CASE DIGESTS

in
Labor Relations
3-E
1. Francisco - Cham
Case no. 1: Francisco v NLRC
FACTS: In 1995, petitioner Angelina Francisco was hired by Kasei Corporation during its
incorporation stage. She was designated as Accountant and Corporate Secretary and was
assigned to handle all the accounting needs of the company. She was also designated as Liaison
Officer to the City of Makati to secure business permits, construction permits and other licenses
for the initial operation of the company.
Although she was designated as Corporate Secretary, she was not entrusted with the
corporate documents; neither did she attend any board meeting nor required to do so. She never
prepared any legal document and never represented the company as its Corporate Secretary.
However, on some occasions, she was prevailed upon to sign documentation for the company.
In 1996, petitioner was designated Acting Manager. The corporation also hired Gerry
Nino as accountant in lieu of petitioner. As Acting Manager, petitioner was assigned to handle
recruitment of all employees and perform management administration functions; represent the
company in all dealings with government agencies, especially with the Bureau of Internal
Revenue (BIR), Social Security System (SSS) and in the city government of Makati; and to
administer all other matters pertaining to the operation of Kasei Restaurant which is owned and
operated by Kasei Corporation.
For five years, petitioner performed the duties of Acting Manager. As of December
31, 2000 her salary was P27,500.00 plus P3,000.00 housing allowance and a 10% share in the
profit of Kasei Corporation.
In January 2001, petitioner was replaced by Liza R. Fuentes as Manager. Petitioner
alleged that she was required to sign a prepared resolution for her replacement but she was
assured that she would still be connected with Kasei Corporation. Timoteo Acedo, the designated
Treasurer, convened a meeting of all employees of Kasei Corporation and announced that
nothing had changed and that petitioner was still connected with Kasei Corporation as Technical
Assistant to Seiji Kamura and in charge of all BIR matters.
Thereafter, Kasei Corporation reduced her salary by P2,500.00 a month beginning
January up to September 2001 for a total reduction of P22,500.00 as of September 2001.
Petitioner was not paid her mid-year bonus allegedly because the company was not earning
well. On October 2001, petitioner did not receive her salary from the company. She made
repeated follow-ups with the company cashier but she was advised that the company was not
earning well.
On October 15, 2001, petitioner asked for her salary from Acedo and the rest of the
officers but she was informed that she is no longer connected with the company.
Since she was no longer paid her salary, petitioner did not report for work and filed an action for
constructive dismissal before the labor arbiter.
Private respondents averred that petitioner is not an employee of Kasei Corporation. They
alleged that petitioner was hired in 1995 as one of its technical consultants on accounting matters

and act concurrently as Corporate Secretary. As technical consultant, petitioner performed

her work at her own discretion without control and supervision of Kasei Corporation.
Petitioners designation as technical consultant depended solely upon the will of
management. As such, her consultancy may be terminated any time considering that her
services were only temporary in nature and dependent on the needs of the corporation.
To prove that petitioner was not an employee of the corporation, private respondents
submitted a list of employees for the years 1999 and 2000 duly received by the BIR showing that
petitioner was not among the employees reported to the BIR, as well as a list of payees subject to
expanded withholding tax which included petitioner. SSS records were also submitted showing
that petitioners latest employer was Seiji Corporation.
Labor Arbiter: Petitioner was illegally dismissed
NLRC: the decision of the Labor Arbiter was affirmed
On appeal, the Court of Appeals reversed and set aside the decision of the NLRC. The
subsequent motion for reconsideration was also denied, hence, the present recourse.
ISSUES: (1) whether there was an employer-employee relationship between petitioner and
private respondent Kasei Corporation; and if in the affirmative
(2) whether petitioner was illegally dismissed.
HELD: (1) YES. By applying the control test, there is no doubt that petitioner is an employee
of Kasei Corporation because she was under the direct control and supervision of Seiji Kamura,
the corporations Technical Consultant. She reported for work regularly and served in various
capacities as Accountant, Liaison Officer, Technical Consultant, Acting Manager and Corporate
Secretary, with substantially the same job functions, that is, rendering accounting and tax
services to the company and performing functions necessary and desirable for the proper
operation of the corporation such as securing business permits and other licenses over an
indefinite period of engagement.
Under the broader economic reality test, the petitioner can likewise be said to be an
employee of respondent corporation because she had served the company for six years before her
dismissal, receiving check vouchers indicating her salaries/wages, benefits, 13th month pay,
bonuses and allowances, as well as deductions and Social Security contributions from August 1,
1999 to December 18, 2000. When petitioner was designated General Manager, respondent
corporation made a report to the SSS signed by Irene Ballesteros. Petitioners membership in the
SSS as manifested by a copy of the SSS specimen signature card which was signed by the
President of Kasei Corporation and the inclusion of her name in the on-line inquiry system of the
SSS evinces the existence of an employer-employee relationship between petitioner and
respondent corporation. It is therefore apparent that petitioner is economically dependent on
respondent corporation for her continued employment in the latters line of business.
Petitioner is an employee of respondent Kasei Corporation. She was selected and
engaged by the company for compensation, and is economically dependent upon respondent for
her continued employment in that line of business. Her main job function involved accounting
and tax services rendered to respondent corporation on a regular basis over an indefinite period
of engagement. Respondent corporation hired and engaged petitioner for compensation, with the
power to dismiss her for cause. More importantly, respondent corporation had the power to
control petitioner with the means and methods by which the work is to be accomplished.

(2) YES. The corporation constructively dismissed petitioner when it reduced her salary
by P2,500 a month from January to September 2001. This amounts to an illegal termination of
employment, where the petitioner is entitled to full backwages. Since the position of petitioner as
accountant is one of trust and confidence, and under the principle of strained relations, petitioner
is further entitled to separation pay, in lieu of reinstatement.

2. Sonza - Cham
Case no 2: Sonza vs ABS CBN
jurisdiction case
FACTS: In May 1994, respondent ABS-CBN Broadcasting Corporation (ABS-CBN) signed
an Agreement with the Mel and Jay Management and Development Corporation (MJMDC).
ABS-CBN was represented by its corporate officers while MJMDC was represented by
SONZA, as President and General Manager, and Carmela Tiangco (TIANGCO), as EVP and
Treasurer. Referred to in the Agreement as AGENT, MJMDC agreed to provide SONZAs
services exclusively to ABS-CBN as talent for radio and television.
ABS-CBN agreed to pay for SONZAs services a monthly talent fee of P310,000 for
the first year andP317,000 for the second and third year of the Agreement. ABS-CBN
would pay the talent fees on the 10thand 25th days of the month.
On 1 April 1996, SONZA wrote a letter to ABS-CBNs President, Eugenio Lopez III,
stating in the letter that Mr. Sonza irrevocably resigned in view of recent events** concerning his
programs and career; that these were due to acts of the station in violation and breach of their
agreement; that the letter served as notice of rescission of said agreement; and that he is waiving
and renouncing recovery of the remaining amount stipulated in paragraph 7 of the Agreement but
reserves the right to seek recovery of the other benefits under said Agreement.
**DIGESTERS NOTE: later on in the case, this apparently refers to the cancellation of
his programs.
On 30 April 1996, SONZA filed a complaint against ABS-CBN before the Department of
Labor and Employment, National Capital Region in Quezon City. SONZA complained that
ABS-CBN did not pay his salaries, separation pay, service incentive leave pay, 13th month pay,
signing bonus, travel allowance and amounts due under the Employees Stock Option Plan
(ESOP).
On 10 July 1996, ABS-CBN filed a Motion to Dismiss on the ground that no employeremployee relationship existed between the parties, to which SONZA filed an opposition to the
motion.
Ruling of the Labor Arbiter: The Labor Arbiter denied the motion to dismiss. The Labor
Arbiter ruled:
In this instant case, complainant for having invoked a claim that he was an employee of
respondent company until April 15, 1996 and that he was not paid certain claims, it is
sufficient enough as to confer jurisdiction over the instant case in this Office. And as
to whether or not such claim would entitle complainant to recover upon the causes of
action asserted is a matter to be resolved only after and as a result of a hearing. Thus,
the respondents plea of lack of employer-employee relationship may be pleaded

only as a matter of defense. It behooves upon it the duty to prove that there really is no
employer-employee relationship between it and the complainant.
The Labor Arbiter then considered the case submitted for resolution. The parties
submitted their position papers on 24 February 1997. The Labor Arbiter rendered his Decision
dated 8 July 1997 dismissing the complaint for lack of jurisdiction:
It must be noted that complainant was engaged by respondent by reason of his peculiar
skills and talent as a TV host and a radio broadcaster. Unlike an ordinary employee, he
was free to perform the services he undertook to render in accordance with his own
style Whatever benefits complainant enjoyed arose from specific agreement by the
parties and not by reason of employer-employee relationship The fact that complainant
was made subject to respondents Rules and Regulations, likewise, does not detract from
the absence of employer-employee relationship.
Ruling of the NLRC: Affirmed the LAs decision of lack of jurisdiction. Motion for
reconsideration denied.
MJMDC is an agent of SONZA, not a mere labor-only contractor of ABS-CBN such
that there exists an employer-employee relationship between the latter and SONZA. Jurisdiction
over the instant controversy belongs to the regular courts, the same being in the nature of an
action for alleged breach of contractual obligation on the part of respondent-appellee. The
compensation and bonuses for Mr. Sonzas services are not based on the Labor Code but rather
on the provisions of their agreement.
Ruling of the Court of Appeals: Petitioner filed a special civil action for certiorari, to which the
CA dismissed the case.
The Court of Appeals affirmed the NLRCs finding that no employer-employee
relationship existed between SONZA and ABS-CBN.
The Court of Appeals ruled that the existence of an employer-employee relationship
between SONZA and ABS-CBN is a factual question that is within the jurisdiction of the NLRC
to resolve. A special civil action for certiorari extends only to issues of want or excess of
jurisdiction of the NLRC. Such action cannot cover an inquiry into the correctness of the
evaluation of the evidence which served as basis of the NLRCs conclusion.
ISSUE: Whether the Court of Appeals gravely erred in affirming the NLRCs decision and
refusing to find that an Employer-Employee relationship existed between SONZA and ABSCBN.
HELD: NO, the Court of Appeals did not. No convincing reason exists to warrant a reversal of
the decision of the Court of Appeals affirming the NLRC ruling which upheld the Labor
Arbiters dismissal of the case for lack of jurisdiction.
SONZA maintains that all essential elements of an employer-employee relationship are
present in this case. Case law has consistently held that the elements of an employer-employee
relationship are: (a) the selection and engagement of the employee; (b) the payment of wages;
(c) the power of dismissal; and (d) the employers power to control the employee on the means
and methods by which the work is accomplished. The last element, the so-called control test,
is the most important element.

(a) On Selection: ABS-CBN engaged SONZAs services to co-host its television and
radio programs because of SONZAs peculiar skills, talent and celebrity status. The
specific selection and hiring of SONZA, because of his unique skills, talent and
celebrity status not possessed by ordinary employees, is a circumstance indicative, but
not conclusive, of an independent contractual relationship.
(b) On wages: All the talent fees and benefits paid to SONZA were the result of
negotiations that led to the Agreement. Whatever benefits SONZA enjoyed arose from
contract and not because of an employer-employee relationship.
(c) On power of dismissal: For violation of any provision of the Agreement, either party
may terminate their relationship. SONZA failed to show that ABS-CBN could
terminate his services on grounds other than breach of contract, such as retrenchment to
prevent losses as provided under labor laws.
(d) On control: Applying the control test to the present case, we find that SONZA is not
an employee but an independent contractor. ABS-CBN was not involved in the actual
performance that produced the finished product of SONZAs work. ABS-CBN did not
instruct SONZA how to perform his job. ABS-CBN merely reserved the right to modify
the program format and airtime schedule for more effective programming. ABS-CBNs
sole concern was the quality of the shows and their standing in the ratings. Clearly, ABSCBN did not exercise control over the means and methods of performance of SONZAs
work.
Although ABS-CBN did have the option not to broadcast SONZAs show, ABSCBN was still obligated to pay SONZAs talent fees. Thus, even if ABS-CBN was
completely dissatisfied with the means and methods of SONZAs performance of his
work, or even with the quality or product of his work, ABS-CBN could not dismiss or
even discipline SONZA. All that ABS-CBN could do is not to broadcast SONZAs show
but ABS-CBN must still pay his talent fees in full.
The present case does not call for an application of the Labor Code provisions but an
interpretation and implementation of the May 1994 Agreement. In effect, SONZAs cause of
action is for breach of contract which is intrinsically a civil dispute cognizable by the
regular courts.
3. Javier - Cham
Case No 3: Javier vs Flyace Corp
Facts: On May 23, 2008, Javier filed a complaint before the NLRC for underpayment of salaries
and other labor standard benefits. He alleged that he was an employee of Fly Ace since
September 2007, performing various tasks at the respondents warehouse such as cleaning
and arranging the canned items before their delivery to certain locations, except in instances
when he would be ordered to accompany the companys delivery vehicles, as pahinante; that
during his employment, he was not issued an identification card and payslips by the company;
that on May 6, 2008, he reported for work but he was no longer allowed to enter the
company premises by the security guard upon the instruction of Ruben Ong (Mr. Ong), his
superior; that after several minutes of begging to the guard to allow him to enter, he saw Ong
whom he approached and asked why he was being barred from entering the premises; that Ong
replied by saying, Tanungin mo anak mo; that he then went home and discussed the matter
with his family; that he discovered that Ong had been courting his daughter Annalyn after the

two met at a fiesta celebration in Malabon City; that Annalyn tried to talk to Ong and convince
him to spare her father from trouble but he refused to accede; that thereafter, Javier was
terminated from his employment without notice; and that he was neither given the
opportunity to refute the cause/s of his dismissal from work.
To support his allegations, Javier presented an affidavit of one Bengie Valenzuela
who alleged that Javier was a stevedore or pahinante of Fly Ace from September 2007 to
January 2008. The said affidavit was subscribed before the Labor Arbiter
For its part, Fly Ace averred that it was engaged in the business of importation and sales of
groceries. Sometime in December 2007, Javier was contracted by its employee, Mr. Ong, as
extra helper on a pakyaw basis at an agreed rate of 300.00 per trip, which was later increased
to 325.00 in January 2008. Mr. Ong contracted Javier roughly 5 to 6 times only in a month
whenever the vehicle of its contracted hauler, Milmar Hauling Services, was not available. On
April 30, 2008, Fly Ace no longer needed the services of Javier. Denying that he was their
employee, Fly Ace insisted that there was no illegal dismissal. Fly Ace submitted a copy of
its agreement with Milmar Hauling Services and copies of acknowledgment receipts evidencing
payment to Javier for his contracted services bearing the words, daily manpower (pakyaw/piece
rate pay) and the latters signatures/initials.
Ruling of the Labor Arbiter: the LA dismissed the complaint for lack of merit on the ground
that Javier failed to present proof that he was a regular employee of Fly Ace.
Ruling of the NLRC: LA Decision was reversed. On appeal with the NLRC, Javier was
favored. It ruled that the LA skirted the argument of Javier and immediately concluded that he
was not a regular employee simply because he failed to present proof. It was of the view that a
pakyaw-basis arrangement did not preclude the existence of employer-employee relationship.
The NLRC held that substantial evidence was sufficient basis for judgment on the existence
of the employer-employee relationship. Finding Javier to be a regular employee, the NLRC
ruled that he was entitled to a security of tenure.
Ruling of the Court of Appeals: the CA annulled the NLRC findings that Javier was indeed a
former employee of Fly Ace and reinstated the dismissal of Javiers complaint as ordered by the
LA.
In an illegal dismissal case the onus probandi rests on the employer to prove that its
dismissal was for a valid cause. However, before a case for illegal dismissal can prosper, an
employer-employee relationship must first be established. x x x it is incumbent upon private
respondent to prove the employee-employer relationship by substantial evidence.
Since no substantial evidence was presented to establish an employer-employee relationship, the
case for illegal dismissal could not prosper.
ISSUE: Whether or not Petitioner was an employee of Fly Ace.
HELD: No, he was not an employee. The Court affirms the assailed CA decision.
As the records bear out, the LA and the CA found Javiers claim of employment with
Fly Ace as wanting and deficient. The Court is constrained to agree. The petitioner needs to
show by substantial evidence that he was indeed an employee of the company against which he
claims illegal dismissal.
Although substantial evidence is not a function of quantity but rather of quality, the
circumstances of the instant case demand that something more should have been proffered. Had
there been other proofs of employment, such as inclusion in petitioners payroll, or a clear

exercise of control, the Court would have affirmed the finding of employer-employee
relationship.
In this case, the LA and the CA both concluded that Javier failed to establish his
employment with Fly Ace. By way of evidence on this point, all that Javier presented were his
self-serving statements purportedly showing his activities as an employee of Fly Ace. Clearly,
Javier failed to pass the substantiality requirement to support his claim. Hence, the Court
sees no reason to depart from the findings of the CA.
Javier was not able to persuade the Court that the elements of the four-fold test exist in his
case. He could not submit competent proof that Fly Ace engaged his services as a regular
employee; that Fly Ace paid his wages as an employee, or that Fly Ace could dictate what his
conduct should be while at work. In other words, Javiers allegations did not establish that his
relationship with Fly Ace had the attributes of an employer-employee relationship on the basis of
the four-fold test.

4. SMCEU - Cham
Case No 4: SMCEU vs Judge Bersamira (of Pasig RTC)
*case of Jurisdiction
FACTS: Sometime in 1983 and 1984, SanMig entered into contracts for merchandising services
with Lipercon and D'Rite. These companies are independent contractors duly licensed by the
Department of Labor and Employment (DOLE). In said contracts, it was expressly understood
and agreed that the workers employed by the contractors were to be paid by the latter and that
none of them were to be deemed employees or agents of SanMig. There was to be no
employer-employee relation between the contractors and/or its workers, on the one hand,
and SanMig on the other.
Petitioner San Miguel Corporation Employees Union-PTWGO (the Union, for brevity) is
the duly authorized representative of the monthly paid rank-and-file employees of SanMig with
whom the latter executed a Collective Bargaining Agreement (CBA) effective 1 July 1986 to 30
June 1989. Section 1 of their CBA specifically provides that "temporary, probationary, or
contract employees and workers are excluded from the bargaining unit and, therefore, outside the
scope of this Agreement."
In a letter, dated 20 November 1988, the Union advised SanMig that some Lipercon
and D'Rite workers had signed up for union membership and sought the regularization of
their employment with SMC. The Union alleged that this group of employees, while appearing
to be contractual workers supposedly independent contractors, have been continuously working
for SanMig for a period ranging from six (6) months to fifteen (15) years and that their work is
neither casual nor seasonal as they are performing work or activities necessary or desirable in the
usual business or trade of SanMig. Thus, it was contended that there exists a "labor-only"

contracting situation. It was then demanded that the employment status of these workers
be regularized.
The Union filed two notices to strike and several conciliation conferences were held to
settle the dispute before the National Conciliation and Mediation Board (NCMB) of DOLE.
Beginning 14 February 1989 until 2 March 1989, series of pickets were staged by Lipercon and
D'Rite workers in various SMC plants and offices.
On 6 March 1989, SMC filed a verified Complaint for Injunction and Damages before
respondent Court to enjoin the Union from staging the strikes.
Respondent Court found the Complaint sufficient in form and substance and issued a Temporary
Restraining Order for the purpose of maintaining the status quo, and set the application for
Injunction for hearing.
In the meantime, the Union filed a Motion to Dismiss SanMig's Complaint on the ground of
lack of jurisdiction over the case/nature of the action, which motion was opposed by
SanMig. That Motion was denied by respondent Judge.
After several hearings on SanMig's application for injunctive relief, respondent Court issued the
questioned Order granting the application and enjoining the Union from committing the acts
complained of. Accordingly, respondent Court issued the corresponding Writ of Preliminary
Injunction. The respondent court rationalized that the absence of an employer-employee
relationship negates the existence of labor dispute. Verily, this court (RTC) has jurisdiction
to take cognizance of plaintiff's grievance.
ISSUE: Whether, or not the case at bar involves, or is in connection with, or relates to a labor
dispute.
An affirmative answer would bring the case within the original and exclusive jurisdiction of
labor tribunals to the exclusion of the regular Courts.
HELD: YES, it does. That a labor dispute, as defined by the law in Article 212 (1) of the
Labor Code, does exist herein is evident. At bottom, what the Union seeks is to regularize the
status of the employees contracted by Lipercon and D'Rite in effect, that they be absorbed into
the working unit of SanMig. This matter definitely dwells on the working relationship between
said employees vis-a-vis SanMig. Terms, tenure and conditions of their employment and the
arrangement of those terms are thus involved bringing the matter within the purview of a labor
dispute. Further, the Union also seeks to represent those workers, who have signed up for
Union membership, for the purpose of collective bargaining. SanMig, for its part, resists that
Union demand on the ground that there is no employer-employee relationship between it and

