending claim against the
management/employer by returning to the negotiating table to fulfill its duty to
represent the interest of its members, except when the pending claim has
been expressly waived or compromised in its subsequent negotiations with
the management. To hold otherwise would be tantamount to subjecting
industrial peace to the precondition that previous claims that labor may have
against capital must first be waived or abandoned before negotiations
between them may resume. Undoubtedly, this would be against public policy
of affording protection to labor and will encourage scheming employers to
commit unlawful acts without fear of being sanctioned in the future.
Second, that the management of Bayer decided to recognize EUBP as
the certified collective bargaining agent of its rank-and-file employees for
purposes of its 2006-2007 CBA negotiations is of no moment. It did not
obliterate the fact that the management of Bayer had withdrawn its recognition
of EUBP and supported REUBP during the tumultuous implementation of the
1997-2001 CBA. Such act of interference which is violative of the existing
CBA with EUBP led to the filing of the subject complaint. AEDCHc

On the matter of damages prayed for by the petitioners, we have held

that as a general rule, a corporation cannot suffer nor be entitled to moral
damages. A corporation, and by analogy a labor organization, being an
artificial person and having existence only in legal contemplation, has no
feelings, no emotions, no senses; therefore, it cannot experience physical
suffering and mental anguish. Mental suffering can be experienced only by
one having a nervous system and it flows from real ills, sorrows, and griefs of
life — all of which cannot be suffered by an artificial, juridical person. 59 A
fortiori, the prayer for exemplary damages must also be
denied. 60 Nevertheless, we find it in order to award (1) nominal damages in
the amount of P250,000.00 on the basis of our ruling in De La Salle University
v. De La Salle University Employees Association (DLSUEA-NAFTEU) 61 and
Article 2221, 62 and (2) attorney's fees equivalent to 10% of the monetary
award. The remittance to petitioners of the collected union dues previously
turned over to Remigio and Villareal is likewise in order.
WHEREFORE, the petition for review on certiorari is PARTLY
GRANTED. The Decision dated December 15, 2003 and the Resolution dated
 March 23, 2004 of the Court of Appeals in CA-G.R. SP No. 73813
are MODIFIED as follows:
1) Respondents Bayer Phils., Dieter J. Lonishen and Asuncion
Amistoso are found LIABLE for Unfair Labor Practice, and
are hereby ORDERED to remit to petitioners the amount of
P254,857.15 representing the collected union dues
previously turned over to Avelina Remigio and Anastacia
Villareal. They are likewise ORDERED to pay petitioners
nominal damages in the amount of P250,000.00 and
attorney's fees equivalent to 10% of the monetary award;
and
2) The complaint, as against respondents Remigio and Villareal
is DISMISSED due to the lack of jurisdiction of the Labor
Arbiter and the NLRC, the complaint being in the nature of
an intra-union dispute.
No pronouncement as to costs.
SO ORDERED.
 (Employees Union of Bayer Phils., FFW v. Bayer Philippines, Inc., G.R. No.
|||

162943, [December 6, 2010], 651 PHIL 190-210)

G.R. No. 168583. July 26, 2010.]

ATTY. ALLAN S. MONTAÑO, petitioner, vs. ATTY. ERNESTO C.

VERCELES, respondent.

DECISION

DEL CASTILLO, J  : p

The Federation/Union's Constitution and By-Laws govern the

relationship between and among its members. They are akin to ordinary
contracts in that their provisions have obligatory force upon the
federation/union and its member. What has been expressly stipulated therein
shall be strictly binding on both.
 By this Petition for Review on Certiorari, 1 petitioner Atty. Allan S.
Montaño (Atty. Montaño) assails the Decision 2 dated May 28, 2004 and
Resolution 3 dated June 28, 2005 of the Court of Appeals (CA) in CA-G.R. SP
No. 71731, which declared as null and void his election as the National Vice-
President of Federation of Free Workers (FFW), thereby reversing the May 8,
2002 Decision 4 of the Bureau of Labor Relations (BLR) in BLR-O-TR-66-7-
13-01.

Factual Antecedents

Atty. Montaño worked as legal assistant of FFW Legal Center on

October 1, 1994. 5 Subsequently, he joined the union of rank-and-file
employees, the FFW Staff Association, and eventually became the
employees' union president in July 1997. In November 1998, he was likewise
designated officer-in-charge of FFW Legal Center. 6
During the 21st National Convention and Election of National Officers of
FFW, Atty. Montaño was nominated for the position of National Vice-
President. In a letter dated May 25, 2001, 7 however, the Commission on
Elections (FFW COMELEC), informed him that he is not qualified for the
position as his candidacy violates the 1998 FFW Constitution and By-Laws,
particularly Section 76 of Article XIX 8 and Section 25 (a) of Article VIII, 9 both
in Chapter II thereof. Atty. Montaño thus filed an Urgent Motion for
Reconsideration 10 praying that his name be included in the official list of
candidates. CTaIHE

Election ensued on May 26-27, 2001 in the National Convention held at

Subic International Hotel, Olongapo City. Despite the pending motion for
reconsideration with the FFW COMELEC, and strong opposition and protest
of respondent Atty. Ernesto C. Verceles (Atty. Verceles), a delegate to the
convention and president of University of the East Employees' Association
(UEEA-FFW) which is an affiliate union of FFW, the convention delegates
allowed Atty. Montaño's candidacy. He emerged victorious and was
proclaimed as the National Vice-President.
On May 28, 2001, through a letter 11 to the Chairman of FFW
COMELEC, Atty. Verceles reiterated his protest over Atty. Montaño's
candidacy which he manifested during the plenary session before the holding
of the election in the Convention. On June 18, 2001, Atty. Verceles sent a
follow-up letter 12 to the President of FFW requesting for immediate action on
his protest.

Proceedings before the Bureau of Labor Relations

 On July 13, 2001, Atty. Verceles, as President of UEEA-FFW and
officer of the Governing Board of FFW, filed before the BLR a petition 13 for
the nullification of the election of Atty. Montaño as FFW National Vice-
President. He alleged that, as already ruled by the FFW COMELEC, Atty.
Montaño is not qualified to run for the position because Section 76 of Article
XIX of the FFW Constitution and By-Laws prohibits federation employees
from sitting in its Governing Board. Claiming that Atty. Montaño's premature
assumption of duties and formal induction as vice-president will cause serious
damage, Atty. Verceles likewise prayed for injunctive relief. 14
Atty. Montaño filed his Comment with Motion to Dismiss 15 on the
grounds that the Regional Director of the Department of Labor and
Employment (DOLE) and not the BLR has jurisdiction over the case; that the
filing of the petition was premature due to the pending and unresolved protest
before the FFW COMELEC; and that, Atty. Verceles has no legal standing to
initiate the petition not being the real party in interest.
Meanwhile, on July 16, 2001, the FFW COMELEC sent a letter to FFW
National President, Bro. Ramon J. Jabar, in reference to the election protest
filed before it by Atty. Verceles. In this correspondence, which was used by
Atty. Verceles as an additional annex to his petition before the BLR, the FFW
COMELEC intimated its firm stand that Atty. Montaño's candidacy
contravenes the FFW's Constitution, by stating:
At the time Atty. Verceles lodged his opposition in the floor before
the holding of the election, we, the Comelec unanimously made the
decision that Atty. Montaño and others are disqualified and barred from
running for any position in the election of the Federation, in view of
pertinent provisions of the FFW Constitution.
Our decision which we repeated several times as final was
however further deliberated upon by the body, which then gave the go
signal for Atty. Montaño's candidacy notwithstanding our decision
barring him from running and despite the fact that several delegates took
the floor [stating] that the convention body is not a constitutional
convention body and as such could not qualify to amend the FFW's
present constitution to allow Atty. Montaño to run. 
DTEScI

We would like to reiterate what we stated during the plenary

session that our decision was final in view of the cited pertinent
provisions of the FFW Constitution and we submit that the decision of
the convention body in allowing Atty. Montaño's candidacy is not valid in
view of the fact that it runs counter to the FFW Constitution and the body
at that time was not acting as a Constitutional Convention body
empowered to amend the FFW Constitution on the spot.
Our having conducted the election does not depart from the fact
that we did not change our decision disqualifying candidates such as
 Atty. Allan S. Montaño, and others from running. The National
Convention as a co-equal constitutional body of the Comelec was not
given the license nor the authority to violate the Constitution. It therefore,
cannot reverse the final decision of the Comelec with regard to the
candidacy of Atty. Allan Montaño and other disqualified candidates. 16
The BLR, in its Order dated August 20, 2001, 17 did not give due course
to Atty. Montaño's Motion to Dismiss but ordered the latter to submit his
answer to the petition pursuant to the rules. The parties thereafter submitted
their respective pleadings and position papers.
On May 8, 2002, the BLR rendered a Decision 18 dismissing the petition
for lack of merit. While it upheld its jurisdiction over the intra-union dispute
case and affirmed, as well, Atty. Verceles' legal personality to institute the
action as president of an affiliate union of FFW, the BLR ruled that there were
no grounds to hold Atty. Montaño unqualified to run for National Vice-
President of FFW. It held that the applicable provision in the FFW Constitution
and By-Laws to determine whether one is qualified to run for office is not
Section 76 of Article XIX 19 but Section 26 of Article VIII 20 thereof. The BLR
opined that there was sufficient compliance with the requirements laid down
by this applicable provision and, besides, the convention delegates
unanimously decided that Atty. Montaño was qualified to run for the position
of National Vice-President.
Atty. Verceles filed a Motion for Reconsideration but it was denied by
the BLR.

Proceedings before the Court of Appeals

Atty. Verceles thus elevated the matter to the CA via a petition

for certiorari, 21 arguing that the Convention had no authority under the FFW
Constitution and By-Laws to overrule and set aside the FFW COMELEC's
Decision rendered pursuant to the latter's power to screen candidates.
On May 28, 2004, the CA set aside the BLR's Decision. While it agreed
that jurisdiction was properly lodged with the BLR, that Atty. Verceles has
legal standing to institute the petition, and that the applicable provision of
FFW Constitution and By-Laws is Section 26 of Article VIII and not Section 76
of Article XIX, the CA however ruled that Atty. Montaño did not possess the
qualification requirement under paragraph (d) of Section 26 that candidates
must be an officer or member of a legitimate labor organization. According to
the CA, since Atty. Montaño, as legal assistant employed by FFW, is
considered as confidential employee, consequently, he is ineligible to join
FFW Staff Association, the rank-and-file union of FFW. The CA, thus, granted
the petition and nullified the election of Atty. Montaño as FFW National Vice-
President. DScTaC
 Atty. Montaño moved for reconsideration claiming that the CA seriously
erred in granting Atty. Verceles' petition on the ground that FFW Staff
Association, of which he is an officer and member, is not a legitimate labor
organization. He asserted that the legitimacy of the union was never raised as
an issue. Besides, the declaration of the CA that FFW Staff Association is not
a legitimate labor organization amounts to a collateral attack upon its legal
personality, which is proscribed by law. Atty. Montaño also reiterated his
allegations of lack of jurisdiction and lack of cause of action due to a pending
protest. In addition, he claimed violation of the mandatory requirement on
certification against forum shopping and mootness of the case due to the
appointment of Atty. Verceles as Commissioner of the National Labor
Relations Commission (NLRC), thereby divesting himself of interest in any
matters relating to his affiliation with FFW.
Believing that it will be prejudiced by the CA Decision since its legal
existence was put at stake, the FFW Staff Association, through its president,
Danilo A. Laserna, sought intervention.
On June 28, 2005, the CA issued a Resolution 22 denying both Atty.
Montaño's motion for reconsideration 23 and FFW Staff Association's motion
for intervention/clarification. 24 
aSCDcH

Issues

Hence, this petition anchored on the following grounds:

I.
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION, AMOUNTING TO LACK AND/OR EXCESS OF
JURISDICTION, IN RENDERING THE ASSAILED DECISION, IN
THAT: 
A.) THE SOLE GROUND USED AND/OR INVOKED IN
GRANTING THE PETITION A QUO WAS NOT EVEN
RAISED AND/OR INVOKED BY PETITIONER;
B.) THE DECLARATION THAT "FFW STAFF ASSOCIATION IS
NOT A LEGITIMATE LABOR ORGANIZATION",
WITHOUT GIVING SAID ORGANIZATION A 'DAY IN
COURT' AMOUNTS TO A COLLATERAL ATTACK
PROSCRIBED UNDER THE LAW; AND
C.) THE COURT OF APPEALS FAILED AND/OR REFUSED TO
PASS UPON OTHER LEGAL ISSUES WHICH HAD BEEN
TIMELY RAISED, SPECIFICALLY ON THE
PREMATURITY OF THE COMPLAINT AND THE LACK
 OF CERTIFICATION AGAINST FORUM SHOPPING OF
THE PETITION A QUO.
II.
THE COURT OF APPEALS ERRED IN UPHOLDING THE EXERCISE
OF JURISDICTION BY HEREIN RESPONDENT BUREAU AND IN NOT
ORDERING THE DISMISSAL OF THE CASE, DESPITE EXPRESS
PROVISION OF LAW GRANTING SAID JURISDICTION OVER CASES
INVOLVING PROTESTS AND PETITIONS FOR ANNULMENT OF
RESULTS OF ELECTIONS TO THE REGIONAL DIRECTORS OF THE
DEPARTMENT OF LABOR AND EMPLOYMENT.
III.
IN THE ALTERNATIVE, THE COURT OF APPEALS LIKEWISE ERRED
IN NOT ORDERING THE DISMISSAL OF THE PETITION A QUO, IN
THAT:
A.) THE FILING OF THE PETITION FOR NULLIFICATION OF
THE RESULT OF ELECTION IS PREMATURE, IN VIEW
OF PENDENCY OF HEREIN RESPONDENT ATTY.
VERCELES' PROTEST BEFORE THE COMMISSION ON
ELECTIONS OF THE FEDERATION OF FREE
WORKERS (FFW COMELEC) AT THE TIME OF THE
FILING OF THE SAID PETITION, HENCE, HE HAS NO
CAUSE OF ACTION; AND  cTDIaC

B.) HEREIN RESPONDENT ATTY. VERCELES HAS VIOLATED

SECTION 5, RULE 7 OF THE 1997 RULES ON CIVIL
PROCEDURE, AS HIS PETITION A QUO HAS NO
CERTIFICATION AGAINST FORUM SHOPPING, WHICH
IS A MANDATORY REQUIREMENT. IT IS ALSO IN
UTTER DISREGARD AND IN GROSS VIOLATION OF
SUPREME COURT CIRCULAR NO. 04-94.
IV.
FINALLY, ASSUMING ARGUENDO THAT HEREIN RESPONDENT
BUREAU ACTED WITH JURISDICTION OVER THE CASE;
AND ASSUMING FURTHER THAT HEREIN RESPONDENT ATTY.
VERCELES HAS A CAUSE OF ACTION, DESPITE THE PENDENCY
OF HIS PROTEST BEFORE FFW'S COMELEC AT THE TIME HE
FILED HIS PETITION A QUO; AND ASSUMING FINALLY, THAT
HEREIN RESPONDENT ATTY. VERCELES BE EXCUSED IN
DISREGARDING THE MANDATORY REQUIREMENT ON
CERTIFICATION AGAINST FORUM SHOPPING WHICH WAS TIMELY
OBJECTED TO, THE COURT OF APPEALS COMMITTED GRAVE
ABUSE OF DISCRETION, AMOUNTING TO LACK AND/OR EXCESS
OF JURISDICTION, IN NOT ORDERING THE DISMISSAL OF THE
 CASE FOR HAVING BEEN RENDERED MOOT AND ACADEMIC BY A
SUPERVENING EVENT — THAT WAS, WHEN HEREIN
RESPONDENT ATTY. VERCELES SOUGHT APPOINTMENT AND
WAS APPOINTED AS COMMISSIONER OF THE NATIONAL LABOR
RELATIONS COMMISSION (NLRC), THUS, DIVESTING HIMSELF
WITH ANY INTEREST WITH MATTERS RELATING TO HIS FORMER
MEMBERSHIP AND AFFILIATION WITH THE FEDERATION OF FREE
WORKERS (FFW), HENCE, HE IS NO LONGER A REAL PARTY IN
INTEREST, AS HE DOES NOT STAND TO BE INJURED OR
BENEFITED BY THE JUDGMENT IN THE INSTANT CASE. 25
Atty. Montaño contends that the CA gravely erred in upholding the
jurisdiction of the BLR; in not declaring as premature the petition in view of the
pending protest before FFW COMELEC; in not finding that the petition
violated the rule on non-forum shopping; in not dismissing the case for being
moot in view of the appointment of Atty. Verceles as NLRC Commissioner;
and in granting the petition to annul his election as FFW National Vice-
President on the ground that FFW Staff Association is not a legitimate labor
organization.

Our Ruling

The petition is devoid of merit.

The BLR has jurisdiction over intra-

union disputes involving a federation.

We find no merit in petitioner's claim that under Section 6 of Rule

XV 26 in relation to Section 1 of Rule XIV 27 of Book V of the Omnibus Rules
Implementing the Labor Code, it is the Regional Director of the DOLE and not
the BLR who has jurisdiction over election protests.
Section 226 of the Labor Code 28 clearly provides that the BLR and the
Regional Directors of DOLE have concurrent jurisdiction over inter-union and
intra-union disputes. Such disputes include the conduct or nullification of
election of union and workers' association officers. 29 There is, thus, no doubt
as to the BLR's jurisdiction over the instant dispute involving member-unions
of a federation arising from disagreement over the provisions of the
federation's constitution and by-laws.  TDCAIS

We agree with BLR's observation that:

Rule XVI lays down the decentralized intra-union dispute
settlement mechanism. Section 1 states that any complaint in this regard
'shall be filed in the Regional Office where the union is domiciled.' The
concept of domicile in labor relations regulation is equivalent to the place
 where the union seeks to operate or has established a geographical
presence for purposes of collective bargaining or for dealing with
employers concerning terms and conditions of employment.
The matter of venue becomes problematic when the intra-union
dispute involves a federation, because the geographical presence of a
federation may encompass more than one administrative region.
Pursuant to its authority under Article 226, this Bureau exercises original
jurisdiction over intra-union disputes involving federations. It is well-
settled that FFW, having local unions all over the country, operates in
more than one administrative region. Therefore, this Bureau maintains
original and exclusive jurisdiction over disputes arising from any violation
of or disagreement over any provision of its constitution and by-laws. 30

The petition to annul Atty. Montaño's

election as VP was not prematurely filed.

