L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
LABOR RELATIONS Art. XII, Sec. 12. The State shall promote the preferential use of
Note:The Labor Code articles cited here are those that are
numbered according to the Codal of Rex Bookstore, 2013 edition.
The renumbering accommodated the revisions introduced to the
Code by RA 10151. If you are using an older codal version, just
subtract six from the article number (e.g., ULP of employers in the
2013 Rex codal is Art. 254. Old number is Art. 248)
Preliminary Discussions: Constitutional Mandates on Labor, Labor
Law, Labor Legislation, Social Legislation
What is Labor?
 As an act: Exertion by human beings of physical or mental
efforts, or both, towards the production of goods and
services.
 As a sector of society: That sector or group in a society,
which derives its livelihood chiefly from rendition of work or
services in exchange for compensation under managerial
direction (Mendoza, 2001).
 Refers to workers, whether agricultural or non-agricultural
Constitutional Mandates on Labor
 The State shall protect and promote the interests of the
Filipino Laborer:
Art. II, Sec. 9. The State shall promote a just and dynamic social
order that will ensure the prosperity and independence of the
nation and free the people from poverty through policies that
provide adequate social services, promote full employment, a rising
standard of living and improved quality of life for all.
Art. II, Sec. 18. The State affirms labor as a primary social economic
force. It shall protect the rights, of workers and promote their
welfare.
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Filipino labor, domestic materials and locally produced goods, and
adopt measures that help make them competitive.
Art XIII, Sec. 14. The State shall protect women by providing safe
and healthful working conditions, taking into account their maternal
functions, and such facilities and opportunities that will enhance
their welfare and enable them to realize their full potential in the
service of the nation.
Art. XV, Sec. 8. The State shall, from time to time, review to upgrade
the pensions and other benefits due to retirees of both the
government and the private sectors
 Rights of Workers
Art. Ill, Sec. 8. The right of the people, including those employed in
the public and private sectors, to form unions, associations, or
societies for purposes not contrary to law, shall not be abridged.
(formation of labor organizations)
Art. Ill, Sec. 18(2). No involuntary servitude in any form shall exist
except as a punishment for a crime whereof the party shall have
been duly convicted.
 Protection to Labor Clause
Art. XIII, Sec. 3 The State shall afford full protection to labor, local
and overseas, organized and unorganized, and promote full
employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization,
collective bargaining and negotiations, and peaceful concerted
activities, including the right to strike in accordance with law. They
shall be entitled to security of tenure, humane conditions of work,
and a living wage. They shall also participate in policy and decision-
making process affecting their rights and benefits as may be
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provided by law.  Constitutional provisions on labor are not self-executory,

Art. XIII, Sec. 3 , cont.
The State shall promote the principle of shared responsibility
between workers and employers and the preferential use of
voluntary modes in settling disputes, including conciliation, and shall
enforce their mutual compliance therewith to foster industrial
peace.
The State shall regulate the relations between workers and
employers, recognizing the right of labor to its just share in the fruits
of production' and the right of enterprises to reasonable returns of
investments, and to expansion and growth.
Participation in Policy and Decision Making Processes
 Phrase included in the 1987 constitution to highlight
worker’s participation in policy-making;
 Added in the Labor Code
o Article 217, Declaration of Policy
o Article 261, Exclusive Bargaining Representation and
Worker’s Participation in Policy and Decision-
Making
hence the need for Social Legislation, Labor Legislation and
Welfare Legislation
 Social Legislation - Laws that provide particular kinds of
protection or benefits to society or segments thereof in
furtherance of social justice.
 Labor Legislation - Statutes, regulations and jurisprudence
governing the relations between capital and labor. It
provides for certain employment standards and a legal
framework for negotiating, adjusting and administering
those standards and other incidents of employment.
 Welfare Legislation - Provides for the minimum economic
security, of the worker and his family in case, of loss of
earnings due to death, old age, disability, dismissal, injury or
disease.
Social Legislation and Labor Legislation, Distinguished

Defines rights of workers under Labor Standards and Labor

Relations:
Under Labor Standards Under Labor Relations
Security of Tenure; Self-organization
Living wage; Collective bargaining and
negotiations
Share in the fruits of production; Peaceful concerted activities,
including strike;
Humane conditions of work. Participation in policy and  Social legislation encompasses labor legislation, thus is
decision-making processes. broader in scope than the latter. All labor laws are social
legislations but not all social legislations are labor laws.
Social, Labor and Welfare Legislation
Labor Law, defined.
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 The law governing the rights and duties of employers and
employees with respect to Labor Standards and Labor
Relations.
 Labor Standards Law deals with the minimum standards as
to wages, hours of work and other terms and conditions of
employment that employers must provide their employees.
 Labor Relations Law defines the status, rights and duties as
well as the institutional mechanisms that govern the
individual and collective interactions between employers,
employees and their representatives.
The Philippine Labor Code, and Other Laws
 Presidential Decree No. 442
o Deals with Labor Standards and Labor Relations
o Became effective November 1, 1974
 Special Laws:
1. Laws on Social Security (SSS Law, GSIS Law, Limited
Portability Law (RA 7699)
2. National Health Insurance Act
3. Paternity Leave Act
4. Retirement Pay Law
5. Home Mutual Development Fund Law
6. Anti-Sexual Harassment Act
7. Anti-Child Labor Act
8. 13th Month Pay Law
9. Migrant Workers and Overseas Filipinos Act of 1995
(R.A. No. 8042, as amended by RA 10151)
10. Expanded Comprehensive Agrarian Reform Law
11. Magna Carta for Public Health Workers
The Aim and Basis of Labor Laws
Labor-related provisions in Other Laws
 Civil Code
a. Art. 1700. The relation between capital and labor
are not merely contractual. They are so impressed
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with public interest that labor contracts must yield
to the common good. Therefore, such contracts are
subject to the special laws on labor unions,
collective bargaining, strikes and lockouts, closed
shop, wages, working conditions, hours of labor
and similar subjects.
b. Art. 1701. Neither capital nor labor shall act
oppressively against the other, or impair the interest
or convenience of the public.
c. Art. 1702. In case of doubt, all labor legislations
and all labor contracts shall be construed in favor
of the safety and decent living for the laborer.
d. Art. 1703. No contract which practically amounts to
involuntary servitude, under any guise whatsoever,
shall be valid.
 Revised Penal Code
a. Art. 289. Formation, maintenance and prohibition of
combination of capital or labor through violence or
threats. — The penalty of arresto mayor and a fine
not exceeding 300 pesos shall be imposed upon any
person who, for the purpose of organizing,
maintaining or preventing coalitions of capital or
labor, strike of laborers or lock-out of employees,
shall employ violence or threats in such a degree as
to compel or force the laborers or employers in the
free and legal exercise of their industry or work, if
the act shall not constitute a more serious offense in
accordance with the provisions of this Code.
 Attainment of Social Justice
o Balance the interest of labor and capital (eliminate
oppression)
o Labor is afforded a greater measure of protection
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 There is greater supply of labor than
demand for their services;
 Those who have less in life should have
more in law;
 The need for employment by labor comes
from vital, and even desperate necessity
(survival);
Social Justice
 “Social justice is … the humanization of laws and the
equalization of social and economic forces by the State so
that justice in its rational and objectively secular conception
may at least be approximated. Social justice means the
PROMOTION OF THE WELFARE of all people, the adoption
by the government of measures calculated to ensure
economic stability of all the component elements of the
society through the maintenance of proper economic and
social equilibrium in the interrelations of- the members of
the community, constitutionally, through the adoption of
measures, legally justifiable, or extra-constitutionally,
through the exercise of powers underlying the existence of
all governments, on the time-honored principle of salus
populi est suprema lex.” (Calalang v. Williams, No. 47800,
December 2, 1940).
MAXIMO CALALANG vs A. D. WILLIAMS, ET AL.,
FACTS:
The National Traffic Commission, in its resolution of July 17,
1940, resolved to recommend to the Director of the Public Works
and to the Secretary of Public Works and Communications
that animal-drawn vehicles be prohibited from passing along the
following for a period of one year from the date of the opening of
the Colgante Bridge to traffic:
1) Rosario Street extending from Plaza Calderon de la Barca
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to Dasmariñas
Street from 7:30Am to 12:30 pm and from 1:30 pm to 530
pm; and
2) along Rizal Avenue extending from the railroad crossing
at Antipolo Street to
Echague Street from 7 am to 11pm
The Chairman of the National Traffic Commission on July 18,
1940 recommended to the Director of Public Works with the
approval of the Secretary of Public Works the adoption of
thethemeasure proposed in the resolution aforementioned in pursu
ance of the provisions of theCommonwealth Act No. 548 which auth
orizes said Director with the approval from the
Secretary of the Public Works and Communication to promulgate rul
es and regulations to regulate and control the use of and traffic on
national roads.
On August 2, 1940, the Director recommended to the
Secretary the approval of the recommendations made by the
Chairman of the National Traffic Commission with modifications. The
Secretary of Public Works approved the recommendations on
August 10,1940. The Mayor of Manila and the Acting Chief of Police
of Manila have enforced and caused to be enforced the rules and
regulation. As a consequence, all animal-drawn vehicles are not
allowed to pass and pick up passengers in the places above
mentioned to the detriment not only of their owners but of the
riding public as well.
ISSUES:
1) Whether the rules and regulations promulgated by the
respondents pursuant to the provisions of Commonwealth Act NO.
548 constitute an unlawful inference with legitimate business or
trade and abridged the right to personal liberty and freedom of
locomotion?
2) Whether the rules and regulations complained of infringe
upon the constitutional precept regarding the promotion
of social justice to insure the well-being and economic security of all
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the people?