those workers and because the demand violates the terms of their CBA. Obvious then is that
representation and association, for the purpose of negotiating the conditions of employment are
also involved. In fact, the injunction sought by SanMig was precisely also to prevent such
representation. Again, the matter of representation falls within the scope of a labor dispute.
Neither can it be denied that the controversy below is directly connected with the labor dispute
already taken cognizance of by the NCMB-DOLE
The issues between the parties union demands; labor-only contracting of Lipercon
and Drite; the Union representing workers from Lipercon and Drite are issues the resolution
of which calls for the application of labor laws.
As the case is indisputably linked with a labor dispute, jurisdiction belongs to the
labor tribunals. As explicitly provided for in Article 217 of the Labor Code, prior to its
amendment by R.A. No. 6715 on 21 March 1989, since the suit below was instituted on 6
March 1989, Labor Arbiters have original and exclusive jurisdiction to hear and decide the
following cases involving all workers including "1. unfair labor practice cases; 2. those that
workers may file involving wages, hours of work and other terms and conditions of employment;
... and 5. cases arising from any violation of Article 265 of this Code, including questions
involving the legality of striker and lockouts. ..." Article 217 lays down the plain command of
the law.
5. Locsinet - Jewel
5. Locsin et. al. v. PLDT, October 2, 2009
Facts:
On November 1, 1990, respondent PLDT and the Security and Safety Corporation of the
Philippines (SSCP) entered into a Security Services Agreement whereby SSCP would provide
armed security guards to PLDT to be assigned to its various offices. Petitioners Raul Locsin and
Eddie Tomaquin, among other security guards, were posted at a PLDT office. On August 30,
2001, respondent issued a Letter terminating the Agreement effective October 1, 2001. Despite
the termination of the Agreement, however, petitioners continued to secure the premises of their
assigned office. They were allegedly directed to remain at their post by representatives of
respondent. In support of their contention, petitioners provided the Labor Arbiter with copies of
petitioner Locsin's pay slips for the period of January to September 2002. Then, on September
30, 2002, their services were terminated.
Petitioners filed a complaint before the Labor Arbiter for illegal dismissal and recovery
of money claims such as overtime pay, holiday pay, premium pay for holiday and rest day,
service incentive leave pay, Emergency Cost of Living Allowance, and moral and exemplary
damages against PLDT. The Labor Arbiter rendered a Decision finding PLDT liable for illegal
dismissal. It held that petitioners were employees of PLDT and not of SSCP for petitioners
continued to serve as guards of PLDT's offices. As such employees, they were entitled to
substantive and procedural due process before termination of employment.
PLDT appealed to NLRC which rendered a Resolution affirming in toto the Arbiter's
Decision. Thus, PDLT filed a Motion for Reconsideration of the NLRC's Resolution which was
also denied. Hence, PLDT filed a Petition for Certiorari with the CA which rendered the assailed
decision granting PLDT's petition and dismissing petitioners' complaint. The CA applied the

four-fold test in order to determine the existence of an employer-employee relationship between

the parties but did not find such relationship. It determined that SSCP was not a labor-only
contractor and was an independent contractor having substantial capital to operate and conduct
its own business. The CA further bolstered its decision by citing the Agreement whereby it was
stipulated that there shall be no employer-employee relationship between the security guards and
PLDT. Anent the pay slips that were presented by petitioners, the CA noted that those were
issued by SSCP and not PLDT; hence, SSCP continued to pay the salaries of petitioners after the
Agreement. This fact allegedly proved that petitioners continued to be employees of SSCP albeit
performing their work at PLDT's premises. Hence, this petition.
Issue: Whether petitioners became employees of respondent after the Agreement between SSCP
and respondent was terminated. (yes)
Held: The SC held that there was no employer-employee relationship between the parties from
the time of petitioners' first assignment to respondent by SSCP in 1988 until the alleged
termination of the Agreement between respondent and SSCP. The petitioners were among those
declared to be employees of their respective security agencies and not of PLDT. However, the
petitioners became the employees of respondent after the agreement between SSCP and
respondent was terminated.
While respondent and SSCP no longer had any legal relationship with the termination of the
Agreement, petitioners remained at their post securing the premises of respondent while
receiving their salaries, allegedly from SSCP. Clearly, such a situation makes no sense, and the
denials proffered by respondent do not shed any light to the situation. It is but reasonable to
conclude that, with the directive of respondent, petitioners continued with their services.
Evidently, such are indicia of control that respondent exercised over petitioners. Such power of
control has been explained as the "right to control not only the end to be achieved but also the
means to be used in reaching such end." With the conclusion that respondent directed petitioners
to remain at their posts and continue with their duties, it is clear that respondent exercised the
power of control over them; thus, the existence of an employer-employee relationship.
Evidently, respondent having the power of control over petitioners must be considered as
petitioners employerfrom the termination of the Agreement onwardsas this was the only
time that any evidence of control was exhibited by respondent over petitioners. Thus, as aptly
declared by the NLRC, petitioners were entitled to the rights and benefits of employees of
respondent, including due process requirements in the termination of their services. Both the
Labor Arbiter and NLRC found that respondent did not observe such due process requirements.
Having failed to do so, respondent is guilty of illegal dismissal.

6. People broadcasting - Cathy

6. PEOPLES BROADCASTING SERVICE vs SEC OF LABOR
FACTS: The DOLE Regional Office No. VII conducted an inspection of Bombo Radyos
premises in response to Juezans money claims against the broadcasting company, as a
result 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 Radyos 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. But was dismissed for lack of merit, hence this appeal. 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 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).
ISSUE: Whether the DOLE can determine existing EE-ER relationship.
HELD: YES.
No limitation in the law was placed upon the power of the DOLE to determine the existence
of an employer-employee relationship. No procedure was laid down where the DOLE
would only make a preliminary finding, that the power was primarily held by the NLRC.
The law did not say that the DOLE would first seek the NLRCs determination of the
existence of an employer-employee relationship, or that should the existence of the
employer-employee relationship be disputed, the DOLE would refer the matter to the
NLRC. The DOLE must have the power to determine whether or not an employeremployee relationship exists, and from there to decide whether or not to issue compliance
orders in accordance with Art. 128(b) of the Labor Code, as amended by RA 7730.
The DOLE, in determining the existence of an employer-employee relationship, has a ready
set of guidelines to follow, the same guide the courts themselves use. The elements to
determine the existence of an employment relationship are: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power of dismissal; (4) the
employers power to control the employees conduct. 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 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. This means 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.
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, 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.
7. Ymbong vs Abs-Cbn
Facts:
Petitioner Ernesto G. Ymbong started working for ABS-CBN Broadcasting Corporation
(ABS-CBN) in 1993 at its regional station in Cebu as a television talent, co-anchoring
Hoy Gising and TV Patrol Cebu. His stint in ABS-CBN later extended to radio when
ABS-CBN Cebu launched its AM station DYAB in 1995 where he worked as drama and
voice talent, spinner, scriptwriter and public affairs program anchor. Like Ymbong,
Leandro Patalinghug also worked for ABS-CBN Cebu. Starting 1995, he worked as
talent, director and scriptwriter for various radio programs aired over DYAB. On January
1, 1996, the ABS-CBN Head Office in Manila issued Policy No. HR-ER-016 or the
Policy on Employees Seeking Public Office. Under this policy, employees who will be
seeking public office must file a letter of resignation, while those who will be joining a
political party or actively campaign for a candidate must file a request for leave of
absence subject to the managements approval. Because of the impending May 1998
elections and based on his immediate recollection of the policy at that time, Dante
Luzon, Assistant Station Manager of DYAB issued a memorandum stating that
employees who want to run for office should file for a leave of absence and his services
will be temporarily suspended during the campaign period.
Luzon, however,
admitted that upon double-checking of the exact text of the policy and subsequent
confirmation with the ABS-CBN Head Office, he saw that the policy actually required
suspension for those who intend to campaign for a political party or candidate and
resignation for those who will actually run in the elections. Ymbong informed Luzon that
he will be taking a leave of absence to campaign for the administration ticket, however it
was found out after the elections that Ymbong actually ran for councilor of Lapu-lapu
city. Patalinghug , on the other hand tendered his resignation for he will be running as
councilor at Naga, Cebu. Both Ymbong and Patalinghug lost in the elections. They were
not allowed to come back to work for respondent, but because of liberality, they were
given a chance to wind up their participation in a radio drama entitle Nagbabagang
Langit. Both then filed an illegal dismissal complaint against respondent. Respondent
prayed for dismissal of the complaints claiming that there is no E-E relationship since
both are mere talents.
LA found the dismissal illegal and ordered the reinstatement of respondents as well as
the payment of backwages. It also declared that there exists an E-E relationship
between the parties. The Labor Arbiter noted particularly that the appointment
letters/talent contracts imposed conditions in the performance of their work, specifically
on attendance and punctuality, which effectively placed them under the control of ABSCBN.
NLRC modified the decision. In the case of Patalinghug, it found that he voluntarily
resigned from employment on April 21, 1998 when he submitted his resignation letter.
The NLRC noted that although the tenor of the resignation letter is somewhat
involuntary, he knew that it is the policy of the company that every person connected
therewith should resign from his employment if he seeks an elected position in the
government. As to Ymbong, however, the NLRC ruled otherwise.
Issues:

a. Whether or not there exists E-E relationship between the parties (discussed by
the CA, but not by the SC)
CA rendered the assailed decision reversing and setting aside the March 8, 2004
Decision and June 21, 2004 Resolution of the NLRC. The CA declared Ymbong
resigned from employment and not to have been illegally dismissed. The award of full
back wages in his favor was deleted accordingly. The CA ruled that ABS-CBN is
estopped from claiming that Ymbong was not its employee after applying the provisions
of Policy No. HR-ER-016 to him. It noted that said policy is entitled Policy on
Employees Seeking Public Office and the guidelines contained therein specifically
pertain to employees and did not even mention talents or independent contractors. It
held that it is a complete turnaround on ABS-CBNs part to later argue that Ymbong is
only a radio talent or independent contractor and not its employee. By applying the
subject company policy on Ymbong, ABS-CBN had explicitly recognized him to be an
employee and not merely an independent contractor.
b. Whether or not Ymbong was illegally dismissed
HELD:
We find no merit in Ymbongs argument that [his] automatic termination x x x was
a blatant [disregard] of [his] right to due process as he was never asked to explain why
he did not tender his resignation before he ran for public office as mandated by [the
subject company policy]. Ymbongs overt act of running for councilor of Lapu-Lapu City
is tantamount to resignation on his part. He was separated from ABS-CBN not because
he was dismissed but because he resigned. Since there was no termination to speak
of, the requirement of due process in dismissal cases cannot be applied to Ymbong.
Thus, ABS-CBN is not duty-bound to ask him to explain why he did not tender his
resignation before he ran for public office as mandated by the subject company policy.
8. Prof.services - David
Case No. 8: Professional Services Inc. vs. CA
Facts:

Natividad Agana was admitted at Medical City because of difficulty of bowel movement
and bloody anal discharge. Dr. Ampil diagnosed her to be suffering from "cancer of the
sigmoid."
Dr. Ampil, assisted by the medical staff of Medical City, performed surgery upon her.
During the surgery, he found that the malignancy in her sigmoid area had spread to her
left ovary, necessitating the removal of certain portions of it. Thus, Dr. Ampil obtained
the consent of Natividads husband, to permit Dr. Fuentes to perform another operation.
However, the operation appeared to be flawed. After a couple of days, Natividad
complained of excruciating pain in her anal region. They told her that the pain was the
natural consequence of the surgical operation performed upon her.
Natividad and her husband went to the United States to seek further treatment of her
cancerous nodes. After 4 months of consultations and laboratory examinations, Natividad
was told that she was free of cancer.
Still suffering from pains. 2 weeks after returning to the Philippines, her daughter found a
piece of gauze protruding from her vagina. Dr. Ampil was immediately informed. He
proceeded to Natividads house where he managed to extract by hand a piece of gauze

measuring 1.5 inches in width. Dr. Ampil then assured Natividad that the pains would
soon vanish.
Despite that, the pains intensified, prompting Natividad to seek treatment at another
hospital. While confined thereat, Dr. Gutierrez detected the presence of a foreign object
in her vagina -- a foul-smelling gauze measuring 1.5 inches in width. The gauze had
badly infected her vaginal vault, which forced stool to excrete through the vagina.

Natividad and her husband filed with the Regional Trial Court a complaint for damages
against PSI (owner of Medical City), Dr. Ampil and Dr. Fuentes.

Pending the outcome of the above case, Natividad died. She was duly substituted by her
children (the Aganas).

RTC: PSI, Dr. Ampil and Dr. Fuentes jointly and severally liable.

CA: affirmed the RTC judgment but dismissed the complaint against Dr. Fuentes.

PSI, Dr. Ampil and the Aganas filed with SC separate petitions for review on certiorari.

SC (First Division): PSI is jointly and severally liable with Dr. Ampil for the following
reasons:
1. There is an employer-employee relationship between Medical City and Dr.
Ampil.
2. PSIs act of publicly displaying in the lobby of the Medical City the names and
specializations of its accredited physicians, including Dr. Ampil, estopped it from
denying the existence of an employer-employee relationship between them under
the doctrine of ostensible agency or agency by estoppel
3. PSIs failed to supervise Dr. Ampil to take an active step in order to remedy their
negligence rendered it directly liable under the doctrine of corporate negligence.

PSIs contention: 1) there is no employer-employee relationship between it and its

consultant, Dr. Ampil. 2) the doctrine of ostensible agency or agency by estoppel
cannot apply because spouses Agana failed to establish that Natividad relied on the
representation of the hospital in engaging the services of Dr. 3) PSI maintains that the
doctrine of corporate negligence is misplaced because the proximate cause of
Natividads injury was Dr. Ampils negligence

ISSUE: Whether or not there exists an employee-employer relationship, thus making PSI jointly
and severally liable.
HELD: Yes An employer-employee relationship "in effect" exists between the Medical City and
Dr. Ampil. Consequently, both are jointly and severally liable to the Agana.
In the SC decision in Ramos vs. CA

Hospitals exercise significant control in the hiring and firing of consultants and in
the conduct of their work within the hospital premises. Doctors who apply for
"consultant" slots, visiting or attending, are required to submit proof of completion of
residency, their educational qualifications; generally, evidence of accreditation by the
appropriate board, evidence of fellowship in most cases, and references. These
requirements are carefully scrutinized by members of the hospital administration or
by a review committee set up by the hospital who either accept or reject the
application. This is particularly true with respondent hospital.

After a physician is accepted, either as a visiting or attending consultant, he is still

normally required to accomplish more tasks. Further, physicians performance as a
specialist is generally evaluated by a peer review committee. A consultant remiss in
his duties, or a consultant who regularly falls short of the minimum standards
acceptable to the hospital or its peer review committee, is normally politely
terminated.

In other words, private hospitals hire, fire and exercise real control over their
attending and visiting "consultant" staff. While "consultants" are not, technically
employees, the control exercised, the hiring, and the right to terminate consultants
all fulfill the important hallmarks of an employer-employee relationship, with the
exception of the payment of wages. In assessing whether such a relationship in fact
exists, the control test is determining. Accordingly, on the basis of the foregoing, for
the purpose of allocating responsibility in medical negligence cases, an employeremployee relationship in effect exists between hospitals and their attending and
visiting physicians.

The basis for holding an employer solidarily responsible for the negligence of its
employee is found in Article 2180 of the Civil Code which considers a person
accountable not only for his own acts but also for those of others based on the

Even assuming that Dr. Ampil is not an employee of Medical City, but an independent
contractor, still the said hospital is liable to the Aganas.

In Nograles, et al. v. Capitol Medical Center, et al., the Court held:

In general, a hospital is not liable for the negligence of an independent contractorphysician. There is, however, an exception to this principle. The hospital may be
liable if the physician is the "ostensible" agent of the hospital.

The doctrine of apparent authority essentially involves two factors to determine the
liability of an independent contractor-physician.
o

First factor focuses on the hospitals manifestationswhether the hospital acted

in a manner which would lead a reasonable person to conclude that the individual
who was alleged to be negligent was an employee or agent of the hospital

o Second factor focuses on the patients reliancewhether the plaintiff acted in

reliance upon the conduct of the hospital or its agent, consistent with ordinary
care and prudence.

Atty. Agana categorically testified that one of the reasons why he chose Dr. Ampil was
that he knew him to be a staff member of Medical City, a prominent and known
hospital.

Clearly, PSI is estopped from passing the blame solely to Dr. Ampil. Its act of
displaying his name and those of the other physicians in the public directory at the
lobby of the hospital amounts to holding out to the public that it offers quality
medical service through the listed physicians.

Lastly, PSI had been remiss in its duty. It did not conduct an immediate investigation on
the reported missing gauzes to the great prejudice and agony of its patient. This renders
PSI, not only vicariously liable for the negligence of Dr. Ampil under Article 2180 of the
Civil Code, but also directly liable for its own negligence under Article 2176.

9. Southeast - David
Case No. 9: South East International Rattan vs. Coming
FACTS:

South East International Rattan, Inc. (SEIRI) is a domestic corporation engaged in the
business of manufacturing and exporting furniture to various countries while petitioner
Estanislao Agbay, as per records, is the President and General Manager of SEIRI.

Respondent Jesus Coming filed a complaint for illegal dismissal, underpayment of

wages, non-payment of holiday pay, 13th month pay and service incentive leave pay,
with prayer for reinstatement, back wages, damages and attorneys fees.

Respondents allegations: He was hired by petitioners as Sizing Machine Operator on

March 17, 1984. His work schedule is from 8:00 a.m. to 5:00 p.m. Initially, his
compensation was on "pakiao" basis but sometime it was fixed at P150.00 per day which
was paid weekly. In 1990, without any apparent reason, his employment was interrupted
as he was told by petitioners to resume work in two months time

Despite being an employee for many years with his work performance never questioned
by petitioners, respondent was dismissed without lawful cause. He was told that he will
be terminated because the company is not doing well financially and that he would be
called back to work only if they need his services again. Respondent waited for almost a
year but petitioners did not call him back to work.

Petitioners contention: denied having hired respondent and that respondent actually
worked for SEIRIs furniture suppliers. They stressed that respondent was not included in
the list of employees submitted to the Social Security System (SSS). Moreover,

respondents brother, Vicente Coming, executed an affidavit in support of petitioners

position while Allan Mayol and Faustino Apondar issued notarized certifications that
respondent worked for them instead.

Labor Arbiter: respondent is a regular employee of SEIRI and that the termination of
his employment was illegal
o

Respondents work as sizing machine operator is usually necessary and desirable

to the rattan furniture business of petitioners and their failure to include
respondent in the employment report to SSS is not conclusive proof that
respondent is not their employee.

NLRC (Fourth Division): SET ASIDE LAs decision and dismissed the complaint
o

First complainant alleged that he worked continuously from March 17, 1984 up to
January 21, 2002. Records reveal however that South East (Intl.) Rattan, Inc. was
incorporated only last July 18, 1986 and they were engaged purely on "buying
and exporting rattan furniture" hence no manufacturing employees were hired.
Furthermore, from the last quarter of 1989 up to August of 1992, the company
suspended operations due to economic reverses

Second, for all his insistence that he was a regular employee, complainant failed
to present a single payslip, voucher or a copy of a company payroll showing that
he rendered service during the period indicated therein.

Complainants name does not appear in the list of employees reported to the SSS
nor does it appear in the sample payrolls of respondents employees.

CA: reversed the NLRC and ruled that there existed an employer-employee relationship
between petitioners and respondent who was dismissed without just and valid cause.
o

As to the "control test", the following facts indubitably reveal that respondents
wielded control over the work performance of petitioner, to wit: (1) they required
him to work within the company premises; (2) they obliged petitioner to report
every day of the week and tasked him to usually perform the same job; (3) they
enforced the observance of definite hours of work from 8am to 5pm; (4) the mode
of payment of petitioners salary was under their discretion, at first paying him on
pakiao basis and thereafter, on daily basis; (5) they implemented company rules
and regulations; (6) Agbay directly paid petitioners salaries and controlled all
aspects of his employment and (7) petitioner rendered work necessary and
desirable in the business of the respondent company.

ISSUE: Whether or not Coming is an employee of South East Rattan

HELD: YES

To ascertain the existence of an employer-employee relationship jurisprudence has

invariably adhered to the four-fold test, to wit: (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 employees conduct, or the so-called "control test." Although no
particular form of evidence is required to prove the existence of the relationship, and any
competent and relevant evidence to prove the relationship may be admitted, a finding that
the relationship exists must nonetheless rest on substantial evidence.
In Tan v. Lagrama, the Court held that the fact that a worker was not reported as an
employee to the SSS is not conclusive proof of the absence of employer-employee
relationship. Otherwise, an employer would be rewarded for his failure or even neglect
to perform his obligation.
Nor does the fact that respondents name does not appear in the payrolls and pay
envelope records submitted by petitioners negate the existence of employeremployee relationship. For a payroll to be utilized to disprove the employment of a
person, it must contain a true and complete list of the employee. In this case, the
exhibits offered by petitioners before the NLRC consisting of copies of payrolls and
pay earnings records are only for the years 1999 and 2000; they do not cover the
entire 18-year period during which respondent supposedly worked for SEIRI.
While they claim that respondent was the employee of their suppliers Mayol and
Apondar, they did not submit proof that the latter were indeed independent
contractors; clearly, petitioners failed to discharge their burden of proving their own
affirmative allegation. In any controversy between a laborer and his master, doubts
reasonably arising from the evidence are resolved in favor of the laborer.
As a regular employee, respondent enjoys the right to security of tenure under Article
279 of the Labor Code and may only be dismissed for a just or authorized cause,
otherwise the dismissal becomes illegal.