There is likewise no merit to petitioner's argument that the petition

should have been immediately dismissed due to a pending and unresolved
protest before the FFW COMELEC pursuant to Section 6, Rule XV, Book V of
the Omnibus Rules Implementing the Labor Code. 31
It is true that under the Implementing Rules, redress must first be
sought within the organization itself in accordance with its constitution and by-
laws. However, this requirement is not absolute but yields to exception under
varying circumstances. 32 In the case at bench, Atty. Verceles made his
protest over Atty. Montaño's candidacy during the plenary session before the
holding of the election proceedings. The FFW COMELEC, notwithstanding its
reservation and despite objections from certain convention delegates, allowed
Atty. Montaño's candidacy and proclaimed him winner for the position. Under
the rules, the committee on election shall endeavor to settle or resolve all
protests during or immediately after the close of election proceedings and any
protest left unresolved shall be resolved by the committee within five days
after the close of the election proceedings. 33 A day or two after the election,
Atty. Verceles made his written/formal protest over Atty. Montaño's
candidacy/proclamation with the FFW COMELEC. He exhausted the
remedies under the constitution and by-laws to have his protest acted upon by
the proper forum and even asked for a formal hearing on the matter. Still, the
FFW COMELEC failed to timely act thereon. Thus, Atty. Verceles had no
other recourse but to take the next available remedy to protect the interest of
the union he represents as well as the whole federation, especially so that
Atty. Montaño, immediately after being proclaimed, already assumed and
started to perform the duties of the position. Consequently, Atty. Verceles
properly sought redress from the BLR so that the right to due process will not
be violated. To insist on the contrary is to render the exhaustion of remedies
within the union as illusory and vain. 34 
ACcHIa

The allegation regarding certification

against forum shopping was belatedly
raised.

Atty. Montaño accuses Atty. Verceles of violating the rules on forum

shopping. We note however that this issue was only raised for the first time in
Atty. Montaño's motion for reconsideration of the Decision of the CA, hence,
the same deserves no merit. It is settled that new issues cannot be raised for
the first time on appeal or on motion for reconsideration. 35 While this
allegation is related to the ground of forum shopping alleged by Atty. Montaño
at the early stage of the proceedings, the latter, as a ground for the dismissal
of actions, is separate and distinct from the failure to submit a proper
certificate against forum shopping. 36

There is necessity to resolve the case

despite the issues having become moot.

During the pendency of this case, the challenged term of office held and
served by Atty. Montaño expired in 2006, thereby rendering the issues of the
case moot. In addition, Atty. Verceles' appointment in 2003 as NLRC
Commissioner rendered the case moot as such supervening event divested
him of any interest in and affiliation with the federation in accordance with
Article 213 of the Labor Code.However, in a number of cases, 37 we still
delved into the merits notwithstanding supervening events that would
ordinarily render the case moot, if the issues are capable of repetition, yet
evading review, as in this case.
As manifested by Atty. Verceles, Atty. Montaño ran and won as FFW
National President after his challenged term as FFW National Vice-President
had expired. It must be stated at this juncture that the legitimacy of Atty.
Montaño's leadership as National President is beyond our jurisdiction and is
not in issue in the instant case. The only issue for our resolution is petitioner's
qualification to run as FFW National Vice-President during the May 26-27,
2001 elections. We find it necessary and imperative to resolve this issue not
only to prevent further repetition but also to clear any doubtful interpretation
and application of the provisions of FFW Constitution & By-laws in order to
ensure credible future elections in the interest and welfare of affiliate unions of
FFW.

Atty. Montaño is not qualified to run as

FFW National Vice-President in view of
the prohibition established in Section 76,
Article XIX of the 1998 FFW Constitution
and By-Laws.

Section 76, Article XIX of the FFW Constitution and By-laws provides
that no member of the Governing Board shall at the same time be an
employee in the staff of the federation. There is no dispute that Atty. Montaño,
at the time of his nomination and election for the position in the Governing
Board, is the head of FFW Legal Center and the President of FFW Staff
Association. Even after he was elected, albeit challenged, he continued to
perform his functions as staff member of FFW and no evidence was
presented to show that he tendered his resignation. 38 On this basis, the FFW
COMELEC disqualified Atty. Montaño. The BLR, however, overturned FFW
COMELEC's ruling and held that the applicable provision is Section 26 of
Article VIII. The CA subsequently affirmed this ruling of the BLR but held Atty.
Montaño unqualified for the position for failing to meet the requirements set
forth therein. 
acIHDA 

We find that both the BLR and CA erred in their findings.

To begin with, FFW COMELEC is vested with authority and power,
under the FFW Constitution and By-Laws, to screen candidates and
determine their qualifications and eligibility to run in the election and to adopt
and promulgate rules concerning the conduct of elections. 39 Under the Rules
Implementing the Labor Code, the Committee shall have the power to
prescribe rules on the qualification and eligibility of candidates and such other
rules as may facilitate the orderly conduct of elections. 40 The Committee is
also regarded as the final arbiter of all election protests. 41 From the
foregoing, FFW COMELEC, undeniably, has sufficient authority to adopt its
own interpretation of the explicit provisions of the federation's constitution and
by-laws and unless it is shown to have committed grave abuse of discretion,
its decision and ruling will not be interfered with. The FFW Constitution and
By-laws are clear that no member of the Governing Board shall at the same
time perform functions of the rank-and-file staff. The BLR erred in
disregarding this clear provision. The FFW COMELEC's ruling which
considered Atty. Montaño's candidacy in violation of the FFW Constitution is
therefore correct.
We, thus, concur with the CA that Atty. Montaño is not qualified to run
for the position but not for failure to meet the requirement specified under
Section 26 (d) of Article VIII of FFW Constitution and By-Laws. We note that
the CA's declaration of the illegitimate status of FFW Staff Association is
proscribed by law, owing to the preclusion of collateral attack. 42 We
nonetheless resolve to affirm the CA's finding that Atty. Montaño is
disqualified to run for the position of National Vice-President in view of the
 proscription in the FFW Constitution and By-Laws on federation employees
from sitting in its Governing Board. Accordingly, the election of Atty. Montaño
as FFW Vice-President is null and void.
WHEREFORE, the petition is DENIED. The assailed May 28, 2004
Decision of the Court of Appeals in CA-G.R. SP No. 71731 nullifying the
election of Atty. Allan S. Montaño as FFW National Vice-President and the
June 28, 2005 Resolution denying the Motion for Reconsideration
are AFFIRMED.
SO ORDERED.
|||  (Montaño v. Verceles, G.R. No. 168583, [July 26, 2010], 639 PHIL 418-437)

G.R. No. 168475. July 4, 2007.]

EMILIO E. DIOKNO, VICENTE R. ALCANTARA, ANTONIO Z.

VERGARA, JR., DANTE M. TONG, JAIME C. MENDOZA,
ROMEO M. MACAPULAY, ROBERTO M. MASIGLAT,
LEANDRO C. ATIENZA, ROMULO AQUINO, JESUS SAMIA,
GAUDENCIO CAMIT, DANTE PARAO, ALBERTO MABUGAT,
EDGARDO VILLANUEVA, JR., FRANCISCO ESCOTO,
EDGARDO SEVILLA, FELICITO MACASAET, and JOSE Z.
TULLO, petitioners, vs. HON. HANS LEO J. CACDAC, in his
capacity as Director of the Bureau of Labor Relations, DOLE,
MANILA, MED-ARBITER TRANQUILINO C. REYES, EDGARDO
DAYA, PABLO LUCAS, LEANDRO M. TABILOG, REYNALDO
ESPIRITU, JOSE VITO, ANTONIO DE LUNA, ARMANDO
YALUNG, EDWIN LAYUG, NARDS PABILONA, REYNALDO
REYES, EVANGELINE ESCALL, ALBERTO ALCANTARA,
ROGELIO CERVITILLO, MARCELINO MORELOS, FAUSTINO
ERMINO, JIMMY S. ONG, ALFREDO ESCALL, NARDITO C.
ALVAREZ, JAIME T. VALERIANO, JOHNSON S. REYES,
GAUDENCIO JIMENEZ, JR., GAVINO R. VIDANES, ARNALDO
G. TAYAO, BONIFACIO F. CIRUJANO, EDGARDO G.
CADVONA, MAXIMO A. CAOC, JOSE O. MACLIT, JR.,
LUZMINDO D. ACORDA, JR., LEMUEL R. RAGASA, and GIL G.
DE VERA, respondents.

DECISION
CHICO-NAZARIO, J  : p

This is a Petition for Review on Certiorari under Rule 45 of the 1997

Revised Rules of Civil Procedure, seeking the nullification of the Decision 1 and
Resolution 2 of the Court of Appeals in CA-G.R. SP No. 83061, dated 17 June
2004 and 10 June 2005, respectively, which dismissed petitioners' Petition
for Certiorari and denied their Motion for Reconsideration thereon.

The Facts

The First Line Association of Meralco Supervisory Employees (FLAMES) is

a legitimate labor organization which is the supervisory union of Meralco.
Petitioners and private respondents are members of FLAMES.
On 1 April 2003, the FLAMES Executive Board created the Committee on
Election (COMELEC) for the conduct of its union elections scheduled on 7 May
2003. 3 The COMELEC was composed of petitioner Dante M. Tong as its
chairman, and petitioners Jaime C. Mendoza and Romeo M. Macapulay as
members. Subsequently, private respondents Jimmy S. Ong, Nardito C. Alvarez,
Alfredo J. Escall, and Jaime T. Valeriano filed their respective certificates of
candidacy. On 12 April 2003, the COMELEC rejected Jimmy S. Ong's candidacy
on the ground that he was not a member of FLAMES. Meanwhile, the certificates
of candidacy of Nardito C. Alvarez, Alfredo J. Escall, and Jaime T. Valeriano
were similarly rejected on the basis of the exclusion of their department from the
scope of the existing collective bargaining agreement (CBA). The employees
assigned to the aforesaid department are allegedly deemed disqualified from
membership in the union for being confidential employees.  ITaCEc

On 24 April 2003, private respondents Jimmy S. Ong, Nardito C. Alvarez,

Alfredo J. Escall, Jaime T. Valeriano (Ong, et al.), and a certain Leandro M.
Tabilog filed a Petition 4 before the Med-Arbitration Unit of the Department of
Labor and Employment (DOLE). They prayed, inter alia, for the nullification of the
order of the COMELEC which disallowed their candidacy. 5 They further prayed
that petitioners be directed to render an accounting of funds with full and detailed
disclosure of expenditures and financial transactions; and that a representative
from the Bureau of Labor Relations (BLR) be designated to act as chairman of
the COMELEC in lieu of petitioner Dante M. Tong. 6
On 30 April 2003, DOLE-NCR Regional Director Alex E. Maraan issued an
Order 7 directing DOLE personnel to observe the conduct of the FLAMES
election on 7 May 2003. 8
On 2 May 2003, petitioners filed a Petition 9 with the COMELEC seeking
the disqualification of private respondents Edgardo Daya, Pablo Lucas, Leandro
Tabilog, Reynaldo Espiritu, Jose Vito, Antonio de Luna, Armando Yalung, Edwin
Layug, Nards Pabilona, Reynaldo Reyes, Evangeline Escall, Alberto Alcantara,
Rogelio Cervitillo, Marcelino Morelos, and Faustino Ermino (Daya, et al.).
Petitioners alleged that Daya, et al., allowed themselves to be assisted by non-
union members, and committed acts of disloyalty which are inimical to the
interest of FLAMES. In their campaign, they allegedly colluded with the officers of
the Meralco Savings and Loan Association (MESALA) and the Meralco Mutual
Aid and Benefits Association (MEMABA) and exerted undue influence on the
members of FLAMES.
On 6 May 2003, the COMELEC issued a Decision, 10 declaring Daya, et
al., officially disqualified to run and/or to participate in the 7 May 2003 FLAMES
elections. The COMELEC also resolved to exclude their names from the list of
candidates in the polls or precincts, and further declared that any vote cast in
their favor shall not be counted. According to the COMELEC, Daya, et al.,
violated Article IV, Section 4 (a) (6) 11 of the FLAMES Constitution and By-Laws
(CBL) by allowing non-members to aid them in their campaign. Their acts of
solicitation for support from non-union members were deemed inimical to the
interest of FLAMES.  CAScIH

On 7 May 2003, the COMELEC proclaimed the following candidates,

including some of herein petitioners as winners of the elections, to wit: 12
NAME POSITION

   
Emilio E. Diokno President
Vicente P. Alcantara Executive Vice President — External
Antonio Z. Vergara, Jr. Executive Vice President — Internal
Alberto L. Mabugat Vice-President — Organizing
Roberto D. Masiglat, Jr. Vice-President — Education
Leandro C. Atienza Vice-President — Chief Steward
Felito C. Macasaet Secretary
Edgardo R. Villanueva Asst. Secretary
Romulo C. Aquino Treasurer
Jesus D. Samia Asst. Treasurer
Gaudencio C. Camit Auditor
Rodante B. [Parao] Asst. Auditor
Jose Z. Tullo Central Coordinator
Bernardo C. Sevilla North Coordinator
 Francis B. Escoto South Coordinator

On 8 May 2003, private respondents Daya, et al., along with Ong, et al.,
filed with the Med-Arbitration Unit of the DOLE-NCR, a Petition 13 to: a) Nullify
Order of Disqualification; b) Nullify Election Proceedings and Counting of Votes;
c) Declare Failure of Election; and d) Declare Holding of New Election to be
Controlled and Supervised by the DOLE. The Petition was docketed as Case No.
NCR-OD-0304-002-LRD.
On 14 May 2003, another group led by private respondent Gaudencio
Jimenez, Jr., along with private respondents Johnson S. Reyes, Gavino R.
Vidanes, Arnaldo G. Tayao, Bonifacio F. Cirujano, Edgardo G. Cadavona,
Maximo A. Caoc, Jose O. Maclit, Jr., Luzmindo D. Acorda, Jr., Lemuel R.
Ragasa and Gil G. de Vera (Jimenez, et al.) filed a Petition with the Med-
Arbitration Unit of the DOLE-NCR against petitioners to nullify the 7 May 2003
election on the ground that the same was not free, orderly, and peaceful. It was
docketed as Case No. NCR-OD-0305-004-LRD, which was subsequently
consolidated with the Petition of Daya, et al. and the earlier Petition of Ong, et al.
Meanwhile, the records show that a subsequent election was held on 30
June 2004, which was participated in and won by herein private respondents
Daya, et al. The validity of the 30 June 2004 elections was assailed by herein
petitioners before the DOLE 14 and taken to the Court of Appeals in CA-G.R. SP
No. 88264 on certiorari, which case does not concern us in the instant Petition.
The Court of Appeals, in the aforesaid case, rendered a Decision 15 dated 12
January 2007, upholding the validity of the 30 June 2004 elections, and the
declaration of herein private respondents Daya, et al., as the duly elected
winners therein. ECcTaH

The Decision of the Med-Arbiter

On 7 July 2003, Med-Arbiter Tranquilino B. Reyes, Jr. issued a

Decision 16 in favor of private respondents, Daya, et al. However, the petition of
Jimenez, et al., was dismissed because it was premature, it appearing that the
COMELEC had not yet resolved their protest prior to their resort to the Med-
Arbiter. Finally, the Petition of Ong, et al., seeking to declare themselves as bona
fide members of FLAMES was ordered dismissed.
The Med-Arbiter noted in his decision that during a conference which was
held on 15 May 2003, the parties agreed that the issue anent the qualifications of
private respondents Ong, et al. had been rendered moot and academic. 17
The Med-Arbiter reversed the disqualification imposed by the COMELEC
against private respondents Daya, et al. He said that the COMELEC accepted all
the allegations of petitioners against private respondents Daya, et al., sans
evidence to substantiate the same. Moreover, he found that the COMELEC erred
in relying on Article IV, Section 4 (a) (6) of the CBL as basis for their
disqualification. The Med-Arbiter read the aforesaid provision to refer to the
dismissal and/or expulsion of a member from FLAMES, but not to the
disqualification of a member as a candidate in a union election. He rationalized
that the COMELEC cannot disqualify a candidate on the same grounds for
expulsion of members, which power is vested by the CBL on the Executive
Board. The Med-Arbiter also held that there was a denial of due process because
the COMELEC failed to receive private respondents Daya, et al.'s motion for
reconsideration of the order of their disqualification. The COMELEC was also
found to have refused to receive their written protest in violation of the union's
CBL. 18
Lastly, the Med-Arbiter defended his jurisdiction over the case. He
concluded that even as the election of union officers is an internal affair of the
union, his office has the right to inquire into the merits and conduct of the election
when its jurisdiction is sought. 19
The decretal portion of the Med-Arbiter's Decision states, viz:
WHEREFORE, premises considered, the [P]etition to Nullify the
Order of Disqualification; Nullify Election proceedings and counting of
Votes; and Declare a Failure of Elections is hereby granted. The
disqualification of [private respondent] Ed[gardo] Daya, et al., is hereby
considered as null and void. Perforce, the election of union officers of
FLAMES on May 7, 2003 is declared a failure and a new election is
ordered conducted under the supervision of the Department of Labor
and Employment.  TAaCED

The [P]etition to conduct an accounting of union funds and to stop

the release of funds to [petitioner] Diokno, et al., is ordered dismissed for
lack of merit.
And the Petition to Declare [private respondents] Jimmy Ong,
Alfredo [E]scall, Nardito Alvarez, and Jaime Valeriano as members of
FLAMES is hereby ordered dismissed for lack of merit.
The [P]etition to Nullify the election filed by [private respondents]
Gaudencio Jimenez, et al., is likewise ordered dismissed. 20
Aggrieved, petitioners filed an appeal before the Director of the BLR.

The Ruling of the BLR Director

On 3 December 2003, the Director of the BLR issued a

Resolution, 21 affirming in toto the assailed Decision of the Med-Arbiter.
 Public respondent Director Hans Leo J. Cacdac ruled, inter alia, that the
COMELEC's reliance on Article IV, Section 4 (a) (6) of the CBL, as a ground for
disqualifying private respondents Daya, et al., was premature. He echoed the
interpretation of the Med-Arbiter that the COMELEC erroneously resorted to the
aforecited provision which refers to the expulsion of a member from the union on
valid grounds and with due process, along with the requisite 2/3 vote of the
Executive Board. Hence, the COMELEC cut short the expulsion proceedings in
disqualifying private respondents Daya, et al. 22 The BLR Director further held
that the case involves a question of disqualification on account of the alleged
commission by private respondents Daya, et al., of illegal campaign acts, which
acts were not specifically mentioned in the guidelines for the conduct of election
as issued by the COMELEC. Likewise, on the alleged refusal of private
respondents Daya, et al., to submit to the jurisdiction of the COMELEC by failing
to file a petition to nullify its order of disqualification, the BLR Director deemed
the same as an exception to the rule on exhaustion of administrative remedies.
Thus: TCAHES

By themselves, such acts could not be taken as repugnant of

COMELEC's authority. Sensing that they were prejudiced by the
disqualification order, it was only incumbent upon [private respondents
Daya, et al.] to seek remedy before a body, which they thought has a
more objective perspective over the situation. In short, they opted to
bypass the administrative remedies within the union. Such a move could
not be taken against [private respondents Daya, et al.] considering that
non-exhaustion of administrative remedies is justified in instances where
it would practically amount to a denial of justice, or would be illusory or
vain, as in the present controversy. 23
The BLR Director disposed in this wise:
WHEREFORE, the appeal is DISMISSED for lack of merit. The
Decision of Med-Arbiter Tranquilino B. Reyes, DOLE-NCR, dated 7 July
2003 is AFFIRMED in its entirety.
Let the records of this case be returned to the DOLE-NCR for the
immediate conduct of election of officers of the First Line Association of
Meralco Supervisory Employees (FLAMES) under the supervision of
DOLE-NCR personnel. 24
Subsequently, petitioners sought a reversal of the 3 December 2003
Resolution, but the BLR Director issued a Resolution dated 10 February
2003, 25 refusing to reverse his earlier Resolution for lack of merit.
Petitioners elevated the case to the Court of Appeals via a Petition
for Certiorari.