RULING:
1) No. The promulgation of the Act aims to promote safe
transit upon and avoid obstructions on national roads in the interest
and convenience of the public. In enacting said law, the National
Assembly was prompted by considerations of public convenience
and welfare. It was inspired by the desire to relieve congestion of
traffic, which is a menace to the public safety. Public welfare lies at
the bottom of the promulgation of the said law and the state in
order to promote the general welfare may interfere with personal
liberty, with property, and with business and occupations. Persons
and property may be subject to all kinds of restraints and burdens in
order to secure the general comfort, health, and prosperity of the
State. To this fundamental aims of the government, the rights of the
individual are subordinated. Liberty is a blessing which should not
be made to prevail over authority because society will fall into
anarchy. Neither should authority be made to prevail over liberty
because then the individual will fall into slavery. The paradox lies in
the fact that the apparent curtailment of liberty is precisely the very
means of insuring its preserving.
2) No. Social justice is “neither communism, nor despotism,
nor atomism, nor anarchy,” but the humanization of laws and the
equalization of social and economic forces by the State so that
justice in its rational and objectively secular conception may at least
be approximated. Social justice means the promotion of the welfare
of all the people, the adoption by the Government of measures
calculated to insure economic stability of all the competent
elements of society, through the maintenance of a proper economic
and social equilibrium in the interrelations of the members of the
community, constitutionally, through the adoption of measures
legally justifiable, or extra-constitutionally, through the exercise of
powers underlying the existence of all governments on the time-
honored principles of salus populi estsuprema lex.
Social justice must be founded on the recognition of the
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necessity of interdependence among divers and diverse units of a
society and of the protection that should be equally and evenly
extended to all groups as a combined force in our social and
economic life, consistent with the fundamental and paramount
objective of the state of promoting health, comfort and quiet of all
persons, and of bringing about “the greatest good to the greatest
number.”
Basic Principles: Preliminary Discussions on the Labor Code
What are the basic principles in the constitution and labor-related
laws on protection to labor?
 The state shall afford full protection to labor, promote full
employment, equal work opportunities without bias or
discrimination, regulate the relations of employers and
employees, and assure workers rights (refer to protection to
labor clause Art. XIII, Sec. 3, 1987 Const. & Art. 3, Labor
Code);
 The relation of capital and labor are impressed with public
interest, hence employment contracts are not ordinary
contracts (Art. 1700, NCC);
 In case of doubt or ambiguity, labor laws and rules are to be
construed in favor of labor (Art. 4, Labor Code, Art. 1702,
Civil Code)
o IF THERE IS DOUBT as to the meaning of the legal
and contractual provision, the above-mentioned
applies.
o IF THE PROVISION IS CLEAR AND UNAMBIGUOUS, it
must be applied in accordance with its express
terms. (Meralco v. NLRC, GR No. 78763, July 12,
1989).
Manila Electric Company vs National Labor Relations Commission
& Apolinario Signo
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FACTS:
Signo was employed in Meralco as supervisor-leadman since
Jan 1963.In 1981, he supervised the installation of electricity in de
Lara’s house in Antipolo. De Lara’s house was not yet within the
required 30-meter distance from the Meralco facility hence he is not
yet within the service scope of Meralco. As a workaround, Signo had
it be declared that a certain sarisari store nearer the facility be
declared as de Lara’s so as to facilitate the installation. Evertything
would have been smooth thereafter but due to fault of the Power
Sales Division of Meralco, de Lara was not billed for a year.
Investigation was conducted and Meralco found out the irregularity
in Signo’s work on de Lara’s electricity installation. Signo was
dismissed on May 18, 1983. Signo filed a case for illegal dismissal
and for backwages. The Lanor Arbiter ruled that though there is a
breach of trust in the actuations of Signo dismissal is a harsh penalty
as Signo has been employed for more than 20 years by Meralco and
has been commended twice before for honesty. The NLRC affirmed
the Labor Arbiter. Meralco appealed.
ISSUE:
Whether or not there has been due process in the dismissal
of Signo.
RULING:
The SC sustained the decision of the NLRC. Well-established is the
principle that findings of administrative agencies which have
acquired expertise because their jurisdiction is confined to specific
matters are generally accorded not only respect but even finality.
Judicial review by this Court on labor cases does not go so far as to
evaluate the sufficiency of the evidence upon which the proper
labor officer or office based his or its determination but is limited to
issues of jurisdiction or grave abuse of discretion.Notwithstanding
the existence of a valid cause for dismissal, such as breach of trust
by an employee, nevertheless, dismissal should not be imposed, as
it is too severe a penalty if the latter has been employed for a
considerable length of time in the service of his employer.
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Reinstatement of respondent Signo is proper in the instant case, but
without the award of backwages, considering the good faith of the
employer in dismissing the respondent.
o The law also recognizes that management has rights
which are also entitled to respect and enforcement
in the interest of fair play (St. Luke's Medical Center
Employee's Assoc, v. NLRC, GR No. 162053, March 7,
2007).
St. Luke’s Medical Center Employees’ Association vs. NLRC
FACTS:
Maribel S. Santos was an X-Ray Technician in the Radiology
department of St. Luke’s. Subsequently, Congress passed and
enacted Republic Act No. 7431 known as the “Radiologic Technology
Act of 1992,” which required that a person must obtain the proper
certificate of registration from the Board of Radiologic Technology
for the practice or offer to practice as a radiology and/or x-ray
technologist in the Philippines. In turn, the Director of the Institute
of Radiology issued a final notice to Santos requiring her to comply
by taking and passing the examination; otherwise St. Lukes may be
compelled to retire her from employment should there be no other
position available where she may be absorbed. Despite extensions
of time within which she could comply, Santos failed to comply with
the requirement for her continued employment.
ISSUE:
Whether or not Santos was validly dismissed for failure to
secure a certificate of registration from the Board of Radiologic
Technology.
RULING:
While the right of workers to security of tenure is
guaranteed by the Constitution, its exercise may be reasonably
regulated pursuant to the police power of the State to safeguard
health, morals, peace, education, order, safety, and the general
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welfare of the people. Consequently, persons who desire to engage
in the learned professions requiring scientific or technical knowledge
may be required to take an examination as a prerequisite to
engaging in their chosen careers. The most concrete example of this
would be in the field of medicine, the practice of which in all its
branches has been closely regulated by the State. It has long been
recognized that the regulation of this field is a reasonable method of
protecting the health and safety of the public to protect the public
from the potentially deadly effects of incompetence and ignorance
among those who would practice medicine. The same rationale
applies in the regulation of the practice of radiologic and x-ray
technology.
The enactment of R.A. (Nos.) 7431 and 4226 are recognized
as an exercise of the State’s inherent police power. It should be
noted that the police power embraces the power to prescribe
regulations to promote the health, morals, educations, good order,
safety or general welfare of the people. The state is justified in
prescribing the specific requirements for x-ray technicians and/or
any other professions connected with the health and safety of its
citizens. St. Luke’s being engaged in the hospital and health care
business, is a proper subject of the cited law; thus, having in mind
the legal requirements of these laws, the latter cannot close its eyes
and [let] complainant-appellant’s private interest override public
interest.
Why the preference for labor over capital?
 Comes from acknowledgement that capital wields more
power than labor; (Sanchez v. Harry Lyons Construction Inc.,
GR No. L-2779, October 18, 1950).
DANIEL SANCHEZ, ET AL. vs. HARRY LYONS CONSTRUCTION, INC.,
ET AL.
FACTS:
Enrique Ramirez and Juan Ramirez were employed by
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Material Distributors, Inc. on December 16, 1966 as warehousemen.
Enrique receives a salary of P450/month which was reduced to
P360/month while Juan receives a salary of 250/month. Daniel
Sanchez was employed by the Harry Lyons Construction, Inc. on
January 1, 1947 as a foreman with a salary of P250/month. Mariano
Javier, Venancio Diaz, Esteban Bautista, Faustino Aquillo, Godofredo
Diamante, Marcial Lazaro, Ambrosio de la Cruz, and Marcelino
Macada were employed as guards by the Harry Lyons Construction,
Inc. on January 1, 1947 with a salary of P5/day.
All the employees agreed that such employment may be
terminated at any time, without previous notice, and they further
agree that salary and wages, shall be computed and paid at the rate
specified up to the date of such termination. They also expressly
waive the benefit of article 302 of the Code of Commerce and that
of any other law, ruling, or custom which might require notice of
discharge or payment of salary or wages after date of the
termination of such employment.
The employees were dismissed by the corporations on
December 31, 1947 without one months' previous notice.
ISSUE:
Whether or not both those paid on a monthly and daily
basis are entitled to the benefit granted in article 302 of the Code of
Commerce.
Whether or not their waiver of such benefits legal and valid.
RULING:
Article 302 of the Code of Commerce reads as follows:
ART. 302. In cases in which no special time is fixed in the
contracts of service, any one of the parties thereto may
cancel it, advising the other party thereof one month in
advance. The factor or shop clerk shall be entitled, in such
case, to the salary due for said month.
It is a clear doctrine, as gleaned from the provision of the law
and settled jurisprudence, that in a mercantile contract of service in
which no special time is fixed, any one of the parties may cancel said
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contract upon giving of a one-month notice, called a mesada, to the
other party. The law gives an added proviso that in the case of
factors or shop clerks, these shall be entitled to salary during this
one month of standing notice. In any case, the one-month notice
must be given to any employee, whether factor, shop clerk or
otherwise, so long as the two conditions concur, namely, that no
special time is fixed in the contract of service, and that said
employee is a commercial employee. And when such notice is not
given under these conditions, not only the factor or shop clerk but
any employee discharged without cause, is entitled to indemnity
which may be one month's salary.
In the instant case, there lies no doubt that plaintiffs are
commercial employees of appellant corporations, rendering service
as warehousemen, carpenter-foreman and guards. There is likewise
no doubt as can be seen from the contracts of employment
submitted as exhibits, that no special time has been fixed in the
contracts of services between plaintiffs-appellees and defendants-
appellants. The stated computation or manner of payment, whether
monthly or daily, does not represent nor determine a special time of
employment. Thus, a commercial employee may be employed for
one year and yet receive his salary on the daily or weekly or monthly
or other basis.
Now, as the second question, namely, the validity of
plaintiffs' waiver of the benefits given them by said article 302. This
court holds that such a waiver, made in advance, is void as being
contrary to public policy. Granting that the "mesada" given in article
302 of the Code of Commerce, is for the bilateral benefit of both
employer and employee, nevertheless, this does not preclude the
finding that a waiver of such "mesada" in advance by the employee
is contrary to public policy.