10.Tenazaset - David
Case No. 10: Tenazas et al vs. R. Villegas Taxi
FACTS:

Tenazas and Francisco filed a complaint for illegal dismissal against respondents. At that
time, a similar case had already been filed by Endraca against the same respondents. The
2 cases were subsequently consolidated.

In their position paper, petitioners alleged that they were hired and dismissed by the
respondents.

Tenazas allegation: On July 1, 2007, the taxi unit assigned to him was sideswiped by
another vehicle, causing a dent on the left fender near the driver seat. Upon reporting the
incident to the company, he was scolded by respondents and was told to leave the garage
for he is already fired. He was even threatened with physical harm should he ever be seen
in the companys premises again. Despite the warning, Tenazas reported for work on the
following day but was told that he can no longer drive any of the companys units as he is
already fired.

Franciscos allegation: His dismissal without the benefit of procedural due process was
brought about by the companys unfounded suspicion that he was organizing a labor
union.

Endracas allegation: His dismissal was instigated by an occasion when he fell short of
the required boundary for his taxi unit because he needed to bring his unit for an urgent
repair. Upon returning to the company garage and informing the management of the
incident, his drivers license was confiscated and was told to settle the deficiency in his
boundary first before his license will be returned to him. He was no longer allowed to
drive a taxi unit despite his persistent pleas.

Respondents contention: Tenazas and Endraca were employees of the company, the
former being a regular driver and the latter a spare driver. The respondents, however,
denied that Francisco was an employee of the company or that he was able to drive one
of the companys units at any point in time. That Tenazas was never terminated by the
company instead he was just advised to wait for further notice from the company if his
unit has already been fixed. However, upon being informed that his unit is ready for
release, Tenazas failed to report back to work for no apparent reason. As regards
Endraca, he stopped reporting for work without informing the company of his
reason. Even then, they expressed willingness to accommodate Endraca should he wish
to work as a spare driver for the company again since he was never really dismissed from
employment anyway.

Petitioners filed a Motion to Admit Additional Evidence. They submitted (a) Joint
Affidavit of the petitioners; (2) Affidavit of Good Faith of Aloney Rivera, a co-driver; (3)
pictures of the petitioners wearing company shirts; and (4) Tenazas Certification/Record
of Social Security System (SSS) contributions.

LA: There was no illegal dismissal.

NLRC: the additional pieces of evidence belatedly submitted by the petitioners sufficed
to establish the existence of employer-employee relationship and their illegal dismissal.

CA: agreed with the NLRCs finding that Tenazas and Endraca were employees of the
company, but ruled otherwise in the case of Francisco for failing to establish his
relationship with the company.

ISSUE: Whether or not there exist employer-employee relationship

HELD: Affirmed CA Decision
In determining the presence or absence of an employer-employee relationship, the Court
has consistently looked for the following incidents, to wit: (a) the selection and
engagement of the employee; (b) the payment of wages; (c) the power of dismissal;
and (d) the employers power to control the employee on the means and methods by
which the work is accomplished. The last element, the so-called control test, is the
most important element."

There is no hard and fast rule designed to establish the aforesaid elements. Any
competent and relevant evidence to prove the relationship may be admitted. Identification
cards, cash vouchers, social security registration, appointment letters or employment
contracts, payrolls, organization charts, and personnel lists, serve as evidence of
employee status.
In this case, however, Francisco failed to present any proof substantial enough to
establish his relationship with the respondents. Anent his claim that he was not issued
with employment records, he could have, at least, produced his social security records
which state his contributions, name and address of his employer, as his co-petitioner
Tenazas did. He could have also presented testimonial evidence showing the
respondents exercise of control over the means and methods by which he
undertakes his work.
Here, Francisco simply relied on his allegation that he was an employee of the
company without any other evidence supporting his claim. Bereft of any evidence,
the CA correctly ruled that Francisco could not be considered an employee of the
respondents.
The CAs order of reinstatement of Tenazas and Endraca, instead of the payment of
separation pay, is also well in accordance with prevailing jurisprudence.
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.
After a perusal of the NLRC decision, this Court failed to find the factual basis of the
award of separation pay to the petitioners. The NLRC decision did not state the facts
which demonstrate that reinstatement is no longer a feasible option that could have
justified the alternative relief of granting separation pay instead. Thus, it was a prudent
call for the CA to delete the award of separation pay and order for reinstatement instead,
in accordance with the general rule stated in Article 279 of the Labor Code.

11. Citibank - Joyce

CITIBANK V CA
FACTS:
In 1983, Citibank and and El Toro Security Agency, Inc. (hereafter El Toro) entered into a
contract to protect the banks premises situated at Paseo de Roxas, Makati, Metro Manila.
Under the contract, El Toro obligated itself to provide the services of security guards to
safeguard and protect the premises and property of Citibank against theft, robbery or any
other unlawful acts. In 1990, this contract expired and was not renewed.
Hence, private respondent Citibank Integrated Guards Labor Alliance-SEGA-TUPAS/FSM
(CIGLA) filed with the National Conciliation and Mediation Board (NCMB) a request for
preventive mediation citing Citibank as respondent therein giving as issues for preventive
mediation the following:
a) Unfair labor practice;
b) Dismissal of union officers/members; and
c) Union busting.

Petitioner Citibank served on El Toro a written notice that the bank would not renew
anymore the service agreement with the latter. Simultaneously, Citibank hired another
security agency, the Golden Pyramid Security Agency, to render security services at
Citibank's premises.
Private 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.
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.
Faced with the prospect of disruption of its business operations, petitioner Citibank filed with
the RTC of Makati, a complaint for injunction and damages. The complaint sought to
enjoin CIGLA and any person claiming membership therein from striking or otherwise
disrupting the operations of the bank.
4

CIGLA filed a motion to dismiss on the ground that the RTC has no jurisdiction, the subject
matter being a labor dispute. The motion to dismiss was denied.
CIGLA then filed with the CA a petition for certiorari assailing the validity of the proceedings
had before the regional trial court. The CA ruled in CIGLAs favor.
Hence, this petition by Citibank.
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 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.
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". 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
6

assigned to it by a security service contractor. 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.
7

ISSUE: 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?
HELD: NO.
Article 212, paragraph l of the Labor Code provides the definition of a "labor dispute". It
"includes any controversy or matter concerning terms or conditions of employment or the
association or representation of persons in negotiating, fixing, maintaining, changing or
arranging the terms and conditions of employment, regardless of whether the disputants
stand in the proximate relation of employer and employee."
If at all, the dispute between Citibank and El Toro security agency is one regarding the
termination or non-renewal of the contract of services. This is a civil dispute . El Toro was
an independent contractor. Thus, no employer-employee relationship existed between
Citibank and the security guard members of the union in the security agency who were
assigned to secure the bank's premises and property. Hence, there was no labor dispute
and no right to strike against the bank.
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. Consequently, we rule that jurisdiction over the
subject matter of the complaint lies with the regional trial court.
8

11

12.PAL - David
Case No. 12: PHILIPPINE AIRLINES vs. NATIONAL LABOR RELATIONS
COMMISSION (PAL vs. NLRC)
FACTS:

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.

A confrontation between them and Mr. Abaca (the man who was carrying the bag
containing the smuggled money worth 2.5 Million pesos when converted to Philippine
currency) was compulsorily arranged by PALs disciplinary board; Abaca was made to
identify petitioners as co-conspirators, which was anomalous because there was no one
else in the line-up but them.

Despite that, Abaca still had difficulty in identifying Pineda as his co-conspirator, and as
to Cabling, he was pointed by Abaca only after PALs lawyer pressed the him to identify
Cabling as co-conspirator;

During the next hearing Abaca finally gave statements to the board clearing Pineda and
Cabling from any participation or from being the owners of the currencies.

Just as they thought that they were already fully cleared of the charges, they were
surprised to receive a Memorandum terminating their services for alleged violation of
PALs Code of Discipline.

Aggrieved by said dismissal, private respondents filed with the NLRC a petition for
injunction

NLRC: issued a temporary mandatory injunction enjoining petitioner to cease and desist
from enforcing its Memorandum of dismissal, adopting the view that:
1. PALs Code of Discipline was declared illegal by the SC in the case of PAL, Inc.
vs. NLRC 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
3. NLRC is empowered under Article 218 (e) of the Labor Code to issue a
temporary mandatory injunction

PAL moved for reconsideration (some of PALs contentions among others)

1. NLRC 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. NLRC divested the labor arbiter of its original and exclusive jurisdiction over
illegal dismissal cases;
3. There is no irreparable or substantial injury.
4.

Assuming that the acts of dismissing petitioners 'may be great, still the same is
capable of compensation', consequently, 'injunction need not be issued where
adequate compensation at law could be obtained'.

ISSUE: Whether or Not the NLRC acted in excess of its jurisdiction.

HELD: YES
Generally, injunction 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 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. Injunction is also a special equitable relief granted only in cases where there is
no plain, adequate and complete remedy at law.
In labor cases, Article 218 of the Labor Code empowers the NLRC"(e) To enjoin or restrain any actual or threatened commission of any or all prohibited or
unlawful acts or to require the performance of a particular act in any labor dispute

which, if not restrained or performed forthwith, may cause grave or irreparable damage
to any party or render ineffectual any decision in favor of such party; x x x."
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.

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."

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.

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 such
cases. 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 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, injunction is only an ancillary remedy in ordinary labor disputes Thus,
the NLRC exceeded its jurisdiction when it issued the assailed Order

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. 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.

Furthermore, there is no showing of any urgency or irreparable injury, which the

private respondents might suffer. 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

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"

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. It has been the policy of the State to encourage the parties to use the nonjudicial process of negotiation and compromise, mediation and arbitration. 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.

13.Penarada - Lean
CHARLITO PEARANDA vs. BAGANGA PLYWOOD CORPORATION and HUDSON
CHUA
Facts:
Sometime in June 1999, Petitioner Charlito Pearanda was hired as an employee of
Baganga Plywood Corporation (BPC) to take charge of the operations and
maintenance of its steam plant boiler. In May 2001, Pearanda filed a Complaint for
illegal dismissal with money claims against BPC and its general manager, Hudson
Chua, before the NLRC.
After the parties failed to settle amicably, the labor arbiter 8 directed the parties to file
their position papers and submit supporting documents. Their respective allegations
are summarized by the labor arbiter as follows:
Pearanda in his position paper alleges that he was employed by Baganga as
Foreman/Boiler Head/Shift Engineer until he was illegally terminated. Further, [he]
alleges that his services [were] terminated without the benefit of due process and
valid grounds in accordance with law. Furthermore, he was not paid his overtime
pay, premium pay for working during holidays/rest days, night shift differentials and
finally claims for payment of damages and attorneys fees having been forced to
litigate the present complaint.

The respondent [BPC] allege that it was on temporary closure due to repair and
general maintenance and it applied for clearance with the DOLE Regional Office No.
XI to shut down and to dismiss employees. And due to the insistence of herein
complainant he was paid his separation benefits. Consequently, when respondent
[BPC] partially reopened in January 2001, [Pearanda] 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.
The labor arbiter ruled that there was no illegal dismissal and that petitioners
Complaint was premature because he was still employed by BPC. The temporary
closure of BPCs plant did not terminate his employment, hence, he need not reapply
when the plant reopened.
According to the labor arbiter, petitioners 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.
Nevertheless, the labor arbiter found petitioner entitled to overtime pay, premium pay
for working on rest days, and attorneys fees.
On appeal, the NLRC 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.
CA dismissed Penarandas petition for certiorari as well as his motion for
reconsideration.
Issue: Is Penaranda a managerial employee, hence not worthy of the awards
claimed?
Held:
No. However, he is still not worthy of the awards claimed because he is a managerial
staff.
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.
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."
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."
The Court disagrees with the NLRCs finding that petitioner was a managerial
employee.
However, petitioner was a member of the managerial staff, which also takes him out
of the coverage of labor standards. Like managerial employees, officers and
members of the managerial staff are not entitled to the provisions of law on labor
standards. The Implementing Rules of the Labor Code define members of a
managerial staff as those with the following duties and responsibilities:
"(1) The primary duty consists of the performance of work directly related to
management policies of the employer;
"(2) Customarily and regularly exercise discretion and independent judgment;
"(3) (i) Regularly and directly assist a proprietor or a managerial employee whose
primary duty consists of the management of the establishment in which he is
employed or subdivision thereof; or (ii) execute under general supervision work
along specialized or technical lines requiring special training, experience, or
knowledge; or (iii) execute under general supervision special assignments and tasks;
and
"(4) who do not devote more than 20 percent of their hours worked in a workweek to
activities which are not directly and closely related to the performance of the work
described in paragraphs (1), (2), and (3) above."
As shift engineer, petitioners duties and responsibilities were as follows:
"1. To supply the required and continuous steam to all consuming units at minimum
cost.
"2. To supervise, check and monitor manpower workmanship as well as operation of
boiler and accessories.
"3. To evaluate performance of machinery and manpower.
"5. To train new employees for effective and safety while working.
"7. To recommend personnel actions such as: promotion, or disciplinary action.
The foregoing enumeration, 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.
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. The

term foreman implies that he was the representative of management over the workers
and the operation of the department. Petitioners evidence also showed that he was
the supervisor of the steam plant. His classification as supervisor is further evident
from the manner his salary was paid. He belonged to the 10% of respondents 354
employees who were paid on a monthly basis; the others were paid only on a daily
basis.
On the basis of the foregoing, the Court finds no justification to award overtime pay
and premium pay for rest days to petitioner.

14. SMCC - Lean

SAMAHANG MANGGAGAWA SA CHARTER CHEMICAL SOLIDARITY OF UNIONS IN
THE PHILIPPINES FOR EMPOWERMENT AND REFORMS (SMCC-SUPER),
ZACARRIAS JERRY VICTORIO-Union President vs CHARTER CHEMICAL and
COATING CORPORATION
Facts:
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 of the DOLE, NCR.
Respondent company filed an Answer with Motion to Dismiss on the ground that
petitioner union is not a legitimate labor organization because of the inclusion of
supervisory employees within petitioner union among others
Med-Arbiter Tomas F. Falconitin issued a Decision dismissing the petition for
certification election. The Med-Arbiter ruled that petitioner union is not a legitimate
labor organization because 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.
DOLE initially issued a Decision in favor of respondent company dismissing
petitioner unions appeal on the ground that the latters petition for certification
election was filed out of time. On motion for reconsideration, however, the DOLE
reversed its earlier ruling. (More on documentation requirements itong part na to so
di ko na inelaborate).
In nullifying the decision of the DOLE, the CA 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-Arbiters finding that
petitioner union consisted of both rank-and-file and supervisory employees.
Issue:
Is the mixture of rank-and-file and supervisory employee[s] of petitioner [unions]
membership [a] ground for the cancellation of petitioner [unions] legal personality
and dismissal of [the] petition for certification election?
Held:

No. 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 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 (hereinafter Toyota).
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
courts reliance on Toyota is misplaced in view of this Courts subsequent ruling in
Republic v. Kawashima Textile Mfg., Philippines, Inc. (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.
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 pronounced 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.

15. Jumuad - Lean

Pamela Florentina P. Jumuad vs Hi-flyer Food, Inc. and Jesus R. Montemayor
Facts:
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.
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. 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).
In just her first year as Area Manager, Jumuad gained distinction and was awarded
the 3 top area manager nationwide. She was rewarded with a trip to Singapore for
her excellent performance.
rd

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. When asked to explain, Jumuad first pointed out that she had already
taken steps to prevent the further infestation of the branch. As to why the branch
became infested with rodents, Jumuad faulted managements decision to terminate
the services of the branchs pest control program and to rely solely on the pest
control program of the mall. As for the defective chiller, she explained that it was
under repair at the time of the CER. Soon thereafter, Hi-Flyer ordered the KFCGaisano branch closed.
Hi-Flyer audited the accounts of KFC-Bohol amid reports that certain employees were
covering up cash shortages. As a result, the following irregularities were discovered:
1) cash shortage amounting to 62,290.85; 2) delay in the deposits of cash sales by
an average of three days; 3) the presence of two sealed cash-for-deposit envelopes
containing paper cut-outs instead of cash; 4) falsified entries in the deposit logbook;
5) lapses in inventory control; and 6) material product spoilage. 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.
Hi-Flyer conducted another CER, this time at its KFC-Cocomall branch. Grout and
leaks at the branchs kitchen wall, dried up spills from the marinator, as well as a live
rat under postmix, and signs of rodent gnawing/infestation were found. 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.
Seeking to hold Jumuad accountable for the irregularities uncovered in the branches
under her supervision, Hi-Flyer sent Jumuad an Irregularities Report and Notice of
Charges which she received. Jumuad submitted her written explanation. 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 effecting
her termination.
This prompted Jumuad to file a complaint against Hi-Flyer and/or Jesus R.
Montemayor (Montemayor) for illegal dismissal before the NLRC on October 17, 2005,
praying for reinstatement and payment of separation pay, 13 month pay, service
incentive leave, moral and exemplary damages, and attorneys fees, etc.
Labor Arbiter Ruling: Jumuad was not completely blameless for the anomalies
discovered, 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.
NLRC affirmed the decision in toto.
CA reversed the ruling. On the issue of loss of trust and confidence, the CA
considered the deplorable sanitary conditions and the cash shortages uncovered at
th

three of the seven KFC branches supervised by Jumuad as enough bases for Hi-Flyer
to lose its trust and confidence in her.
Issue:
Was Jumuad Illegally dismissed?
Held:
No. On whether Jumuad was illegally dismissed, Article 282 of the Labor Code
provides that an employer may terminate an employment for Gross and habitual
neglect by the employee of his duties, and Fraud or willful breach by the employee of
the trust reposed in him by his employer or duly authorized representative among
others.
Jumuad was terminated for neglect of duty and breach of trust and confidence. To be
a ground for removal, the neglect of duty must be both gross and habitual. 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.
After an assiduous review of the facts as contained in the records, the Court is
convinced that Jumuad cannot be dismissed on the ground of gross and habitual
neglect of duty. The Court notes the apparent neglect of Jumuad of her duty in
ensuring that her subordinates were properly monitored and that she had dutifully
done all that was expected of her to ensure the safety of the consuming public who
continue to patronize the KFC branches under her jursidiction. Had Jumuad
discharged her duties to be highly visible in the restaurants under her jurisdiction,
monitor and support the day to day operations of the branches and ensure that all
the facilities and equipment at the restaurant were properly maintained and serviced,
the deplorable conditions and irregularities at the various KFC branches under her
jurisdiction would have been prevented.Considering, however, that over a year had
lapsed between the incidences at KFC-Gaisano and KFC-Bohol, and that the nature of
the anomalies uncovered were each of a different nature, the Court finds that her acts
or lack of action in the performance of her duties is not born of habit.
Despite saying this, it cannot be denied that Jumuad willfully breached her duties as
to be unworthy of the trust and confidence of Hi-Flyer. First, there is no denying that
Jumuad was a managerial employee. As correctly noted by the appellate court,
Jumuad executed management policies and had the power to discipline the
employees of KFC branches in her area. She recommended actions on employees to
the head office. Pertinent is Article 212 (m) of the Labor Code defining a managerial
employee as one who is vested with powers or prerogatives to lay down and execute
management policies and/or hire, transfer, suspend, lay off, recall, discharge, assign
or discipline employees.
Based on established facts, the mere existence of the grounds for the loss of trust
and confidence justifies petitioners dismissal. Pursuant to the Courts ruling in Lima
Land, Inc. v. Cuevas, as long as there is some basis for such loss of confidence, and
the nature of his participation therein renders him unworthy of the trust and
confidence demanded of his position, a managerial employee may be dismissed.
In the present case, the CERs reports of Hi-Flyer show that there were anomalies
committed in the branches managed by Jumuad. On the principle of respondeat
superioror 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.
Thus, there is reasonable basis for Hi-Flyer to withdraw its trust in her and
dismissing her from its service.