The Ruling of the Court of Appeals

 The Court of Appeals found petitioners' appeal to be bereft of merit.
The appellate court held that the provision relied upon by the COMELEC
concerns the dismissal and/or expulsion of union members, which power is
vested in the FLAMES' Executive Board, and not the COMELEC. It affirmed the
finding of the BLR Director that the COMELEC, in disqualifying private
respondents Daya, et al., committed a procedural shortcut. It held:
Without the requisite two-thirds (2/3) vote of the Executive Board
dismissing and/or expelling private respondents for acts contemplated
thereunder, the COMELEC was clearly violating the union's constitution
and bylaws (sic) by utilizing the aforequoted provision in its said May 6,
2003 decision and, in the process, arrogating unto itself a power it did
not possess. As the document embodying the covenant between a union
and its members and the fundamental law governing the members'
rights and obligations, it goes without saying that the constitution and
bylaws (sic) should be upheld for as long as they are not contrary to law,
good morals or public policy. 26 
EICSDT

On the matter of the failure of private respondents Daya, et al. to come up

with 30 percent (30%) members' support in filing the Petition to Nullify the
COMELEC's Decision before the Med-Arbiter, the Court of Appeals said that the
petition did not involve the entire membership of FLAMES, so there was no need
to comply with the aforesaid requirement. Furthermore, the appellate court
applied the exception to the rule on exhaustion of administrative remedies on the
ground, inter alia, that resort to such a remedy would have been futile, illusory or
vain. 27 Indeed, the Court of Appeals emphasized that private respondents
Daya, et al., were directed by the COMELEC to file their Answer to the petition
for their disqualification only on 5 May 2003. Private respondents Daya, et al.,
filed their Answer on 6 May 2003. On the same day, the COMELEC issued its
Decision disqualifying them. A day after, the 7 May 2003 election was held. The
Court of Appeals further stressed that private respondents Daya, et al.'s efforts to
have their disqualification reconsidered were rebuffed by the COMELEC; hence,
they were left with no choice but to seek the intervention of the BLR, 28 which
was declared to have jurisdiction over intra-union disputes even at its own
initiative under Article 226 29 of the Labor Code.
Petitioners sought a reconsideration of the 17 June 2004 Decision of the
Court of Appeals, but the same was denied in a Resolution 30 dated 10 June
2005.
Hence, the instant Petition.
At the outset, petitioners contend that the instant Petition falls under the
exceptions to the rule that the Supreme Court is not a trier of facts. They implore
this Court to make factual determination anent the conduct of the 7 May 2003
elections. They also question the jurisdiction of the BLR on the case at bar
because of the failure of private respondents Daya, et al., to exhaust
administrative remedies within the union. It is the stance of petitioner that Article
226 31 of the Labor Code which grants power to the BLR to resolve inter-union
and intra-union disputes is dead law, and has been amended by Section 14
of Republic Act No. 6715, whereby the conciliation, mediation and voluntary
arbitration functions of the BLR had been transferred to the National Conciliation
and Mediation Board.
Petitioners similarly assert that the 7 May 2003 election was conducted in
a clean, honest, and orderly manner, and that private respondents, some of
whom are not bona fide members of FLAMES, were validly disqualified by the
COMELEC from running in the election. They also rehashed their argument that
non-members of the union were allowed by private respondents Daya, et al., to
participate in the affair. They challenge the finding of the BLR Director that the
reliance by the COMELEC on Article IV, Section 4 (a) (6) of the CBL, was
premature. Petitioners insist that the COMELEC had the sole and exclusive
power to pass upon the qualification of any candidate, and therefore, it has the
correlative power to disqualify any candidate in accordance with its guidelines.  SHIcDT

For their part, private respondents Daya, et al., maintain that the Petition
they filed before the DOLE-NCR Med-Arbiter questioning the disqualification
order of the COMELEC and seeking the nullification of the 7 May 2003 election
involves an intra-union dispute which is within the jurisdiction of the BLR. They
further claim that the COMELEC, in disqualifying them, mistakenly relied on a
provision in the FLAMES' CBL that addresses the expulsion of members from the
union, and no expulsion proceedings were held against them. Finally, they
underscore the finding of the appellate court that there was disenfranchisement
among the general membership of FLAMES due to their wrongful disqualification
which restricted the members' choices of candidates. They reiterate the
conclusion of the Court of Appeals that had the COMELEC tabulated the votes
cast in their favor, there would have been, at least, a basis for the declaration
that they lost in the elections.

Issues

Petitioners attribute to the Court of Appeals several errors to substantiate

their Petition. 32 They all boil down, though, to the question of whether the Court
of Appeals committed grave abuse of discretion when it affirmed the jurisdiction
of the BLR to take cognizance of the case and then upheld the ruling of the BLR
Director and Med-Arbiter, nullifying the COMELEC's order of disqualification of
private respondents Daya et al., and annulling the 7 May 2003 FLAMES
elections.

The Court's Ruling

 The Petition is devoid of merit.
We affirm the finding of the Court of Appeals upholding the jurisdiction of
the BLR. Article 226 of the Labor Code is hereunder reproduced, to wit:
ART. 226. BUREAU OF LABOR RELATIONS. — The Bureau of
Labor Relations and the Labor Relations Divisions in the regional offices
of the Department of Labor shall have original and exclusive authority to
act, at their own initiative or upon request of either or both parties, on all
inter-union and intra-union conflicts, and all disputes, grievances or
problems arising from or affecting labor-management relations in all
workplaces whether agricultural or nonagricultural, except those arising
from the implementation or interpretation of collective bargaining
agreements which shall be the subject of grievance procedure and/or
voluntary arbitration. 
DAEIHT

The Bureau shall have fifteen (15) working days to act on labor
cases before it, subject to extension by agreement of the parties.
The amendment to Article 226, as couched in Republic Act No.
6715, 33 which is relied upon by petitioners in arguing that the BLR had been
divested of its jurisdiction, simply reads, thus:
Sec. 14. The second paragraph of Article 226 of the same Code
is likewise hereby amended to read as follows:
"The Bureau shall have fifteen (15) calendar days to act on labor
cases before it, subject to extension by agreement of the parties."
This Court in Bautista v. Court of Appeals, 34 interpreting Article 226 of the
Labor Code, was explicit in declaring that the BLR has the original and exclusive
jurisdiction on all inter-union and intra-union conflicts. We said that since Article
226 of the Labor Code has declared that the BLR shall have original and
exclusive authority to act on all inter-union and intra-union conflicts, there should
be no more doubt as to its jurisdiction. As defined, an intra-union conflict would
refer to a conflict within or inside a labor union, while an inter-union controversy
or dispute is one occurring or carried on between or among unions. 35 More
specifically, an intra-union dispute is defined under Section (z), Rule I of
the Rules Implementing Book V of the Labor Code, viz:
(z) "Intra-Union Dispute" refers to any conflict between and
among union members, and includes all disputes or grievances arising
from any violation of or disagreement over any provision of the
constitution and by-laws of a union, including cases arising from
chartering or affiliation of labor organizations or from any violation of the
rights and conditions of union membership provided for in the Code.
The controversy in the case at bar is an intra-union dispute. There is no
question that this is one which involves a dispute within or inside FLAMES, a
labor union. At issue is the propriety of the disqualification of private respondents
Daya, et al., by the FLAMES COMELEC in the 7 May 2003 elections. It must also
be stressed that even as the dispute involves allegations that private
respondents Daya, et al., sought the help of non-members of the union in their
election campaign to the detriment of FLAMES, the same does not detract from
the real character of the controversy. It remains as one which involves the
grievance over the constitution and by-laws of a union, and it is a controversy
involving members of the union. Moreover, the non-members of the union who
were alleged to have aided private respondents Daya, et al., are not parties in
the case. We are, therefore, unable to understand petitioners' persistence in
placing the controversy outside of the jurisdiction of the BLR. The law is very
clear. It requires no further interpretation. The Petition which was initiated by
private respondents Daya, et al., before the BLR was properly within its
cognizance, it being an intra-union dispute. Indubitably, when private
respondents Daya, et al., brought the case to the BLR, it was an invocation of the
power and authority of the BLR to act on an intra-union conflict.
After having settled the jurisdiction of the BLR, we proceed to determine if
petitioners correctly raised the argument that private respondents Daya, et al.,
prematurely sought the BLR's jurisdiction on the ground that they failed to
exhaust administrative remedies within the union. On this matter, we affirm the
findings of the Court of Appeals which upheld the application by the BLR Director
of the exception to the rule of exhaustion of administrative remedies.  2005jur

In this regard, this Court is emphatic that "before a party is allowed to seek
the intervention of the court, it is a pre-condition that he should have availed of all
the means of administrative processes afforded him. Hence, if a remedy within
the administrative machinery can still be resorted to by giving the administrative
officer concerned every opportunity to decide on a matter that comes within his
jurisdiction when such remedy should be exhausted first before the court's
judicial power can be sought. The premature invocation of court's judicial
intervention is fatal to one's cause of action." 36
Verily, there are exceptions to the applicability of the doctrine. 37 Among
the established exceptions are: 1) when the question raised is purely legal; 2)
when the administrative body is in estoppel; 3) when the act complained of is
patently illegal; 4) when there is urgent need for judicial intervention; 5) when the
claim involved is small; 6) when irreparable damage will be suffered; 7) when
there is no other plain, speedy, and adequate remedy; 8) when strong public
interest is involved; 9) when the subject of the proceeding is private land; 10)
in quo warranto proceedings; 38 and 11) where the facts show that there was a
violation of due process. 39 As aptly determined by the BLR Director, private
respondents Daya, et al., were prejudiced by the disqualification order of the
COMELEC. They endeavored to seek reconsideration, but the COMELEC failed
to act thereon. 40 The COMELEC was also found to have refused to receive their
written protest. 41 The foregoing facts sustain the finding that private respondents
Daya, et al., were deprived of due process. Hence, it becomes incumbent upon
private respondents Daya, et al., to seek the aid of the BLR. To insist on the
contrary is to render their exhaustion of remedies within the union as illusory and
vain. 42 These antecedent circumstances convince this Court that there was
proper application by the Med-Arbiter of the exception to the rule of exhaustion of
administrative remedies, as affirmed by the BLR Director, and upheld by the
Court of Appeals.
We cannot accept, and the Court of Appeals rightfully rejected, the
contention of petitioners that the private respondents Daya, et al.'s complaint filed
before the Med-Arbiter failed to comply with the jurisdictional requirement
because it was not supported by at least thirty percent (30%) of the members of
the union. Section 1 of Rule XIV of the Implementing Rules of Book V mandates
the thirty percent (30%) requirement only in cases where the issue involves the
entire membership of the union, which is clearly not the case before us. The
issue is obviously limited to the disqualification from participation in the elections
by particular union members.
Having resolved the jurisdictional cobwebs in the instant case, it is now apt
for this Court to address the issue anent the disqualification of private
respondents and the conduct of the 7 May 2003 elections.
On this matter, petitioners want this Court to consider the instant case as
an exception to the rule that the Supreme Court is not a trier of facts; hence,
importuning that we make findings of fact anew. It bears stressing that in a
petition for review on certiorari, the scope of this Court's judicial review of
decisions of the Court of Appeals is generally confined only to errors of
law, 43 and questions of fact are not entertained. We elucidated on our fidelity to
this rule, and we said:
Thus, only questions of law may be brought by the parties and
passed upon by this Court in the exercise of its power to review. Also,
judicial review by this Court does not extend to a reevaluation of the
sufficiency of the evidence upon which the proper labor tribunal has
based its determination. 44 
SCEDaT

It is aphoristic that a re-examination of factual findings cannot be done

through a petition for review on certiorari under Rule 45 of the Rules of
Court because as earlier stated, this Court is not a trier of facts; it reviews only
questions of law. 45 The Supreme Court is not duty-bound to analyze and weigh
again the evidence considered in the proceedings below. 46 This is already
outside the province of the instant Petition for Certiorari. While there may be
exceptions to this rule, petitioners miserably failed to show why the exceptions
should be applied here. With greater force must this rule be applied in the instant
case where the factual findings of the Med-Arbiter were affirmed by the BLR
Director, and then, finally, by the Court of Appeals. The findings below had
sufficient bases both in fact and in law. The uniform conclusion was that private
respondents Daya, et al., were wrongfully disqualified by the COMELEC;
consequently, the FLAMES election should be annulled.
On the issue of disqualification, there was a blatant misapplication by the
COMELEC of the FLAMES' CBL. As has been established ad nauseam, the
provision 47 relied upon by the COMELEC in disqualifying private respondents
Daya, et al., applies to a case of expulsion of members from the union.
In full, Article IV, Section 4 (a) (6) of the FLAMES' CBL, provides, to wit:
Section 4 (a). Any member may be DISMISSED and/or
EXPELLED from the UNION, after due process and investigation, by a
two-thirds (2/3) vote of the Executive Board, for any of the following
causes:
xxx xxx xxx
(6) Acting in a manner harmful to the interest and welfare of the
UNION and/or its MEMBERS. 48
We highlight five points, thus:
First, Article IV, Section 4 (a) (6) of the FLAMES' CBL, embraces
exclusively the case of dismissal and/or expulsion of members from the union.
Even a cursory reading of the provision does not tell us that the same is to be
automatically or directly applied in the disqualification of a candidate from union
elections, which is the matter at bar. It cannot be denied that the COMELEC
erroneously relied on Article IV, Section 4 (a) (6) because the same does not
contemplate the situation of private respondents Daya, et al. The latter are not
sought to be expelled or dismissed by the Executive Board. They were brought
before the COMELEC to be disqualified as candidates in the 7 May 2003
elections. 
aSECAD

Second, the aforecited provision evidently enunciates with clarity the

procedural course that should be taken to dismiss and expel a member from
FLAMES. The CBL is succinct in stating that the dismissal and expulsion of a
member from the union should be after due process and investigation, the same
to be exercised by two-thirds (2/3) vote of the Executive Board for any of the
causes 49 mentioned therein. The unmistakable directive is that in cases of
expulsion and dismissal, due process must be observed as laid down in the CBL.
Third, nevertheless, even if we maintain a lenient stance and consider the
applicability of Article IV, Section 4 (a) (6) in the disqualification of private
respondents Daya, et al., from the elections of 7 May 2003, still, the
disqualification made by the COMELEC pursuant to the subject provision was a
rank disregard of the clear due process requirement embodied therein. Nowhere
do we find that private respondents Daya, et al. were investigated by the
Executive Board. Neither do we see the observance of the voting requirement as
regards private respondents Daya, et al. In all respects, they were denied due
process.
Fourth, the Court of Appeals, the BLR Director, and the Med-Arbiter
uniformly found that due process was wanting in the disqualification order of the
COMELEC. We are in accord with their conclusion. If, indeed, there was a
violation by private respondents Daya, et al., of the FLAMES' CBL that could be a
ground for their expulsion and/or dismissal from the union, which in turn could
possibly be made a ground for their disqualification from the elections, the
procedural requirements for their expulsion should have been observed. In any
event, therefore, whether the case involves dismissal and/or expulsion from the
union or disqualification from the elections, the proper procedure must be
observed. The disqualification ruled by the COMELEC against private
respondents Daya, et al., must not be allowed to abridge a clear procedural
policy established in the FLAMES' CBL. If we uphold the COMELEC, we are
countenancing a clear case of denial of due process which is anathema to
the Constitution of the Philippines which safeguards the right to due process.
Fifth, from another angle, the erroneous disqualification of private
respondents Daya, et al., constituted a case of disenfranchisement on the part of
the member-voters of FLAMES. By wrongfully excluding them from the 7 May
2003 elections, the options afforded to the union members were clipped. Hence,
the mandate of the union cannot be said to have been rightfully determined. The
factual irregularities in the FLAMES elections clearly provide proper bases for the
annulment of the union elections of 7 May 2003.  ASCTac

On a final note, as it appears that the question of the qualifications of

private respondents Ong, et al. had been rendered moot and academic, 50 we do
not find any reason for this Court to rule on the matter. As borne out by the
records, the question had been laid to rest even when the case was still before
the Med-Arbiter. 51
WHEREFORE, the Petition is DENIED. The Decision of the Court of
Appeals dated 17 June 2004, and its Resolution dated 10 June 2005 in CA-G.R.
SP No. 83061 are AFFIRMED. Costs against petitioners.
SO ORDERED.
|||  (Diokno v. Cacdac, G.R. No. 168475, [July 4, 2007], 553 PHIL 405-431)

G.R. No. 161003. May 6, 2005.]

 FELIPE O. MAGBANUA, CARLOS DE LA CRUZ, REMY
ARNAIZ, BILLY ARNAIZ, ROLLY ARNAIZ, DOMINGO
SALARDA, JULIO CAHILIG and NICANOR
LABUEN, petitioners, vs. RIZALINO UY, respondent.

DECISION

PANGANIBAN, J  : p

Rights may be waived through a compromise agreement, notwithstanding

a final judgment that has already settled the rights of the contracting parties. To
be binding, the compromise must be shown to have been voluntarily, freely and
intelligently executed by the parties, who had full knowledge of the judgment.
Furthermore, it must not be contrary to law, morals, good customs and public
policy.

The Case

Before us is a Petition for Review 1 under Rule 45 of the Rules of Court,

assailing the May 31, 2000 Decision 2 and the October 30, 2003 Resolution 3 of
the Court of Appeals (CA) in CA-GR SP No. 53581. The challenged Decision
disposed as follows:
"WHEREFORE, having found that public respondent NLRC
committed grave abuse of discretion, the Court hereby SETS ASIDE
the two assailed Resolutions and REINSTATES the order of the Labor
Arbiter dated February 27, 1998." 4
The assailed Resolution denied reconsideration.