Public policy, with regard to labor, is clearly stated in article II,
section 5, of the Philippine Constitution, which reads —
The promotion of social justice to insure the well-being and
economic security of all the people should be the concern of
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the State.
and article XIV, section 6, which reads —
The State shall afford protection to labor, especially to
working women and minors, and shall regulate the relations
between land-owner and tenant, and between labor and
capital in industry and in agriculture. . . .
Article 302 of the Code of Commerce must be applied in
consonance with these provisions of our constitution. In the matter
of employment bargaining, there is no doubt that the employer
stands on higher footing than the employee. First of all, there is
greater supply than demand for labor. Secondly, the need for
employment by labor comes from vital and even desperate,
necessity. Consequently, the law must protect labor, at least, to the
extent of raising him to equal footing in bargaining relations with
capital and to shield him from abuses brought about by the
necessity for survival. It is safe to presume therefore, that an
employee or laborer who waives in advance any benefit granted him
by law does so, certainly not in his interest or through generosity but
under the forceful intimidation of urgent need, and hence, he could
not have so acted freely and voluntarily.
o There is greater supply than demand for labor;
o Those who have less in life should have more in law;
and
o The need for employment by labor comes from
vital, and even desperate necessity (survival)
To whom does the Labor Code apply?
 General Rule: The Code applies to all workers, whether
agricultural or non-agricultural, including employees in a
government corporation incorporated under the
corporation code;
 Exceptions:
1. Government employees;
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2. Employees of government Corporations created by
special or original charter;
3. Foreign governments;
4. International Agencies, employees of intergovernmental
or international organizations;
5. Corporate officers/Intra-corporate disputes which fall
under PD 902-A and now fall under the jurisdiction of,
the Regular Courts pursuant to the Securities Regulation
Code; and
6. Local water districts except where NLRC jurisdiction is
invoked.
Cases: Government employees
 Employees of government Corporations created by special
or original charter (Juco v. NLRC, GR No. 98107, August 18,
1997);
 Foreign governments (JUSMAG-Philippines v. NLRC, GR No.
108813, December 15, 1994);
 International Agencies (Lasco v. UNRFNRE, GR Nos. 109095-
109107, February 23, 1995), employees of
intergovernmental or international organizations (SEAFDEC-
AQD v. NLRC, GR No. 86773, February 14, 1992);
 Corporate officers / Intra-corporate disputes which fall
under PD 902-A and now fall under the jurisdiction of, the
Regular Courts pursuant to the Securities Regulation Code
(Nacpil v. IBC, GR No. 144767, March 21, 2002); and
 Local water districts (Tanjay Water District v. Gabaton, GR
Nos. 63742 and 84300, 17 April 1989) except where NLRC
jurisdiction is invoked (Zamboanga City Water District v.
Buat, GR No. 104389, May 27, 1994).
Who is a worker/employee?
 Article 13 – A worker is any member of the labor force,
whether employed or unemployed.
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 A person who works for an employer for a fee; a person
working for salary or wages.
 Note the term employee under Article 218 of the Labor
Code: Not limited to the employees of a particular
employer, it shall include any individual whose work has
ceased as a result of or in connection with any current labor
dispute or because of any unfair labor practice if he has not
obtained any other substantially equivalent or regular
employment.
Protection to labor should not come at the expense of oppressing
capital!
 Law recognizes management rights. The employer has the
right to
o Conduct business;
o Prescribe rules;
o Select and hire employees;
o Transfer or discharge employees;
o Discipline of employees, and
o Return of investment and expansion of business.
Management Prerogatives
 Rural Bank of Cantilan . v. Julve, GR No. 169750, February
27, 2007.
o Under the doctrine of management prerogative,
every employer has the inherent right to regulate,
according to his own discretion and judgment, all
aspects of employment, including hiring, work"
assignments, working methods, the time, place and
manner of work, work supervision, transfer of
employees, lay-off of workers, and discipline,
dismissal, and recall of employees
RURAL BANK OF CANTILAN, INC., and WILLIAM HOTCHKISS III vs.
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ARJAY RONNEL H. JULVE
FACTS:
The Rural Bank hired Julve as a management trainee. Later,
he was appointed as planning and marketing officer. Then,
Hotchkiss, the president of the bank, sent Julve a memorandum
appointing him as bookkeeper I at the bank’s branch in Madrid,
Surigao del Sur. Initially, Julve agreed to accept the appointment, but
eventually, he changed his mind and withdraw from the
appointment because he feels that it is a demotion.
Still, Hotchkiss appointed Julve as bookkeeper I and assistant
branch head of the Madrid branch. However, Julve did not report for
work. Hotchkiss directed Julve to explain why he should not be
sanctioned for his failure to assume his new post at the Madrid
branch. Julve explained that he is not accepting the position for the
reason that he was not given the opportunity to examine the newly
created position before he could make a decision to accept it.
On September 14, 2001, Julve filed with the Regional
Arbitration Branch No. XIII, National Labor Relations Commission
(NLRC), Butuan City, a complaint for constructive dismissal against
the Bank and Hotchkiss.
The Labor Arbiter rendered a decision declaring Julve was
contractively dismissed. On appeal, the NLRC reversed the finding s
of the Labor Arbiter, since the appointment was not a demotion. On
appeal at the CA, the court reversed the decision of the NLRC and
affirmed the decision of the Labor Arbiter
ISSUE:
Whether or not there was a contractive illegal dismissal.
RULING:
Under the doctrine of management prerogative, every
employer has the inherent right to regulate, according to his own
discretion and judgment, all aspects of employment, including
hiring, work assignments, working methods, the time, place and
manner of work, work supervision, transfer of employees, lay-off of
workers, and discipline, dismissal, and recall of employees. The only
P a g e | 10
limitations to the exercise of this prerogative are those imposed by
labor laws and the principles of equity and substantial justice.
While the law imposes many obligations upon the employer,
nonetheless, it also protects the employer’s right to expect from its
employees not only good performance, adequate work, and
diligence, but also good conduct and loyalty. In fact, the Labor Code
does not excuse employees from complying with valid company
policies and reasonable regulations for their governance and
guidance.
Concerning the transfer of employees, these are the
following jurisprudential guidelines: (a) a transfer is a movement
from one position to another of equivalent rank, level or salary
without break in the service or a lateral movement from one
position to another of equivalent rank or salary; (b) the employer
has the inherent right to transfer or reassign an employee for
legitimate business purposes; (c) a transfer becomes unlawful where
it is motivated by discrimination or bad faith or is effected as a form
of punishment or is a demotion without sufficient cause; (d) the
employer must be able to show that the transfer is not
unreasonable, inconvenient, or prejudicial to the employee.
Constructive dismissal is defined as "quitting when
continued employment is rendered impossible, unreasonable, or
unlikely as the offer of employment involves a demotion in rank and
diminution of pay."
In light of the above guidelines, we agree with the NLRC in
ruling that respondent was not constructively dismissed from
employment.
 Mendoza v. Rural Bank of Lucban, GR No. 155421, July 7,
2004.
o Management prerogatives, however, are subject to
limitations provided by
 law,
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
 contract or collective bargaining
agreements and
 general principles of fair play and justice
ELMER M. MENDOZA, petitioner, vs. RURAL BANK OF LUCBAN,
respondent.
FACTS:
Respondent bank issued a resolution effecting a reshuffling
of employees to “further strengthen the existing internal control
system of all offices and employees.” Petitioner was one of those
included for reshuffling. In a letter to his manager, petitioner
expressed his refusal to be assigned to another branch and his
request to be excluded from its implementation. Said request was
answered in the negative. Petitioner then requested for a twenty-
day sick leave due to his illness. While on leave, petitioner filed a
complaint before the RAB IV for illegal dismissal, underpayment,
separation pay and damages against respondent bank.
ISSUE:
Whether petitioner was constructively dismissed from his
employment
RULING:
The SC ruled that it find no reason to disturb the conclusion
of the NLRC and the CA that there was no constructive dismissal.
Constructive dismissal is defined as an involuntary
resignation resorted to when continued employment is rendered
impossible, unreasonable or unlikely; when there is a demotion in
rank or a diminution of pay; or when a clear discrimination,
insensibility or disdain by an employer becomes unbearable to the
employee. Petitioner argues that he was compelled to file an action
for constructive dismissal, because he had been demoted from
appraiser to clerk and not given any work to do, while his table had
been placed near the toilet and eventually removed. He adds that
the reshuffling of employees was done in bad faith, because it was
P a g e | 11
designed primarily to force him to resign.
Jurisprudence recognizes the exercise of management
prerogatives. For this reason, courts often decline to interfere in
legitimate business decisions of employers. Indeed, labor laws
discourage interference in employers' judgments concerning the
conduct of their business. The law must protect not only the welfare
of employees, but also the right of employers. In the pursuit of its
legitimate business interest, management has the prerogative to
transfer or assign employees from one office or area of operation to
another — provided there is no demotion in rank or diminution of
salary, benefits, and other privileges; and the action is not motivated
by discrimination, made in bad faith, or effected as a form of
punishment or demotion without sufficient cause. This privilege is
inherent in the right of employers to control and manage their
enterprise effectively. The right of employees to security of tenure
does not give them vested rights to their positions to the extent of
depriving management of its prerogative to change their
assignments or to transfer them.
Managerial prerogatives, however, are subject to limitations
provided by law, collective bargaining agreements, and general
principles of fair play and justice. The managerial prerogative to
transfer personnel must be exercised without grave abuse of
discretion, bearing in mind the basic elements of justice and fair
play. Having the right should not be confused with the manner in
which that right is exercised. Thus, it cannot be used as a subterfuge
by the employer to rid himself of an undesirable worker. In
particular, the employer must be able to show that the transfer is
not unreasonable, inconvenient or prejudicial to the employee; nor
does it involve a demotion in rank or a diminution of his salaries,
privileges and other benefits. Should the employer fail to overcome
this burden of proof, the employee's transfer shall be tantamount to
constructive dismissal, which has been defined as a quitting because
continued employment is rendered impossible, unreasonable or
unlikely; as an offer involving a demotion in rank and diminution in
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S P a g e | 12

pay. Likewise, constructive dismissal exists when an act of clear
discrimination, insensibility or disdain by an employer has become
so unbearable to the employee leaving him with no option but to
forego with his continued employment."