16. Repeated already

17. Ex-Bataan - Riza

Title: Case no. 17; Ex-Bataan Veterans Security Agency V. Secretary of Labor
Bienvenido E. Laguesma
Facts: Ex- Bataan Veterans Security Agency, Inc. (EBVSAI) is in the business of
providing security services while Private Respondents are employees assigned
to the National Power Corporation at Ambuklao Hydro Electric Plant, Bokod,
Benguet (Ambuklao Plant). On February 20, 1996, Private Respondents led by
Alexander Pocding instituted a complaint for underpayment of wages against
EBVSAI before the Regional Office of the Department of Labor and Employment
(DOLE). On March 7, 1996, the Regional Office Conducted a complaint inspection
and 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. On the same day the Regional Office issued a notice of
hearing requiring EBVSAI and private respondents to attend the hearing on 22
March 1996. On August 19,1996, the Regional Director issued an order for
EBVSAI to pay computed deficiencies owing to the affected employees in the
total amount of P763,997.85. EBVSAI filed a Motion for Reconsideration, it
alleged that the Regional Director does not have any jurisdiction over the subject
matter of the case because the money claim exceeded P5,000 and that the
Regional Director should have endorsed the case to the Labor Arbiter. Also in a
supplemental motion for reconsideration, EBVSAI questioned the Regional
Directors basis for the computation of the deficiencies due to each Private
Respondent. The Regional Director (RD) denied the motion for reconsideration
and supplemental motion for reconsideration. The RD stated that pursuant to
RA#7730, the limitations under Articles 129 and 217(6) of the Labor Code no
longer apply to the Secretary of Labors visitorial and enforcement powers under
Article 128(b). 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 the Employer-Employee relations at the time of the inspection. EBVSAI
appealed to the Secretary of Labor. The Secretary of Labor affirmed with
modification the RDs order. The Secretary of Labor ruled that, pursuant to RA

7730, the Court's decision in the Servando 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. There was also no denial of due process
because EBVSAI was accorded several opportunities to present its side but it
failed to present any evidence to controvert the findings of the RD. The EBVSAI
filed motion for reconsideration which was denied by the Secretary of Labor, and
then it filed a petition for certiorari before the court of appeals. The CA dismissed
the petition and affirmed the Secretary of Labors decision. CA denied motion for
reconsideration.
Issue: Whether the Secretary of Labor or his duly authorized representatives
have jurisdiction over the money claims of private respondents which exceed
P5,000.
Held: 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. Said provisions of law do
not contemplate nor cover the visitorial and enforcement powers of the Secretary of
Labor or his duly authorized representatives. 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 (Cirineo
Bowling Plaza, Inc. v. Sensing). 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. 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. 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. It was only in the
supplemental motion for reconsideration before the Regional Director that EBVSAI
questioned the findings of labor regulations officer and presented documentary
evidence to controvert the claims of private respondents. The RD and the Secretary
of Labor still looked into and considered EBVSAIs documentary evidence and found
that such did not warrant the reversal of the RDs 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.

18. Locsin - Riza

Title: Case no. 18 ; Arsenio Z. Locsin v. Nissan Car Lease Phils., Inc. and Luis
Banson
Facts: 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. Locsin held
this position for 13 years, having been re-elected every year since 1992, until
January 21, 2005, when he was nominated and elected Chairman of NCLPIs
Board of Directors. On August 25, 2005, the NCLPI Board held a special meeting.
One of items of the agenda was the election of the new set of officers.
Unfortunately, Locsin was neither re-elected Chairman nor reinstated to his
previous position as EVP/Treasurer. On June 19, 2007, Locsin filed a complaint
for illegal dismissal with prayer for reinstatement, payment of backwages,
damages and attorneys fees before the Labor Arbiter against NCLPI and Banson,
who was then the President of NCLPI. Instead of filing their position paper NCLPI
and Banson filed a motion to dismiss on the ground that the Labor Arbiter has no
jurisdiction over the case since the removal of Locsin as EVP/Treasurer involves
an intra-corporate dispute and Jurisdiction is with the RTC.
Locsin submitted his opposition to the motion maintaining his position as 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. NCLPI elevated the case to the CA
through a Petition for Certiorari under Rule 65 of the Rules of Court. 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 reversed and set aside the Labor Arbiters
Order denying the Motion to Dismiss and ruled that Locsin was a corporate
officer. Citing PD 902-A, the CA defined corporate officers as those officers of a
corporation who are given that character either by the Corporation Code or by the
corporations by-laws. The CA held that petitioners successfully discharged
their onus of establishing that private respondent was a corporate officer who
held the position EVP/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. 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. Further, the CA pointed out
Locsins failure to state any circumstance by which NCLPI engaged his services
as a corporate officer that would make him an employee. Locsin filed the
present petition. He essentially submits that the NCLPI wrongfully filed a petition
for certiorari before the CA, as the latters remedy is to proceed with the
arbitration, and to appeal to the NLRC after the Labor Arbiter shall have ruled on
the merits of the case, as cited on Rule V, Section 6 of the Revised Rules of the

NLRC. And even if the Labor Arbiter committed grave abuse of discretion in
denying the NCLPI motion, a special civil action for certiorari, filed with CA was
not the appropriate remedy, since this was a breach of the doctrine of exhaustion
of administrative remedies. Locsin submits that he is a regular employee of
NCLPI. 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. 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.
NCLPI submits that the CA correctly ruled that the Labor Arbiter does not have
jurisdiction over Locsins complaint for illegal dismissal. Rule VI, Section 2(1) of
the NLRC does not apply since only appealable decisions, resolutions and orders
are covered under the rule.
Issue: Whether the CA has original jurisdiction to review decision of the Labor
Arbiter under Rule 65.
Held: Prefatorily, we agree with Locsins submission that the NCLPI incorrectly
elevated the Labor Arbiters denial of the Motion to Dismiss to the CA. Locsin is
correct in positing that the denial of a motion to dismiss is unappealable. As a
general rule, an aggrieved partys proper recourse to the denial is to file his
position paper, interpose the grounds relied upon in the motion to dismiss before
the labor arbiter, and actively participate in the proceedings. Thereafter, the labor
arbiters decision can be appealed to the NLRC, not to the CA. As a rule, we
strictly adhere to the rules of procedure and do everything we can, to the point of
penalizing violators, to encourage respect for these rules. We take exception to
this general rule, however, when a strict implementation of these rules would
cause substantial injustice to the parties. In the context of this case, we see
sufficient justification to rule on the employer-employee relationship issue raised
by NCLPI, even though the Labor Arbiters interlocutory order was incorrectly
brought to the CA under Rule 65. Art 223. Of the Labor Code: Decisions, awards,
or orders of the Labor Arbiter are final and executory unless appealed to the
Commission by any or both parties within ten (10) calendar days from receipt of
such decisions, awards, or orders. Such appeal may be entertained only on any
of the following grounds: (a) If there is prima facie evidence of abuse of
discretion on the part of the Labor Arbiter; x x x. 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. Abuse of discretion is admittedly within the ambit of certiorari and
its grant of review thereof to the NLRC indicates the lawmakers intention to
broaden the meaning of appeal as that term is used in the Code. For this reason,
petitioners cannot argue now that the NLRC is devoid of any corrective power to
rectify a supposed erroneous assumption of jurisdiction by the Labor Arbiter x x
x. the CA clearly erred in the application of the procedural rules by disregarding

the relevant provisions of the NLRC Rules, as well as the requirements for a
petition for certiorari under the Rules of Court. To reiterate, the proper action of
an aggrieved party faced with the labor arbiters denial of his motion to dismiss is
to submit his position paper and raise therein the supposed lack of jurisdiction.
The aggrieved party cannot immediately appeal the denial since it is an
interlocutory order; the appropriate remedial recourse is the procedure outlined
in Article 223 of the Labor Code, not a petition for certiorari under Rule 65. But 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. 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 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 intracorporate dispute on this point before the appropriate RTC.

19. Reyes - Riza

Title: Case no.19; Oscar C. Reyes v. Hon. RTC of Makati (Intra-corporate
controversy)
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 Pedros estate was judicially partitioned
among his heirs sometime in the 1970s, no similar settlement and partition
appear to have been made with Anastacias estate, which included her
shareholdings in Zenith. As of June 30, 1990, Anastacia owned 136,598 shares of
Zenith; Oscar and Rodrigo owned 8,715,637 and 4,250 shares, respectively.
Zenith and Rodrigo filed a complaint with the Securities and Exchange
Commission (SEC) against Oscar. It is a derivative suit initiated and filed by
Rodrigo C. Reyes to obtain an accounting of the funds and assets of Zenith
Insurance Corporation to determine the shares of stocks of deceased spouses
Pedro and Anastacia Reyes that were arbitrarily and fraudulently appropriated by
Oscar for himself 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. Oscar denied the charge that he illegally acquired the shares
of Anastacia Reyes. He asserted, as a defense, that he purchased the subject
shares with his own funds from the unissued stocks of Zenith, and that the suit is
not a bona fide derivative suit because the requisites therefor have not been
complied with. He thus questioned the SECs jurisdiction to entertain the
complaint because it pertains to the settlement of the estate of Anastacia Reyes.
When Republic Act (R.A.) No. 8799 took effect, the SECs exclusive and original
jurisdiction over cases enumerated in Section 5 of Presidential Decree (P.D.) No.
902-A was transferred to the RTC designated as a special commercial court.8 The
records of Rodrigos SEC case were thus turned over to the RTC, Branch 142,
Makati, and docketed as Civil Case No. 00-1553. Oscar filed a Motion to Declare
Complaint as Nuisance or Harassment Suit. 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. RTC denied the motion in part and declared: A close
reading of the Complaint disclosed the presence of two (2) causes of action,
namely: a) a derivative suit for accounting of the funds and assets of the
corporation which are in the control, custody, and/or possession of the
respondent [herein petitioner Oscar] with prayer to appoint a management
committee; and b) an action for determination of the shares of stock of deceased
spouses Pedro and Anastacia Reyes allegedly taken by respondent, its
accounting and the corresponding delivery of these shares to the parties
brothers and sisters. The latter is not a derivative suit and should properly be
threshed out in a petition for settlement of estate. Oscar thereupon went to the
CA on a petition for certiorari, prohibition, and mandamus and prayed that the
RTC Order be annulled and set aside and that the trial court be prohibited from
continuing with the proceedings. The appellate court affirmed the RTC Order and
denied the petition in its Decision dated May 26, 2004. It likewise denied Oscars
motion for reconsideration in a Resolution dated October 21, 2004.
Issue: Whether the complaint of Rodrigo involves an Intra-Corporate
Controversies and is within the jurisdiction of the RTC acting as a special
commercial court.
Held: 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." P.D. No. 902-A enumerates the cases over which the
SEC (now the RTC acting as a special commercial court) exercises exclusive
jurisdiction. The allegations set forth in Rodrigos complaint principally invoke
Section 5, paragraphs (a) and (b) as basis for the exercise of the RTCs special
court jurisdiction. 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. In an attempt to hold
Oscar responsible for corporate fraud, Rodrigo alleged in the complaint the
following: 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]; 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. 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. 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. Tested against these
standards, we find that the charges of fraud against Oscar were not properly
supported by the required factual allegations. While the complaint contained
allegations of fraud purportedly committed by him, these allegations are not
particular enough to bring the controversy within the special commercial courts
jurisdiction; they are not statements of ultimate facts, but are mere conclusions
of law: how and why the alleged appropriation of shares can be characterized as
"illegal and fraudulent" were not explained nor elaborated on. Not every
allegation of fraud done in a corporate setting or perpetrated by corporate
officers will bring the case within the special commercial courts jurisdiction. No
corporate power or office was alleged to have facilitated the transfer of the
shares; rather, Oscar, as an individual and without reference to his corporate
personality, was alleged to have transferred the shares of Anastacia to his name,
allowing him to become the majority and controlling stockholder of Zenith, and
eventually, the corporations President. Regretfully, we cannot read into the
complaint any specifically alleged corporate fraud that will call for the exercise of
the courts special commercial jurisdiction. Thus, we cannot affirm the RTCs
assumption of jurisdiction over Rodrigos complaint on the basis of Section 5(a)
of P.D. No. 902-A. 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. What is material in resolving the
issues of this case under the allegations of the complaint is Rodrigos interest as
an heir since the subject matter of the present controversy centers on the shares
of stocks belonging to Anastacia, not on Rodrigos personally-owned shares or
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. We find that insofar as

the subject shares of stock (i.e., Anastacias shares) are concerned Rodrigo
cannot be considered a stockholder of Zenith. Consequently, we cannot declare
that an intra-corporate relationship exists that would serve as basis to bring this
case within the special commercial courts jurisdiction under Section 5(b) of PD
902-A, as amended. Rodrigos complaint, therefore, fails the relationship test. In
the application of the Controversy Test: The body rather than the title of the
complaint determines the nature of an action. 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." we hold that the nature of the
present controversy is not one which may be classified as an intra-corporate
dispute and is beyond the jurisdiction of the special commercial court to resolve.
In short, Rodrigos complaint also fails the nature of the controversy test. The
RTC sitting as special commercial court has no jurisdiction to hear Rodrigos
complaint since what is involved is the determination and distribution of
successional rights to the shareholdings of Anastacia Reyes. Rodrigos proper
remedy, under the circumstances, is to institute a special proceeding for the
settlement of the estate of the deceased Anastacia Reyes, a move that is not
foreclosed by the dismissal of his present complaint.

20.Okol-Beverly
Okoy vs. Slimmers World Intl., Behavior Modification Inc. and Ronald Joseph Moy
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. Prior to Okols dismissal, Slimmers World preventively suspended Okol.
The suspension arose from the seizure by the Bureau of Customs of seven Precor elliptical
machines and seven Precor treadmills belonging to or consigned to Slimmers World. The
shipment of the equipment was placed under the names of Okol and two customs brokers
for a value less than US$500. For being undervalued, the equipment were seized.
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. Okol filed her written
explanation. However, Slimmers World found Okols explanation to be unsatisfactory so
Slimmers World terminated Okols employment.
Okol filed a complaint with the Arbitration branch of the NLRC against Slimmers World,
Behavior Modifications, Inc. and Moy (collectively called respondents) for illegal
suspension, illegal dismissal, unpaid commissions, damages and attorneys fees, with
prayer for reinstatement and payment of
backwages.

On 22 February 2000, respondents filed a Motion to Dismiss 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. The labor
arbiter granted the motion to dismiss. The labor arbiter ruled that Okol was the vicepresident 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. The NLRC reversed and set
aside the labor arbiters order. It then ordered respondent Behavior Modification,
Inc./Slimmers World International to reinstate complainant Leslie F. Okol to her former
position with full back wages plus indemnity pay and attorneys fee and 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.
Respondents filed a Motion for Reconsideration with the NLRC but the latter denied the
motion for lack of merit. They then filed an appeal with the Court of Appeals, which set
aside the NLRCs decision ruling that the case, being an intra-corporate dispute, falls
within the jurisdiction of regular courts, as provided under R.A. 8799. 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.
Issue: W/N the petitioner was an employee or corporate officer of Slimmers World;
Consequently, W/N NLRC has jurisdiction over the illegal dismissal case filed by the
petitioner
Held:
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. An
office is created by the charter of the corporation and the officer is elected by the
directors or stockholders. On the other hand, an employee usually occupies no office and
generally is employed not by action of the directors or stockholders but by the managing
officer of the corporation who also determines the compensation to be paid to such
employee.
In the present case, the respondents, in their motion to dismiss filed before the labor
arbiter, questioned the jurisdiction of the NLRC in taking cognizance of petitioners
complaint. In the motion, respondents attached the General Information Sheet (GIS) dated
14 April 1998, Minutes of the meeting of the Board of Directors dated 14 April 1997 and
Secretarys Certificate, and the Amended By-Laws dated 1 August 1994 of Slimmers
World as submitted to the SEC to show that petitioner was a corporate officer whose rights
do not fall within the NLRCs jurisdiction. The GIS and minutes of the meeting of the
board of directors indicated that petitioner was a member of the board of directors,
holding one subscribed share of the capital stock, and an elected corporate officer. 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. A corporate officers 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. It is a settled rule that jurisdiction over the subject matter is conferred
by law. 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 intracorporate 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.

21.Rural Bank-Beverly
RURAL BANK OF CORON (PALAWAN), INC., et al. vs. ANNALISA CORTES
Facts:
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 Anitas 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, drawing petitioners to terminate respondents services on November 23,
1998 in petitioner corporations. Respondents counsel conveyed respondents 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. Respondents counsel thus demanded the payment of respondents unpaid
salary for the months of October and November 1998, separation pay equivalent to 12
months salary, 13th month pay and other benefits. As the demand remained unheeded,
respondent filed a complaint for illegal dismissal and non-payment of salaries and other
benefits.
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).
In resolving the issue of jurisdiction, the Labor Arbiter noted that aside from her
being Corporate Secretary of Rural Bank of Coron, complainant was likewise appointed as
Financial Assistant & Personnel Officer of all respondents herein. 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. Eventually, the Labor Arbiter
found for respondent, computing the monetary award due her and ordered respondents
jointly and severally pay complainant.
On the tenth or last day of the period of appeal, petitioners filed their appeal. By
resolution, the 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
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 was denied by
the NLRC hence, they filed a Petition for Certiorari before the Court of Appeals. The CA
dismissed the petition for lack of merit. Petitioners motion for reconsideration was also
denied.
Issue: W/N the labor arbiter had jurisdiction to hear the case
Held:
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. Mainland Construction Co., Inc. v. Movilla instructs that a corporation can
engage its corporate officers to perform services under a circumstance which would make
them employees. The Labor Arbiter has thus jurisdiction over respondents complaint.
To reiterate, the appellate court did not 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. 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. 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.
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.
22. Halguena-Beverly
Halaguena vs. PAL
Facts:
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.
Respondent and FASAP entered into a Collective Bargaining Agreement 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 for the
compulsory retirement of cabin attendants hired before Nov. 22, 1996 and that it shall be
fifty-five (55) for females and sixty (60) for males. 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 by petitioners' counsel addressed to respondent
demanding the removal of gender discrimination provisions in the coming re-negotiations
of the PAL-FASAP CBA. Robert D. Anduiza, President of FASAP submitted their 20042005 CBA proposals and manifested their willingness to commence the collective
bargaining negotiations between the management and the association, at the soonest
possible time. Petitioners then filed a Special Civil Action for Declaratory Relief with
Prayer for the Issuance of Temporary Restraining Order and Writ of Preliminary
Injunction with the Regional Trial Court (RTC) of Makati City. The RTC then issued an
Order upholding its jurisdiction over the present case. It reasoned that 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 found for the petitioner.
Aggrieved, respondent, filed a petition with the 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 declared the RTC to have NO JURISDICTION OVER THE CASE.
Issue: W/N 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.
Held:
Petitioners submit that the RTC has jurisdiction in all civil actions in which the subject of
the litigation is incapable of pecuniary estimation and in all cases not within the exclusive
jurisdiction of any court, tribunal, person or body exercising judicial or quasi-judicial
functions. The RTC has the power to adjudicate all controversies except those expressly
witheld from the plenary powers of the court. Accordingly, it has the power to decide issues
of constitutionality or legality of the provisions of Section 144, Part A of the PAL-FASAP
CBA. As the issue involved is constitutional in character, the labor arbiter or the National
Labor Relations Commission (NLRC) has no jurisdiction over the case and, thus, the
petitioners pray that judgment be rendered on the merits declaring Section 144, Part A of
the PAL-FASAP CBA null and void.
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.
Petitioner is correct. 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. 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. 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. The the petitioners' primary relief 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. Being an ordinary civil action, the same is
beyond the jurisdiction of labor tribunals.
The said issue cannot be resolved solely by applying the Labor Code. Rather, it
requires the application of the Constitution, labor statutes, law on contracts and the
Convention on the Elimination of All Forms of Discrimination Against Women, and the
power to apply and interpret the constitution and CEDAW is within the jurisdiction of
trial courts, a court of general jurisdiction. 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 viceversa 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. 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.

23. Santiago - Beverly

Santiago vs. CF SHARP CREW MANAGEMENT, INC.
Facts:
Petitioner Santiago had been working as a seafarer for Smith Bell Management,
Inc. (respondent) for about 5 years. He had signed a new contract of employment
with respondent, with the duration of nine (9) months. Sais contract was
approved by the 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. However, a week before the scheduled date of departure, Capt.
Pacifico Fernandez, respondents Vice President, sent a facsimile message to the
captain of "MSV Seaspread," from the wife of Santiago asking him not to send her

husband to MSV Seaspread anymore. He was also informed anonymously that

Santiago, if allowed to depart will jump ship in Canada like his brother
Christopher Santiago, O/S who jumped ship from the C.S. Thus, the captain
cancelled plans for Santiagos departure. 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. 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.
On appeal by respondent, the 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 attorneys fees should be dismissed. On the other
hand, the NLRC found respondents decision not to deploy petitioner to be a valid
exercise of its management prerogative.
Petitioner moved for the reconsideration of the NLRCs Decision but his motion
was denied for lack of merit. He elevated the case to the Court of Appeals through
a petition for certiorari. The CA noted that there is an ambiguity in the NLRCs
Decision when it affirmed with modification the labor arbiters Decision, because
by the very modification introduced by the Commission (vacating the award of
actual damages and attorneys fees), there is nothing more left in the labor
arbiters Decision to affirm. 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. It agreed with the NLRCs finding that petitioners non-deployment was a
valid exercise of respondents management prerogative. 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 socalled employer could have no leg to stand on.
Issue: W/N 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 seafarers actual departure from the port in the point of hire, is entitled
to relief?
Held:
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. 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. 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 respondents act of not deploying him was a scheme designed to
prevent him from attaining the status of a regular employee. 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.
On the other hand, respondent argues that the Labor Arbiter has no jurisdiction
to award petitioners 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
petitioners case much less award damages to him. The controversy involves a
breach of contractual obligations and as such is cognizable by civil courts.
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. 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. Respondents act of preventing petitioner

from departing the port of Manila and boarding "MSV Seaspread" constitutes a
breach of contract, giving rise to petitioners cause of action. Respondent
unilaterally and unreasonably reneged on its obligation to deploy petitioner and
must therefore answer for the actual damages he suffered.
Despite the absence of an employer-employee relationship between petitioner
and respondent, the Court rules that the NLRC has jurisdiction over petitioners
complaint. The jurisdiction of labor arbiters is not limited to claims arising from
employer-employee relationships as provided under Section 10 of R.A. No. 8042
(Migrant Workers Act). 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.