The Facts

The CA relates the facts in this wise:

"As a final consequence of the final and executory decision of the
Supreme Court in Rizalino P. Uy v. National Labor Relations
Commission, et al. (GR No. 117983, September 6, 1996) which affirmed
with modification the decision of the NLRC in NLRC Case No. V-0427-
93, hearings were conducted [in the National Labor Relations
Commission Sub-Regional Arbitration Branch in Iloilo City] to determine
the amount of wage differentials due the eight (8) complainants therein,
now [petitioners]. As computed, the award amounted to
P1,487,312.69 . . .
 "On February 3, 1997, [petitioners] filed a Motion for Issuance of
Writ of Execution.
"On May 19, 1997, [respondent] Rizalino Uy filed a Manifestation
requesting that the cases be terminated and closed, stating that the
judgment award as computed had been complied with to the satisfaction
of [petitioners]. Said Manifestation was also signed by the eight (8)
[petitioners]. Together with the Manifestation is a Joint Affidavit dated
May 5, 1997 of [petitioners], attesting to the receipt of payment from
[respondent] and waiving all other benefits due them in connection with
their complaint.
xxx xxx xxx
"On June 3, 1997, [petitioners] filed an Urgent Motion for
Issuance of Writ of Execution wherein they confirmed that each of them
received P40,000 from [respondent] on May 2, 1997.
"On June 9, 1997, [respondent] opposed the motion on the
ground that the judgment award had been fully satisfied. In their Reply,
[petitioners] claimed that they received only partial payments of the
judgment award.
xxx xxx xxx
"On October 20, 1997, six (6) of the eight (8) [petitioners] filed a
Manifestation requesting that the cases be considered closed and
terminated as they are already satisfied of what they have received (a
total of P320,000) from [respondent]. Together with said Manifestation is
a Joint Affidavit in the local dialect, dated October 20, 1997, of the six (6)
[petitioners] attesting that they have no more collectible amount from
[respondent] and if there is any, they are abandoning and waiving the
same.  EASCDH

"On February 27, 1998, the Labor Arbiter issued an order denying
the motion for issuance of writ of execution and [considered] the cases
closed and terminated . . .
"On appeal, the [National Labor Relations Commission
(hereinafter 'NLRC')] reversed the Labor Arbiter and directed the
immediate issuance of a writ of execution, holding that a final and
executory judgment can no longer be altered and that quitclaims and
releases are normally frowned upon as contrary to public policy." 5

Ruling of the Court of Appeals

The CA held that compromise agreements may be entered into even after
a final judgment. 6 Thus, petitioners validly released respondent from any claims,
upon the voluntary execution of a waiver pursuant to the compromise
agreement. 7
 The appellate court denied petitioners' motion for reconsideration for
having been filed out of time. 8
Hence, this Petition. 9

The Issues

Petitioners raise the following issues for our consideration:

"1. Whether or not the final and executory judgment of the
Supreme Court could be subject to compromise settlement;
"2. Whether or not the petitioners' affidavit waiving their awards in
[the] labor case executed without the assistance of their counsel and
labor arbiter is valid;
"3. Whether or not the ignorance of the jurisprudence by the Court
of Appeals and its erroneous counting of the period to file [a] motion for
reconsideration constitute a denial of the petitioners' right to due
process." 10

The Court's Ruling

The Petition has no merit.

First Issue:
Validity of the Compromise Agreement

A compromise agreement is a contract whereby the parties make

reciprocal concessions in order to resolve their differences and thus avoid or put
an end to a lawsuit. 11 They adjust their difficulties in the manner they have
agreed upon, disregarding the possible gain in litigation and keeping in mind that
such gain is balanced by the danger of losing. 12 Verily, the compromise may be
either extrajudicial (to prevent litigation) or judicial (to end a litigation). 13
A compromise must not be contrary to law, morals, good customs and
public policy; and must have been freely and intelligently executed by and
between the parties. 14 To have the force of law between the parties, 15 it must
comply with the requisites and principles of contracts. 16 Upon the parties, it has
the effect and the authority of res judicata, once entered into. 17
When a compromise agreement is given judicial approval, it becomes
more than a contract binding upon the parties. Having been sanctioned by the
court, it is entered as a determination of a controversy and has the force and
effect of a judgment. 18 It is immediately executory and not appealable, except for
vices of consent or forgery. 19 The nonfulfillment of its terms and conditions
justifies the issuance of a writ of execution; in such an instance, execution
becomes a ministerial duty of the court. 20
Following these basic principles, apparently unnecessary is a compromise
agreement after final judgment has been entered. Indeed, once the case is
terminated by final judgment, the rights of the parties are settled. There are no
more disputes that can be compromised.

Compromise Agreements
after Final Judgment

The Court is tasked, however, to determine the legality of a compromise

agreement after final judgment, not the prudence of entering into one. Petitioners
vehemently argue that a compromise of a final judgment is invalid under Article
2040 of the Civil Code, which we quote: 21
"Art. 2040. If after a litigation has been decided by a final
judgment, a compromise should be agreed upon, either or both parties
being unaware of the existence of the final judgment, the compromise
may be rescinded.
"Ignorance of a judgment which may be revoked or set aside is
not a valid ground for attacking a compromise." (Bold types supplied)
The first paragraph of Article 2040 refers to a scenario in which either or
both of the parties are unaware of a court's final judgment at the time they agree
on a compromise. In this case, the law allows either of them to rescind the
compromise agreement. It is evident from the quoted paragraph that such an
agreement is not prohibited or void or voidable. Instead, a remedy to impugn the
contract, which is an action for rescission, is declared available. 22 The law allows
a party to rescind a compromise agreement, because it could have been entered
into in ignorance of the fact that there was already a final judgment. Knowledge
of a decision's finality may affect the resolve to enter into a compromise
agreement.
The second paragraph, though irrelevant to the present case, refers to the
instance when the court's decision is still appealable or otherwise subject to
modification. Under this paragraph, ignorance of the decision is not a ground to
rescind a compromise agreement, because the parties are still unsure of the final
outcome of the case at this time.
Petitioners' argument, therefore, fails to convince. Article 2040 of the Civil
Code does not refer to the validity of a compromise agreement entered into after
final judgment. Moreover, an important requisite, which is lack of knowledge of
the final judgment, is wanting in the present case.
 Supported by Case Law

The issue involving the validity of a compromise agreement

notwithstanding a final judgment is not novel. Jesalva v. Bautista 23 upheld a
compromise agreement that covered cases pending trial, on appeal, and with
final judgment. 24 The Court noted that Article 2040 impliedly allowed such
agreements; there was no limitation as to when these should be entered
into. 25 Palanca v. Court of Industrial Relations 26 sustained a compromise
agreement, notwithstanding a final judgment in which only the amount of back
wages was left to be determined. The Court found no evidence of fraud or of any
showing that the agreement was contrary to law, morals, good customs, public
order, or public policy. 27
Gatchalian v. Arlegui 28 upheld the right to compromise prior to the
execution of a final judgment. The Court ruled that the final judgment had been
novated and superseded by a compromise agreement. 29 Also, Northern Lines,
Inc. v. Court of Tax Appeals 30 recognized the right to compromise final and
executory judgments, as long as such right was exercised by the proper party
litigants. 31
Rovero v. Amparo, 32 which petitioners cited, did not set any precedent that
all compromise agreements after final judgment were invalid. In that case, the
customs commissioner imposed a fine on an importer, based on the appraised
value of the goods illegally brought to the country. The latter's appeal, which
eventually reached this Court, was denied. Despite a final judgment, the customs
commissioner still reappraised the value of the goods and effectively reduced the
amount of fine. Holding that he had no authority to compromise a final judgment,
the Court explained:
 
"It is argued that the parties to a case may enter into a
compromise about even a final judgment rendered by a court, and it is
contended . . . that the reappraisal ordered by the Commissioner of
Customs and sanctioned by the Department of Finance was authorized
by Section 1369 of the [Revised Administrative Code]. The contention
may be correct as regards private parties who are the owners of the
property subject-matter of the litigation, and who are therefore free
to do with what they own or what is awarded to them, as they
please, even to the extent of renouncing the award, or condoning
the obligation imposed by the judgment on the adverse party. Not
so, however, in the present case. Here, the Commissioner of Customs is
not a private party and is not the owner of the money involved in the fine
based on the original appraisal. He is a mere agent of the Government
and acts as a trustee of the money or property in his hands or coming
thereto by virtue of a favorable judgment. Unless expressly authorized
 by his principal or by law, he is not authorized to accept anything
different from or anything less than what is adjudicated in favor of the
Government." 33 (Bold types supplied) SHDAEC

Compliance with the

Rule on Contracts

There is no justification to disallow a compromise agreement, solely

because it was entered into after final judgment. The validity of the agreement is
determined by compliance with the requisites and principles of contracts, not by
when it was entered into. As provided by the law on contracts, a valid
compromise must have the following elements: (1) the consent of the parties to
the compromise, (2) an object certain that is the subject matter of the
compromise, and (3) the cause of the obligation that is established. 34
In the present factual milieu, compliance with the elements of a valid
contract is not in issue. Petitioners do not challenge the factual finding that they
entered into a compromise agreement with respondent. There are no allegations
of vitiated consent. Neither was there any proof that the agreement was defective
or could be characterized as rescissible, 35 voidable, 36 unenforceable, 37 or
void. 38 Instead, petitioners base their argument on the sole fact that the
agreement was executed despite a final judgment, which the Court had
previously ruled to be allowed by law.
Petitioners voluntarily entered into the compromise agreement, as shown
by the following facts: (1) they signed respondent's Manifestation (filed with the
labor arbiter) that the judgment award had been satisfied; 39 (2) they executed a
Joint Affidavit dated May 5, 1997, attesting to the receipt of payment and the
waiver of all other benefits due them; 40 and (3) 6 of the 8 petitioners filed a
Manifestation with the labor arbiter on October 20, 1997, requesting that the
cases be terminated because of their receipt of payment in full satisfaction of
their claims. 41 These circumstances also reveal that respondent has already
complied with its obligation pursuant to the compromise agreement. Having
already benefited from the agreement, estoppel bars petitioners from challenging
it.

Advantages of Compromise

A reciprocal concession inherent in a compromise agreement assures

benefits for the contracting parties. For the defeated litigant, obvious is the
advantage of a compromise after final judgment. Liability arising from the
judgment may be reduced. As to the prevailing party, a compromise agreement
assures receipt of payment. Litigants are sometimes deprived of their winnings
because of unscrupulous mechanisms meant to delay or evade the execution of
a final judgment.
The advantages of a compromise agreement appear to be recognized by
the NLRC in its Rules of Procedure. As part of the proceedings in executing a
final judgment, litigants are required to attend a pre-execution conference to
thresh out matters relevant to the execution. 42 In the conference, any agreement
that would settle the final judgment in a particular manner is necessarily a
compromise.

Novation of an Obligation

The principle of novation supports the validity of a compromise after final

judgment. Novation, a mode of extinguishing an obligation, 43 is done by
changing the object or principal condition of an obligation, substituting the person
of the debtor, or surrogating a third person in the exercise of the rights of the
creditor. 44
For an obligation to be extinguished by another, the law requires either of
these two conditions: (1) the substitution is unequivocally declared, or (2) the old
and the new obligations are incompatible on every point. 45 A compromise of a
final judgment operates as a novation of the judgment obligation, upon
compliance with either requisite. 46 In the present case, the incompatibility of the
final judgment with the compromise agreement is evident, because the latter was
precisely entered into to supersede the former.

Second Issue:
Validity of the Waiver

Having ruled on the validity of the compromise agreement in the present

suit, the Court now turns its attention to the waiver of claims or quitclaim
executed by petitioners. The subject waiver was their concession when they
entered into the agreement. They allege, however, that the absence of their
counsel and the labor arbiter when they executed the waiver invalidates the
document.

Not Determinative
of the Waiver's Validity

The presence or the absence of counsel when a waiver is executed does

not determine its validity. There is no law requiring the presence of a counsel to
validate a waiver. The test is whether it was executed voluntarily, freely and
intelligently; and whether the consideration for it was credible and
reasonable. 47 Where there is clear proof that a waiver was wangled from an
unsuspecting or a gullible person, the law must step in to annul such
transaction. 48 In the present case, petitioners failed to present any evidence to
show that their consent had been vitiated.
The law is silent with regard to the procedure for approving a waiver after a
case has been terminated. 49 Relevant, however, is this reference to the NLRC's
New Rules of Procedure:
"Should the parties arrive at any agreement as to the whole or
any part of the dispute, the same shall be reduced to writing and signed
by the parties and their respective counsel, or authorized representative,
if any, 50 before the Labor Arbiter.
"The settlement shall be approved by the Labor Arbiter after being
satisfied that it was voluntarily entered into by the parties and after
having explained to them the terms and consequences thereof.  EAHcCT

"A compromise agreement entered into by the parties not in the

presence of the Labor Arbiter before whom the case is pending shall be
approved by him, if after confronting the parties, particularly the
complainants, he is satisfied that they understand the terms and
conditions of the settlement and that it was entered into freely and
voluntarily by them and the agreement is not contrary to law, morals, and
public policy." 51
This provision refers to proceedings in a mandatory/conciliation conference
during the initial stage of the litigation. Such provision should be made applicable
to the proceedings in the pre-execution conference, for which the procedure for
approving a waiver after final judgment is not stated. There is no reason to make
a distinction between the proceedings in mandatory/conciliation and those in pre-
execution conferences.
The labor arbiter's absence when the waivers were executed was
remedied upon compliance with the above procedure. The Court observes that
the arbiter made searching questions during the pre-execution conference to
ascertain whether petitioners had voluntarily and freely executed the
waivers. 52 Likewise, there was evidence that they made an intelligent choice,
considering that the contents of the written waivers had been explained to
them. 53 The labor arbiter's absence when those waivers were executed does
not, therefore, invalidate them.
The Court declines to rule on the allegation that respondent's counsels
encroached upon the professional employment of petitioners' lawyer when they
facilitated the waivers. 54 The present action is not the proper forum in which to
raise any charge of professional misconduct. More important, petitioners failed to
present any supporting evidence.
 The third issue, which refers to the timely filing of petitioners' Motion for
Reconsideration filed with the CA, will no longer be discussed because this
Court's decision has resolved the case on the merits.
WHEREFORE, the Petition is DENIED and the assailed Decision
AFFIRMED. Costs against petitioners.
SO ORDERED.
|||  (Magbanua v. Uy, G.R. No. 161003, [May 6, 2005], 497 PHIL 511-527)

G.R. No. 150861. January 22, 2008.]

AL ARELLANO, SOLOMON BRITANICO, VALERIANO

MENDOZA, JOSE PERPETUA, REY PAMINIANO, FREDDIE
JIMENA, JOEL UBANA, ALEX MABANTA, ALEXANDER
ANTONIO, JERRY NACAYTUNA, ELIZER DELFIN, FRANCISCO
CORPUZ, ALEX GARIDO, DANTE DIMAANO, NARCISO
ALBAY, MAXIMO GAGARIN, APOLLO CAYABYAB, RONALD
GESTIADA, SERGIO ESPERANZA, ROMEO CARPIO and
RODRIGO ORDINIZA, petitioners, vs. POWERTECH
CORPORATION, WILLIE CABOBOS and COURT OF APPEALS
(Former Special Ninth Division), respondents.

DECISION

REYES, R.T., J  :p

FOCUS of this case is the validity of a quitclaim based on a broad

special power of attorney affecting the rights of twenty-two (22) employees.  ITDHSE

This is a petition for review on certiorari assailing the Decision 1 of the

Court of Appeals (CA) which annulled the Resolution 2 of the National Labor
Relations Commission (NLRC) voiding the quitclaim and release executed by
petitioners' attorney-in-fact in favor of their employer, private respondent
Powertech Corporation (Powertech).

The Antecedents
 The case stems from a complaint for illegal dismissal and other money
claims filed by the Nagkakaisang Manggagawa Ng Powertech Corporation in
behalf of its 52 individual members and non-union members against their
employer, Powertech. The case was dismissed as to twenty-seven (27)
employees by virtue of duly executed affidavits of repudiation and quitclaim.
The case proceeded with respect to the remaining twenty-five (25)
employees, petitioners in this case.
On June 25, 1999, Labor Arbiter Renell Joseph R. dela Cruz rendered
a Decision 3 declaring illegal the termination of twenty (20) of petitioners and
granting their monetary claims in the total amount of P2,538,728.84.
Powertech appealed to the NLRC. During its pendency, Carlos
Gestiada, for himself and on behalf of other petitioners, executed a quitclaim,
release and waiver 4 in favor of Powertech in consideration of the amount of
P150,000.00. Earlier, Gestiada was appointed by his co-petitioners as their
attorney-in-fact. The appointment was evidenced by a special power of
attorney dated October 8, 1999. 5 The compromise amount was paid to
Gestiada by check.
Relying on the quitclaim and release, Powertech filed a motion for the
withdrawal of the appeal and cash bond. The NLRC granted 6 the motion,
dismissed the appeal and ordered the release of the cash bond.
The P150,000.00 check, however, bounced due to a stop payment
order of Powertech. 7
Aggrieved, petitioners moved to nullify the release and quitclaim for lack
of consideration. In a Resolution dated February 29, 2000, the NLRC declared
the quitclaim, release and waiver void for lack of consideration, reinstated the
appeal and ordered Powertech to post a cash or surety bond for the monetary
judgment less the amount it had previously posted. 8
On March 15, 2000, Gestiada terminated the services of their counsel,
Atty. Evangelista and, instead, retained Atty. Manuel Luis Felipe of the Public
Attorney's Office. 9 
ETDHaC

A day later, Powertech paid P150,000.00 to Gestiada purportedly as

compromise amount for all of petitioners. That same day, Gestiada, through
Atty. Felipe, and Powertech filed a joint motion to dismiss 10 with the NLRC
based on the compromise agreement. Atty. Evangelista opposed 11 the
motion, alleging that the compromise agreement is unconscionable, that he
was illegally terminated as counsel for the other petitioners without their
consent, and that the P150,000.00 was received by Gestiada as payment
solely for his backwages and other monetary claims.