Petitioner's transfer was made in pursuit of respondent's
policy to "familiarize bank employees with the various phases of
bank operations and further strengthen the existing internal control
system" of all officers and employees. We have previously held that
employees may be transferred — based on their qualifications,
aptitudes and competencies — to positions in which they can
function with maximum benefit to the company. 34 There appears
no justification for denying an employer the right to transfer
employees to expand their competence and maximize their full
potential for the advancement of the establishment. Petitioner was
not singled out; other employees were also reassigned without their
express consent. Neither was there any demotion in the rank of
petitioner; or any diminution of his salary, privileges and other
benefits.
o Promote the enlightenment of workers concerning
their rights and obligations as union members and
as employees;
o Provide an adequate administrative machinery for
the expeditious settlement of labor or industrial
disputes;
o Ensure a stable but dynamic and just industrial
peace; and
o Ensure the participation of workers in decision and
policy-making processes affecting their rights, duties
and welfare.
o Prohibit courts or administrative agencies or officials
from setting or fixing wages, rates of pay, hours of
work or other terms and conditions of employment,
except as otherwise provided under the Labor Code.

Viewpoints on Labor Relations: The Whys and Hows

State Policy on Labor Relations

 Article 217, Labor Code
o Promote and emphasize the primacy of free
collective bargaining and negotiations, including
voluntary arbitration, mediation and conciliation, as
modes of settling labor or industrial disputes;
o Promote free trade unionism as an instrument for
the enhancement of democracy and the promotion
of social justice and development;
o Foster the free and voluntary organization of a
strong and united labor movement;

Self Organization
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
 Workers organize as a union or some other form of
association (registered or unregistered)
 Effect of registration with the State: Acquisition of legally
demandable rights, e.g. right to demand collective
bargaining
 Organization must have rules and mechanisms that respect
member rights
 No employer influence or interference (See Article 261,
Labor Code)
Why Workers Organize
 Self Advancement
 Job Security
 Upholding the rule of law over arbitrary exercise of power
by capital
 Provide employees a sense of participation in the enterprise
Self Organization
 There can be many labor organizations in the workplace, but
o Only one recognized representative for workers in
Collective Bargaining
o Selected by the workers themselves by way of
election (with or without intervention of the
government)
Who may exercise right to self-organization
 All persons employed in commercial, industrial and in
religious, charitable, medical or educational institutions
(profit or non-profit)
 Includes the right to
o Form
o Join
o Assist - Labor organizations of their own choosing
P a g e | 13
Collective Bargaining
 Presentation of proposals and counter-proposals by the
parties
 If capital and labor agree on substantially all points, a labor
contract is forged (Collective Bargaining Agreement)
 If both parties do not agree on material points, this results
in a deadlock
o Parties are obliged to avoid or break the impasse
o Failure to resolve a deadlock may result in work
stoppage
 Strike
 Lockout
 While a legal right, strike or lockout is not an ideal solution
to compel a party to agree to a proposal
 Considered as measures of last resort
 Strikes and lockouts are heavily regulated
o Purpose
o Manner of implementation
o Violation of established rules will merit sanctions
(admin, civil and criminal)
 Parties are allowed to introduce means and methods that
will expedite bargaining
o Subject to compliance to legal standards
 Parties are primarily responsible for dealing with problems
arising out of their relations (Inter-party relationship)
o Voluntary modes of settling disputes are preferred
over compulsory processes
o Grievance machinery: In-house problem solving
structure
o State steps in only when
 Parties fail to agree
 Rights are violated
State’s Intervention
L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
 SSS Employees Association vs. CA, 175 SCRA 686: “The
principle behind labor unionism in private industry is that
industrial peace cannot be secured through compulsion by
law. Relations between private employers and their
employees rest on an essentially voluntary basis. … the
terms and conditions of employment in the unionized
private sector are settled through the process of collective
bargaining…”
P a g e | 14
SSS Employee Asso. v CA
FACTS:
The petitioners went on strike after the SSS failed to act
upon the union’s demands concerning the implementation of their
CBA. SSS filed before the court action for damages with prayer
for writ of preliminary injunction against petitioners for staging an
illegal strike. The court issued a temporary restraining order pending
the resolution of the application for preliminary injunction while
petitioners filed a motion to dismiss alleging the court’s lack of
jurisdiction over the subject matter. Petitioners contend that the
court made reversible error in taking cognizance on the subject
matter since the jurisdiction lies on the DOLE or the National Labor
Relations Commission as the case involves a labor dispute. The SSS
contends on one hand that the petitioners are covered by the Civil
Service laws, rules and regulation thus have no right to strike. They
are not covered by the NLRC or DOLE therefore the court may enjoin
the petitioners from striking.
ISSUES:
Whether or not SSS employers have the right to strike
Whether or not the CA erred in taking jurisdiction over the
subject matter
RULING:
The Constitutional provisions enshrined on Human
Rights and Social Justice provides guarantee among workers with
the right to organize and conduct peaceful concerted activities such
as strikes. On one hand, Section 14 of E.O No. 180 provides that
“the Civil Service law and rules governing concerted activities and
strikes in the government service shall be observed, subject to any
legislation that may be enacted by Congress” referring to
Memorandum Circular No. 6, s. 1987 of the Civil Service
Commission which states that “prior to the enactment by Congress
of applicable laws concerning strike by government employees
enjoins under pain of administrative sanctions, all government
officers and employees from staging strikes, demonstrations, mass
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
leaves, walk-outs and other forms of mass action which will result in
temporary stoppage or disruption of public service.” Therefore in
the absence of any legislation allowing govt. employees to strike
they are prohibited from doing so.
In Sec. 1 of E.O. No. 180 the employees in the civil
service are denominated as “government employees” and that the
SSS is one such government-controlled corporation with an original
charter, having been created under R.A. No. 1161, its employees are
part of the civil service and are covered by the Civil
Service Commission’s memorandum prohibiting strikes.
Neither the DOLE nor the NLRC has jurisdiction over the
subject matter but instead it is the Public Sector Labor-Management
Council which is not granted by law authority to issue writ of
injunction in labor disputes within its jurisdiction thus the resort of
SSS before the general court for the issuance of a writ of injunction
to enjoin the strike is appropriate.
 But, when dispute transgresses legal boundaries, the
injuctive powers of the state may be invoked, especially
when national interest is involved.
Definitions
 Employer: Includes any person acting in the interest of an
employer, directly or indirectly. The term shall not include
any labor organization or any of its officers or agents except
when acting as an employer.
 Employee: Includes any person in the employ of an
employer. The term shall not be limited to the employees of
a particular employer, unless the Labor Code so explicitly
states. It shall include any individual whose work has
ceased as a result of or in connection with any current labor
dispute or because of any unfair labor practice if he has not
obtained any other substantially equivalent and regular
employment.
P a g e | 15
Categories of employees
 Managerial employees
 Supervisory employees
 Rank-and-file employees
Existence of Er-Ee Relationship is Vital in Labor Relations
 If there is no such relationship, there is no basis for
exercising the right of self-organization for purposes of
collective bargaining.
 Note also that Labor Arbiters cannot exercise jurisdiction
where Er-Ee Relationship does not exist. (subj. to exception)
Employer-Employee Relationship
 Four-Fold Test
1. the selection and engagement of the employee;
2. the payment of wages;
3. the power of dismissal; and
4. the power to control the employee’s conduct, or the
so-called “control test.”
 Two-tiered test of employment relation ship
1. Control test – the employer’s power to direct the
employee (the manner, means and methods) by
which work is accomplished;
2. Economic reality test – economic reality of the
relationship; the question of economic dependency
of the worker on his employer. (Read Orozco vs. CA,
GR 155207, April 29, 2005)
Orozco vs CA, PDI and Magsanoc
FACTS:
Orozco was hired as a writer by the Philippine Daily Inquirer
in 1990. She was the columnist of “Feminist Reflections” under the
Lifestyle section of the publication. She writes on a weekly basis and
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
on a per article basis (P250-300/article).
In 1991, Magsanoc as the editor-in-chief sought to improve the
Lifestyle section of the paper. She said there were too many Lifestyle
writers and that it was time to reduce the number of writers.
Orozco’s column was eventually dropped.
Orozco filed for a case for Illegal Dismissal against PDI and
Magsanoc. Orozco won in the Labor Arbiter. The LA ruled that there
exists an employer-employee relationship between PDI and Orozco
hence Orozco is entitled to receive backwages, reinstatement, and
13th month pay.
PDI appealed to the National Labor Relations Commission. The NLRC
denied the appeal because of the failure of PDI to post a surety
bond as required by Article 223 of the Labor Code. The Court of
Appeals reversed the NLRC.
ISSUE:
Whether or not there exists an employer-employee
relationship between PDI and Orozco. Whether or not PDI’s appeal
will prosper.
RULING:
Under Article 223 of the Labor Code:
ART. 223. Appeal. – Decisions, awards or orders of the Labor Arbiter
are final and executory unless appealed to the Commission by any or
both parties within ten (10) calendar days from receipt of such
decisions, awards, or orders.
In case of a judgment involving a monetary award, an appeal
by the employer may be perfected only upon the posting of a cash
or surety bond issued by a reputable bonding company duly
accredited by the Commission in the amount equivalent to the
monetary award in the judgment appealed from.
The requirement that the employer post a cash or surety bond to
perfect its/his appeal is apparently intended to assure the workers
that if they prevail in the case, they will receive the money judgment
in their favor upon the dismissal of the employer’s appeal. It was
intended to discourage employers from using an appeal to delay, or
P a g e | 16
even evade, their obligation to satisfy their employees’ just and
lawful claims.