24. Atlas - Jewel

24. Atlas Farms Inc. v. NLRC Nov. 18, 2002
Facts: Private respondent Jaime O. dela Pea was employed as a veterinary aide by petitioner
Atlas Farms, Inc., in December 1975. On March 3, 1993, Pea was allegedly caught urinating
and defecating on company premises not intended for the purpose. The farm manager of
petitioner issued a formal notice directing him to explain within 24 hours why disciplinary action
should not be taken against him for violating company rules and regulations. Pea refused,
however, to receive the formal notice. 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. Co-respondent Martial I. Abion was a carpenter/mason and a maintenance man
whose employment by petitioner commenced on October 8, 1990. He allegedly 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. The company terminated his services on October 27, 1992. He
acknowledged receipt of a written notice of dismissal, with his separation pay.
Thereafter, Pea and Abion filed separate complaints for illegal dismissal that were later
consolidated. Both claimed that their termination from the 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. 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. According to petitioner, jurisdiction over the case belonged to
the grievance machinery and thereafter the voluntary arbitrator, as provided in the CBA. 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. Private
respondents appealed 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 certiorari
under Rule 65, seeking reinstatement of the labor arbiter's decision. The appellate court denied
the petition and affirmed the NLRC resolution. Hence, the present petition.
Issues:
1. whether private respondents were legally and validly dismissed--No
2. whether the labor arbiter and the NLRC had jurisdiction to decide complaints for illegal
dismissal;Yes
Held:
1. No. Private respondents were illegally dismissed. 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 were subsequently dismissed without hearing.
2. Yes. 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.
The General rule is that, under Article 217 of the Labor Code, labor arbiters have original
and exclusive jurisdiction over termination disputes. An exception to that rule is found 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 CBA and those arising from
the interpretation or enforcement of company personnel policies referred to in the immediately
preceding article. Accordingly, violations of a CBA, 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.
However, 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/CBA since the private
respondents were already dismissed from work without hearing, also depriving them of a chance
to air their side at the level of the grievance machinery. Given the fact of dismissal, it can be said
that the cases were effectively removed from the jurisdiction of the voluntary arbitrator, thus
placing them within the jurisdiction of the labor arbiter. Where the dispute is just in the
interpretation, implementation or enforcement stage, it may be referred to the grievance
machinery set up in the CBA, or brought to voluntary arbitration. But, where there was already
actual termination, with alleged violation of the employees rights, it is already cognizable by the
labor arbiter.
Also, records show, however, that private respondents sought without success to avail of
the grievance procedure in their CBA. 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. 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. Given the circumstances, private respondents acted within their
legal rights in finding another avenue for the redress of their grievances. The Court also upheld
the NLRC in concluding that private respondents had already exhausted the remedies under the
grievance procedure and in ruling 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 complaint for
illegal dismissal and directed the parties to avail of the grievance procedure under Article VII of
the existing CBA. Private respondents could not 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.

25. Perpetual - Darling

Facts: Private Respondents, Benedicto Faburada, Sisinita Vilar, Imelda Tamayo
and Harold Catipay, 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. 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.
The Labor Arbiter denied the motion to dismiss and rendered a decision in favor
of the petitioners declaring them illegally dismissed which was affirmed by the
NLRC, Hence this petition by the PHCCI, they contended that:
1. There is no Employer-Employee relationship,
2. 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) 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.
Issue: Whether or not, the LA has jurisdiction to take cognizance of the petition
Held: Yes, 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. Art 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.
Just in Case na tanungin ni maam
Employer and Employee relationship exist in the case at bar,
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.
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.

26. Austria - Jewel

26. Austria v. NLRC, August 16, 1999
Facts: Pastor Dionisio Austria was dismissed from service by the Seventh Day Adventist (SDA)
for misappropriation of funds, wilful breach of trust, serious misconduct, gross and habitual
neglect of duties and commission of an offense against the person of employers duly authorized

representative as grounds. Pastor Austria began serving the religious corporation on 1963 until
October 1991 when his services was terminated.
From August up to October 1991, petitioner received several communications from Mr.
Ibesate the Treasurer of the Negros Mission asking him to admit accountability and
responsibility for the church tithes and offerings collected by his wife. He explained that it was
Ibesate and Pastor Buhat, the president of the said Mission who authorized his wife to collect
since he was sick at that time. On the other hand, Pastor Buhat and petitioner had a heated
argument when Pastor Rodrigo harboured ill feelings against the latter for helping out one Danny
Diamada for collecting the unpaid balance for the repair of Rodrigos motor vehicle. Upon
discovery that Rodrigo was about to file a complaint against him with the Mission, Austria went
to Buhats office to convene the Executive Committee but he failed since there was no quorum.
Austria banged the attach case of Buhat, scattered the books and tried to overturn the table.
Subsequently, on October 29, 1991, the Executive Committee was convened and rendered the
dismissal of Austria.
The LA ruled in favor of the petitioner. NLRC vacated the findings of the LA for want of
merit, but it reinstated the decision of LA upon filing of the MR by petitioner. Hence, on the
ground that LA has no jurisdiction due to the constitutional provision of the separation of church
and state since the case involved an ecclesiastical affair to which the state cannot interfere. The
SDA filed a motion for reconsideration contending, 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 dismissed
the complaint of petitioner.
Issue:
1.
Whether or not the Labor Arbiter/NLRC has jurisdiction to try and decide the complaint
filed by petitioner against the SDAYES!
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; andNO
3.
Whether or not such termination is valid.NO
Held:
1. Yes. The grounds for the petitioners dismissal are based on Art 282 of the Labor Code
which enumerates the just causes for termination of employment. By this alone, it is palpable
that the reason for his dismissal from the service is not a religious nature. Coupled with this is
the act of the SDA in furnishing NLRC with a copy of petitioners letter of termination
recognizing his 28 years of service. As such, the State, through the LA and the NLRC, has the
right to take cognizance of the case and to determine whether 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. Furthermore, the Labor Code,
under Art 278 on post employment states that the provisions of this Title shall apply to all
establishments or undertakings, whether for profit or not. The provision does not make any
exception in favour of a religious corporation. This is made more evident by the fact that the
Rules Implementing the LC, particularly, Section 1, Rule 1, Book VI on the termination of
Employment and Retirement, categorically includes religious institutions in the coverage of the
law. Private respondents are also estopped from raising the issue of lack of jurisdiction for the

first time on appeal since the SDA had fully participated in the trials and hearings of the case
from start to finish.
2. The principle of separation of church and state finds no application in this case. The case
does not concern an ecclesiastical or purely religious affair as to bar the State from taking
cognizance of the same. 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. Examples of this are proceedings for excommunication, ordinations of religious
ministers, administration of sacraments and other activities with attached religious significance.
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. Aside from these, SDA admitted in a certification23 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.
3. In termination cases, the burden of proving that the termination was for a valid or authorized
cause rests on the employer. The requisites for a valid dismissal are: (1) the employee must be
afforded due process, and; (2) the dismissal must be for a valid cause as provided in Article 282
of the Labor Code. Without this twin requirements, termination would be illegal. The rules
further require the employer to furnish the employee with two written notices, (a) a written
notice served on the employee specifying the ground or grounds for termination and giving the
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
circumstances, grounds have been established to justify his termination. Non-compliance is fatal
because the requirements are conditions sine qua non before dismissal may validly be effected.
Private respondents substantially failed to comply with the abovementioned requirements as
regards the first notice. The notice to attend the meeting cannot be construed as a written charge.
It never stated the particular acts or omissions on which petitioner's impending termination was
grounded. The alleged grounds for Austrias dismissal from the service were only revealed to
him when the actual letter of dismissal was finally issued. Furthermore, the Court did not sustain
the validity of the dismissal based on the grounds enumerated by the private respondents Private
respondent failed to substantially comply with the above requirements.

27. DFA - Darling

Case No. 27 DFA vs NLRC
Facts: On 27 January 1993, private respondent Jose C. Magnayi initiated NLRCNCR 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 DFA, both with a
copy of the complainant. Forthwith, the ADB and the DFA notified respondent LA
Nieves de Castro 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 LA took cognizance of the complaint on the impression that the ADB had
waived its diplomatic immunity from suit 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
time, the LA rendered his decision declaring ADB liable for illegal dismissal.
The ADB did not appeal the decision. Instead, on 03 November 1993, the DFA
referred the matter to the NLRC; in its referral, the DFA sought a "formal vacation
of the void judgment." The NLRC chairman replied saying that while they
exercised administrative supervision over the Commission and its regional
branches and all its personnel, including the Executive LA 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 and if DFA feels that the action of LA Nieves de Castro
constitutes misconduct, malfeasance or misfeasance, it is suggested that an
appropriate complaint be lodged with the Office of the Ombudsman.
Dissatisfied, the DFA lodged the instant petition for certiorari.
Issue: Whether or Not, ADB is immune from labor suits
Held: Yes, 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."
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.
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."
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."
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."
Neither is the contention of respondent 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.
"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." 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.

28. PNB - Jewel

28. PNB v. Cabansag, June 21, 2005
Facts:
Respondent Florence Cabansag arrived in Singapore as a tourist. She applied for employment,
with the Singapore Branch of the PNB, a private banking corporation organized and existing
under the laws of the Philippines. At the time, 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.
She was hired (appointed) upon the recommendation of Ruben C. Tobias a General Manager of
the PNB Singapore branch. As required, she obtained an Employee Pass for two years. Her
appointment as a Credit Officer stated that she would undergo a probation for a period of three
months from the date of assumption of duty that can be terminated upon 1 day notice and after
probation upon one month notice. The Philippine Embassy in Singapore processed the

employment contract of respondent and then she was issued by the POEA, an Overseas
Employment Certificate, certifying that she was a bona fide contract worker for Singapore.
Barely three (3) months in office respondent Cabansag, she submitted to Tobias, her initial
performance report that the latter was so impressed with the it that he made a notation on said
Report: GOOD WORK. However, later she was told that she had to resign because of cost
cutting measure. Perplexed, she asked for a formal advice but she received none. She refused to
resign. Tobias 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. Still respondent Cabansag refused to
resign, Tobias dismissed her just about four months from hiring.
Cabansag filed a complaint of illegal dismissal with the labor arbiter which rendered a decision
finding respondents guilty of Illegal dismissal and devoid of due process. The respondents
appealed to the NLRC, contending that the Labor Arbiter has no jurisdiction because respondent
was "locally hired"; and totally "governed by and subject to the laws, common practices and
customs" of Singapore, not of the Philippines. The NLRC denied the respondents motion. The
CA also 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.
Issue:Whether or not the arbitration branch of the NLRC in the National Capital Region has
jurisdiction over the instant controversyYES
Held: Yes. Based on Art. 127 and more specifically, Section 10 of RA 80421 and 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).
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 Singapore. Similarly, the Philippine government requires nonFilipinos 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 noncitizen is thereby
bound by local laws only, as averred by petitioner. It does not at all imply a waiver of ones
national laws on labor. Absent any clear and convincing evidence to the contrary, such permit
simply means that its holder has a legal status as a worker in the issuing country.
Noteworthy is the fact that respondent likewise applied for and secured an Overseas
Employment Certificate from the POEA through the Philippine Embassy in Singapore. The
Certificate issued 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 assumingarguendo 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. Whether employed locally or overseas, all Filipino workers enjoy the protective
mantle of Philippine labor and social legislation, contract stipulations to the contrary
notwithstanding.

Moreover, petitioner admits that it is a Philippine corporation doing business through a

branch office in Singapore. Significantly, respondents employment by the Singapore branch
office had to be approved by the president of the bank whose principal offices were in Manila.
This circumstance militates against petitioners contention that respondent was "locally hired";
and totally "governed by and subject to the laws, common practices and customs" of Singapore,
not of the Philippines. Instead, this only reinforces the fact 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

29. Banez - Darling

Case no. 29 Banez vs Valdevilla and Oro Marketing Inc
Facts: Petitioner Bebiano Baez was the sales operations manager of private
respondent Oro Marketing in its branch in Iligan City. In 1993, private respondent
"indefinitely suspended" petitioner and the latter filed a complaint for illegal
dismissal with NLRC-iligan City.
On July 7, 1994, LA Nicodemus G. Palangan rendered a judgment in favor of the
petitioner and ordered the payment of separation pay in lieu of reinstatement, and
of back wages and attorney's fees. The decision was appealed to the NLRC,
which dismissed the same for having been filed out of time. Elevated by petition
for certiorari before this Court, the case was dismissed on technical grounds;
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.
On November 13, 1995, private respondent filed a complaint for damages before
the RTC - 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
contends 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 and that 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 LA. 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.
Respondent Judge Downey Valdevilla ruled that 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.
Issue: whether or not the petition is within the jurisdiction of the Labor Arbiter
Held: Yes, Article 217(a), paragraph 4 of the Labor Code, which was already in
effect at the time of the filing of this case, reads:
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 Sec 9 of 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.
History of Art 271
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. On May 1, 1979, however, P.D. 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." 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".
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 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.
So, on May 1, 1980, PD No. 1691 (which substantially reenacted Article 217 in its
original form) nullified PD No. 1367 and restored to the Labor Arbiter and the NLRC

their jurisdiction to award all kinds of damages in cases arising from employeremployee relations. . . .
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.

30. Santos - Joyce

SANTOS V SERVIER PHILS
FACTS:
Petitioner Isabela Santos was the Human Resource Manager of respondent Servier Philippines, Inc.
since 1991 until her termination from service in 1999. (8years)
In 1998, Isabela Santos attended a meeting of all human resource managers of respondent, held in
Paris, France. Since the last day of the meeting coincided with the graduation of her only child, she
arranged for a European vacation with her family right after the meeting. She, thus, filed a vacation leave.
Petitioner Isabela, together with her husband Antonio P. Santos, her son, and some friends, had dinner at
Leon des Bruxelles, a Paris restaurant known for mussels as their specialty. While having dinner,
petitioner complained of stomach pain, then vomited. Eventually, she was brought to the hospital known
as Centre Chirurgical de LQuest where she fell into coma for 21 days; and later stayed at the Intensive
Care Unit (ICU) for 52 days. The hospital found that the probable cause of her sudden attack was
"alimentary allergy," as she had recently ingested a meal of mussels which resulted in a concomitant
uticarial eruption.
During the time that petitioner was confined at the hospital, her husband and son stayed with her in Paris.
Petitioners hospitalization expenses, as well as those of her husband and son, were paid by respondent
Servier Phils.
Respondent Servier Phils had requested the petitioner Isabelas physician to conduct a thorough physical
and psychological evaluation of her condition, to determine her fitness to resume her work at the
company. Petitioners physician concluded that the petitioner had not fully recovered mentally and
physically. Hence, respondent was constrained to terminate petitioners services.
As a consequence of petitioners termination from employment, respondent offered a retirement package
which consists of:
3

Retirement Plan Benefits:

P
1,063,841.76

Insurance Pension at 20,000.00/month for 60 months from company-sponsored group

life policy:

P
1,200,000.00

Educational assistance:

P 465,000.00

Medical and Health Care:

P 200,000.00

10

Of the promised retirement benefits amounting to P1,063,841.76, only P701,454.89 was released to
petitioners husband, the balance thereof was withheld allegedly for taxation purposes. Respondent also
failed to give the other benefits listed above.
Petitioner, represented by her husband, instituted the instant case for unpaid salaries; unpaid separation
pay; unpaid balance of retirement package plus interest; insurance pension for permanent disability;
educational assistance for her son; medical assistance; reimbursement of medical and rehabilitation
expenses; moral, exemplary, and actual damages, plus attorneys fees
The Labor Arbiter dismissed the petition. The arbiter refused to rule on the legality of the deductions
made by respondent from petitioners total retirement benefits for taxation purposes, as the issue was
beyond the jurisdiction of the NLRC.
On appeal, the NLRC emphasized that petitioner was dismissed from employment due to a
disease/disability under Article 284 of the Labor Code. In view of her non-entitlement to retirement
benefits, the amounts received by petitioner should then be treated as her separation pay.
Unsatisfied, petitioner elevated the matter to the Court of Appeals which affirmed the NLRC decision.
11

20

21

25

The SC, before deciding on whether or not the LA/NLRC may decide on the legality of the deduction due
to tax, first settled the issue on whether or not the benefit received by petitioner is a retirement benefit or
a separation pay.
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 Members Account Balance determined as of the last valuation
date. x x
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. 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).
In the instant case, the Retirement Plan bars the petitioner from claiming additional benefits on top of that
provided for in the Plan.
34

35

There being such a provision, petitioner is entitled only to either the separation pay under the law or
retirement benefits under the Plan, and not both.
Clearly, the benefits received by petitioner from the respondent represent her retirement benefits under
the Plan. The question that now confronts us is whether these benefits are taxable. If so, respondent
correctly made the deduction for tax purposes. Otherwise, the deduction was illegal and respondent is still
liable for the completion of petitioners retirement benefits.
Respondent argues that the legality of the deduction from petitioners total benefits cannot be taken
cognizance of by this Court since the issue was not raised during the early stage of the proceedings.
ISSUE: W/N Isabel Santoss claim for illegal deduction falls within the LA/NLRCs jurisdiction
HELD: YES.
The issue of deduction for tax purposes is intertwined with the main issue of whether or not petitioners
benefits have been fully given her. It is, therefore, a money claim arising from the employer-employee
relationship, which clearly falls within the jurisdiction41 of the Labor Arbiter and the NLRC.
Retirement benefits are EXEMPT from tax, provided that:
(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.
38

Here, Isabela was disqualified for disability retirement. At the time of such retirement, shewas only 41
years of age; and had been in the service for more or less eight (8) years. As such, such retirement
benefits are NOT EXEMPT from taxation for failure to comply with the age and length of service
requirements. Therefore, SERRVIER PHILIPPINES cannot be faulted for deducting from Isabela's total
retirement benefits the amount of P362,386.87, for taxation purposes.

31. Pepsi cola - Anton

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 CABAAS & FULGENCIO LEGO, respondents.
FACTS: The private respondents were employees of the petitioner who were suspected of
complicity in the irregular disposition of empty Pepsi Cola bottles. On July 16, 1987, the petitioners
filed a criminal complaint for theft against them but this was later withdrawn and substituted with a
criminal complaint for falsification of private documents. On November 26, 1987, after a preliminary
investigation conducted by the Municipal Trial Court of Tanauan, Leyte, the complaint was
dismissed. The dismissal was affirmed on April 8, 1988, by the Office of the Provincial Prosecutor.
Meantime, allegedly after an administrative investigation, the private respondents were
dismissed by the petitioner company on November 23, 1987. As a result, they lodged a complaint for
illegal dismissal with the Regional Arbitration Branch of the NLRC in Tacloban City on December
1, 1987, and decisions demanded reinstatement with damages. In addition, they instituted in the
Regional Trial Court of Leyte, on April 4, 1988, a separate civil complaint against the petitioners for
damages arising from what they claimed to be their malicious prosecution.
The petitioners moved to dismiss the civil complaint on the ground that the trial court had no
jurisdiction over the case because it involved employee-employer relations that were exclusively
cognizable by the labor arbiter.
ISSUE: Whether the private respondents civil complaint for damages falls under the jurisdiction of
the labor arbiter.
RULING: NO.
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.
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.

32. 7K corp - Anton

G.R. No. 182295, June 26, 2013
7K CORPORATION, Petitioner, v. EDDIE ALBARICO, Respondent.
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. In April of 1993,
the chief operating officer of petitioner 7K Corporation terminated Albaricos employment allegedly
for his poor sales performance. 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.
On 17 September 1997, petitioner corporation filed its Position Paper in the NCMB
arbitration case. 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.
On 18 November 2005, the NCMB voluntary arbitrator rendered a Decision finding
petitioner corporation liable for illegal dismissal. The termination of respondent Albarico, by reason
of alleged poor performance, was found invalid. The arbitrator explained that the promotions,
increases in salary, and awards received by respondent belied the claim that the latter was performing
poorly. 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. 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. Finally, the
arbitrator awarded attorneys fees in respondents favor, because he had been compelled to file an
action for illegal dismissal.
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
attorneys fees to respondent Albarico based on the formers finding of illegal dismissal. 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
attorneys fees for having been made without factual, legal or equitable justification. Petitioners
Motion for Partial Reconsideration was denied as well.
Hence, this Petition.
ISSUE: Whether the voluntary arbitrator properly assumed jurisdiction to decide the issue of the
legality of the dismissal of respondent as well as the latters entitlement to backwages, (even if
neither the legality nor the entitlement was expressly claimed in the Submission Agreement of the
parties).
RULING: YES.
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 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 28329 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 employees31 or to those validly dismissed for non-membership in a union as
required in a closed-shop agreement.
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 respondents allegation of illegal dismissal. In fact, petitioner itself acknowledged the issue of
illegal dismissal in its position paper submitted to the NCMB.
There has to be a reason for deciding the issue of respondents 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 respondents 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 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.
33

33. Repeated already

34. Landbank - Anton

[G.R. No. 152611. August 5, 2003]
LAND BANK OF THE PHILIPPINES, petitioner, vs. SEVERINO LISTANA, SR., respondent.
FACTS: 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), 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.