NLRC Resolution
 On July 31, 2000, the NLRC issued a resolution 12 denying the joint
motion to dismiss, disposing as follows:
WHEREFORE, in view of the foregoing the Joint Motion to
Dismiss filed on March 17, 2000 is hereby DENIED for lack of merit.
Respondents' Omnibus Motion/Manifestation is
hereby DENIED for lack of merit and respondents appeal filed on
August 9, 1999 is hereby DISMISSED for failure to perfect the same.
SO ORDERED. 13
In denying the joint motion to dismiss, the NLRC held that the
P150,000.00 received by Gestiada did not cover the monetary claim of
petitioners against Powertech. The NLRC stated:
Evidence show that there was no voluntary severance of
attorney-client relationship between Gestiada representing the other
complainants and Atty. Evangelista. Thus, in a letter to Atty.
Evangelista Gestiada wrote:
"Tungkol naman po sa pagtanggal sa inyo bilang abogado
iyan po ay isang suwestiyon ni Ginoong Ver Sarmiento at isang
kondisyon para ibigay nila ang kabayaran ng aking backwages at
karagdagang sahod. Pasensiya na po at kung ako ay maluwag
babayaran ko kayo sa inyong serbisyo. Totoong walang
pahintulot ang aking mga kasama sa pagtanggal ko sa inyo pero
pangsariling desisyon ko po iyon para sa aking kapakanan."
The other complainants in this case have never indicated any
objection to the continued appearance of Atty. Evangelista. Hence, it
must be presumed that Atty. Evangelista's appearance is with the
consent of all the complainants herein. 
TDcCIS

On the Joint Motion to Dismiss in their opposition, the other

complainants represented by Atty. Evangelista argued that Gestiada
received the PhP150,000.00 referred to in the Quitclaim and Release
as payment and for his backwages. It is further argued that Gestiada
had never intervened in the payment of awards due the other
complainants in this case. Thus, as admitted by Gestiada in the same
letter addressed to Atty. Evangelista:
"Nais ko pong ipaalam sa inyo na ang kinuha kong pera sa
Powertech Corporation sa halagang PhP150,000.00 ay bilang
kabayaran sa aking backwages na iginawad sa Desisyon ni
Kagalang-galang Labor Arbiter Joseph Rennel dela Cruz. Kung
kukuwentahin kulang pa po yon dahil may babayaran pa ang
kumpanya na karagdagang sahod o reinstatement salaries mula
po lumabas ang Desisyon na ako ay pabalikin sa aking trabaho,
hindi po ako pinabalik ng kompanya. . . .
 . . . Hindi ko naman po pinakialaman ang kabayaran para
sa aking mga kasamahan."
Gestiada's admission that he received the amount of
PhP150,000.00 only as payment for his backwages and that the same
has no reference to the claim of the other complainants in this case is
bolstered further by the fact that the Quitclaim and Release attached to
the instant Joint Motion to Dismiss was signed only by Gestiada and
that the other complainants never took part in the execution thereof. A
waiver of money claims must be regarded as a personal right; hence,
the protective rule that for a compromise dealing with their judgment to
be validly entered into there must be personal and specific individual
consent given by the workers (Galicia v. NLRC, 276 SCRA
381; Republic v. NLRC, 744 SCRA 564; General Rubber v. Onion, 169
SCRA 808).
In any case granting in gratia argumenti that Gestiada had the
authority to enter into a compromise agreement in behalf of the other
complainants, the Quitclaim and Release cannot be recognized as a
valid and binding undertaking as the consideration therefore
(PhP150,000.00) as opposed to the total monetary award in the
amount equivalent to PhP2,538,728.84 is clearly unconscionable and
is thus void for being contrary to public policy. 14
For failure of Powertech to post the required cash or surety bond, the
NLRC ruled that the Labor Arbiter decision had attained finality, to wit:
Thus, settled records show that on June 8, 2000, (illegible),
through counsel, received a copy of Our Resolution dated May 24,
2000 directing herein respondents to post a cash or surety bond within
ten (10) days from receipt thereof. 
IDCHTE

An appeal is neither a natural right nor is it a part of the due

process but is purely a statutory privilege and may be exercised only in
the manner prescribed by and in accordance with the provisions of law
(Acda v. Minister of Labor, 119 SCRA 306). Whoever would avail of it
must strictly comply with (illegible) particularly as these are clearly
spelled in the rules ([illegible] Industry v. NLRC, G.R. No. 94754 [May
11, 1993]). Considering that the Joint Motion to Dismiss remains
unacted upon at the time respondents received a copy of Our
Resolution dated May 24, 2000 respondents in accordance with said
Resolution and with Article 223 Labor Code and with Section 6, Rule
VI, NLRC New Rules of Procedure should have posted a cash or
surety bond. Hence, failing to do so the appealed Decision is deemed
final and executory (Acda v. Minister of Labor, supra). 15
Undaunted, Powertech elevated the matter to the CA via petition
for certiorari under Rule 65 of the 1997 Rules of Civil Procedure.
 CA Disposition

On June 20, 2001, the CA rendered a decision in favor of Powertech.

The dispositive portion of the decision reads:
WHEREFORE, premises considered, the petition is GIVEN
DUE COURSE and is hereby GRANTED. The Resolution of the
National Labor Relations Commission dated July 31, 2000 declaring
the Quitclaim and Release void ab initio and denying the Joint Motion
to Dismiss and dismissing the appeal of the petitioners is ANNULLED
and SET ASIDE. No pronouncement as to costs.
SO ORDERED. 16
The CA upheld the validity of the compromise agreement between
petitioners and Powertech in the following tenor:
The public respondent's act of dismissing the appeal and
declaring the compromise agreement void is a grave abuse of
discretion. Apparently, the National Labor Relations Commission has
already lost jurisdiction over the case because the appeal was already
considered withdrawn and the cash bond was released through its
Resolution dated January 10, 1999. It is noted that said resolution
withdrawing the appeal has become final and executory since the
same has not been the subject of a motion for reconsideration. In the
case at bench, the private respondents sought a reconsideration of the
January 10, 1999 resolution because of the non-compliance of the
terms and conditions of the agreement by the petitioners or their failure
to pay the consideration. Thus, for all intents and purposes, the appeal
was considered withdrawn and there could therefore be no legal basis
for public respondent to dismiss the same. Neither should the
petitioners be required to post any cash or surety bond for the simple
reason that there is no more appeal to speak of. Similarly stated, the
case having been amicably settled for which a resolution was
issued, ipso facto, the filing of a bond is no longer warranted. 
IESDCH

Anent the public respondent's act of declaring the compromise

agreement void, the same is likewise a grave abuse of discretion
amounting to lack or excess of jurisdiction. Fundamental is the rule that
a compromise agreement entered into in good faith by workers and
their employer to resolve a pending controversy is valid and binding on
the agreeing parties. The National Labor Relations Commission shall
not assume jurisdiction over issues involved in the compromise
agreement except 1) in case of non-compliance thereof, or 2) if there
is prima facie evidence that the settlement was obtained through fraud,
misrepresentation or coercion. In the first instance, the Civil Code of
the Philippines affords the prevailing party legal remedies in case of
non-compliance of the terms and conditions of the compromise
agreement. Article 2041 thereof provides that should a party fail or
refuse to comply with the terms of a compromise or amicable
settlement, the other party could either a) enforce the compromise by a
writ of execution, or b) regard it as rescinded and so insist upon his
original demand.
The public respondent, in taking cognizance therefore of the
motion for reconsideration by the complainants seeking to declare the
compromise agreement void on the ground of non-payment, and
consequently, declaring the same as being contrary to law pursuant to
its Resolution dated February 29, 2000, acted in excess of jurisdiction
since the procedure for acquiring jurisdiction over the case was not
properly observed. Indeed, the proper remedy of the aggrieved party is
not to file a motion for reconsideration on the ground of non-payment
but to have the compromise agreement enforced by means of a writ of
execution. Any violation of the terms thereof would entitle the
aggrieved party to an execution of the judgment. In the case
of Paredes v. Court of Appeals, the Supreme Court held that if the
terms of the settlement are violated, execution is the proper remedy.
By and large, when the NLRC made a pronouncement that the
compromise agreement is valid and that the appeal has been
withdrawn, the same became the law between the parties. Enshrined
is the doctrine that compromise agreements voluntarily agreed upon
shall be final and binding upon the parties. Hence, judgment in
consonance with a compromise agreement is consequently rendered
in accordance therewith and the parties are enjoined to comply with,
abide by, its terms and conditions. Settlements of this kind are not only
recognized to be proper agreements but so encouraged as well. . . .
xxx xxx xxx
Suffice it to say that the Supreme Court has consistently held
that a compromise agreement, once approved by final orders of the
court has the force of res judicata between the parties and should not
be disturbed except for vices of consent or forgery. Since a
compromise has upon the parties and their successors-in-interest the
effect of res judicata, it can only be rescinded on the ground of vitiated
consent and this is true even if the compromise turns out to be
unsatisfactory to either of the parties. In the instant case, there is no
evidence to show that the agreement was entered into by means of
fraud, accident, mistake, or excusable negligence or that the
agreement was forged. The compromise agreement was voluntarily
entered into, since the complainants signified their individual consent
to the same by authorizing Carlos Gestiada through a special power of
attorney to act for and in their behalf. Moreover, their very own lawyer
Atty. Jose Evangelista acted as their witness in that agreement and
affixed his signature thereon. On top of this, the said document was
subscribed and sworn before Labor Arbiter dela Cruz.  AEDHST
 Accordingly, the findings of the NLRC, that the execution of the
second compromise agreement is null and void since the consideration
of P150,000 was merely a payment for Carlos Gestiada's backwages
without reference to the claims of the other complainants, becomes
moot and academic. Parenthetically, its findings declaring valid the
authority of Atty. Evangelista in filing the Opposition to the Joint Motion
to Dismiss questioning the reasonableness of the consideration of the
settlement agreement is also futile. In short, the issue as the validity of
the compromise agreement and the authority of Atty. Evangelista has
been rendered moot and academic by the fact of payment of the
consideration of the settlement. 17
Petitioners moved to reconsider the CA decision but their motion was
denied. 18 Hence, the present recourse.

Issues

Petitioners impute to the CA "grave abuse of discretion," 19 contending

that —
I
PUBLIC RESPONDENT COURT OF APPEALS COMMITTED GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION IN RULING THAT THE NATIONAL LABOR
RELATIONS COMMISSION HAD ALREADY LOST JURISDICTION
WHEN IT DISMISSED THE APPEAL OF PRIVATE RESPONDENTS.
II
PUBLIC RESPONDENT COURT OF APPEALS COMMITTED GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK OR IN EXCESS
OF JURISDICTION IN RULING THAT THE NATIONAL LABOR
RELATIONS COMMISSION COMMITTED GRAVE ABUSE OF
DISCRETION IN DECLARING VOID THE COMPROMISE
AGREEMENT.
III
PUBLIC RESPONDENT COURT OF APPEALS COMMITTED GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION IN ASSUMING JURISDICTION OVER THE
PRESENT PETITION CONSIDERING THAT PRIVATE
RESPONDENTS FAILED TO PERFECT THEIR APPEAL WITH THE
NATIONAL LABOR RELATIONS COMMISSION. (Underscoring
supplied)

Our Ruling
 The meat of the petition is found in the second contention. We shall
deal with it ahead of the two others which can be merged into one.

The P150,000 was paid to Gestiada

solely as payment for his backwages,
not those of petitioners; there is
evident collusion between Powertech
and Gestiada, hence, the compromise
agreement is void.

Petitioners assert that the P150,000.00 paid to Gestiada was payment

solely for himself. As proof, they rely on the letter written in Filipino by
Gestiada to Atty. Evangelista dated March 23, 2000. 20 Right at the opening
sentence, Gestiada stated that "ang kinuha kong pera sa Powertech
Corporation na halagang P150,000.00 ay bilang kabayaran sa
aking backwages na iginawad sa desisyon ni Kagalang-galang Labor
Arbiter Joseph Rennel dela Cruz." (the money I got from Powertech in the
sum of P150,000.00 was for payment of my backwages awarded under the
decision of the Labor Arbiter.) In the penultimate sentence, Gestiada further
clarified that "hindi ko naman po pinakialaman ang kabayaran para sa aking
mga kasamahan." (I did not deal with the payment for my companions.) The
letter reads: 
CAcEaS

Ginoong Atty. Jose Evangelista

Suite 1009, 1010 Bldg., A. Mabini
Street
Ermita, Manila, Metro Manila
Sir:
Nais ko pong ipaalam sa inyo na ang kinuha kong pera sa
Powertech Corporation na halagang P150,000.00 ay bilang kabayaran
sa aking backwages na iginawad sa desisyon ni Kagalang-galang Labor
Arbiter Joseph Rennel dela Cruz. Kung kukuwentahin kulang pa po yon
dahil may babayaran pa ang kompanya na karagdagang sahod o
reinstatement salaries dahil mula po lumabas ang Desisyon na ako ay
pabalikin sa aking trabaho, hindi po ako pinabalik ng kompanya. Kahit
kulang, napilitan po akong tanggapin ang alok ng kompanya dahil sa
tindi ng pangangailangan ng aking pamilya lalo na mula ng ako ay
natanggal hanggang ngayon walang tumanggap na ibang kompanya
para ako ay makapagtrabaho.
Tungkol po naman sa pagtanggal sa inyo bilang abogado, iyan po
ay isang suwestiyon ni Ginoong Ver Sarmiento at isang kondisyon para
ibigay nila ang kabayaran ng aking backwages at karagdagang sahod.
Pasensiya na po at kung ako ay maluwag babayaran ko kayo sa inyong
serbisyo. Totoong walang pahintulot ang aking mga kasama sa
 pagtanggal ko sa inyo, pero pangsariling desisyon ko po iyon para sa
aking kapakanan. Hindi ko naman po pinakialaman ang kabayaran para
sa aking mga kasamahan.
Kung di po kayo napadalahan ng summons o notice ng NLRC sa
komperensiya noong Marso 14, 2000 at Marso 15, 2000, hindi ko po
alam iyon. Pasensiya na po at maraming salamat sa iyong pangunawa.
Gumagalang,
(Sgd.) Carlos Gestiada
(Underscoring supplied)
Powertech, on the other hand, argues that the P150,000.00 was given
to Gestiada as compromise amount for all the petitioners. It relies on the
release and quitclaim signed by Gestiada indicating that he signed "for himself
and attorney-in-fact of all complainants." It is pointed out that Gestiada was
given a special power of attorney to negotiate with Powertech on behalf of
petitioners. The pertinent portions of the said special power of
attorney 21 authorize Gestiada to perform the following acts for petitioners:  ATICcS

1. TO REPRESENT us in the case entitled "Nagkakaisa

Manggagawa ng Powertech Corporation, et al. v. Power Corporation, et
al.," NLRC NCR No. 02-01876-98 NCR-04-03148-98;
2. TO ENTER into amicable settlement and compromise
agreement under terms and conditions he may deem just and
reasonable;
3. TO RECEIVE, COLLECT, ENCASH, DEPOSIT and
WITHDRAW, in trust, cash, checks, bills, negotiable instruments and
properties representing awards based on judgments and/or compromise
agreement or voluntary tender of payment by reason of the
aforementioned case;
4. TO SIGN AND EXECUTE compromise agreement, receipts,
vouchers, waiver, quitclaims, and other papers and documents
pertaining to the foregoing authority. 22
The quitclaim, release and waiver 23 signed by Gestiada reads:
COMES NOW the undersigned complainant(s)/petitioner(s) in the
above-entitled case(s) before this office respectfully manifest:
That for and in consideration of the sum of ONE HUNDRED
FIFTY THOUSAND PESOS (P150,000.00) to (sic) paid by Powertech
Corporation in settlement of my/our claims as complainants in the case
receipt of which is hereby acknowledged to my/our complete and full
satisfaction. I/we hereby release and discharge the said Powertech
Corporation and its officer(s) from any/all by way of unpaid wages,
 separation pay, overtime pay, differential pay or 13th months pay,
bonuses, allowances, fringe benefits, SL/VL/SIL, medical benefits, and
claims for illegal dismissal reinstatement, backwages, attorney's fees, or
otherwise as may be due me/us in connection with my past employment
with said establishment and its office.
IN VIEW WHEREOF, I/We have hereunto set my/our hand(s) this
16th day of March, 2000 in the City of Quezon City, Philippines. ITcCSA

(Sgd.)
CARLOS G. GESTIADA
Complainant
For himself and Attorney-
In-Fact of all Complainants 24
If reliance is placed solely on the quitclaim release and waiver executed
by Gestiada and the special power of attorney, it would be an inevitable
conclusion that the P150,000.00 compromise covered the claims of
petitioners, not merely that of Gestiada. That is apparent from the waiver and
the special power of attorney. There is much to be said, however, of the
circumstances in the execution and the payment of the amount which lead Us
to conclude that the P150,000.00 was given to Gestiada solely as payment for
his backwages and other monetary claims.
First, the P150,000 compromise is rather measly when taken in light of
the more than P2.5 million judgment on appeal to the NLRC. Petitioners
already won on the arbiter level P2.5 million pesos. It is highly improbable that
they would suddenly agree to accept P150,000 as compromise for the P2.5
million. That translates to a paltry sum of P6,000.00 each for petitioners. From
this amount will still be deducted attorneys fees and other litigation expenses.
In effect, petitioners agreed to waive more than 94% of what they expect to
receive from Powertech. We note that the compromise is a mere 6% of the
contingent sum that may be received by petitioners. This minuscule amount is
certainly questionable because, to Our mind, it does not represent a true and
fair amount which a reasonable agent may bargain for his principal.
We contrast the monetary judgment to the P150,000.00 received by
Gestiada, which appears to be his share in the P2.5 million based on the
calculation of the NLRC. 25 We find no plausible reason to disbelieve his claim
that the sum represents payment solely of his backwages.
In Galicia v. National Labor Relations Commission (Second
Division), 26 this Court invalidated a compromise agreement which entitled a
worker to receive P12,000 in lieu of a monetary judgment of P108,000 for
being palpably inequitable, to wit: CHcTIA