But in this case, this principle is relaxed by the Supreme
Court considering the fact that the Labor Arbiter, in ruling that the
Orozco is entitled to backwages, did not provide any computation.
The case is then remanded to the Labor Arbiter for the computation.
This necessarily pended the resolution of the other issue of whether
or not there exists an employer-employee relationship between PDI
and Orozco.
Existence of Er-Ee Relationship in the following instances:
 A stipulation stating expressly that there is no Er-Ee
relationship is not controlling (Chavez vs. NLRC, GR No.
146530, Jan. 2005)
 Jeepney and taxi drivers (Paguio Transport Corp. vs. NLRC
GR No. 119500, August 1998)
 Bus, auto-calesa drivers (R. Transport Corp. vs. Ejandra, GR
No. 148508, May 2004)
 Fishermen (Ruga vs. NLRC, Jan. 1990)
 Stevedores
 Lawyers, doctors, nurses, dentists, public relations
practioners, other professionals
 Employees of cooperatives
 Insurance agents (salaried)
No Er-Ee Relationship in the following instances:
 Commission salesmen
 Agents of prinicipal (who are not employees in other
respects)
 Working scholars (See Section 14, Rule X, Book III, IRR, Labor
Code)
 Consultants
 Visiting Physicians
 Independent contractors
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
Definitions
 Labor disputes: 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.
Labor Disputes
 Nature: arises from Er-Ee relationship, regardless of
whether the disputants stand in the proximate relation of
employer and employee;
o SMCEU-PTGWO vs. Bersamira & SMC, GR No.
87700, June 1990)
 Involves issue of SMC’s exclusion of
temporary, probationary & contractual
employees in scope of CBA with union
SMC Employees Union vs. Bersamira
FACTS:
SMC entered into contracts for merchandising
services with Lipercon and D'Rite (L&D), independent
contractors duly licensed by DOLE. In said contracts, it was
expressly understood and agreed that the EEs employed by the
contractors were to be paid by the latter and that none of them
were to be deemed EEsor agents of San Mig. There was to be
no employer-employee relation between the contractors and/or
its workers, on the one hand, and SMC on the other.
SMCEU-PTWGO (Union) is duly authorized representative of
the monthly paid rank-and-file EEs of SMC. Their CBA provides
that temporary, probati onary, or contract EEs are excluded
from the bargaining unit and outside the scope of CBA. Union
P a g e | 17
advised SMC that some L&D workers had signed up for union
membership and sought the legalization of their employment with
SMC. Union alleged that this group of EEs, while appearing to be
contractual workers of supposedly independent
contractors, have been conti nuously working for SMC for a
period of 6 months to 15 years and that their work is
neither casual nor seasonal as they are performing work
or acti viti es necessary desirable in the usual business or
trade of SMC, and that there exists a “lobor-
only{ contracti ng situati on.It was then demanded that the
employment status of these workers be regularized.
This was not acted upon by SMC, and so Union filed a notice
of strike, and then a second notice. Series of pickets were staged by
L&D workers in various SMC plants and offices. SMC filed an action
at the RTC to enjoin the Union from representing and or acting for
and in behalf of the employees of L&D for the purposes of
collecti ve bargaining; calling for and holding a strike vote to
compel plaintiff to hire the employees or workers of L&D, among
others. Union fi led a Moti on to Dismiss SMC's Complaint on
the ground of lack of jurisdiction over the case/nature of the action
which motion was opposed by SMC, which was denied by
respondent Judge. And after several hearings, the RTC issued
Injunction. RTC reasoned that the absence of ER-EE
relati onship negates the existence of labor dispute, so
court has jurisdicti on to take cognizance of SMC's grievance.
Hence, this action.
ISSUE:
Whether or not the RTC correctly assumed jurisdiction over
the controversy and properly issued the writ of preliminary
injunction.
RULING:
NO
A labor dispute can nevertheless exist “regardless
of whether the disputants stand in the proximate
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S P a g e | 18

relati onship of employer and employee, provided the independent contractors. However, the rights of all workers to
controversy concerns among other, the terms and self-organization, collective bargaining and negoti ati ons, and
conditi ons of employment or a “change” or “arrangement” peaceful concerted acti viti es, including the right to strike
thereof. The existence of a labor dispute is not negated by in accordance with law equally call for recogniti on
the fact that the plainti ff s and defendants do not stand in and protecti on. Those contending interests must be placed in
the proximate relati on of employer and employee proper perspective and equilibrium.
Crucial to the resolution of the question on jurisdiction is
the matter of whether or not the case at bar involves, or in  Subject Matter
connection with, or relates to a labor dispute. An affirmative answer o Terms and conditions of employment
would bring the case within the original and exclusive jurisdicti on o Association or Representation of persons
of labor tribunals to the exclusion of the regular Courts. In
this case, the matt er re terms, tenure and conditi ons of Labor Disputes, Kinds
EE’s employment and the arrangement of those terms as  Standards-related
well as the matter of representation bring these issue within the o Compensation
scope of a labor dispute. Hence, it is the labor tribunal that have o Benefits
jurisdiction and not the regular courts o Working Conditions
As the case is indisputably linked with a labor dispute,  Relations Disputes
jurisdiction belongs to the labor tribunals. So, Labor Arbiters have o Organizational rights/ULP
original and exclusive jurisdicti on to hear and decide the o Representation
following cases involving all workers including: [a] unfair o Bargaining
labor practice cases; [b] those that workers may file involving
o Contract administration
wages, hours of work and other terms and conditi ons of
o Personnel policy
employment; and [c] cases arising from any violati on of
o Employment tenure disputes
A265 LC, including questions involving the legality of striker and
lockouts.
Resolving Labor Disputes
SMC’s claim that the action is for damages under A19, 20
 Grievance procedure – CBA-prescribed, in-house
and 21 of the Civil Code is not enough to keep the case within the
mechanism for addressing complaints.
jurisdictional boundaries of regular Courts. That the claim for
damages is interwoven with a labor dispute, to allow the action filed  Conciliation – involves third person who meets with both
below to prosper would bring about "split jurisdiction" which is parties and, by assuaging hurt feelings and cooling tempers,
obnoxious to the orderly administration of justice. SC recognizes the aids in reaching agreement.
proprietary right of SMC to exercise an inherent management  Mediation – third person offers suggested solutions to
prerogative and its best business judgment to determine whether it dispute.
should contract out the performance of some of its work to
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
 Arbitration – dispute is submitted to impartial third person
who renders decision based on evidence, law and
jurisprudence. Decision is enforceable.
o Voluntary – by agreement of parties
o Compulsory – directed by law. Primarily done by
labor arbiters of the NLRC
 Enforcement/Compliance Order – dispute arises from
concern uncovered by the exercise of enforcement/visitorial
power of SOLE, or adjudicatory powers of the DOLE Regional
Directors (Articles 128, 129, Labor Code)
 In case of labor disputes that may affect an industry
indispensable to the national interest, the following apply:
o Assumption of jurisdiction by DOLE
o Certification to the NLRC for compulsory arbitration
The National Labor Relations Commission: Jurisdiction, Case Flow,
Appeals, Cases
The National Labor Relations Commission
 Precursor: Court of Industrial Relations
 NLRC was created by the Labor Code
o attached to the DOLE
o Under EO 204, s. 2005, DOLE exercises
administrative supervision over the commission
o Under RA 9347, several changes to the composition
of the divisions, rank equivalence, and reverted to
the old version of NLRC’s attachment to DOLE
(program and policy coordination)
o Equal representation from workers, employers &
public sector
Jurisdiction of Labor Arbiters
 Original and exclusive jurisdiction to hear and decide the
following cases involving all workers, whether agricultural or
P a g e | 19
non-agricultural (Art. 223, LC, Rule V Section 1, 2011 NLRC
Rules):
1. Unfair labor practice cases; ULP Means "Unfair
labor practice" means any unfair labor practice as
expressly defined by the Code (Art. 218(K), Art. 254,
Art. 255).
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;
The National Labor Relations Commission
 NLRC exercises adjudicatory powers and other functions
through its divisions (not the individual commissioners);
 En banc decisions pertain only to
o Promulgation of rules governing hearing and
disposition of cases in the divisions (e.g., 2011 NLRC
Rules);
o Recommending Labor Arbiters to the President
o Allowing a division to hear and decide a case under
the jurisdiction of another division
Jurisdiction of Labor Arbiters
4. Claims for actual, moral, exemplary and other forms of
Damages arising from the employer-employee relations;
5. Cases arising from any Violation of Article 270 of this Code,
including questions involving the legality of strikes and
lockouts; and
6. Except claims for Employees Compensation, Social Security,
Medicare and maternity benefits, all other Claims arising
from employer-employee relations, including those of
persons in domestic or household service, involving an
amount exceeding five thousand pesos (P5,000.00)
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
regardless of whether accompanied with a claim for
reinstatement (Article 223, Labor Code, as amended).
7. Original and exclusive jurisdiction over money claims arising
out of employer-employee relationship or by virtue of any
law or contract, involving Filipino workers for Overseas
deployment, including claims for actual, moral, exemplary
and other forms of damages (Section 10, Republic Act No.
8042, as amended by Republic Act No. 10022).
8. Wage distortion disputes in unorganized establishments not
voluntarily settled by the parties pursuant to Republic Act
No. 6727.
9. Enforcement of compromise agreements when there is non-
compliance by any of the parties or if there is prima facie
evidence that the settlement was obtained through fraud,
misrepresentation or coercion (Article 233, Labor Code, as
amended).
10. Other cases as may be provided by law.
Cases
 The jurisdiction of labor arbiters, as well as of the NLRC, 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. U-Bix's complaint was one to collect
sum of money based on civil laws – on obligations and
contract, not to enforce rights under the Labor Code, other
labor statutes, or the collective bargaining agreement. (U-
Bix Corporation, et al. vs. Valerie Anne H. Hollero, G.R. No.