Thereafter, a Writ of Execution was issued by the PARAD directing the manager of Land Bank (Mr.
Alex Lorayes) to pay the respondent the aforesaid amount as just compensation in the manner
provided by law.
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.
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.

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

Respondent filed a Motion for Reconsideration of the trial courts order, which was denied in an
Order dated April 2, 2001.
Thus, respondent filed a special civil action for certiorari with the Court of Appeals,
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
ISSUE: Whether the order for the arrest of petitioners manager, Mr. Alex Lorayes by the PARAD,
was valid
RULING: No.
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.

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: First, the Rules of Court
clearly require the filing of a verified petition with the Regional Trial Court, which was not complied
with in this case. The charge was not initiated by the PARAD motu proprio; rather, it was by a
motion filed by respondent. Second, neither the PARAD nor the DARAB have jurisdiction to decide
the contempt charge filed by the respondent. The issuance of a warrant of arrest was beyond the
power of the PARAD and the DARAB. Consequently, all the proceedings that stemmed from
respondents Motion for Contempt, specifically the Orders of the PARAD dated August 20, 2000 and
January 3, 2001 for the arrest of Alex A. Lorayes, are null and void.

35. Meralco - Khey

CASE NO. 35 - MANILA ELECTRIC COMPANY, Petitioner v.JAN CARLO GALA
(March 7, 2012)
Brion, J.:
FACTS:
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 Meralcos Valenzuela Sector. Barely four months on the job, Gala was
dismissed for the alleged involvement in stealing Meralcos electrical supplies
sometime in May 25, 2006.
Apparently, prior to the incident, there had been "reported pilferage" or "rampant
theft" by the crew of Gala. At the time of the incident itself, unused supplies and
materials had not been returned to the prejudice of the company. So on May 25,
unknown to the workers, a surveillance task force was formed by Meralco to monitor
the activities of Gala and his colleagues on the worksite and to record everything using
a handy cam. 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
the supervisors and other crew members were seen conversing with him. Llanes
boarded the trucks, without being stopped, and took out what were later found as
electrical supplies. Gala did not call the attention of his supervisors because, as he
contends, he was just a mere linesman. After proper investigation of Meralco, Gala was
dismissed.
Gala filed a case for illegal dismissal contending that his mere presence at the
scene of the incident was not sufficient to hold him liable as a conspirator.
--Facts directly related to Article 221, LCP:
By way of Galas Comment to the Petition for Cetiorari filed by Meralco, Gala
asks for a denial of the petition because of, among others, serious and fatal infirmities in
the petition. Gala contends, in regard to the alleged procedural defects of the petition,
that the "Verification and Certification," "Secretarys 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.

LA RULING:
DISMISSED FOR LACK OF MERIT. Galas participation in the pilferage of Meralcos
property rendered him unqualified to become a regular employee.
NLRC RULING:
REVERSED LA. It found that Gala had been illegally dismissed, since there was "no
concrete showing of complicity with the alleged misconduct/dishonesty[.]" The NLRC,
however, ruled out Galas reinstatement, stating that his tenure lasted only up to the
end of his probationary period. It awarded him backwages and attorneys fees.
CA RULING:
AFFIRMED NLRC. Gala had been illegally dismissed, a ruling that was supported by
the evidence. It opined that nothing in the records show Galas knowledge of or
complicity in the pilferage. Ordered Galas reinstatement with full backwages and other
benefits.
ISSUE related to ARTICLE 221:
Whether or not the petition shall be dismissed outright based on procedural grounds, to
wit: (a) lack of the Community Tax Certificate details of the affiants; and (b) failure of the
lawyers who signed the petition to indicate their updated MCLE certificate numbers.
SC RULING:
NO. The Court stresses 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. 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, "the application of technical rules of
procedure in labor cases may be relaxed to serve the demands of substantial justice.
The Court found the dismissal to be valid. Gala 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". He failed to qualify as a regular employee.
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.

36. Nationwide- Khey

CASE NO. 36 - NATIONWIDE SECURITY and ALLIED SERVICES, INC., Petitioner,
v.THE COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION and
JOSEPH DIMPAZ, HIPOLITO LOPEZ, EDWARD ODATO, FELICISIMO PABON and
JOHNNY AGBAY (July 14, 2008)
Quisumbing, J.:
FACTS:
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% attorneys fees based on the total
monetary award. As supported by sufficient evidence, Nationwide received the
decision of the Labor Arbiter on July 16, 1999. Nationwide 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. These were
received by the NLRC on July 30, 1999. 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.
On the petition for certiorari filed to the Supreme Court, Nationwide 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.
NLRC RULING:
DISMISSED PETITION. First, for having been filed beyond the reglementary period
within which to perfect the appeal and second, for filing an insufficient appeal bond.
CA RULING:
DISMISSED PETITION TO RESOLVE ON MERITS. Nationwide failed 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.
ISSUE related to ARTICLE 221:
Whether or not the CA erred in dismissing Nationwides appeal based on
technicalities.
SC RULING:
NO. Failure to perfect an appeal renders the decision final and executory. 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. 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.
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.

37. Diamond taxi - Khey

CASE NO. 37 DIAMOND TAXI and/or BRIAN ONG v. FELIPE LLAMAS, JR.
(March 12, 2014)
Brion, J.:

FACTS:
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 Diamond Taxi. In their position
papers, Diamond Taxi claims that Llamas has been dismissed because of his absence
without leave for two weeks, several traffic violations in the year 2000-2005 and refusal
to heed to management instruction. Diamond Taxi argues that these acts constitute
grounds for termination of Llamas employment.
Llamas failed to seasonably file his position paper because his previous counsel,
despite repeated demands, deferred compliance with the LAs orders for its
submission. Llamas further claims that Bryan Ongs brother and head of operations,
Aljuver, refused to give him the car keys unless he signs a resignation letter. The LA
dismissed his petition for lack of merit.
LA RULING:
DISMISSED FOR LACK OF MERIT. The LA declared that Llamas was not
dismissed, legally or illegally, hence, he left his job and had been absent for several
days without leave.
NLRC RULING:
DISMISSED PETITION. Non-perfection of appeal due to the failure of Llamas to
attach the required certification for non-forum shopping as required under Section 4,
Rule VI of the 2005 NLRC Rules. Llamas moved for reconsideration, this time attaching
the required certification, but was again denied.
CA RULING:
REVERSED NLRC. CA found equitable grounds to brush aside the mandatory
requirement. It ruled that non-compliance with the requirement of filing a certification for
non-forum shopping , while mandatory, may be excused upon showing of manifest
equitable grounds proving 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.
Diamond Taxi failed to clearly prove that Llamas did intend to abandon his
work. They even failed to charge Llamas of his alleged infractions to give the latter the
opportunity to explain. CA awarded Llamas full backwages and other benefits.
Separation pay is also awarded instead of reinstatement because of the strained
working relationship between Llamas and Bryan Ong.
ISSUE related to ARTICLE 221:
Whether or not the CA correctly found that the NLRC committed grave abuse of
discretion in dismissing Llamas appeal on purely technical grounds.
SC RULING:
YES. Under Article 221 (now Article 227) 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. 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 x x x.
No procedural rule is sacrosanct if such shall result in subverting justice. 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.
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 LAs decision; the absence of a meaningful
opportunity for Llamas to present his case before the LA; and the clear merits of his
case, the NLRC should have relaxed the application of procedural rules in the
broader interests of substantial justice.
The decision of CA is AFFIRMED. Court found that Llamas has been
constructively dismissed.
38. Islriz - Cathy
ISLRIZ TRADING vs CAPADA et. al
FACTS: Respondents 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 for illegal dismissal and non-payment of overtime pay,
holiday pay, rest day pay, allowances and separation pay against petitioner before the
Labor Arbiter. On his part, petitioner imputed abandonment of work against respondents.
LA Gan rendered decision against petitioner. Petitioner appealed to the NLRC
which granted the appeal and ordered respondents reinstatement but without backwages.
Respondents filed an MR but was denied. Respondents filed with the Labor Arbiter an ExParte Motion to Set Case for Conference with Motion, they averred that despite the
issuance and subsequent finality of the NLRC Resolution which likewise ordered
respondents reinstatement, petitioner still refused to reinstate them. They 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. Since the parties failed to come to
terms of the issue of the monetary award, LA through Fiscal Examiner Trinchera issued an
undated computation. LA Castillon then issued a writ of execution to enforce the monetary
award in accordance with the computation. By virtue of such writ, petitioners properties
were levied and set for auction sale where the respondents were the only bidders. Later,
petitioners claimed that they could not take possession of the properties because they were
padlocked by the petitioner. They asked LA Castillon to issue a break/open order.
Petitioner then filed a motion to quash the writ of execution, notice of sale/levy. It stated
that NLRCs decision did not include payment of backwages but only reinstatement
therefore the writ of execution was null and void. CA dismissed the petition and agreed
with LA Castillons ratiocination that the subject of the writ were accrued salaries owing to
respondents by virtue of the reinstatement order of LA as provided in Article 223.
ISSUE: 1. Whether the provision of Article 223 of the Labor Code is applicable to this
case?
2. Whether respondents may collect their wages during the period between the Labor
Arbiters order of reinstatement pending appeal and the NLRC Resolution overturning
that of the Labor Arbiter?

HELD: 1. Yes. The Court held 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 or tribunal. It likewise settled the view that the Labor Arbiters 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 employees salaries.
2. Yes. The court went on to declare that after the Labor Arbiters 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 employers unjustified act or omission. If
the delay is due to the employers unjustified refusal, the employer may still be required to
pay the salaries notwithstanding the reversal of the Labor Arbiters Decision.
Applying the two-fold test, Respondents have the right to collect their accrued salaries
during the period between the Labor Arbiters Decision ordering their reinstatement
pending appeal and the NLRC Resolution overturning the same because petitioners
failure to reinstate them either actually or through payroll was due to petitioners
unjustified refusal to effect reinstatement.
1.
A Writ of Execution was issued by LA Gan on April 22, 2002. However, until the
issuance of the September 5, 2002 NLRC Resolution overturning Labor Arbiter Gans
Decision, petitioner still failed to reinstate respondents or effect payroll reinstatement.
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.
2.
After petitioner was served with the Writ of Execution dated April 22, 2002 he
promised that he would first refer the matter to his counsel as he could not effectively act
on the order of execution without the latters advice. 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 petitioners
appeal. Evidently, the delay in the execution of respondents reinstatement was due to
petitioners unjustified refusal to effect the same.
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.

39. Garcia - Cathy

GARCIA vs KJ COMMERCIAL & REYNALDO QUE

FACTS: Respondent owns trucks and engages in the business of distributing

cement products. It employed as truck drivers and truck helpers petitioners.
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. Petitioners then filed with the LA a complaint for
illegal dismissal, underpayment of salary and non-payment of service incentive
leave and thirteenth month pay.
In his 30 October 2008 Decision, LA decided in favor of respondents stating that
complainants were illegally dismissed from their work and they are 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. KJ Commercial appealed to the NLRC. It filed before the NLRC
a motion to reduce bond and posted a P50,000 cash bond. In its 9 March 2009
Decision, the NLRC dismissed the appeal for non-perfection of the appeal and
held 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.
. KJ filed a motion for reconsideration and posted a P2,562,930 surety bond and .
In its 8 February 2010 Resolution, NLRC granted the motion stating that there has
been 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. Petitioners filed an MR which was
denied by NLRC on June 25, 2010. They then filed a petition for certiorari with the
CA. CA affirmed the decision of NLRC on 29 April 2011.
ISSUE: Whether or not LAs 30 October 2008 Decision became final and executory for non
perfection of the appeal; thus, the NLRCs 8 February and 25 June 2010 Resolutions and
the Court of Appeals 29 April 2011 Decision are void for lack of jurisdiction?
HELD: NO. Petitioner contends that the labor arbiters monetary award has
already reached finality, since private respondents were not able to file a timely
appeal before the NLRC, since they have failed to post the required surety bond.
KJ Commercials filing of a motion to reduce bond and delayed posting of the
P2,562,930 surety bond did not render the Labor Arbiters 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. The filing of
a motion to reduce bond and compliance with the two conditions stop the
running of the period to perfect an appeal.
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

appellants 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.
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.
In the present case, KJ Commercial showed willingness to post a partial bond. In
fact, it 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.
WHEREFORE, the Court DENIES the petition and AFFIRMS the decision of CA
40. Ong - Krystle
ONG vs CA
G.R. No. 152494
September 22, 2004
YNARES-SANTIAGO, J: p
FACTS: Ong, owner of Milestone Metal Mfg. was charged before the NLRC for illegal
dismissal, underpayment of wages and non-payment of monetary benefits by his
employees, herein private respondents. Ong allegedly had to adopt a rotation scheme
reducing his employees workdays to 3 days a week or less for indefinite period due to
economic crisis affecting his business. The Labor Arbiter ruled in favor of the
respondents awarding P1.1M representing wage differential, payment of benefits and
attorneys fees and ordered Ong to pay separation pay equivalent to month salary for
every year of service of respondents. Ong filed a notice and memorandum of appeal
with the NLRC but instead of posting the required cash or surety bond, he filed a motion
to reduce the appeal bond. The NLRC denied the motion and the subsequent motion for
reconsideration due to Ongs failure to post the required cash or surety bond. On appeal
for certiorari, the CA dismissed Ongs appeal for non-perfection of appeal and his
subsequent appeal for reconsideration was likewise dismissed for lack of merit.
ISSUE: Whether or not the CA erred in dismissing petitioners appeal which was
seasonably filed?
HELD: NO. The right to appeal is not a natural right but a statutory privilege i.e. it must
comply with the requirements of the rule or law. Art. 223 of the Labor Code provides:
Appeal. Decisions, awards, or orders of the Labor Arbiter are final and executory 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 xxx xxx in the amount
equivalent to the monetary award in the judgment appealed from. Section 3, Rule VI of
the New Rules of Procedure of the NLRC provides: 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. 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 (Phil.Transmarine Carriers, Inc. v. Cortina, G.R. No. 146094, 12
November 2003). For petitioners failure to post a full or partial appeal bond within the
prescribed period, his appeal was not perfected and the NLRC has no authority to
entertain the appeal nor reverse the decision of the Labor Arbiter which has become
final and executory.
The Court denied and dismissed the petition for lack of merit, affirming the assailed
decision of the Court of Appeals. No costs.
41. Rosewood - Krystle
ROSEWOOD PROCESSING INC. vs NLRC
G.R. Nos. 116476-84
May 21, 1998
PANGANIBAN, J: p
FACTS: Six (6) security guards, private respondents herein, filed a complaint against
their employer, Veterans Phil. Scout Security Agency (Veterans for brevity), for illegal
dismissal, unpaid wages, underpayment of wages and non-payment of other monetary
benefits. Petitioner Rosewood was impleaded as third-party respondent by Veterans
being an indirect employer of the guards during some points in time. The Labor Arbiter
rendered a decision ordering Veterans and Rosewood to pay jointly and severally the
complainants a total of P789,154.39 plus attorneys fees. Rosewood appealed to the
NLRC but was dismissed for failure to file the required appeal bond within the
reglementary period. Rosewood filed a motion for reconsideration contending that it
timely filed a Notice of Appeal with Memorandum on Appeal, a Motion to Reduce
Appeal Bond and a surety bond of P50,000 issued by Prudential Guarantee and
Assurance, Inc. The NLRC denied the motion for recon for lack of merit.
ISSUES:
1). Whether or not petitioners appeal to the NLRC was perfected on time?
2). Whether or not petitioner is solidarily liable with the security agency for payment of
salary differentials to the complainants?
HELD:
1). YES. While it is indisputable that the appeal to the Commission of the decisions,
awards or orders of the Labor Arbiter should be made within ten (10) calendar days
from receipt of such decisions, awards, or orders and may be perfected only upon
posting of a cash or surety bond in an amount equivalent to the monetary award in the
judgment appealed from (Art. 223 of the Labor Code), the Court on some cases
(Quiambao vs NLRC, 254 SCRA 211, 216-217, March 4, 1996; Globe Gen. Services &
Security Agency vs NLRC, 249 SCRA 408, 414-415, October 23 1995) had relaxed the
appeal bond requirement if justified by substantial compliance with the rule. The Court
noted that the NLRC dismissed the appeal due to late filing of the appeal bond while

petitioner filed its memorandum of appeal 10 days after its receipt of the arbiters
decision together with a motion to reduce the appeal bond accompanied by a P50,000
surety bond. The Court held that with petitioners motion to reduce the bond together
with a surety bond, it has substantially complied with the Labor Code. The Court also
finds petitioners motion to reduce the appeal bond meritorious while the NLRC acted
with grave abuse of discretion in ignoring the merits of petitioners motions which
caused its dismissal.
2). YES. The liability of petitioner as an indirect employer was provided under Articles
106, 107 and 109 of the Labor Code. However, petitioners liability to the guards as
contractor of the security agency extends only to the period during which they are
working for the petitioner and ends when the guards were reassigned to another
contractor. Further, petitioners liability is only limited to the wage difference if any,
between the contract price with the security agency and the statutory minimum wage.
Petitioner cannot be held liable for back wages and separation pay as there is no
showing that it committed or conspired in the illegal dismissal of the security guards.
The Court partially granted the petition. The assailed decision of the NLRC was
modified such that petitioner, with the Security Agency, is solidarily liable to pay
complainants wage differentials during the period that the complainants were actually
under its employ. Petitioner was exonerated from payment of back wages and
separation pay. The NLRC was required to recompute the wage differentials liability of
petitioner within 15 days from finality of its decision. No pronouncement as to costs.
42. FSFI - Krystle
FILIPINAS SYSTEMS, INC. vs. NLRC
G. R. No. 153859 December 11, 2003
PUNO, J.: p
FACTS: A complaint for illegal dismissal and monetary claims were filed by private
respondents against their employer, Filipinas Systems, Inc. (Filsystems for brevity).
Filsystems failed to file its position paper in spite of the order of the Labor Arbiter
prompting the Labor Arbiter to decide in favor of respondents in the illegal dismissal
complaints and awarded their monetary claims. Filsystems appealed to the NLRC
submitting for the first time evidence showing that respondents were project employees
whose dismissal was due to the discontinuation of the project they were assigned.
Respondents questioned the jurisdiction of the NLRC over the appeal as petitioner
belatedly file the appeal bond however, the NLRC assumed jurisdiction and remanded
the case to the Labor Arbiter for further proceedings. Respondents motion for
reconsideration was denied so they appeal to the CA via a Petition for Certiorari. The
CA ruled that the NLRC lacks jurisdiction over the appeal for late filing of the appeal
bond and reinstated the Labor Arbiters decision. Peitioners motion for reconsideration
was denied.
ISSUES: Whether or not the NLRC acquired jurisdiction over petitioners appeal?
HELD: NO. Art. 223 of the Labor Code and Section 1 of the NLRC Rules of Procedure
provide a ten (10)-day period from receipt of the decision of the Arbiter to file an appeal
together with an appeal bond if the decision involves a monetary award. Records
showed that petitioners received a copy of the Arbiters decision on October 31. Their

memorandum of appeal was dated November 9, but their appeal bond was executed
only on November 17; no partial payment of the bond was made within the
reglementary period nor did they submit an explanation for its late filing. Thereof, the
late filing of the bond divested the NLRC of its jurisdiction to entertain petitioners
appeal. Further, petitioners failed to submit their evidence to the Labor Arbiter in spite of
the opportunities given them and submit the evidence instead to the NLRC when the
decision became adverse to them.
The Court dismissed the petition; the decision of the Labor Arbiter was reinstated with
the modification that if reinstatement of respondents is not feasible, petitioner should
pay their separation pay in accordance with law.
43. Buenaobra - Japo
Case No. 43 Buenaobra, et. al. vs Lim King Guan G.R. No. 150147 January 20, 2004
FACTS:
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 13 month pay, unpaid wages, interest,
moral and exemplary damages and attorneys fees.
On February 23, 1993 the Labor Arbiter (LA) de Vera decided in favor of the
petitioners ordering UNIX to pay the former the following (more than 8Million):
P 5,821,838.40 as backwages;
P 1,484,912.00 as separation pay;
P 527,748.00 as wage differentials;
P 33,830.00 as regular holiday pay differentials; and
P 365,551.95 as proportionate 13th month pay for 1990.
The decision of the LA became final and executory as neither of the parties
appealed.
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 LA de Vera. A judgment was rendered by LA Pati in favor
again of the petitioners piercing the veil of corporate fiction of the two respondent sister
companies ordering them to pay the 8M plus 3M and 1M for moral and exemplary
damages.
On July 30, 1998, 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 before the NLRC. 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. The 3 Division of the NLRC denied
the motion to exempt to post appeal bond and instead ordered them to post the appeal
bond of 8M within unextendable period of 10 days upon receipt.
th

rd

The petitioners argued that timely posting of the appeal bond is mandatory for the
perfection of the appeal and should be complied with hence they moved for the
reconsideration of the decision rendered by the 3 division of the NLRC. The NLRC
dismissed the petitioners MR for lack of merit and allowed respondents Supplemental
Memorandum of Appeal. Hence, petitioners elevated it to the CA 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.
CA dismissed it.
ISSUE:
Whether or not respondents be allowed to appeal and post an appeal bond even
beyond the reglementary period provided in Article 223 of the Labor Code.
RULING:
Affirmative. Respondent should be allowed to appeal and post appeal bond. 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. 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. 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.
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 Patis 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.
rd

44. Lepanto - Japo

Case No. 44 Lepanto vs Belio Icao G.R. No. 196047 January 15, 2014
FACTS:
Respondent Icao filed a complaint for illegal dismissal and damages against
herein petitioner Lepanto Consolidated Mining Company (LCMC) and its CEO Felipe

Yap before the Arbitration Branch of the NLRC. Icao was a former employee of the
company and worked as the Lead Miner in its underground mine in Paco, Mankayan,
Benguet. On February 4, 2008, the company ordered the dismissal from employment of
Icao due to breach of trust and confidence and act of highgrading (or act of concealing,
possessing or unauthorized extraction of highgrade material/ore without proper
authority). This order stemmed from what transpired on January 4, 2008, when Icao
allegedly had in his possession a wrapped object containing gold bearing highgrade
ores found in his skullguard upon being apprehended by the security guards of the
company. Icao denied the charge against him and claimed that his dismissal from work
was without just or authorized cause.
The Labor Arbiter ruled in favor of Icao on September 30, 2008. It found out that
the charge of highgrading was fabricated and there was no just cause for the dismissal
of respondent. It further 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 and 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. LCMC was ordered to pay Icao his full backwages
amounting to P345, 879.45.
LCMC appealed to the NLRC. On February 29, 2009, the NLRC 1 st Division ruled
for the dismissal on the ground that there was non-perfection of the appeal provided for
under Article 223 of the Labor Code and consequently declaring LAs decision to be
final and executory. It noted that instead of posting an appeal bond required under the
Labor Code for the perfection of an appeal, LCMC and its CEO filed a Consolidated
Motion For Release Of Cash Bond And To Apply Bond Subject For Release As
Payment For Appeal Bond (Consolidated Motion). 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, and apply the 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. 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.
An appeal before the CA was made but to no avail, said court affirmed the
NLRCs decision of dismissal due to non-perfection of appeal, that the posting of the
appeal bond is indispensable jurisdictional requirement. However, the CA dropped the
CEO as a party to this case as it found that no specific act was alleged in private
respondents pleadings to show that he had a hand in Icaos illegal dismissal; much
less, that he acted in bad faith.
ISSUE:
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.
RULING:
Affirmative.