The more relevant inquiry is whether the consideration for the

quitclaims signed by the workers was reasonable and acceptable.
 Where it is shown that the person making the waiver did so voluntarily
and with full understanding of what he was doing and the consideration
of the quitclaim is credible, the transaction must be recognized as a valid
and binding undertaking. Here, the amount accepted by petitioners was
very much less than the amount awarded by the Labor Arbiter. The
consideration for the quitclaim, a measly P12,000.00 per worker and the
total sum of P300,000.00 are inordinately low and exceedingly
unreasonable relative to the P107,380.00 per worker and total
P3,223,261.00 awarded by the Arbiter. Palpably inequitable, the
quitclaim cannot be considered an obstacle to the pursuit of their
legitimate claims. Petitioners never accepted as full compensation the
meager amount they received when they signed the quitclaim and
release. In the Sinumpaang Salaysay they executed the next day, they
expressly declared their awareness that the amount they received was
unjust and insufficient to answer for their just claims and the award given
by the Labor Arbiter, but due to destitution caused by their protracted
unemployment, they decided to accept the P12,000.00 in the meantime.
The Court also recognizes "dire necessity" of laborers as ample
justification to accept even insufficient sums of money from their
employers.
xxx xxx xxx
Worth noting is the Solicitor General's opinion in favor of granting
the petition. The OSG concluded that "(w)hile petitioners may not have
been ‘tricked' into accepting the P12,000.00, to repeat, the undisputed
and concurrent circumstances of dire necessity and unconscionability
obtaining in the case at bar constitute more than sufficient ground to
invalidate the compromise agreement." (Underscoring supplied)
Second, even granting for the mere sake of argument that the
P150,000 was a fair and reasonable compromise for all, petitioners failed to
receive a single centavo from the compromise. This conclusively indicates
that Gestiada received the P150,000 in payment of his backwages and no
other.
Third, We give credence to the admission of Gestiada that he received
the P150,000.00 as payment for his own backwages. In his letter to Atty.
Evangelista, Gestiada said that he was pressured by Powertech to sign the
waiver and quitclaim for petitioners in order to receive his share in the P2.5
million judgment. Having no stable job after his dismissal, Gestiada had no
other choice but to breach his fiduciary obligation to petitioners. He
succumbed to the pressure of Powertech in signing the waiver, release and
quitclaim in exchange for the P150,000.00. In short, he colluded with
Powertech to the detriment of petitioners.
Powertech knew that Gestiada had plenary authority to act for
petitioners in the labor case. It had prior dealings with him. It also knew that
Gestiada was authorized to negotiate for any amount "he may deem just and
reasonable" and to sign waivers and quitclaims on behalf of petitioners.
Powertech obviously used that knowledge, capitalized on the vulnerable
position of Gestiada in entering into the agreement and took advantage of the
situation to the disadvantage of petitioners. 
TAHcCI

Fourth, the events that led to the execution of the compromise

agreement show that Powertech was negotiating in bad faith. More
importantly, they show that Powertech colluded with Gestiada to defraud
petitioners of their share of the P2.5 million Labor Arbiter judgment.
Evidently, Powertech never intended to pay the P150,000 compromise
agreement. It was minded to do so only after the NLRC declared the
compromise void and reinstated the P2.5 million judgment of the Labor
Arbiter. It cannot escape Our notice that Powertech even ordered a stop
payment for the P150,000.00 check issued to Gestiada without any sufficient
reason. Worse, it was recalcitrant in making good the check despite due
demand.
To Our mind, what prompted Powertech to agree to pay the
P150,000.00 was the NLRC order voiding the compromise agreement and
reinstating the Labor Arbiter P2.5 million judgment. By then, Powertech was
faced with the possibility of paying P2.5 million to petitioners. It was also
required by law to post a surety bond for the same amount in order to perfect
its appeal with the NLRC.
Armed with the NLRC order, petitioners were bent on pursuing their
appeal. Powertech panicked. It negotiated with Gestiada offering him
P150,000.00 in exchange for a waiver and quitclaim for himself and for
petitioners. Powertech knew that Gestiada was authorized by petitioners to
negotiate for "any sum he may deem just and reasonable" and to sign
quitclaims and waivers for them. Jobless and having no regular income,
Gestiada succumbed to the pressure. He connived with Powertech and
agreed to receive the P150,000.00 for himself in exchange for signing a
quitclaim and waiver in the name of petitioners.
To give effect to the collusion, Gestiada had to get rid of Atty.
Evangelista, who had previously succeeded in nullifying the compromise
agreement. He fired Atty. Evangelista without cause basing his dismissal on
his plenary authority as agent of petitioners. He then procured the services of
another lawyer, Atty. Felipe. We find it striking that Gestiada was not
authorized under the special power of attorney to terminate or retain another
counsel for petitioners in the labor dispute. The special power of attorney
merely authorized Gestiada to negotiate with Powertech, nothing more.
 In his letter, Gestiada admitted that the dismissal of Atty. Evangelista
was upon the prodding of Virtue Sarmiento, personnel manager of Powertech.
Powertech imposed the dismissal of Atty. Evangelista as a condition before
Gestiada may receive the amount. A day after firing Atty. Evangelista,
Gestiada received the P150,000.00. That same day, Gestiada, represented
by Atty. Felipe, and Powertech filed a joint motion to dismiss with the
NLRC.  CacEID

All these circumstances indicate that the P150,000.00 was received by

Gestiada solely as payment for his backwages and not a whit of a settlement
for the monetary claim of petitioners.
In line with Our conclusion that Powertech colluded with Gestiada, the
CA gravely erred in upholding the compromise agreement. The appellate
court decision was premised on the compromise agreement being entered
into by Powertech and Gestiada in good faith. It is now clear that there is
ample evidence indicating that Powertech was negotiating in bad faith and,
worse, it colluded with Gestiada in shortchanging, nay, fraudulently depriving
petitioners of their just share in the award.
Collusion is a species of fraud. 27 Article 227 of the Labor
Code empowers the NLRC to void a compromise agreement for fraud, thus:
Any compromise settlement, including those involving labor
standard laws, voluntarily agreed upon by the parties with the assistance
of the Bureau or the regional office of the Department of Labor, shall be
final and binding upon the parties. The National Labor Relations
Commission or any court shall not assume jurisdiction over issues
involved therein except in case of non-compliance thereof or if there
is prima facie evidence that the settlement was obtained through fraud,
misrepresentation, or coercion. 28 (Underscoring supplied)
In fine, We find that the CA erred in upholding the compromise
agreement between Powertech and Gestiada. The NLRC justifiably declared
the compromise agreement as void.

Posting of surety bond is mandatory

and jurisdictional. Failure to post
surety bond rendered the Labor
Arbiter decision final and executory.

Addressing petitioners' third contention on the failure of Powertech to

post a surety bond, We agree with the NLRC resolution dismissing its appeal.
Said the NLRC on this point:  DHSCTI

An appeal is neither a natural right nor is it part of due process but

purely a statutory privilege and may be exercised only in the manner and
 in accordance with the provisions of law (Acda v. Minister of Labor, 119
SCRA 306). . . . Considering that the Joint motion to Dismiss remains
unacted upon at the time respondents received a copy of Our Resolution
dated May 24, 2000, respondents, in accordance with said Resolution
and with Article 223 Labor Code and with Section 6, Rule VI, NLRC New
Rules of Procedure should have posted a cash and surety bond. Hence
failing to do so the appealed Decision is deemed final and
executory (Acda v. Minister of Labor, supra).
The posting of a surety bond is mandatory and jurisdictional. This is
well settled. In Viron Garments Manufacturing Co., Inc. v. National Labor
Relations Commission, 29 this Court held:
The intention of the lawmakers to make the bond an
indispensable requisite for the perfection of an appeal by the employer,
is clearly limned (sic) in the provision that an appeal by the employer
may be perfected "only upon the posting of a cash or surety bond."  The
word "only"; makes it perfectly clear, that the lawmakers intended the
posting of a cash or surety bond by the employer to be the exclusive
means by which an employer's appeal may be perfected.
The word "may" refers to the perfection of an appeal as optional
on the part of the defeated party, but not to the posting of an appeal
bond, if he desires to appeal.
The meaning and the intention of the legislature in enacting a
statute must be determined from the language employed, and where
there is no ambiguity in the words, there is no room for construction
(Provincial Board of Cebu v. Presiding Judge of Cebu, Court of First
Instance, Branch IV, 171 SCRA 1).
The requirement that the employer post a cash or surety bond to
perfect its/his appeal is apparently intended to assure the workers that if
they prevail in the case, they will receive the money judgment in their
favor upon the dismissal of the employer's appeal. It was intended to
discourage employers from using an appeal to delay, or even evade,
their obligation to satisfy their employees' just and lawful claims.
The "undertakings" which the petitioners signed, binding
themselves to answer and pay the judgment or award would not assure
satisfaction of the monetary awards if they (the judgment debtors)
became insolvent during the pendency of the appeal. (Underscoring
supplied) ADaEIH

This rule was affirmed in Quiambao v. National Labor Relations

Commission, 30 thus:
. . . Petitioner is right that the filing of a supersedeas bond is
indispensable to the perfection of an appeal in cases which, like the
present one, involve monetary awards and that because Central Cement
 failed to comply with this requirement, the decision of the Labor Arbiter,
finding Central Cement guilty of the illegal dismissal of petitioner,
became final and executory. Art. 223 expressly provides that "In case of
a judgment involving a monetary award, an appeal by the employer may
be perfected only upon the posting of a cash or surety bond issued by a
reputable bonding company duly accredited by the commission in the
amount equivalent to the monetary award in the judgment appealed
from."
In the recent case of Mary Abigail's Food Service, Inc. v. Court of
Appeals, 31 this Court again reiterated:
A mere notice of appeal without complying with the other
requisites aforestated shall not stop the running of the period for
perfecting an appeal.
Clear it is from the above that an appeal to the NLRC from any
decision, award or order of the Labor Arbiter must have to be made
within ten (10) calendar days from receipt of such decision, award or
order with proof of payment of the required appeal bond accompanied by
a memorandum of appeal. And where, as here, the decision of the Labor
Arbiter involves a monetary award, the appeal is deemed perfected only
upon the posting of a cash or surety bond also within ten (10) calendar
days from receipt of such decision in an amount equivalent to the
monetary award.
The posting of a cash or surety bond is a requirement sine qua
non for the perfection of an appeal from the labor arbiter's monetary
award. Notably, the perfection of an appeal within the period and in the
manner prescribed by law is jurisdictional and non-compliance with the
requirements therefore is fatal and has the effect of rendering the
judgment sought to be appealed final and executory. Such requirement
cannot be trifled with.
Considering that Powertech failed to post the required bond, its appeal
was not deemed perfected and the Labor Arbiter decision is now final and
executory. In the similar case of Aquino v. National Labor Relations
Commission, 32 this Court held:
We agree with the Solicitor General that the provisions of Article
223 of the Labor Code, as amended by R.A. No. 6715, requiring the
posting of cash or surety bond in appeals from decisions of Labor Arbiter
granting monetary awards, are self-executing and do not need any
administrative rules to implement them. The appeal made by private
respondent, not having been perfected on time for failure to file the
appeal bond, the decision of the Labor Arbiter became final and
executory. ICTaEH
 Given the foregoing ruling, We find it unnecessary to tackle petitioners'
contention that the NLRC had lost jurisdiction over the case when it dismissed
Powertech's appeal. It has become inconsequential, the crucial issue having
been resolved in their favor.

Final Note

As a final note, We rebuke Powertech's unscrupulous and despicable

act of using an apparently valid compromise agreement to evade payment of
its legal obligation to petitioners. We will not allow employers to make a
mockery of our legal system by using legal means to perpetrate fraud. This
should serve as a warning to parties in labor cases to endeavor to achieve a
just and equitable resolution of their disputes and to enter into compromise
agreements in good faith.
Further, there would have been no opportunity for collusion between
Powertech and Gestiada without the blanket authority given by petitioners to
Gestiada in the special power of attorney. This should serve as a caveat to
principals, particularly to laborers in labor disputes, to be wary of giving too
broad an authority to their agents. The powers of the agent may be
circumscribed either (a) by putting a clause in the special power of attorney
providing a minimum amount upon which the agent may compromise on
behalf of the principal or (b) by providing that some acts of the agent are
conditional and subject to the approval of the principal.
These conditions may impose additional burden on the negotiating
parties. But it will better protect them since the agent will only be authorized to
settle for an amount predictably acceptable to the principal, and the third party
will have full knowledge of the terms and conditions the principal would not
disown or disclaim.
Hindi sana nagkaroon ng pagkakataong magsabwatan ang
Powertech at si Gestiada kung walang malawak na pahintulot na
ibinigay ang petitioners sa kanya. Ito ay dapat magsilbing babala para
mag-ingat ang mga prinsipal, lalo na ang mga manggagawa sa usaping
pang-obrero. Ang ibinibigay na kapangyarihan o special power of
attorney sa kinatawan ay maaaring lagyan ng hangganan na magtatakda
(a) ng pinakamababang halaga na maaaring pagkasunduan, o (b) ang
ilang gagawin ng ahente ay may mga kondisyon na dapat pagtibayin ng
prinsipal.
Ang mga kondisyong ito ay maaaring magbigay ng karagdagang
abala sa magkabilang panig. Subalit higit silang protektado sapagkat
ang ahente ay pahihintulutan lamang na pumayag sa halagang
katanggap-tanggap sa prinsipal, at ang ikatlong panig naman ay
 magkakaroon ng buong pagkaunawa sa mga kondisyon na hindi
tatanggihan o itatatwa ng prinsipal. 
cCAIaD

WHEREFORE, the petition is GRANTED. The Decision of the Court of

Appeals is REVERSED and SET ASIDE. The Resolution of the NLRC dated
July 31, 2000 is REINSTATED.
SO ORDERED.
 (Arellano v. Powertech Corp., G.R. No. 150861, [January 22, 2008], 566 PHIL
|||

178-203)

G.R. No. 166421. September 5, 2006.]

PHILIPPINE JOURNALISTS, INC., BOBBY DELA CRUZ,

ARNOLD BANARES and ATTY. RUBY RUIZ
BRUNO, petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION, HON. COMMS. LOURDES JAVIER, TITO
GENILO and ERNESTO VERCELES, JOURNAL EMPLOYEES
UNION, and THE COURT OF APPEALS, respondents.

DECISION

CALLEJO, SR., J  : p

This is a Petition for Certiorari under Rule 65 1 of the Rules of Court of the

Decision 2 of the Court of Appeals (CA) in CA-G.R. SP No. 81544, as well as the
Resolution 3 dated November 23, 2004 denying the motion for reconsideration
thereof.

The Antecedents

The Philippine Journalists, Inc. (PJI) is a domestic corporation engaged in

the publication and sale of newspapers and magazines. The exclusive bargaining
agent of all the rank-and-file employees in the company is the Journal
Employees Union (Union for brevity).
Sometime in April 2005, the Union filed a notice of strike before the
National Conciliation and Mediation Board (NCMB), claiming that PJI was guilty
of unfair labor practice. PJI was then going to implement a retrenchment program
due to "over-staffing or bloated work force and continuing actual losses sustained
by the company for the past three years resulting in negative stockholders equity
of P127.0 million." The Secretary of the Department of Labor and Employment
(DOLE) certified 4 the labor dispute to the National Labor Relations Commission
(NLRC) for compulsory arbitration pursuant to Article 263 (g) of the Labor Code.
The case was docketed as NCMB-NCR-NS-03-087-00.
The parties were required to submit their respective position papers. PJI
filed a motion to dismiss, contending that the Secretary of Labor had no
jurisdiction to assume over the case and thus erred in certifying it to the
Commission. The NLRC denied the motion. PJI, thereafter, filed a Motion to
Defer Further Proceedings, alleging, among others, that the filing of its position
paper might jeopardize attempts to settle the matter extrajudicially, which the
NLRC also denied. The case was, thereafter, submitted for decision. 5
In its Resolution 6 dated May 31, 2001, the NLRC declared that the 31
complainants were illegally dismissed and that there was no basis for the
implementation of petitioner’s retrenchment program. The NLRC noted that the
following circumstances belied PJI's claim that it had incurred losses: (1) office
renovations were made as evidenced by numerous purchase orders; (2) certain
employees were granted merit increases; and (3) a Christmas party for
employees was held at a plush hotel. It also observed that PJI's executives
refused to forego their quarterly bonuses if the Union members refused to forego
theirs. 
AIECSD

Thus, the NLRC declared that the retrenchment of 31 employees was

illegal and ordered their reinstatement "to their former position without loss of
seniority rights and other benefits, with payment of unpaid salaries, bonuses and
backwages from the date of dismissal up to the actual date of reinstatement plus
10% of the total monetary award as attorney's fees." PJI was adjudged liable in
the total amount of P6,447,008.57. 7
Thereafter, the parties executed a Compromise Agreement 8 dated July 9,
2001, where PJI undertook to reinstate the 31 complainant-employees effective
July 1, 2001 without loss of seniority rights and benefits; 17 of them who were
previously retrenched were agreed to be given full and complete payment of their
respective monetary claims, while 14 others would be paid their monetary claims
minus what they received by way of separation pay. The agreement stated that
the parties entered the agreement "[i]n a sincere effort at peace and
reconciliation as well as to jointly establish a new era in labor management
relations marked by mutual trust, cooperation and assistance, enhanced by
open, constant and sincere communication with a view of advancing the interest
of both the company and its employees." The compromise agreement was
submitted to the NLRC for approval. All the employees mentioned in the
agreement and in the NLRC Resolution affixed their signatures thereon. They
likewise signed the Joint Manifesto and Declaration of Mutual Support and
Cooperation 9 which had also been submitted for the consideration of the labor
tribunal.
The NLRC forthwith issued another Resolution 10 on July 25, 2002,
declaring that the Clarificatory Motion of complainants Floro Andrin, Jr. and
Jazen M. Jilhani had been mooted by the compromise agreement as they
appeared to be included in paragraph 2.c and paragraph 2.d, respectively
thereof. As to the seven others who had filed a motion for clarification, the NLRC
held that they should have filed individual affidavits to establish their claims or
moved to consolidate their cases with the certified case. Thus, the NLRC granted
the computation of their benefits as shown in the individual affidavits of the
complainants. However, as to the prayer to declare the Union guilty of unfair
labor practice, to continue with the CBA negotiation and to pay moral and
exemplary damages, the NLRC ruled that there was no sufficient factual and
legal basis to modify its resolution. Thus, the compromise agreement was
approved and NCMB-NCR-NS-03-087-00 was deemed closed and terminated. 11
In the meantime, however, the Union filed another Notice of Strike on July
1, 2002, premised on the following claims:
1. OUTRIGHT DISMISSAL OF 29 EMPLOYEES
2. VIOLATION OF CBA BENEFITS
3. NON-PAYMENT OF ALLOWANCES, MEAL, RICE,
TRANSPORTATION, QUARTERLY BONUS, X-MAS BONUS,
ANNIVERSARY BONUS, HEALTH INSURANCE, DENTAL TO 29
EMPLOYEES
4. NON-PAYMENT OF BACKWAGES OF 38 REINSTATED
EMPLOYEES [JUNE 2001 SALARY AND ALLOWANCES,
DIFFERENCE (sic) OF ALLOWANCES AND BONUSES AWARDED BY
NLRC]
5. TRANSPORTATION ALLOWANCE OF 5 UNION MEMBERS
6. NON-PAYMENT OF P1000 INCREASE PER CBA
7. DIMINUTION OF SALARY OF 200 EMPLOYEES TO 50% 12
In an Order 13 dated September 16, 2002, the DOLE Secretary certified the
case to the Commission for compulsory arbitration. The case was docketed as
NCMB-NCR-NS-07-251-02.
The Union claimed that 29 employees were illegally dismissed from
employment, and that the salaries and benefits 14 of 50 others had been illegally
reduced. 15 After the retrenchment program was implemented, 200 Union
members-employees who continued working for petitioner had been made to
sign five-month contracts. The Union also alleged that the company, through its
legal officer, threatened to dismiss some 200 union members from employment if
they refused to conform to a 40% to 50% salary reduction; indeed, the 29
employees who refused to accede to these demands were dismissed on June
28, 2002. The Union prayed that the dismissed employees be reinstated with
payment of full backwages and all other benefits or their monetary equivalent
from the date of their dismissal on July 3, 2002 up to the actual date of
reinstatement; and that the CBA benefits (as of November 2002) of the 29
employees and 50 others be restored.  HAEDIS

In its Resolution 16 dated July 31, 2003, the NLRC ruled that the
complainants were not illegally dismissed. The May 31, 2001 Resolution
declaring the retrenchment program illegal did not attain finality as "it had been
academically mooted by the compromise agreement entered into between both
parties on July 9, 2001." According to the Commission, it was on the basis of this
agreement that the July 25, 2002 Resolution which declared the case closed and
terminated was issued. Pursuant to Article 223 of the Labor Code, this later
resolution attained finality upon the expiration of ten days from both parties'
receipt thereof. Thus, the May 31, 2001 Resolution could not be made the basis
to justify the alleged continued employment regularity of the 29 complainants
subsequent to their retrenchment. The NLRC further declared that the two cases
involved different sets of facts, hence, the inapplicability of the doctrine of stare
decisis. In the first action, the issue was whether the complainants as regular
employees were illegally retrenched; in this case, whether the 29 complainants,
contractual employees, were illegally dismissed on separate dates long after their
retrenchment.
The NLRC also declared that by their separate acts of entering into fixed-
term employment contracts with petitioner after their separation from employment
by virtue of retrenchment, they are deemed to have admitted the validity of their
separation from employment and are thus estopped from questioning it.
Moreover, there was no showing that the complainants were forced or pressured
into signing the fixed-term employment contracts which they entered into.
Consequently, their claims for CBA benefits and increases from January to
November 2002 should be dismissed. The NLRC pointed out that since they
were mere contractual employees, the complainants were necessarily excluded
from the collective bargaining unit. The NLRC stressed that the complainants had
refused to be regularized and ceased to be employees of petitioner upon the
expiration of their last fixed-term employment contracts. Thus, the NLRC
dismissed the case for lack of merit, but directed the company to "give
preference to the separated 29 complainants should they apply for re-
employment."
On the other issues raised by the complainants, the NLRC held:
 We, furthermore find that JEU has no personality to represent the
29 Complainants for, as prudently discussed above, they were
contractual employees, not regular employees, from the time they
entered into fixed-term employment contracts after being retrenched up
to the time they ceased being employees of PJI due to the non-renewal
of their last fixed-term employment contracts. As contractual employees,
they were excluded from the Collective Bargaining Unit (Section 2, CBA)
and hence, not union members.
Complainants contend that PJI admitted that the 29 Complainants
were union members because PJI deducted union dues from their
monthly wages.
 