177647, October 31, 2008)
U-BIX CORPORATION and EDILBERTO B. BRAVO vs. VALERIE ANNE
H. HOLLERO
FACTS:
Valerie Anne H. Hollero was hired as a management trainee
P a g e | 20
and was eventually promoted to facilities manager by U-Bix
Corporation (U-Bix). Hollero and three other employees were later
sent to the United States for two months of training for a newly
acquired franchise. Before she left, she signed a contract with U-Bix
which reads that ―VALERIE ANNE H. HOLLERO shall remain in the
employ of U-BIX CORPORATION for a period of five (5) years from
completion of her U.S. Training otherwise she shall reimburse U-BIX
CORPORATION for all costs (prorated) and expenses which U-BIX
CORPORATION incurred for her (Hollero's) training in the U.S‖
U-Bix, citing Hollero’s supposed ―pattern of tardiness,
absences, neglect of duties and lack of interest,‖ terminated her
employment for loss of trust and confidence. U-Bix then filed against
Hollero before the Labor Arbiter for the reimbursement of training
expenses and damages. Subsequently, Hollero also filed a complaint
against U-Bix for illegal dismissal.
The Labor Arbiter (LA) rendered a decision declaring that
the dismissal of Hollero is valid and legal and ordered her to pay U-
Bix the reimbursement of her training. It dismissed Hollero’s
complaint for lack of merit. On appeal before the National Labor
Relations Commission (NLRC), the NLRC reversed the LA’s decision. A
Motion for Reconsideration was filed but subsequently denied by
NLRC. The Court of Appeals affirmed the lower court’s decision.
ISSUES:
Whether or not Hollero was illegally dismissed by U-Bix.
RULING:
An employer who seeks to dismiss an employee must afford
the latter ample opportunity to be heard and to defend himself with
the assistance of his representative if he so desires.
U-Bix failed to discharge the burden of proof that Hollero’s
dismissal is for a valid and just cause.
In termination cases, the employer has the burden of
proving that the dismissal is for a valid and just cause. While an
employer enjoys a wider latitude of discretion in terminating the
employment of managerial employees, managerial employees are
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
also entitled to security of tenure and cannot be arbitrarily
dismissed at any time and without cause as reasonably established
in an appropriate investigation.
In the case at bar, U-Bix failed to substantiate their
allegations of Hollero’s habitual absenteeism, habitual tardiness,
neglect of duties, and lack of interest. Daily time records, attendance
records, or other documentary evidence attesting to these grounds
could have readily been presented to support the allegations but
none was.
The merits of a complaint for illegal dismissal do not depend
on its prayer but on whether the employer discharges its burden of
proving that the dismissal is valid.
U-Bix failed to comply with the procedural due process of
dismissing an employee In another vein, the Court finds that U-Bix
and Bravo failed to comply with the procedural requirements for a
valid dismissal. Hollero being a manager did not excuse them from
observing such procedural requirements.
The notice does not inform outright the employee that an
investigation will be conducted on the charges particularized therein
which, if proven, will result to her dismissal. It does not contain a
plain statement of the charges of malfeasance or misfeasance nor
categorically state the effect on her employment if the charges are
proven to be true. It does not apprise Hollero of possible dismissal
should her explanation prove unsatisfactory. Besides, the U-Bix and
Bravo did not even establish that Hollero received the
memorandum.
Neither did U-Bix and Bravo show that they conducted a
hearing or conference during which Hollero, with the assistance of
counsel if she so desired, had opportunity to respond to the charge,
present her evidence, or rebut the evidence presented against her.
The meeting with Hollero on December 23, 1996 did not satisfy the
hearing requirement, for Hollero was not given the opportunity to
avail herself of counsel.
Article 277(b) of the Labor Code mandates that an employer
P a g e | 21
who seeks to dismiss an employee must ―afford the latter ample
opportunity to be heard and to defend himself with the assistance
of his representative if he so desires.‖ Expounding on this provision,
the Court held that ―'[a]mple opportunity' connotes every kind of
assistance that management must accord the employee to enable
him to prepare adequately for his defense including legal
representation.
 The jurisdiction of labor courts extends only to cases where
an employer-employee relationship exists. (Jaguar Security
& Investigation Agency vs. Rodolfo Sales, et. al., G.R. No.
162420, April 22, 2008)
JAGUAR SECURITY AND INVESTIGATION AGENCY vs. RODOLFO A.
SALES
FACTS:
Jaguar Security and Investigation Agency (“Jaguar”) is a
private corporation engaged in the business of providing security
services to its clients, one of whom is Delta Milling Industries, Inc.
(“Delta”).
Rodolfo Sales, Melvin Tamayo, Dionisio Caranyagan, Jesus
Silva, Jr., Jaime Moron and Daneth Fetalvero were hired as security
guards by Jaguar. They were assigned at the premises of Delta in
Libis, Quezon City. Caranyagan and Tamayo were terminated by
Jaguar on May 26, 1998 and August 21, 1998, respectively. Allegedly
their dismissals were arbitrary and illegal. Sales, Moron, Fetalvero
and Silva remained with Jaguar. All the guard-employees, claim for
monetary benefits such as underpayment, overtime pay, rest day
and holiday premium pay, underpaid 13th month pay, night shift
differential, five days service and incentive leave pay. In addition to
these money claims, Caranyagan and Tamayo argue that they were
entitled to separation pay and back wages, for the time they were
illegally dismissed until finality of the decision. Furthermore, all
respondents claim for moral and exemplary damages.
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
On September 18, 1998, respondent security guards instituted the
instant labor case before the labor arbiter. The labor arbiter
rendered a decision in favor of private respondents Sales, et al
On July 1, 1999, petitioner Jaguar filed a partial appeal questioning
the failure of public respondent NLRC to resolve its cross-claim
against Delta as the party ultimately liable for payment of the
monetary award to the security guards.
In its Resolution dated September 19, 2000, the NLRC
dismissed the appeal, holding that it was not the proper forum to
raise the issue. It went on to say that Jaguar, being the direct
employer of the security guards, is the one principally liable to the
employees. Thus, it directed petitioner to file a separate civil action
for recovery of the amount before the regular court having
jurisdiction over the subject matter, for the purpose of proving the
liability of Delta. Jaguar sought reconsideration of the dismissal, but
the Commission denied the same in its Resolution dated November
9, 2001. Petitioner filed a petition for certiorari with the CA, which,
in the herein assailed Decision dated October 21, 2002 and
Resolution dated February 13, 2004, dismissed the petition for lack
of merit.
ISSUE:
Whether or not the regular court has a jurisdiction over the
collection of sum of money.
RULING:
We agree with the respondent that the RTC has jurisdiction
over the subject matter of the present case. It is well-settled in law
and jurisprudence that where no employer-employee relationship
exists between the parties and no issue is involved which may be
resolved by reference to the Labor Code, other labor statutes or any
collective bargaining agreement, it is the Regional Trial Court that
has jurisdiction. In its complaint, private respondent is not seeking
any relief under the Labor Code but seeks payment of a sum of
money and damages on account of petitioner’s alleged breach of its
obligation under their Guard Service Contract. The action is within
P a g e | 22
the realm of civil law hence jurisdiction over the case belongs to
the regular courts. While the resolution of the issue involves the
application of labor laws, reference to the labor code was only for
the determination of the solidary liability of the petitioner to the
respondent where no employer-employee relation exists. Article
217 of the Labor Code as amended vests upon the labor arbiters
exclusive original jurisdiction only over the following:
1. Unfair labor practices;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases
that workers may file involving wages, rates of pay, hours of
work and other terms and conditions of employment;
4. Claims for actual, moral exemplary and other forms of
damages arising from employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code,
including questions involving legality of strikes and lockouts;
and
6. Except claims for Employees Compensation, Social Security,
Medicare and maternity benefits, all other claims, arising
from employer-employee relations, including those of
persons in domestic or household service, involving an
amount exceeding five thousand pesos (P5,000.00)
regardless of whether accompanied with a claim for
reinstatement.
In all these cases, an employer-employee relationship is an
indispensable jurisdictional requisite; and there is none in this case.
The jurisdiction of labor courts extends only to cases where
an employer-employee relationship exists.
In the present case, there exists no employer-employee
relationship between petitioner and Delta Milling. In its cross-claim,
petitioner is not seeking any relief under the Labor Code but merely
reimbursement of the monetary benefits claims awarded and to be
paid to the guard employees. There is no labor dispute involved in
the cross-claim against Delta Milling. Rather, the cross-claim involves
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
a civil dispute between petitioner and Delta Milling. Petitioner’s
cross-claim is within the realm of civil law, and jurisdiction over it
belongs to the regular courts.
Exception to the rule that Er-Ee relationship is necessary for
Labor Arbiters to acquire jurisdiction:
 “The jurisdiction of Labor Arbiters is not limited to claims
arising from Employer-Employee relationships under Sec. 10
of RA 8042, which cover money claims arising out of an
employer-employee relationship or by virtue of any law or
contract involving Filipino workers for overseas deployment,
including claims for…damages.” Santiago vs. CF Sharp Crew
Management, Inc. (GR No. 162419, July 2007)
PAUL V. SANTIAGO, vs. CF SHARP CREW MANAGEMENT, INC.,
FACTS:
Petitioner had been working as a seafarer for Smith Bell
Management, Inc. (respondent) for about five (5) years. He
signed a new contract of employment with the duration of 9
months on Feb 3 1998 and he was to be deployed 10 days after.
This contract was approved by POEA. A week before the date of
departure, the respondent received a phone call from
petitioner’s wife and some unknown callers asking not to send
the latter off because if allowed, he will jump ship in Canada.
Because of the said information, petitioner was told that
he would not be leaving for Canada anymore. This prompted
him to file a complaint for illegal dismissal against the
respondent. The LA held the latter responsible. On appeal, the
NLRC ruled that there is no employer-employee relationship
between petitioner and respondent, hence, the claims should
be dismissed. The CA agreed with the NLRC’s finding that since
petitioner had not departed from the Port of Manila, no
employer-employee relationship between the parties arose and
any claim for damages against the so-called employer could
P a g e | 23
have no leg to stand on.
ISSUE:
When does the employer-employee relationship
involving seafarers commence?
RULING:
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.