We reiterate our pronouncement in Araneta v. Rodas,22where 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.
First, there is no question that the appeal was filed within the 10-day
reglementary period.23Except 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 in the separate case Dangiw
Siggaao, which was earlier decided in its favor.
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 ofP401,610.84 posted in Dangiw Siggaao is
more than enough to cover the appeal bond in the amount ofP345,879.45 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 employers appeal eventually fails.There was no showing at all of any
attempt on the part of petitioner to evade the posting of the appeal bond
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.
45. Bergonio - Japo
Case No. 45 Bergonio vs SEAIR G.R. No. 195227 April 21, 2014
FACTS:
In 2004, petitioners filed before the LA a complaint for illegal dismissal and illegal
suspension with prayer of reinstatement against respondents. On May 31, 2005, the LA
ruled in favor of the petitioners that they were illegally dismissed and suspended and
ordered respondent among others, to immediately reinstate the petitioners with full
backwages. On August 20, 2005, petitioners filed before LA a Motion for issuance of

Writ of Execution and for their immediate reinstatement. A pre-execution conference

was made and respondent manifested their intention to reinstate petitioners in the
payroll but it did not materialize and instead the respondents subsequently filed an
Opposition to the Motion for execution on October 3, 2005 arguing its strained
relationship with the petitioners because of threatening text messages.
On October 7, 2005, LA issued a Writ of Execution. However, it was returned
unsatisfied prompting the petitioners to file for a recomputation of accrued wages that
was granted by LA.
On February 21, 2006, FOUR MONTHS after the Oct. 7, 2005 issuance of the
Writ of Execution, repondents issued a Memorandum directing petitioner to report for
work on February 24, 2006 at Clark-Field, Pampanga but petitioners failed to report
prompting the respondent to move for the suspension of the reinstatement.
Meanwhile, the May 31, 2005 decision was appealed by the respondent to the
NLRC but the latter dismissed the same on the ground of non-perfection of appeal on
Nov. 29, 06. And on February 6, 2007, the NLRC issued an Entry of Judgment
declaring the Nov 29, 06 decision final and executory. In this regard, another Writ of
Execution was issued by the LA together with A Notice of Garnishment sent to the
respondents depositary bank in the amount of 1.9M.
On Dec. 18, 07 respondents got a partly favorable decision when it elevated the
case to the CA, ruling that the dismissal of the petitioners was in fact valid.
But the petitioners filed with LA an Urgent Ex-Parte Motion for the Immediate
Release of the Garnished amount and LA noted that due to respondents refusal to
reinstate petitioners despite the final and executory nature of the Reinstatement Order
on May 31, 05 - the accrued wages should be computed until the the Dec. 18, 07 CA
decision reversing LAs earlier ruling of illegal dismissal, - amounting to P 3, 078,
366.33. The LA granted the Urgent Ex-Parte Motion and affirmed in toto by the NLRC
on July 16, 08.
Again, the respondent assailed the July 16, 08 NLRC decision before the CA.
The appellate court ruled in favor of respondents and remanded the case to the
Computation and Examination Unit of the NLRC for proper computation only up to Feb.
24, 06. Furthermore, CA agrees that the Reinstatement is immediate in nature and
should be executed even pending appeal until the decision is reversed by a higher court
--- applying this principle, the computation should be up to Dec. 18 CA decision BUT the
CA further pointed out that the petitioners cannot do this computation because the delay
of the reinstatement was WITHOUT the fault of the employer as it was petitioners who
did not show up on Feb. 24 return-to-work order of the respondent, in effect barring
them to compute backwages up to Dec. 18, 07. Accordingly, CA reversed, for grave
abuse of discretion, the NLRC July 16, 08 decision that affirmed LAs order to release
the garnished amount and recomputation of backwages.
ISSUE:
Whether or not 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.
RULING:
Negative.

Under Article 223 (now 229) paragraph 3 of our Labor Code:

Xxxx
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.
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. 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. 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 awrit of execution to
trigger the employers duty to reinstate the dismissed employee.
The reversal by a higher tribunal of the LAs finding (of illegal dismissal),
notwithstanding, an employer, who, despite the LAs 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.
Therule,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 LAs decision.
There are only 2 exceptions in the above rule:
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 employers unjustified act or omission
In reversing the CAs decision for its legal error we apply this exceptions as twofold 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. From the time the
respondents received copy of the LAs 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.
From these facts and without doubt, there was actual delay in the execution of
the reinstatement aspect of the LAs May 31, 2005 decision before it was reversed in
the CAs decision.

SECOND, the cause of the delay whether the delay was not due to the
employers 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 NLRCs 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 returnto-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.
The Court is convinced that the delay in the reinstatement pending appeal was
due to respondents fault. For one, respondent filed several pleading to suspend the
execution of reinstatement. These pleadings to our mind show a determined effort on
the respondents part to prevent or suspend the execution of reinstatement pending
appeal. Another is that NO actual intention to reinstate despite return-to-work directive
being issued as it was only sent to one paryt (Pelaez) who did not act in representation
of the others hence there was really no sufficient notice.
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.

46. Loon
Facts:
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. 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. The respondents counsel also appeared in a preliminary
mandatory conference on July 5, 2001.
LAs Ruling: The LA awarded the petitioners salary differential, service incentive leaves
and 13th month pays. In awarding these claims the LA stated that the burden in proving
the payment of these money claims rests with the employer. However, they were not
awarded backwages, overtime, holiday and premium pays for failure to show that they
rendered overtime work and worked on holidays. Moreover, it was not decided that they
were illegally dismissed for failure to show notice of termination of employment.
NLRC: Both arties appealed to the ruling of the LA. NLRC affirmed LAs ruling with
regard the payment of holiday pay and attorneys fees but vacated the awards of salary
differential, 13th month pays and service incentive leaves. Moreover, NLRC allowed the
respondents to present pieces of evidence for the first time on appeal on the ground
that they have been deprived of due process. It also ruled that petitioners were legally
dismissed due to gross misconduct.
CA: Ruling of the NLRC was affirmed.
Issue: Whether the respondents perfected their appeal before the NLRC
SC: Pursuant to Article 223 of the Labor Code, 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 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. 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., we
ruled that a bonding companys revocation of authority is prospective in application.
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.
47. Mcburnie Facts: On October 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 with the company
EGI as an Executive Vice-President who shall oversee the management of the
companys 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.
LAs Ruling: 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) attorneys fees
equivalent to 10% of the total monetary award.
The respondents appealed the LAs Decision to the NLRC. On November 2004,
they filed their Memorandum of Appeal and Motion to Reduce Bond, 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.
NLRC: NLRC denied the motion to reduce bond, explaining that "in cases involving
monetary award, an employer seeking to appeal the LAs decision to the Commission is
unconditionally required by Art. 223, Labor Code to post bond in the amount equivalent
to the monetary award.
CA: Petitioners Motion to Reduce Appeal Bond was granted. Petitioners were directed
to post appeal bond in the amount of P10,000,000.00. The NLRC was also directed to
give due course to petitioners appeal which was ordered to be remanded to the NLRC
for further proceedings. The CA explained that "while 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." Moreover, the appellate court ruled that such bond was
unreasonable and excessive.
ISSUE: Whether or not the appeal bond should be reduced
SC: 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. 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.
The Court held that the reduction decided upon by the CA was the reasonable amount
to be posted as bond.

48. Pioneer - Donabel

CASE NO. 48: PIONEER TEXTURIZING CORP vs. NLRC
Facts:
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, 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, she was terminated.
On September 22, 1992, de Jesus filed a complaint for illegal dismissal against
petitioners with the Labor Arbiter.
Labor Arbiter:
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 back wages from the
time of her suspension on August 19, 1992.
Petitioners appealed to the public respondent National Labor Relations Commission
(NLRC).
NLRC:

In its July 21, 1994 decision, the NLRC ruled that de Jesus was
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 back wages. 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.
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. 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; CocaCola Bottlers Phil., Inc. v. NLRC, 172 SCRA 751, and Piedad v. Lanao del Norte
Electric Cooperative,154 SCRA 500.
Petitioners' also argued the theory 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 supersedes as bond, which they did in this case, effectively
forestalled and stayed execution of the reinstatement order of the Labor Arbiter.
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.
Issues:
(1) Whether or not de Jesus was illegally dismissed.
(2) Whether or not an order for reinstatement needs a writ of execution.
Held:
(1) Yes, de Jesus was illegally dismissed. Based on 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. 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.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.
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 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. 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 employees functions. 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. 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 days quota of work she, just the same, is paid the
daily minimum wage
(2) No, writ of execution is not necessary for order of reinstatement. 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. 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.
Peoples 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.
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 awards becomes final and executory. It cannot
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
content is quite obvious, 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, 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. Statutes, as a
rule, are to be construed in the light of the purpose to be achieved and the evil sought to
be remedied and where statues are fairly susceptible of two or more construction, that
construction should be adopted which will most tend to give effect to the manifest intent
of the law maker 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.
49. Roquero - Donabel
CASE NO. 49: ALEJANDRO ROQUERO vs. PHILIPPINE AIRLINES, INC
Facts:
Alejandro 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
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. 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. They 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.
Thus, they filed a case for illegal dismissal.
Labor Arbiter:
Dismissal of Roquero and Pabayo was upheld. Both parties are found 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 attorneys fees to the complainants.

While the case was on appeal with the 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.
NLRC:
The NLRC found PAL guilty of instigation and ordered reinstatement to their
former positions but without backwages.
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. PALs petition was referred to the Court of Appeals.
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. The motion was granted in a Resolution
promulgated by the Former Thirteenth Division of the Court of Appeals on January 29,
2002.
Court of Appeals:
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 attorneys fees to Roquero on the ground that one
who has been validly dismissed is not entitled to those benefits.
Issues:
(1) Whether or not the instigated employee shall be solely responsible for an action
arising from the instigation perpetrated by the employer.
(2) whether or not the executory nature of the decision, more so the reinstatement
aspect of a labor tribunals order be halted by a petition having been filed in higher
courts without any restraining order or preliminary injunction.
(3) Whether or not the employer who refused to reinstate the employee despite a writ
duly issued be held to pay the salary of the subject employee from the time he was
ordered reinstated up to the time of the reversal of the decision.
Held:
(1) 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. 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.
Roquero is guilty of serious misconduct for possessing and using shabu. For serious
misconduct to warrant the dismissal of an employee, it (1) must be serious; (2) must
relate to the performance of the employees duty; and (3) must show that the employee

has become unit to continue working for the employer. It is of public knowledge that
drugs can damage the mental faculties of the user. Roquero was tasked with the repair
and maintenance of PALs 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.
There was 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 employers decision to dismiss him.
(2) 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.
(3)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.
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. 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.

50. Air phil - Donabel

CASE NO. 50: Air Philippines Corporation vs. Enrico Zamora
Facts:
Enrico Zamora (Zamora) was employed with Air Philippines Corporation (APC) as Flight
Deck Crew when 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. APC 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.
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, GrandAir.
Labor Arbiter:
Declared APC liable for constructive dismissal and ordered the reinstate
complainant to his position as B-737 Captain without loss of seniority right
immediately upon receipt thereof, Pay complainant his full backwages from May
15, 1997 up to the promulgation of this decision, TWO MILLION PESOS (P2,
000,000.00) in the concept of moral damages, ONE MILLION PESOS
(P1,000,000.00) as exemplary damages and attorneys fees equivalent to TEN
PERCENT (10%) of the total award.
Zamora immediately filed a Motion for Execution of the order of reinstatement.
Meanwhile, APC filed with the NLRC an appeal assailing the finding of the Labor Arbiter
that it was liable for constructive dismissal.
NLRC:
The NLRC granted the appeal in a Resolution dated and held that no dismissal,
constructive or otherwise, took place for it was Zamora himself who voluntarily
terminated his employment by not reporting for work and by joining a competitor
Grand Air. However, upon Motion for Reconsideration filed by Zamora, the
NLRC, in a Resolution dated December 17, 1999, modified its earlier Resolution.
Court of Appeals:
APC hereafter filed 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. 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. APC filed a Motion for Reconsideration and attached the documents
required by the Court but it was denied.
Issues:
(1) Whether or not the dismissal issued by the Court of Appeals was valid on the
ground that petitioner failed to attach required documents.
(2) Whether or not the employer is obligated to reinstate and pay the wages of the
dismissed employee during the period of appeal.
Held:
(1) It is readily apparent in this case that the Court of Appeals was overzealous in its
enforcement of the rules. 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. In sum, we annul and set aside the January 11, 2000 and May 23, 2001
Resolutions of the Court of Appeals.
(2) Rather than remand it to the Court of Appeals for resolution, the main issue was
resolved in an expedite matters. The Supreme Court ruled that 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. it was 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.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.
There is a policy elevated in this ruling. In Aris (Phil.) Inc. v. National Labor Relations
Commission, it was held that with respect to decisions reinstating employees, the law
itself has determined a sufficiently overwhelming reason for its execution pending
appeal. It is 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.

51. Lansangan LANSANGAN vs. AMKOR TECHNOLOGY January 9 2009

Facts: 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 Cendaa (petitioners) for
"stealing company time." Respondent thus investigated the matter, requiring petitioners
to submit their written explanation. In handwritten letters, petitioners admitted their

wrongdoing. Respondent thereupon terminated petitioners for "extremely serious

offenses" as defined in its Code of Discipline, prompting petitioners to file a complaint
for illegal dismissal against it.
LAs Ruling: Labor Arbiter Amansec, dismissed petitioners complaint, he having found
them guilty of "Swiping another employees I.D. card or requesting another employee to
swipe ones 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. 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.
NLRC: The LAs decision was modified and the portion regarding the reinstatement of
the petitioners was deleted.
CA: The CA affirmed the finding that petitioners were guilty of misconduct and the like,
and further ordered respondent to "pay petitioners their corresponding backwages
without qualification and deduction for the period covering October 20, 2004 (date of the
Arbiters decision) up to June 30, 2005 (date of the NLRC Decision)," citing Article 223
of the Labor Code and Roquero v. Philippine Airlines.
ISSUE: Whether or not petitioners are entitled to receive backwages pursuant to Article
223
SC: Roquero, as well as Article 22318 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.

52. Genuino -

Facts: Citibank is an American banking corporation duly licensed to do business

in the Philippines. Genuino was employed by Citibank as Treasury Sales Division
Head with the rank of Assistant Vice-President. On August 23, 1993, Citibank
sent Genuino a letter charging her with "knowledge and/or involvement" in
transactions "which were irregular or even fraudulent and was informed she was
under preventive suspension. She was further directed to explain in writing why
she should not be terminated. Petitioners counsel replied and demanded a bill of
particular regarding the charges against her. The bank claimed that the petitioner
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 other companies and that they made money in the process.

Genuino did not appear in the administrative investigation and thereafter Citibank
informed Genuino of the result of their investigation and was further informed
thet her 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. Genuino filed before the Labor Arbiter a
Complaint for illegal suspension and illegal dismissal with damages
Labor Arbiter
Held that the dismissal was without just cause and in violation of her right to due
process, and the bank is ordered to reinstate complainant immediately and pay
other benefits, with backwages . Both parties appealed to the NLRC.
NLRC
reversed the Labor Arbiter's decision and declared that the dismissal of the
complainant valid and legal but ORDERING bank to pay the salaries due to the
complainant from the date it reinstated complainant in the payroll. The parties
filed a petition for certiorari before the Court of Appeals.
CA
only modified the amount of indemnity (P5000).
Citibank contends that the Labor Arbiters decision in upholding the right of
Genuino to reinstatement is not supported by evidence thus there can be no right
to payroll reinstatement.
ISSUE: WON bank shall pay the salaries due the complainant from the date or
reinstatement up to the date of final decision.
HELD:
The court held that the dismissal was for just cause but lacked due process due
to failure of the bank to meet the requirement of twin notices. 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. Since the notice
of charges given to Genuino is inadequate for not specifying the specific acts and
surrounding circumstances of the transactions, the dismissal could not be in
accordance with due process. However the Court nevertheless find Genuino's
dismissal justified. [L]oss of confidence is a valid ground for dismissing an
employee.It is sufficient if there is some basis for such loss of confidence. In this
case, Genuino was tasked to solicit investments and keep them in Citibank.
Curiously, Genuino did not even dissuade the depositors from withdrawing their
monies from Citibank. The Court was thus compelled to conclude that Genuino
did not have her employer's interest. Furthermore, Court cancels the directive of
NLRC directing the bank to pay salaries due to the complainant from the date it
reinstated complainant in the payroll up to and until the date of this decision,
view of the Courts finding that the dismissal is valid. 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. 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.