We, however, do not subscribe to this view.
Firstly, although PJI deducted union dues from the monthly wages
of the 29 employees, it erroneously did so due to the distracting
misrepresentation of JEU that they were union members. Thus, if there
is any legal effect of these acts of misrepresentation and erroneous
deduction, it is certainly the liability of JEU for restitution of the
erroneously deducted amounts to PJI.
Secondly, the union membership admission due to erroneous
union dues deduction is incompatible with the fixed-term employment
contracts Complainants entered into with PJI.
We finally rule that JEU is not guilty of unfair labor practice.
Although it admitted the 29 contractual employees as its members and
represented them in the instant case and circulated derogatory letters
and made accusations against Respondents, it is, nevertheless, deemed
to have acted in good faith, there being no substantial evidence on
record showing that they did so in bad faith and with malice.
Much as we empathize with Complainants in their period of
depressing economic plight and hence, sincerely yearn to extricate them
from them such a situation, [w]e cannot do anything, for our hands are
shackled by the hard but true merits of the instant case. As an exception
to this incapacity, however, [w]e can request Respondents to give
preference to the 29 Complainants should they apply for re-
employment. 17
The Union assailed the ruling of the NLRC before the CA via petition
for certiorari under Rule 65.
In its Decision dated August 17, 2004, the appellate court held that the
NLRC gravely abused its discretion in ruling for PJI. The compromise agreement
referred only to the award given by the NLRC to the complainants in the said
case, that is, the obligation of the employer to the complainants. The CA pointed
out that the NLRC Resolution nevertheless declared that respondent failed to
prove the validity of its retrenchment program, which according to it, stands even
after the compromise agreement was executed; it was the reason why the
agreement was reached in the first place.
The CA further held that the act of respondent in hiring the retrenched
employees as contractual workers was a ploy to circumvent the latter's security
of tenure. This is evidenced by the admission of PJI, that it hired contractual
employees (majority of whom were those retrenched) because of increased,
albeit uncertain, demand for its publications. The CA pointed out that this was
done almost immediately after implementing the retrenchment program. Another
"telling feature" is the fact that the said employees were re-hired for five-month
contracts only, and were later offered regular employment with salaries lower
than what they were previously receiving. The CA also ruled that the dismissed
employees were not barred from pursuing their monetary claims despite the fact
that they had accepted their separation pay and signed their quitclaims. The
dispositive portion of the decision reads:
WHEREFORE, the petition is GRANTED. Respondent is ordered
to reinstate the 29 dismissed employees to their previous positions
without loss of seniority rights and payment of their full backwages from
the time of their dismissal up to their actual reinstatement. Respondent is
likewise ordered to pay the 29 and 50 employees, respectively, their
rightful benefits under the CBA, less whatever amount they have already
received. The records of this case are remanded to the NLRC for the
computation of the monetary awards.
SO ORDERED. 18

The Present Petition

PJI, its President Bobby Dela Cruz, its Executive Vice-President Arnold
Banares, and its Chief Legal Officer Ruby Ruiz Bruno, the petitioners, now come
before this Court and submit that the CA erred as follows:
I
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE
ABUSE OF DISCRETION WHEN IT ADOPTED THE RESOLUTION
DATED 31 MAY 2001 IN CERT. CASE NO. 000181-00 AND APPLIED
THE SAME TO THE INSTANT CASE DOCKETED AS CERT. CASE
NO. 000229-02, DESPITE THE SAID RESOLUTION
BEING ABANDONED AND ACADEMICALLY MOOTED BY THE
RESOLUTION DATED 25 JULY 2001, WHICH APPROVED THE
COMPROMISE AGREEMENT BETWEEN THE PARTIES IN CERT.
CASE NO. 000181-00. IN FINE; THE HONORABLE COURT OF
APPEALS APPLIED TO THE INSTANT CASE THE LOGIC AND LAW
 OF AN ABANDONED RESOLUTION WHICH NEVER ATTAINED
FINALITY.
II
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE
ABUSE OF DISCRETION WHEN IT TRIED FACTS AND EVIDENCES
WHICH WERE NOT PRESENTED AND CONSIDERED BY THE
COURT A QUO. IN FINE, THE HONORABLE COURT OF APPEALS
WENT BEYOND ITS MANDATE AND AUTHORITY WHEN IT
BECAME A TRIER OF FACTS.
III
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE
ABUSE OF DISCRETION WHEN IT GRANTED TO AWARD 50 OTHER
PERSONS WHO ARE NOT PARTIES OR PRIVIES TO THE INSTANT
CASE. IN FINE, THE HONORABLE COURT OF APPEALS GRANTED
AWARDS TO THOSE WITH WHOM IT NEVER HAD
JURISDICTION. 19
At the outset, we note that this case was brought before us via petition
for certiorari under Rule 65 of the Revised Rules of Civil Procedure. The proper
remedy, however, was to file a petition under Rule 45. It must be stressed
that certiorari under Rule 65 is "a remedy narrow in scope and inflexible in
character. It is not a general utility tool in the legal workshop." 20 Moreover, the
special civil action for certiorari will lie only when a court has acted without or in
excess of jurisdiction or with grave abuse of discretion. 21
Be that as it may, a petition for certiorari may be treated as a petition for
review under Rule 45. Such move is in accordance with the liberal spirit
pervading the Rules of Court and in the interest of substantial justice. 22 As the
instant petition was filed within the prescribed fifteen-day period, and in view of
the substantial issues raised, the Court resolves to give due course to the petition
and treat the same as a petition for review on certiorari. 23
The primary issue before the Court is whether an NLRC Resolution, which
includes a pronouncement that the members of a union had been illegally
dismissed, is abandoned or rendered "moot and academic" by a compromise
agreement subsequently entered into between the dismissed employees and the
employer; this, in turn, raises the question of whether such a compromise
agreement constitutes res judicata to a new complaint later filed by other union
members-employees, not parties to the agreement, who likewise claim to have
been illegally dismissed.
Petitioners point out that a compromise agreement is the product of free
will and consent of the parties and that such agreement can be entered into
during any stage of the case. They insist that its terms are not dictated or
dependent on the court's findings of facts; it is valid as long as not contrary to
law, public order, public policy, morals or good customs. According to petitioners,
the execution of the compromise agreement embodied and approved by the
NLRC Resolution dated July 25, 2001 effectively closed and terminated Certified
Case No. 000181-00. Citing Golden Donuts, Inc., v. National Labor Relations
Commission. 24 Thus, a judgment on a compromise agreement has the force and
effect of any other judgment.
Petitioners also point out that as correctly observed by the NLRC, the
resolution declaring respondents' retrenchment was promulgated on May 31,
2001. Petitioners' side was never presented in Certified Case No. 000181-00,
and if it were not for the filing of the compromise agreement, they would have
moved to reconsider or at least filed the appropriate pleadings to rectify the
findings adverse to them. They insist that the compromise agreement effectively
abandoned all findings of facts and its necessary consequences in favor of the
amicable settlement. The compromise agreement was thereafter approved on
July 25, 2001 by the NLRC. As clearly stated in Article 223 of the Labor Code, it
is the Resolution dated July 25, 2001 that attained finality after the expiration of
the ten-day period, and not the abandoned and mooted Resolution dated May
31, 2001.
Petitioners claim that the letter of Atty. Adolfo Romero dated March 20,
2000 was never presented as evidence. Moreover, since the CA is not a trier of
facts, it was error on its part to "admit material evidence that was never
presented in the instant case (or to lift findings of facts from the abandoned and
mooted resolution dated 31 May 2001)." Thus, the NLRC did not act with grave
abuse of discretion when it found that the retrenchment was legal as stated in the
appealed decision dated July 31, 2003. Such use of the admissions contained in
the said letter dated March 20, 2000 denied them due process as they were not
given the opportunity to contest or deny its validity or existence.
Petitioners further point out that while the instant petition was filed only by
29 complainants, the dispositive portion of the assailed decision was extended to
cover 50 other persons. They insist that the said letter, as well as the findings of
a "mooted decision," were used as evidence to support the erroneous decision of
the CA; in so doing, the appellate court acted with grave abuse of discretion
amounting to lack or excess of jurisdiction.
For their part, private respondents claim that the appellate court did not
commit any reversible error, and that the assailed decision is borne out by the
evidence on record. Since the dismissal of the retrenched employees has been
declared illegal, the 29 dismissed employees enjoy the status of regular and
permanent employees who cannot be dismissed except for cause; hence, the CA
correctly ordered their reinstatement. CHEIcS
 They further point out that the fixing of five-month contracts of employment
entered into by the individual union members was intentionally employed by
petitioners to circumvent the provisions of the Labor Code on security of tenure,
hence, illegal. They also allege that petitioners did not comply with the 30-day
notice rule required by law to render any dismissal from employment valid. The
letter of dismissal was dated June 27, 2002, and took effect a week after, or on
July 3, 2002, a violation of the 30-day notice rule. The Union members' salaries
and benefits were obtained through CBA negotiations and were included in the
existing CBA. Thus, petitioners' act of unilaterally removing such benefits and
wage increases constitutes gross violations of its economic provisions, and unfair
labor practice as defined by the Labor Code. Private respondents cite Philippine
Carpet Employees Association v. Philippine Carpet Manufacturing
Corporation 25 to support their arguments. They insist that the illegally retrenched
employees were made to believe that their retrenchment was valid, and thus,
through mistake or fraud accepted their separation pay, which, however, does
not militate against their claims.
 

The Ruling of the Court

The petition is denied.

The nature of a compromise is spelled out in Article 2028 of the New Civil
Code: it is "a contract whereby the parties, by making reciprocal concessions,
avoid litigation or put an end to one already commenced." Parties to a
compromise are motivated by "the hope of gaining, balanced by the dangers of
losing." 26 It contemplates mutual concessions and mutual gains to avoid the
expenses of litigation, or, when litigation has already begun, to end it because of
the uncertainty of the result. 27 Article 227 of the Labor Code of the
Philippines authorizes compromise agreements voluntarily agreed upon by the
parties, in conformity with the basic policy of the State "to promote and
emphasize the primacy of free collective bargaining and negotiations, including
voluntary arbitration, mediation and conciliation, as modes of settling labor or
industrial disputes." 28 As the Court held in Reformist Union of R.B. Liner, Inc. v.
NLRC, 29 the provision "bestows finality to unvitiated compromise agreements,"
particularly if there is no allegation that either party did not comply with what was
incumbent upon them under the agreement. The provision reads:
ART. 227 Compromise Agreements. — Any compromise
settlement, including those involving labor standard laws, voluntarily
agreed upon by the parties with the assistance of the Bureau or the
regional office of the Department of Labor, shall be final and binding
upon the parties. The National Labor Relations Commission or any court
shall not assume jurisdiction over issues involved therein except in case
 of noncompliance thereof or if there is prima facie evidence that the
settlement was obtained through fraud, misrepresentation, or coercion.
Thus, a judgment rendered in accordance with a compromise agreement is
not appealable, and is immediately executory unless a motion is filed to set aside
the agreement on the ground of fraud, mistake, or duress, in which case an
appeal may be taken against the order denying the motion. 30 Under Article 2037
of the Civil Code, "a compromise has upon the parties the effect and authority
of res judicata," even when effected without judicial approval; and under the
principle of res judicata, an issue which had already been laid to rest by the
parties themselves can no longer be relitigated. 31
In AFP Mutual Benefit Association, Inc. v. Court of Appeals, 32 the Court
spelled out the distinguishing features of a compromise agreement that is
basically intended to resolve a matter already in litigation, or what is normally
termed as a judicial compromise. The Court held that once approved, the
agreement becomes more than a mere contract binding upon the parties,
considering that it has been entered as the court's determination of the
controversy and has the force and effect of any other judgment. The Court went
on to state:
Adjective law governing judicial compromises annunciate that
once approved by the court, a judicial compromise is not appealable and
it thereby becomes immediately executory but this rule must be
understood to refer and apply only to those who are bound by the
compromise and, on the assumption that they are the only parties to the
case, the litigation comes to an end except only as regards to its
compliance and the fulfillment by the parties of their respective
obligations thereunder. The reason for the rule, said the Court
in Domingo v. Court of Appeals [325 Phil. 469], is that when both
parties so enter into the agreement to put a close to a pending
litigation between them and ask that a decision be rendered in
conformity therewith, it would only be "natural to presume that
such action constitutes an implicit waiver of the right to appeal"
against that decision. The order approving the compromise
agreement thus becomes a final act, and it forms part and parcel of
the judgment that can be enforced by a writ of execution unless
otherwise enjoined by a restraining order. 33
Thus, contrary to the allegation of petitioners, the execution and
subsequent approval by the NLRC of the agreement forged between it and the
respondent Union did not render the NLRC resolution ineffectual, nor rendered it
"moot and academic." The agreement becomes part of the judgment of the court
or tribunal, and as a logical consequence, there is an implicit waiver of the right
to appeal. 
ACETID
 In any event, the compromise agreement cannot bind a party who did not
voluntarily take part in the settlement itself and gave specific individual
consent. 34 It must be remembered that a compromise agreement is also a
contract; it requires the consent of the parties, and it is only then that the
agreement may be considered as voluntarily entered into.
The case of Golden Donuts, Inc. v. National Labor Relations
Commission, 35 which petitioners erroneously rely upon, is instructive on this
point. The Court therein was confronted with the following questions:
. . . (1) whether or not a union may compromise or waive the
rights to security of tenure and money claims of its minority members,
without the latter's consent, and (2) whether or not the compromise
agreement entered into by the union with petitioner company, which has
not been consented to nor ratified by respondents minority members has
the effect of res judicata upon them." 36
Speaking through Justice Reynato C. Puno, the Court held that pursuant to
Section 23, Rule 138 37 of the then 1964 Revised Rules of Court, a special
authority is required before a lawyer may compromise his client's litigation; thus,
the union has no authority to compromise the individual claims of members who
did not consent to the settlement. 38 The Court also stated that "the authority to
compromise cannot lightly be presumed and should be duly established by
evidence," 39 and that "a compromise agreement is not valid when a party in the
case has not signed the same or when someone signs for and in behalf of such
party without authority to do so;" consequently, the affected employees may still
pursue their individual claims against their employer. 40 The Court went on to
state that a judgment approving a compromise agreement cannot have the effect
of res judicata upon non-signatories since the requirement of identity of parties is
not satisfied. A judgment upon a compromise agreement has all the force and
effect of any other judgment, and, conclusive only upon parties thereto and their
privies, hence, not binding on third persons who are not parties to it. 41
A careful perusal of the wordings of the compromise agreement will show
that the parties agreed that the only issue to be resolved was the question of the
monetary claim of several employees. The prayer of the parties in the
compromise agreement which was submitted to the NLRC reads:
WHEREFORE, premises considered, it is respectfully prayed that
the Compromise Settlement be noted and considered; that the instant
case [be] deemed close[d] and terminated and that the Decision dated
May 31, 2001 rendered herein by this Honorable Commission be
deemed to be fully implemented insofar as concerns the thirty-one (31)
employees mentioned in paragraphs 2c and 2d hereof; and, that the
only issue remaining to be resolved be limited to the question of the
 monetary claim raised in the motion for clarification by the seven
employees mentioned in paragraph 2e hereof. 42
The agreement was later approved by the NLRC. The case was
considered closed and terminated and the Resolution dated May 31, 2001 fully
implemented insofar as the employees "mentioned in paragraphs 2c and 2d of
the compromise agreement" were concerned. Hence, the CA was correct in
holding that the compromise agreement pertained only to the "monetary
obligation" of the employer to the dismissed employees, and in no way affected
the Resolution in NCMB-NCR-NS-03-087-00 dated May 31, 2001 where the
NLRC made the pronouncement that there was no basis for the implementation
of petitioners' retrenchment program.
To reiterate, the rule is that when judgment is rendered based on a
compromise agreement, the judgment becomes immediately executory, there
being an implied waiver of the parties' right to appeal from the decision. 43 The
judgment having become final, the Court can no longer reverse, much less
modify it. 
DaTISc

Petitioners' argument that the CA is not a trier of facts is likewise

erroneous. In the exercise of its power to review decisions by the NLRC, the CA
can review the factual findings or legal conclusions of the labor tribunal. 44 Thus,
the CA is not proscribed from "examining evidence anew to determine whether
the factual findings of the NLRC are supported by the evidence presented and
the conclusions derived therefrom accurately ascertained." 45
The findings of the appellate court are in accord with the evidence on
record, and we note with approval the following pronouncement:
Respondents alleged that it hired contractual employees majority
of whom were those retrenched because of the increased but uncertain
demand for its publications. Respondent did this almost immediately
after its alleged retrenchment program. Another telling feature in the
scheme of respondent is the fact that these contractual employees were
given contracts of five (5) month durations and thereafter, were offered
regular employment with salaries lower than their previous salaries.
The Labor Code explicitly prohibits the diminution of employee's
benefits. Clearly, the situation in the case at bar is one of the things the
provision on security of tenure seeks to prevent.
Lastly, it could not be said that the employees in this case are
barred from pursuing their claims because of their acceptance of
separation pay and their signing of quitclaims. It is settled that
"quitclaims, waivers and/or complete releases executed by employees
do not stop them from pursuing their claims — if there is a showing of
undue pressure or duress. The basic reason for this is that such
quitclaims, waivers and/or complete releases being figuratively exacted
 through the barrel of a gun, are against public policy and therefore null
and void ab initio (ACD Investigation Security Agency, Inc. v. Pablo D.
Daquera, G.R. No. 147473, March 30, 2004)." In the case at bar, the
employees were faced with impending termination. As such, it was but
natural for them to accept whatever monetary benefits that they could
get. 46
 
CONSIDERING THE FOREGOING, the petition is DENIED and the
assailed Decision and Resolution AFFIRMED. Costs against the petitioners.
SO ORDERED.
 (Philippine Journalists, Inc. v. National Labor Relations Commission, G.R. No.
|||

166421, [September 5, 2006], 532 PHIL 531-550)

G.R. No. 141471. September 18, 2000.]