Respondent’s act of preventing petitioner from
departing the port of Manila and boarding "MSV Seaspread"
constitutes a breach of contract, giving rise to petitioner’s cause
of action. Respondent unilaterally and unreasonably reneged on
its obligation to deploy petitioner and must therefore answer for
the actual damages he suffered.
Corporate Officers
 Nacpil vs. IBC (GR No. 144767, March 21, 2002) – Officers
designated by the board are corporate officers
Nacpil vs. International Broadcasting Corporation
FACTS:
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
Dily Dany Nacpil states that he was Assistant General
Manager for Finance/Administration and Comptroller of
Intercontinental Broadcasting Corporation (IBC) from 1996 until April
1997. According to Nacpil, when Emiliano Templo was appointed to
replace IBC President Tomas Gomez III sometime in March 1997, the
former told the Board of Directors that as soon as he assumes the
IBC presidency, he would terminate the services of Nacpil.
Apparently, Templo blamed Nacpil, along with a certain Mr. Basilio
and Mr. Gomez, for the prior mismanagement of IBC. Upon his
assumption of the IBC presidency, Templo allegedly harassed,
insulted, humiliated and pressured Nacpil into resigning until the
latter was forced to retire. However, Templo refused to pay him his
retirement benefits, allegedly because he had not yet secured the
clearances from the Presidential Commission on Good Government
(PCGG) and the Commission on Audit (COA). Furthermore, Templo
allegedly refused to recognize Nacpil's employment, claiming that
Nacpil was not the Assistant General Manager/Comptroller of IBC
but merely usurped the powers of the Comptroller. Hence, in 1997,
Nacpil filed with the Labor Arbiter a complaint for illegal dismissal
and non-payment of benefits. Instead of filing its position paper, IBC
filed a motion to dismiss alleging that the Labor Arbiter had no
jurisdiction over the case.
IBC contended that Nacpil was a corporate officer who was
duly elected by the Board of Directors of IBC; hence, the case
qualities as an intra-corporate dispute falling within the jurisdiction
of the Securities and Exchange Commission (SEC). However, the
motion was denied by the Labor Arbiter in an Order dated 22 April
1998. On 21 August 1998, the Labor Arbiter rendered a Decision
stating that Nacpil had been illegally dismissed. IBC was ordered (1)
to reinstate Nacpil to his former position without diminution of
salary or loss of seniority rights, and with full backwages computed
from the time of his illegal dismissal on May 16, 1997 up to the time
of his actual reinstatement which is tentatively computed as of the
date of this decision on August 21, 1998 in the amount of
P a g e | 24
P1,231,750.00; and that should Nacpil be not reinstated within 10
days from receipt of this decision, he shall be entitled to additional
backwages until actually reinstated; and (2) to pay Nacpil P2 Million
as and for moral damages, P500,000.00 as and for exemplary
damages, and 10% thereof as and for attorney's fees. IBC appealed
to the NLRC, but the same was dismissed in a Resolution dated 2
March 1999, for its failure to file the required appeal bond in
accordance with Article 223 of the Labor Code. IBC then filed a
motion for reconsideration that was likewise denied in a Resolution
dated 26 April 1999. IBC then filed with the Court of Appeals a
petition for certiorari under Rule 65, which petition was granted by
the appellate court in its Decision dated 23 November 1999. Nacpil
then filed a motion for reconsideration, which was denied by the
appellate court in a Resolution dated 31 August 2000. Nacpil filed
the petition for review on certiorari.
ISSUE:
1. Whether the SEC or the NLRC has jurisdiction over
the Nacpil’s alleged illegal dismissal.
2. Whether the inclusion of money claims in Nacpil’s
complaint for illegal dismissal removes the case from the
ambit of the Corporation Code.
RULING:
1. As Nacpil's appointment as comptroller required the
approval and formal action of the IBC's Board of Directors to
become valid, 17 it is clear therefore holds that Nacpil is a corporate
officer whose dismissal may be the subject of a controversy
cognizable by the SEC under Section 5(c) of PD 902-A which includes
controversies involving both election and appointment of corporate
directors, trustees, officers, and managers Had Nacpil been an
ordinary employee, such board action would not have been
required. Thus, since Nacpil is considered a corporate officer and his
claim of illegal dismissal is a controversy that falls under the
jurisdiction of the SEC as contemplated by Section 5 of PD 902-A.
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
The rule is that dismissal or non-appointment of a corporate officer
is clearly an intra-corporate matter and jurisdiction over the case
properly belongs to the SEC, not to the NLRC. As to the argument
that the nature of his functions is recommendatory thereby making
him a mere managerial officer, the Court has previously held that
the relationship of a person to a corporation, whether as officer or
agent or employee is not determined by the nature of the services
performed, but instead by the incidents of the relationship as they
actually exist.
2. It is of no consequence that Nacpil's complaint for illegal
dismissal includes money claims, for such claims are actually part of
the perquisites of his position in, and therefore linked with his
relations with, the corporation. The inclusion of such money claims
does not convert the issue into a simple labor problem. Clearly, the
issues raised by Nacpil against the IBC are matters that come within
the area of corporate affairs and management, and constitute a
corporate controversy in contemplation of the Corporation Code.
 Prudential Bank and Trust Company (GR No. 141093, Feb.
20, 2001) - One rising from the ranks is not a mere
corporate officer
Prudential Bank and Trust Company vs. Reyes
FACTS:
Reyes was appointed Accounting Clerk by the Bank on July
14, 1963. From that position she rose to become supervisor. Then in
1982, she was appointed Assistant Vice-President which she
occupied until her illegal dismissal on July 19, 1991.
ISSUE:
Whether or not the illegal dismissal is correctly brought at
the NLRC
RULING:
The bank’s contention that she merely holds an elective
position and that in effect she is not a regular employee is belied by
P a g e | 25
the nature of her work and her length of service with the Bank. As
earlier stated, she rose from the ranks and has been employed with
the Bank since 1963 until the termination of her employment in
1991. As Assistant Vice President of the Foreign Department of the
Bank, she is tasked, among others, to collect checks drawn against
overseas banks payable in foreign currency and to ensure the
collection of foreign bills or checks purchased, including the signing
of transmittal letters covering the same. It has been stated that “the
primary standard of determining regular employment is the
reasonable connection between the particular activity performed by
the employee in relation to the usual trade or business of the
employer. Additionally, “an employee is regular because of the
nature of work and the length of service, not because of the mode
or even the reason for hiring them.” As Assistant Vice-President of
the Foreign Department of the Bank she performs tasks integral to
the operations of the bank and her length of service with the bank
totalling 28 years speaks volumes of her status as a regular
employee of the bank. In fine, as a regular employee, she is entitled
to security of tenure; that is, her services may be terminated only
for a just or authorized cause. This being in truth a case of illegal
dismissal, it is no wonder then that the Bank endeavoured to the
very end to establish loss of trust and confidence and serious
misconduct on the part of private respondent but, as will be
discussed later, to no avail.
 Rural Bank of Coron vs. Cortes, (GR No. 164888, Dec. 6,
2006) – A corporate officer who is also an employee may file
an illegal dismissal case with the labor arbiter.
RURAL BANK OF CORON vs. ANNALISA CORTES, Respondent.
FACTS:
Respondent Annalisa Cortes was hired as of the Rural Bank
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
of Coron. Later, she married a member of the family which ran the
corporation. Respondent later on became the Financial Assistant,
Personnel Officer and Corporate Secretary of The Rural Bank of
Coron and some other sensitive positions in the sister companies of
the Bank.
On examination of the financial books of the corporations by
petitioner Sandra Garcia Escat, she found out that respondent
was involved in several anomalies, drawing petitioners to terminate
respondent’s services on November 23, 1998 in petitioner
corporations.
Respondent filed a complaint for illegal dismissal and non-
payment of salaries and other benefits with the NLRC.
Petitioners moved for the dismissal of the complaint on the
ground of lack of jurisdiction, contending that the case was an intra-
corporate controversy involving the removal of a corporate officer,
respondent being the Corporate Secretary of the Rural Bank of
Coron, Inc., hence, cognizable by the Securities and Exchange
Commission (SEC) pursuant to Section 5 of PD 902-A.
ISSUE:
Whether or not the NLRC had jurisdiction over the case.
RULING:
The SC held that Labor Arbiter has jurisdiction over
respondent’s complaint.
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 respondent’s
complaint.
Cases: See also
P a g e | 26
 Okol vs. Slimmers World International (GR No. 160146,
December 11, 2009)
Okol v. Slimmers
FACTS:
Leslie Okol, a Vice President of Slimmers World, was
terminated from employment after an incident with the Bureau of
Customs regarding equipment belonging to/consigned to Slimmers
World. As such, Okol filed a complaint with the Arbitration branch of
the NLRC against Slimmers World for illegal suspension, illegal
dismissal, unpaid commissions, damages, and attorney’s fees, with
prayer for reinstatement and payment of back wages. Slimmers
World filed a Motion to Dismiss the case, asserting that the NLRC
had no jurisdiction over the subject matter of the complaint.
Slimmers World’s motion was sustained, with the labor arbiter
ruling that since Okol was the vice president at the time of
her dismissal, being a corporate officer, the dispute was an intra-
corporate controversy falling outside the jurisdiction of the
arbitration branch. On appeal, the NLRC reversed the LA decision
and ordered Slimmers World to reinstate Okol. The CA subsequently
set aside the NLRC decision and ruled that the case was an intra-
corporate controversy, and falls within the jurisdiction of the regular
courts pursuant to RA 8799.
ISSUES:
1. Whetheror not Okol was an employee or corporate
officer of Slimmers World.
2. Whether or not the NLRC has jurisdiction over the
illegal dismissal case filed by Okol.