53. GARCIA VS PAL

FACTS: an administrative charge was filed by PAL against its employees-herein
petitioners 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
Centers Toolroom. After due notice, PAL dismissed petitioners prompting them
to file a complaint for illegal dismissal and damages.
Labor Arbiter
resolved in their favor, ordering PAL to immediately comply with the
reinstatement aspect of the decision.
Prior to the promulgation of the Labor Arbiters decision, PAL was under
Permanent Rehabilitation Receiver due to severe financial loss. Respondent
appealed to the NLRC
NLRC
reversed said decision and dismissed petitioners complaint for lack of merit.
Subsequently the Labor Arbiter issued a Writ of Execution (Writ) respecting the
reinstatement aspect and issued a Notice of Garnishment (Notice). Respondent
filed an Urgent Petition for Injunction with the NLRC which 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. The case was
elevated to appellate court
Court of appeals
nullified 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 arbiters 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

ISSUE: whether or not petitioners may collect their wages during the period
between the Labor Arbiters order of reinstatement pending appeal and the NLRC
decision overturning that of the Labor Arbiter
HELD:
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. the Genuino ruling not only
disregards the social justice principles behind the rule, but also institutes a
scheme unduly favorable to management. 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. 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. It
was ruled that the inaction of the Labor Arbiter who failed to act upon the
employees motion for the issuance of a writ of execution may no longer
adversely affect the cause of the dismissed employee in view of the selfexecutory nature of the order of reinstatement. After the labor arbiters 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. 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 employers unjustified act or omission
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. Case law recognizes that unless there is a
restraining order, the implementation of the order of reinstatement is ministerial
and mandatory. This injunction or suspension of claims by legislative fiat
partakes of the nature of a restraining order that constitutes a legal justification
for respondents non-compliance with the reinstatement order. Such being the
case, respondents obligation to pay the salaries pending appeal, as the normal
effect of the non-exercise of the options, did not attach.
54.
MT. CARMEL COLLEGEvs. JOCELYN RESUENA
FACTS: Petitioner Mt. Carmel College is a private educational institution and
administered by the Carmelite Fathers . 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 explain in writing why they
should not be dismissed for loss of trust and confidence for joining the protest
action. After a hearing dismissal or suspension of respondents were
recommended. On May 15 1998 respondents were terminated by petitioner.
Respondents filed a complaint for illegal dismissal.
Labor Arbiter Drilon issued a decision affirming validity of termination dated 25
May 1999. On 9 September 1999, Labor Arbiter Drilon issued to the parties a
Notice of Judgment/Decision of his decision. The notice indicated that the
reinstatement of the respondents. Petitioner appealed to the NLRC.
NLRC declared the termination of respondents to be illegal. It ordered the
reinstatement of respondents, with payment of backwages or payment of
separation pay as computed in the appealed decision. The case was elevated to
the Court of Appeals
COurt of Appeals
decided that [NLRC] correctly held that even if participation in the protest picket
is rather improper or disappointing to the School Administrator, termination it is
definitely too harsh and 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. Hence, appeal to Supreme
Court.
Petitioner claims that Labor Arbiter exceeded his jurisdiction in issuing the writ of
execution despite the fact that his decision did not order reinstatement. The
petitioner further 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 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
Issues: (1) whether reinstatement in the instant case is self-executory and does
not need a writ of execution for its enforcement
(2) whether the continuing award of backwages is proper.
Held:
1.
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. 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. 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.
2.
Petitioner seems to have missed that the 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. 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.
55. Buenviaje vs CA
FACTS:
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. NLRC reversed the decision and
ordered the reinstatement of petitioners with payment of full wages and proportionate
13th month pay. On August 30, 1996 Cottonway filed a manifestation with NLRC
claiming that the petitioners have lost their employment for failing to comply with the
return to work order. 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.
Cottonway filed another manifestation on march 4, 1997 informing NLRC that
petitioners have found work elsewhere.
LA - 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.
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. 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.
CA granted Cottonways petition for certiorari ruling 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.
ISSUE:
WON the Honorable Court of Appeals gravely abused its discretion amounting to lack of
and/or in excess of jurisdiction in reinstating the irregular and illegal April 8, 1998 Order
of Honorable Arbiter Romulus Protasio
HELD:
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 relationshipIf 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.

56. Pfizer vs Velasco

FACTS:
Respondent was on leave when she received a show- cause notice from petitioner,
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 and ordered the surrender
of accountabilities. A second show-cause notice was sent to her informing her of the
developments in the investigation. 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.
LA rendered Velascos dismissal illegal and ordered her reinstatement as well as
payment of backwages, moral and exemplary damages and attorneys fees. NLRC
modified the ruling and deleted the award of damages.
CA annulled the previous rulings and declared respondents dismissal with just cause
and dismissed her complaint for illegal dismissal. CA later modified its ruling by ordering
the payment of respondents back wages from the date of the Labor Arbiters Decision
dated December 5, 2003 up to the Court of Appeals Decision dated November 23,
2005.
ISSUE:
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 Arbiters
decision ordering her reinstatement until November 23, 2005, when the Court of
Appeals rendered its decision declaring Velascos dismissal valid.
HELD:
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, PFIZERs 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 respondents 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 respondents noncompliance 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
PFIZERs 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.
In the case at bar, respondents 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 PFIZERs position that respondents 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 respondents

demand at all. As it was, PFIZERs failure to effect reinstatement and accept

respondents offer to terminate her employment relationship with the company meant
that, prior to the Court of Appeals reversal in the November 23, 2005 Decision,
PFIZERs liability for backwages continued to accrue for the period not covered by the
writ of execution dated May 24, 2005 until November 23, 2005.
. 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 respondents part.

57. Wenphil - Ana

Case No. 57: Wenphil Corp. vs. Abing, GR No. 207983, April 7, 2014
Facts:
This case stemmed from a complaint for illegal dismissal filed by the respondents,
Almer Abing and Anabelle Tuazon, against Wenphil.
On December 8, 2000, LA Geobel A. Bartolabac ruled 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. LA
Bartolabac ordered Wenphil to immediately reinstate the respondents to their
respective positions or to equivalent ones, whether actuall or in the payroll and to
pay the respondents their backwages.
Wenphil appealed to the NLRC on April 16, 2001. In the meantime, the
respondents moved for the immediate execution of the LAs December 8, 2000
decision.
On October 29, 2001, Wenphil and the respondents entered into a compromise
agreement before LA Bartolabac. They agreed to the respondents payroll
reinstatement while Wenphils appeal with the NLRC was ongoing. Wenphil also
agreed to pay the accumulated salaries of the respondents for the payroll until
such time that the questioned decision of LA Bartolabac is either modified,
amended or reversed by the Honorable National Labor Relations Commission.
On January 30, 2002, the NLRC issued a resolution affirming LA Bartolabacs decision
with modifications. Instead of ordering the respondents reinstatement, the NLRC directed
Wenphil to pay the respondents their respective separation pay.
Wenphil filed a petition for certiorari with the CA to question the NLRCs resolutions. On
August 27, 2003, the CA rendered its decision reversing the NLRCs finding that the
respondents had been illegally dismissed. On appeal to the Supreme Court (docketed as
G.R. No. 162447 and dated December 27, 2006), the SC denied the respondents petition for
review and affirmed the CAs resolution. The respondents did not file any motion for
reconsideration to question the SCs decision; thus, the decision became final and
executory on February 15, 2007.
Sometime after the SCs 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. The respondents asserted that although the CAs ruling on
the absence of illegal dismissal was adverse to them, under the law and settled

jurisprudence, they were still entitled to backwages from the time of their
dismissal until the NLRCs decision finding them to be illegally dismissed was
reversed with finality.
LA Bartolabac granted the respondents motion and directed Wenphil to pay each
complainant their salaries on reinstatement.
Both parties appealed to the NLRC. 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. Since the NLRC modified the LAs ruling by
ordering the payment of separation pay in lieu of reinstatement, then the
respondents, were entitled to backwages only up to the finality of the NLRC
decision.
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, the date SCs decision
became final and executor.
The NLRC denied the parties respective appeals in its decision dated March 26,
201034 and affirmed in toto the LAs order.
The CAs Ruling
The CA reversed the NLRC rulings and prescribed a different computation period.
The CA cited the case of Pfizer v. Velasco37 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 employees 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 NLRCs 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.
Issues:
Wenphil maintained that the respondents were no longer entitled to payment of backwages
in view of the modification of the LAs ruling by the NLRC pursuant with their October
29, 2001 compromise agreement.
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
courts tolerance of an unjust and equitable situation.
Ruling of the SC:
We resolve to DENY the petition. An order of reinstatement is immediately
executory even pending appeal. (Art. 223 of the Labor Code).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.
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
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 employers 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 tribunals governing
decision was for the employees illegal dismissal.
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.
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. These two reliefs are not inconsistent with one
another and the labor arbiter can award both simultaneously.
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.
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 NLRCs
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.
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 NLRCs 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 SCs 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.

58. Sy - Ana
Case No. 58: Sy, et. al., vs Fairland Knitcraft Co.
Facts:
Fairland is a domestic corporation engaged in garments business, while Susan
de Leon (Susan) is the owner/proprietress of Weesan Garments (Weesan). The
complaining workers are sewers, trimmers, helpers, a guard and a secretary who
were hired by Weesan.
On December 23, 2002 and on January 2003, workers filed with the Arbitration
Branch of the NLRC a Complaint9 for underpayment and/or non-payment of
wages, and other monetary benefits against Susan/Weesan.
On February 5, 2003, Weesan filed before the DOLE-NCR a report on its
temporary closure for a period of not less than six months. The workers filed an
Amended Complaint, as they are not allowed to work anymore, to include the
charge of illegal dismissal and impleaded Fairland and its manager, Debbie
Manduabas (Debbie), as additional respondents.
A Notice of Hearing12 was thereafter sent to Weesan requesting it to appear before
Labor Arbiter Reyes on April 3, 2003, at 10:00 a.m. On said date and time, Atty.
Geronimo appeared as counsel for Weesan and requested for an extension of
time to file his clients position paper.
On May 16, 2003, Atty. Geronimo filed two separate position papers one for
Fairland15 and another for Susan/Weesan. Atty. Geronimo then filed a
Consolidated Reply18 verified19 both by Susan and Debbie.
Ruling of the Labor Arbiter
On November 26, 2003, Labor Arbiter Reyes rendered his Decision, dismissing
the complaint for lack of merit; and ordering the respondents to pay each
complainant P5,000.00 by way of financial assistance.
Ruling of the National Labor Relations Commission
The workers filed their appeal which was granted by the NLRC,ruling that the
dismissal of complainants is declared illegal. Respondents are ordered to
reinstate complainants with full backwages with legal interests.
Atty. Geronimo filed a Motion for Reconsideration.25 However, Fairland filed
another Motion for Reconsideration26 through 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
In-affirm ng CA ung NLRC na may illegal dismissal na naganap. Sabi n g CA,
solidarily liable si Weeson with Fairland as labor-only contractor and principal
respectively. Nag-file ang Fairland ng MoR claiming na independent contractor
ang Weesan at nag-file din sila ng Motion for Voluntary Inhibition of two CA
Assoc. Justices. Na-grant ung Inhibition, hence, the case was transferred to CAs
Special Ninth Division for resolution ng MoR ng Fairland.

On May 9, 2008, the CAs Special Ninth Division reversed33 the First Divisions
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.
Syempre, nag-appeal mga workers. Sabi nila, among others, may jurisdiction over the
person of Fairland.
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.
Fairlands 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. 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.
Supreme Court: Grant ang Petition ng Workers
"It is basic that the Labor Arbiter cannot acquire jurisdiction over the person of the
respondent without the latter being served with summons. 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 latters voluntary appearance."
Fairland argued before the CA that it did not engage Atty. Geronimo as its counsel.
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.
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.
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.
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, quoting Article 224 of
the Labor Code.
The Court disagree.
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.
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 counsels
receipt of the decision, order or award, it necessarily follows that the reckoning period for
their finality is likewise the counsels 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 NLRC106 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 CAs conclusion, the said NLRC
Decision became final, as to Fairland, 10 calendar days after Atty. Tecsons receipt107

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 latters filing of pleadings on their behalf.
59. Yupangco - Ana
Case No. 59: Yupangco Cotton Mills vs CA
Facts:
Petitioner claims that a sheriff of the National Labor Relations Commission
"erroneously and unlawfully 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 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
Manilaon 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. It filed an original petition for mandatory injunction with the NLRC on
November 16, 1995. This case is still pending with that Commission.
"6. It filed a complaint in the Regional Trial Court in Manila. 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.
CA dismissed the petition on the ground of Forum Shopping. 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.
In a MoR, petitioner argued that the filing of a complaint for accion
reinvindicatoria 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.
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, were entirely distinct and separate from the reliefs sought and the issues
involved in the proceedings before the Labor Arbiter and the NLRC.
CA denied the MoR.
Issue: whether the Court of Appeals erred in dismissing the petitioner's accion
reinvindicatoria on the ground of lack of jurisdiction of the trial court.
Ruling of SC:

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.
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 possession. What said court do in these
instances, however, is limited to a determination of whether the sheriff has acted
rightful or wrongly in the performance of his duties in the execution of judgment,
more specifically, if he has indeed take 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.
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.
"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."
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 reinvindicatory action
against the execution creditor or the purchaser of the property after the sale at
public auction, or a complaint for damages against the bond filed by the
judgment creditor in favor of the sheriff.
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 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.
60. Ando - Ana
Case No. 60: Ando vs Campo
Facts:
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 LA Pura ruled in respondents
favour, directing PACSI and petitioner to pay P 422, 702.28.
Petitioner and PACSI appealed to the NLRC. In a decision, the NLRC ruled that
petitioner failed to perfect his appeal because he did not pay the supersedeas
bond. Upon finality of the decision, respondents moved for its execution.
To answer for the monetary award, NLRC Acting Sheriff Romeo Pasustento
issued a Notice of Sale on Execution of Personal Property10 over the property in
the name of "Paquito V. Ando x x x 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). 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 latters properties.
On December 27, 2006, the RTC issued an Order12 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,
petitioners 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 filed a petition for certiorari under Rule 65 before the CA. 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.
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. 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."
What he is seeking to be restrained, petitioner maintains, is not the Decision itself
but the manner of its execution.

Held:
The CA did not, in fact, err in upholding the RTCs 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.
There is no doubt in our mind that petitioners 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--vis the Labor
Arbiters 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 petitioners wife is a third party within contemplation of the law.
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.
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 TCT 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.
61. Manila Hotel - Joyce
Manila Hotel v NLRC
FACTS:
Private respondent Marcelo 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, Peoples Republic of China and later terminated due to retrenchment.
Petitioners are the Manila Hotel Corporation (MHC) and the Manila Hotel International Company,
Limited (MHICL).
By virtue of a management agreement with the Palace Hotel, MHICL trained the personnel
and staff of the Palace Hotel at Beijing, China.
[9]

[10]

During his employment with the Mazoon Printing Santos received a letter from Mr. Gerhard R.
Shmidt, General Manager, Palace Hotel, Beijing, China. Mr. Schmidt informed 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.
Santos wrote to Mr. Shmidt and signified his acceptance of the offer.
The Palace Hotel Manager, Mr. Hans J. Henk mailed a ready to sign employment contract to
Santos. Mr. Henk advised 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.
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 familys piggery and poultry
business.
Santos wrote the Palace Hotel and acknowledged Mr. Henks 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. It provided for a monthly salary of nine hundred dollars
(US$900.00) net of taxes, payable fourteen (14) times a year.
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.
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.
On July 22, 1989, Mr. Shmidts 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.
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.
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 attorneys fees equivalent to 20% of the damages prayed for. The complaint
named MHC, MHICL, the Palace Hotel and Mr. Shmidt as respondents.
The LA decided the case in favor of Santos his unearned salaries, moral and exemplary damages,
and attorneys fees.
Petitioners appealed to the NLRC, arguing that the POEA, not the NLRC had jurisdiction over the
case. The NLRC upheld the contention of the petitioners.
Santos filed a MR with the NLRC. The NLRC reversed itself and upheld the contention of Santos
that the case was not cognizable by the POEA as Santos was not an overseas contract worker.
ISSUE: Whether it is the POEA or the LA/NLRC that has jurisdiction of the case
HELD: 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.
[12]

[13]

[14]

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.
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.
[36]

[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).
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 Peoples 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, Peoples 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. He is not an overseas contract worker a fact
which he admits with conviction.
[38]

[39]

[40]

Considering that the NLRC was forum non-conveniens and considering further that no employeremployee relationship existed between MHICL, MHC and respondent Santos, the Labor Arbiter Ceferina
J. Diosana clearly had no jurisdiction over respondents claim.
Labor Arbiters have exclusive and original jurisdiction only over the following:
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 employeremployee 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.
[53]

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.
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.
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.
[54]

[55]

[56]

Case No. 8: Professional Services Inc. vs. CA

Facts:
Natividad Agana was admitted at Medical City because of difficulty of bowel movement
and bloody anal discharge. Dr. Ampil diagnosed her to be suffering from "cancer of the
sigmoid."
Dr. Ampil, assisted by the medical staff of Medical City, performed surgery upon her.
During the surgery, he found that the malignancy in her sigmoid area had spread to her
left ovary, necessitating the removal of certain portions of it. Thus, Dr. Ampil obtained the
consent of Natividads husband, to permit Dr. Fuentes to perform another operation.

However, the operation appeared to be flawed. After a couple of days, Natividad

complained of excruciating pain in her anal region. They told her that the pain was the
natural consequence of the surgical operation performed upon her.
Natividad and her husband went to the United States to seek further treatment of her
cancerous nodes. After 4 months of consultations and laboratory examinations, Natividad
was told that she was free of cancer.
Still suffering from pains. 2 weeks after returning to the Philippines, her daughter found a
piece of gauze protruding from her vagina. Dr. Ampil was immediately informed. He
proceeded to Natividads house where he managed to extract by hand a piece of gauze
measuring 1.5 inches in width. Dr. Ampil then assured Natividad that the pains would soon
vanish.
Despite that, the pains intensified, prompting Natividad to seek treatment at another
hospital. While confined thereat, Dr. Gutierrez detected the presence of a foreign object in
her vagina -- a foul-smelling gauze measuring 1.5 inches in width. The gauze had badly
infected her vaginal vault, which forced stool to excrete through the vagina.

Natividad and her husband filed with the Regional Trial Court a complaint for damages
against PSI (owner of Medical City), Dr. Ampil and Dr. Fuentes.

Pending the outcome of the above case, Natividad died. She was duly substituted by her
children (the Aganas).

RTC: PSI, Dr. Ampil and Dr. Fuentes jointly and severally liable.

CA: affirmed the RTC judgment but dismissed the complaint against Dr. Fuentes.

PSI, Dr. Ampil and the Aganas filed with SC separate petitions for review on certiorari.

SC (First Division): PSI is jointly and severally liable with Dr. Ampil for the following
reasons:
1. There is an employer-employee relationship between Medical City and Dr.
Ampil.
2. PSIs act of publicly displaying in the lobby of the Medical City the names
and specializations of its accredited physicians, including Dr. Ampil,
estopped it from denying the existence of an employer-employee relationship
between them under the doctrine of ostensible agency or agency by estoppel
3. PSIs failed to supervise Dr. Ampil to take an active step in order to remedy
their negligence rendered it directly liable under the doctrine of corporate
negligence.

PSIs contention: 1) there is no employer-employee relationship between it and its

consultant, Dr. Ampil. 2) the doctrine of ostensible agency or agency by estoppel cannot
apply because spouses Agana failed to establish that Natividad relied on the representation

of the hospital in engaging the services of Dr. 3) PSI maintains that the doctrine of
corporate negligence is misplaced because the proximate cause of Natividads injury was
Dr. Ampils negligence
ISSUE: Whether or not there exists an employee-employer relationship, thus making PSI
jointly and severally liable.
HELD: Yes An employer-employee relationship "in effect" exists between the Medical City
and Dr. Ampil. Consequently, both are jointly and severally liable to the Agana.
In the SC decision in Ramos vs. CA

Hospitals exercise significant control in the hiring and firing of consultants and in the
conduct of their work within the hospital premises. Doctors who apply for "consultant"
slots, visiting or attending, are required to submit proof of completion of residency, their
educational qualifications; generally, evidence of accreditation by the appropriate board,
evidence of fellowship in most cases, and references. These requirements are carefully
scrutinized by members of the hospital administration or by a review committee set up by
the hospital who either accept or reject the application. This is particularly true with
respondent hospital.

After a physician is accepted, either as a visiting or attending consultant, he is still

normally required to accomplish more tasks. Further, physicians performance as a
specialist is generally evaluated by a peer review committee. A consultant remiss in his
duties, or a consultant who regularly falls short of the minimum standards acceptable to
the hospital or its peer review committee, is normally politely terminated.

In other words, private hospitals hire, fire and exercise real control over their attending
and visiting "consultant" staff. While "consultants" are not, technically employees, the
control exercised, the hiring, and the right to terminate consultants all fulfill the important
hallmarks of an employer-employee relationship, with the exception of the payment of
wages. In assessing whether such a relationship in fact exists, the control test is
determining. Accordingly, on the basis of the foregoing, for the purpose of allocating
responsibility in medical negligence cases, an employer-employee relationship in effect
exists between hospitals and their attending and visiting physicians.

The basis for holding an employer solidarily responsible for the negligence of its employee
is found in Article 2180 of the Civil Code which considers a person accountable not only for
his own acts but also for those of others based on the

Even assuming that Dr. Ampil is not an employee of Medical City, but an independent
contractor, still the said hospital is liable to the Aganas.
In Nograles, et al. v. Capitol Medical Center, et al., the Court held:

In general, a hospital is not liable for the negligence of an independent contractorphysician. There is, however, an exception to this principle. The hospital may be liable if
the physician is the "ostensible" agent of the hospital.

The doctrine of apparent authority essentially involves two factors to determine the
liability of an independent contractor-physician.
o

First factor focuses on the hospitals manifestationswhether the hospital

acted in a manner which would lead a reasonable person to conclude that the
individual who was alleged to be negligent was an employee or agent of the
hospital

Second factor focuses on the patients reliancewhether the plaintiff acted

in reliance upon the conduct of the hospital or its agent, consistent with
ordinary care and prudence.

Atty. Agana categorically testified that one of the reasons why he chose Dr. Ampil was that
he knew him to be a staff member of Medical City, a prominent and known hospital.

Clearly, PSI is estopped from passing the blame solely to Dr. Ampil. Its act of displaying
his name and those of the other physicians in the public directory at the lobby of the
hospital amounts to holding out to the public that it offers quality medical service through
the listed physicians.

Lastly, PSI had been remiss in its duty. It did not conduct an immediate investigation on
the reported missing gauzes to the great prejudice and agony of its patient. This renders
PSI, not only vicariously liable for the negligence of Dr. Ampil under Article 2180 of the
Civil Code, but also directly liable for its own negligence under Article 2176.