COLEGIO DE SAN JUAN DE LETRAN, petitioner, vs.

ASSOCIATION OF EMPLOYEES AND FACULTY OF LETRAN
and ELEONOR AMBAS, respondents.

 (Colegio de San Juan de Letran v. Association of Employees and Faculty of

|||

Letran, G.R. No. 141471, [September 18, 2000], 394 PHIL 936-949)

KAPUNAN, J  : p

This is a petition for review on certiorari seeking the reversal of the

Decision of the Court of Appeals, promulgated on 9 August 1999, dismissing the
petition filed by Colegio de San Juan de Letran (hereinafter, "petitioner") and
affirming the Order of the Secretary of Labor, dated December 2, 1996, finding
the petitioner guilty of unfair labor practice on two (2) counts.
The facts, as found by the Secretary of Labor and affirmed by the Court of
Appeals, are as follows:
"On December 1992, Salvador Abtria, then President of
respondent union, Association of Employees and Faculty of Letran,
initiated the renegotiation of its Collective Bargaining Agreement with
petitioner Colegio de San Juan de Letran for the last two (2) years of the
CBA's five (5) year lifetime from 1989-1994. On the same year, the
union elected a new set of officers wherein private respondent Eleanor
Ambas emerged as the newly elected President (Secretary of Labor and
Employment's Order dated December 2, 1996, p. 12).
Ambas wanted to continue the renegotiation of the CBA but
petitioner, through Fr. Edwin Lao, claimed that the CBA was already
prepared for signing by the parties. The parties submitted the disputed
CBA to a referendum by the union members, who eventually rejected the
said CBA (Ibid., p. 2).
Petitioner accused the union officers of bargaining in bad faith
before the National Labor Relations Commission (NLRC). Labor Arbiter
Edgardo M. Madriaga decided in favor of petitioner. However, the Labor
Arbiter's decision was reversed on appeal before the NLRC (Ibid., p. 2).
On January 1996, the union notified the National Conciliation and
Mediation Board (NCMB) of its intention to strike on the grounds (sic) of
petitioner's: non-compliance with the NLRC (1) order to delete the name
of Atty. Federico Leynes as the union's legal counsel; and (2) refusal to
bargain (Ibid., p. 1).
On January 18, 1996, the parties agreed to disregard the
unsigned CBA and to start negotiation on a new five-year CBA starting
1994-1999. On February 7, 1996, the union submitted its proposals to
petitioner, which notified the union six days later or on February 13, 1996
that the same had been submitted to its Board of Trustees. In the
meantime, Ambas was informed through a letter dated February 15,
1996 from her superior that her work schedule was being changed from
Monday to Friday to Tuesday to Saturday. Ambas protested and
requested management to submit the issue to a grievance machinery
under the old CBA (Ibid., pp. 2-3). 
DTISaH

Due to petitioner's inaction, the union filed a notice of strike on

March 13, 1996. The parties met on March 27, 1996 before the NCMB to
discuss the ground rules for the negotiation. On March 29, 1996, the
union received petitioner's letter dismissing Ambas for alleged
insubordination. Hence, the union amended its notice of strike to include
Ambas' dismissal. (Ibid., pp. 2-3).
On April 20, 1996, both parties again discussed the ground rules
for the CBA renegotiation. However, petitioner stopped the negotiations
after it purportedly received information that a new group of employees
had filed a petition for certification election (Ibid., p. 3).
On June 18, 1996, the union finally struck. On July 2, 1996, public
respondent the Secretary of Labor and Employment assumed
jurisdiction and ordered all striking employees including the union
president to return to work and for petitioner to accept them back under
the same terms and conditions before the actual strike. Petitioner
readmitted the striking members except Ambas. The parties then
 submitted their pleadings including their position papers which were filed
on July 17, 1996 (Ibid., pp. 2-3).
On December 2, 1996, public respondent issued an order
declaring petitioner guilty of unfair labor practice on two counts and
directing the reinstatement of private respondent Ambas with
backwages. Petitioner filed a motion for reconsideration which was
denied in an Order dated May 29, 1997 (Petition, pp. 8-9)." 1
Having been denied its motion for reconsideration, petitioner sought a
review of the order of the Secretary of Labor and Employment before the Court of
Appeals. The appellate court dismissed the petition and affirmed the findings of
the Secretary of Labor and Employment.  EHITaS

The dispositive portion of the decision of the Court of Appeals sets forth:
WHEREFORE, foregoing premises considered, this Petition is
DISMISSED, for being without merit in fact and in law.
With cost to petitioner.
SO ORDERED. 2
Hence, petitioner comes to this Court for redress.
Petitioner ascribes the following errors to the Court of Appeals:
I
THE HONORABLE COURT OF APPEALS ERRED AND ACTED WITH
GRAVE ABUSE OF DISCRETION IN AFFIRMING THE RULING OF
THE SECRETARY OF LABOR AND EMPLOYMENT WHICH
DECLARES PETITIONER LETRAN GUILTY OF REFUSAL TO
BARGAIN (UNFAIR LABOR PRACTICE) FOR SUSPENDING THE
COLLECTIVE BARGAINING NEGOTIATIONS WITH RESPONDENT
AEFL, DESPITE THE FACT THAT THE SUSPENSION OF THE
NEGOTIATIONS WAS BROUGHT ABOUT BY THE FILING OF A
PETITION FOR CERTIFICATION ELECTION BY A RIVAL UNION WHO
CLAIMED TO COMMAND THE MAJORITY OF THE EMPLOYEES
WITHIN THE BARGAINING UNIT.
II
THE HONORABLE COURT OF APPEALS ERRED AND ACTED WITH
GRAVE ABUSE OF DISCRETION IN AFFIRMING THE RULING OF
THE SECRETARY OF LABOR AND EMPLOYMENT WHICH
DECLARES PETITIONER LETRAN GUILTY OF UNFAIR LABOR
PRACTICE FOR DISMISSING RESPONDENT AMBAS, DESPITE THE
FACT THAT HER DISMISSAL WAS CAUSED BY HER
INSUBORDINATE ATTITUDE, SPECIFICALLY, HER REFUSAL TO
FOLLOW THE PRESCRIBED WORK SCHEDULE. 3
 The twin questions of law before this Court are the following: (1) whether
petitioner is guilty of unfair labor practice by refusing to bargain with the union
when it unilaterally suspended the ongoing negotiations for a new Collective
Bargaining Agreement (CBA) upon mere information that a petition for
certification has been filed by another legitimate labor organization? (2) whether
the termination of the union president amounts to an interference of the
employees' right to self-organization?
The petition is without merit.
After a thorough review of the records of the case, this Court finds that
petitioner has not shown any compelling reason sufficient to overturn the ruling of
the Court of Appeals affirming the findings of the Secretary of Labor and
Employment. It is axiomatic that the findings of fact of the Court of Appeals are
conclusive and binding on the Supreme Court and will not be reviewed or
disturbed on appeal. In this case, the petitioner failed to show any extraordinary
circumstance justifying a departure from this established doctrine.
As regards the first issue, Article 252 of the Labor Code defines the
meaning of the phrase "duty to bargain collectively," as follows:
Art. 252. Meaning of duty to bargain collectively. — The duty to
bargain collectively means the performance of a mutual obligation to
meet and convene promptly and expeditiously in good faith for the
purpose of negotiating an agreement with respect to wages, hours of
work and all other terms and conditions of employment including
proposals for adjusting any grievances or questions arising under such
agreement and executing a contract incorporating such agreements if
requested by either party but such duty does not compel any party to
agree to a proposal or to make any concession.
Noteworthy in the above definition is the requirement on both parties of the
performance of the mutual obligation to meet and convene promptly and
expeditiously in good faith for the purpose of negotiating an agreement.
Undoubtedly, respondent Association of Employees and Faculty of Letran
(AEFL) (hereinafter, "union") lived up to this requisite when it presented its
proposals for the CBA to petitioner on February 7, 1996. On the other hand,
petitioner devised ways and means in order to prevent the negotiation.
Petitioner's utter lack of interest in bargaining with the union is obvious in
its failure to make a timely reply to the proposals presented by the latter. More
than a month after the proposals were submitted by the union, petitioner still had
not made any counter-proposals. This inaction on the part of petitioner prompted
the union to file its second notice of strike on March 13, 1996. Petitioner could
only offer a feeble explanation that the Board of Trustees had not yet convened
to discuss the matter as its excuse for failing to file its reply. This is a clear
violation of Article 250 of the Labor Code governing the procedure in collective
bargaining, to wit: 
CIaASH

Art. 250. Procedure in collective bargaining. — The following

procedures shall be observed in collective bargaining:
(a) When a party desires to negotiate an agreement, it shall serve
a written notice upon the other party with a statement of its
proposals. The other party shall make a reply thereto not later than ten
(10) calendar days from receipt of such notice.  4
xxx xxx xxx
As we have held in the case of Kiok Loy vs. NLRC, 5 the company's refusal
to make counter-proposal to the union's proposed CBA is an indication of its bad
faith. Where the employer did not even bother to submit an answer to the
bargaining proposals of the union, there is a clear evasion of the duty to bargain
collectively. 6 In the case at bar, petitioners actuation show a lack of sincere
desire to negotiate rendering it guilty of unfair labor practice.
Moreover, the series of events that transpired after the filing of the first
notice of strike in January 1996 show petitioner's resort to delaying tactics to
ensure that negotiation would not push through. Thus, on February 15, 1996, or
barely a few days after the union proposals for the new CBA were submitted, the
union president was informed by her superior that her work schedule was being
changed from Mondays to Fridays to Tuesdays to Saturdays. A request from the
union president that the issue be submitted to a grievance machinery was
subsequently denied. Thereafter, the petitioner and the union met on March 27,
1996 to discuss the ground rules for negotiation. However, just two days later, or
on March 29, 1996, petitioner dismissed the union president for alleged
insubordination. In its final attempt to thwart the bargaining process, petitioner
suspended the negotiation on the ground that it allegedly received information
that a new group of employees called the Association of Concerned Employees
of Colegio (ACEC) had filed a petition for certification election. Clearly, petitioner
tried to evade its duty to bargain collectively.
Petitioner, however, argues that since it has already submitted the union's
proposals to the Board of Trustees and that a series of conferences had already
been undertaken to discuss the ground rules for negotiation such should already
be considered as acts indicative of its intention to bargain. As pointed out earlier,
the evidence on record belie the assertions of petitioner.
Petitioner, likewise, claims that the suspension of negotiation was proper
since by the filing of the petition for certification election the issue on majority
representation of the employees has arose. According to petitioner, the authority
of the union to negotiate on behalf of the employees was challenged when a rival
union filed a petition for certification election. Citing the case of Lakas Ng
Manggagawang Makabayan v. Marcelo Enterprises, 7 petitioner asserts that in
view of the pendency of the petition for certification election, it had no duty to
bargain collectively with the union.
We disagree. In order to allow the employer to validly suspend the
bargaining process there must be a valid petition for certification election raising
a legitimate representation issue. Hence, the mere filing of a petition for
certification election does not ipso facto justify the suspension of negotiation by
the employer. The petition must first comply with the provisions of the Labor
Code and its Implementing Rules. Foremost is that a petition for certification
election must be filed during the sixty-day freedom period. The "Contract Bar
Rule" under Section 3, Rule XI, Book V, of the Omnibus Rules Implementing the
Labor Code, provides that: ". . . If a collective bargaining agreement has been
duly registered in accordance with Article 231 of the Code, a petition for
certification election or a motion for intervention can only be entertained within
sixty (60) days prior to the expiry date of such agreement." The rule is based on
Article 232, 8 in relation to Articles 253, 253-A and 256 of the Labor Code. No
petition for certification election for any representation issue may be filed after the
lapse of the sixty-day freedom period. The old CBA is extended until a new one
is signed. The rule is that despite the lapse of the formal effectivity of the CBA
the law still considers the same as continuing in force and effect until a new CBA
shall have been validly executed. 9 Hence, the contract bar rule still
applies. 10 The purpose is to ensure stability in the relationship of the workers
and the company by preventing frequent modifications of any CBA earlier
entered into by them in good faith and for the stipulated original period. 11
In the case at bar, the lifetime of the previous CBA was from 1989-1994.
The petition for certification election by ACEC, allegedly a legitimate labor
organization, was filed with the Department of Labor and Employment (DOLE)
only on May 26, 1996. Clearly, the petition was filed outside the sixty-day
freedom period. Hence, the filing thereof was barred by the existence of a valid
and existing collective bargaining agreement. Consequently, there is no
legitimate representation issue and, as such, the filing of the petition for
certification election did not constitute a bar to the ongoing negotiation. Reliance,
therefore, by petitioner of the ruling in Lakas Ng Manggagawang Makabayan v.
Marcelo Enterprises 12 is misplaced since that case involved a legitimate
representation issue which is not present in the case at bar.
Significantly, the same petition for certification election was dismissed by
the Secretary of Labor on October 25, 1996. The dismissal was upheld by this
Court in a Resolution, dated April 21, 1997. 13
In view of the above, there is no doubt that petitioner is guilty of unfair
labor practice by its stern refusal to bargain in good faith with respondent union.
 Concerning the issue on the validity of the termination of the union
president, we hold that the dismissal was effected in violation of the employees'
right to self-organization.
To justify the dismissal, petitioner asserts that the union president was
terminated for cause, allegedly for insubordination for her failure to comply with
new working schedule assigned to her, and pursuant to its managerial
prerogative to discipline and/or dismiss its employees. While we recognize the
right of the employer to terminate the services of an employee for a just or
authorized cause, nevertheless, the dismissal of employees must be made within
the parameters of law and pursuant to the tenets of equity and fair play. 14 The
employer's right to terminate the services of an employee for just or authorized
cause must be exercised in good faith. 15 More importantly, it must not amount to
interfering with, restraining or coercing employees in the exercise of their right to
self-organization because it would amount to, as in this case, unlawful labor
practice under Article 248 of the Labor Code.
The factual backdrop of the termination of Ms. Ambas leads us to no other
conclusion that she was dismissed in order to strip the union of a leader who
would fight for the right of her co-workers at the bargaining table. Ms. Ambas, at
the time of her dismissal, had been working for the petitioner for ten (10) years
already. In fact, she was a recipient of a loyalty award. Moreover, for the past ten
(10) years her working schedule was from Monday to Friday. However, things
began to change when she was elected as union president and when she started
negotiating for a new CBA. Thus, it was when she was the union president and
during the period of tense and difficult negotiations when her work schedule was
altered from Mondays to Fridays to Tuesdays to Saturdays. When she did not
budge, although her schedule was changed, she was outrightly dismissed for
alleged insubordination. 16 We quote with approval the following findings of the
Secretary of Labor on this matter, to wit:
"Assuming arguendo that Ms. Ambas was guilty, such
disobedience was not, however, a valid ground to terminate her
employment. The disputed management action was directly connected
with Ms. Ambas' determination to change the complexion of the CBA. As
a matter of fact, Ms. Ambas' unflinching position in faithfully and truthfully
carrying out her duties and responsibilities to her Union and its members
in getting a fair share of the fruits of their collective endeavors was the
proximate cause for her dismissal, the charge insubordination being
merely a ploy to give a color of legality to the contemplated management
action dismiss her. Thus, the dismissal of Ms. Ambas was heavily tainted
with and evidently done in bad faith. Manifestly, it was designed to
interfere with the members' right to self-organization.
Admittedly, management has the prerogative to discipline its
employees for insubordination. But when the exercise of such
 management right tends to interfere with the employees' right to self-
organization, it amounts to union-busting and is therefore a prohibited
act. The dismissal of Ms. Ambas was clearly designed to frustrate the
Union in its desire to forge a new CBA with the College that is reflective
of the true wishes and aspirations of the Union members. Her dismissal
was merely a subterfuge to get rid of her, which smacks of a pre-
conceived plan to oust her from the premises of the College. It has the
effect of busting the Union, stripping it of its strong-willed leadership.
When management refused to treat the charge of insubordination as a
grievance within the scope of the Grievance Machinery, the action of the
College in finally dismissing her from the service became arbitrary,
capricious and whimsical, and therefore violated Ms. Ambas' right to due
process." 17
In this regard, we find no cogent reason to disturb the findings of the Court
of Appeals affirming the findings of the Secretary of Labor and Employment. The
right to self-organization of employees must not be interfered with by the
employer on the pretext of exercising management prerogative of disciplining its
employees. In this case, the totality of conduct of the employer shows an evident
attempt to restrain the employees from fully exercising their rights under the law.
This cannot be done under the Labor Code.
WHEREFORE, premises considered, the petition is DENIED for lack of
merit.
SO ORDERED.
 (Colegio de San Juan de Letran v. Association of Employees and Faculty of
|||

Letran, G.R. No. 141471, [September 18, 2000], 394 PHIL 936-949)