RULING:
1. Okol was a corporate officer at the time of her dismissal.
According to the Amended By-Laws of Slimmers World which
enumerate the power of the board of directors as well as the
officers of the corporation, “the general management of the
corporation shall be vested in a board of five directors who shall be
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
stockholders and who shall be elected annually by the stockholders
and who shall serve until the election and qualification of their
successors” and “Like the Chairman of the Board and the President,
the Vice President shall be elected by the Board of Directors from
[its] own members. The Vice President shall be vested with all the
powers and authority and is required to perform all the duties of the
President during the absence of the latter for any cause. The Vice
President will perform such duties as the Board of Directors may
impose upon him from time to time.” This clearly shows that Okol
was a director and officer of Slimmers World.
An office is created by the charter of the corporation and
the officer is elected by the directors and 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.
2. NO. Since it has been shown that Okol was a corporate
officer, her charges of illegal suspension, illegal dismissal, unpaid
commissions, reinstatement and back wages against Slimmers World
fall squarely within the ambit of intra-corporate disputes. A
corporate officer’s dismissal is always a corporate act, or an intra-
corporate controversy which arises between a stockholder and a
corporation. The question of remuneration involving a stockholder
and officer, not a mere employee, is not a simple labor problem but
a matter that comes within the area of corporate affairs and
management and is a corporate controversy in contemplation of the
Corporate Code. The determination of the rights of a director and
corporate officer dismissed from his employment as well as the
corresponding liability of a corporation, if any, is an intra-corporate
dispute subject to the jurisdiction of the regular courts. Prior to its
amendment, Section 5 of PD 902-A provided that intra-corporate
disputes fall within the jurisdiction of the SEC. Subsection 5.2,
Section 5 of RA 8799, transferred to RTCs the SEC’s jurisdiction over
all cases listed in Section 5 of PD 902-A.
P a g e | 27
CA affirmed. Petition denied, without prejudice to Okol’s
taking recourse to and seeking relief through the appropriate
remedy in the proper forum. Jurisdiction over the subject matter
is conferred by law.
 Gomez vs. PNOC Development and Management
Corporation (GR No. 174044, November 27, 2009)
Gomez vs. PNOC
FACTS:
Petitioner Gloria V. Gomez used to work as Manager of the
Legal Department of Petron Corporation, then a government-owned
corporation. With Petron’s privatization, she availed of the
company’s early retirement program and left that organization on
April 30, 1994. On the following day, May 1, 1994, however, Filoil
Refinery Corporation (Filoil), also a government-owned corporation,
appointed her its corporate secretary and legal counsel, with the
same managerial rank, compensation, and benefits that she used to
enjoy at Petron. However, the privatization did not materialize so
Gomez continued to serve as corporate secretary of respondent
PDMC. On September 23, 1996 its president re-hired her as
administrator and legal counsel of the company.
On March 29, 1999 the new board of directors of
respondent PDMC removed petitioner Gomez as corporate
secretary. Further, at the board’s meeting on October 21, 1999 the
board questioned her continued employment as administrator. In
answer, she presented the former president’s May 24, 1998 letter
that extended her term. Dissatisfied with this, the board sought the
advice of its legal department, which expressed the view that
Gomez’s term extension was an ultra vires act of the former
president. It reasoned that, since her position was functionally that
of a vice-president or general manager, her term could be extended
under the company’s by-laws only with the approval of the board.
The legal department held that her “de facto” tenure could be
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
legally put to an end.
Petitioner Gomez for her part conceded that as corporate
secretary, she served only as a corporate officer. But, when they
named her administrator, she became a regular managerial
employee. Consequently, the respondent PDMC’s board did not
have to approve either her appointment as such or the extension of
her term in 1998.
ISSUE:
Whether or not Gomez an ordinary employee whose
complaint is within the jurisdiction of the NLRC.
RULING:
Yes. The relationship of a person to a corporation, whether
as officer or agent or employee, is not determined by the nature of
the services he performs but by the incidents of his relationship with
the corporation as they actually exist. That the employee served
concurrently as corporate secretary for a time is immaterial. A
corporation is not prohibited from hiring a corporate officer to
perform services under circumstances which will make him an
employee. Indeed, it is possible for one to have a dual role of officer
and employee. NLRC has jurisdiction over a complaint filed by one
who served both as corporate officer and employee, when the
money claims were made as an employee and not as a corporate
officer.
 Atty. Virgilio R. Garcia vs. Eastern Telecommunications
Philippines (GR No. 173115, April 16, 2009)
ATTY. VIRGILIO R. GARCIA vs. EASTERN TELECOMMUNICATIONS
PHILIPPINES, INC. and ATTY. SALVADOR C. HIZON
FACTS:
Atty. Virgilio R. Garcia was the Vice President and Head of
Business Support Services and Human Resource Departments of the
Eastern Telecommunications Philippines, Inc. (ETPI). Atty. Salvador C.
Hizon is the President/Chief Executive Officer of ETPI.
P a g e | 28
Atty. Garcia was placed under preventive suspension based
on three complaints for sexual harassment. In response to the
complaints, the Human Resources Department constituted a
Committee on Decorum to investigate the complaints which
recommended his dismissal. Atty. Hizon advised Atty. Garcia that his
employment with ETPI was, per recommendation of the Committee,
terminated effective 16 April 2000.
A complaint-affidavit for illegal dismissal with prayer for full
backwages and recovery of moral and exemplary damages was filed
by Atty. Virgilio R. Garcia against ETPI and Atty. Salvador C. Hizon.
Atty. Garcia filed a Motion to Inhibit, praying that Labor
Arbiter Libo-on to inhibit himself from further proceeding with the
case, on the ground that he was a fraternity brother of Atty. Hizon
which was denied. Atty. Garcia appealed said order before the NLRC
where the NLRC set aside the order of Labor Arbiter Libo-on and
ordered the re-raffling of the case. ETPI and Atty. Hizon moved for
the reconsideration of the decision, but the same was
denied. Consequently, the case was re-raffled to Labor Arbiter
Ramon Valentin C. Reyes.
Labor Arbiter Reyes found the preventive suspension and
subsequent dismissal of Atty. Garcia illegal. Labor Arbiter Reyes
issued a Writ of Execution insofar as the reinstatement aspect of the
decision was concerned, however, the writ remained unsatisfied
because ETPI and Atty. Hizon refused to reinstate Atty. Garcia to his
former position..
Labor Arbiter Reyes subsequently issued a 1st Alias Writ of
Execution dated 11 December 2002 ordering the sheriff to proceed
to the premises of ETPI to reinstate Atty. Garcia and/or garnish the
amounts prayed for. Per Sheriff’s Return dated 17 January 2003, the
1st Alias Writ of Execution was satisfied with the amount
ofP450,000.00 being released for proper disposition to Atty. Garcia.
Subsequently, the 2nd Alias Writ of Execution was issued.
ETPI and Atty. Hizon, without waiving their right to continue
to question the jurisdiction of the Labor Arbiter over the case, filed
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
on 18 February 2003 a Motion to Inhibit, seeking the inhibition of
Labor Arbiter Reyes for allegedly evident partiality in favor of the
complainant in issuing writs of execution in connection with the
order of reinstatement contained in his decision dated 30
September 2002, despite the pendency of an Urgent with the NLRC,
which sought the restraining of the execution pending appeal of the
order of reinstatement. Said motion to inhibit was subsequently
granted by Labor Arbiter Reyes. The case was re-raffled to Labor
Arbiter Elias H. Salinas.
On 21 March 2003, the NLRC rendered its decision reversing
the decision of Labor Arbiter Reyes and dismissing the case for lack
of jurisdiction.
The Commission ruled that the dismissal of Atty. Garcia,
being ETPI’s Vice President, partook of the nature of an intra-
corporate dispute cognizable by Regional Trial Courts and not by
Labor Arbiters. It added that ETPI and Atty. Hizon were not barred by
estoppel from challenging the jurisdiction of the Labor Arbiter over
the instant case. The NLRC made permanent the TRO it since the
Labor Arbiter had no jurisdiction over the case, the decision of the
Labor Arbiter dated 30 September 2002 was void.
On 9 July 2004, Atty. Garcia filed a Motion to Set Aside
Finality of Judgment With Opposition to Motion to Discharge Appeal
Bond, claiming that he did not receive the resolution dated 16
December 2003 of the NLRC, the same having been sent to his
former address at 9 Isidora St., Don Antonio Heights, Diliman,
Quezon City, and not to his new address at 4 Pele St., Filinvest 2,
Batasan Hills, Quezon City, where he had been receiving all
pleadings, Resolutions, Orders and Decisions pertaining to the
instant case since April 2001. On 23 August 2004, the NLRC,
admitting that it missent the resolution dated 16 December 2003
denying Atty. Garcia’s motion for reconsideration, issued an order
granting the motion. It recalled and set aside the Entry of Judgment
dated 14 June 2004 and denied the Motion to Discharge and/or
Release the Appeal Bond.
P a g e | 29
In its Motion for Reconsideration dated 17 September 2004,
ETPI and Atty. Hizon argued that the NLRC correctly sent the
resolution of 16 December 2003 to counsel’s allegedly old address,
considering that same was counsel’s address of record, there being
no formal notice filed with the NLRC informing it of a change of
address. They contended that the aforesaid resolution had become
final and executory, and that Atty. Garcia should bear the
consequences of his inequitable conduct and/or gross
negligence. On 10 January 2005, the NLRC denied the motion for
reconsideration.
On 14 March 2005, Atty. Garcia appealed to the Court of
Appeals via a Petition for Certiorari. It prayed that the Decision
dated 21 March 2003 and resolution dated 16 December 2003 of
the NLRC be annulled and set aside, and that the decision of the
Labor Arbiter dated 30 September 2002 be reinstated.
On 28 March 2005, ETPI and Atty. Hizon likewise filed a
Petition for Certiorari asking that the Orders dated 23 August 2004
and 10 January 2005 of the NLRC be set aside; that its resolution
dated 16 December 2003 be declared final and executory; and that
the NLRC be directed to discharge and/or release Supersede as Bond
No. JCL (15) 00823 SICI Bond No. 75069 dated 18 November 2002
posted by them.
Upon motion of Atty. Garcia, the two petitions for certiorari
were consolidated which were both dismissed by the CA.
ISSUE:
Whether or not the question of legality or illegality of the
removal or termination of employment of an officer of a corporation
is an intra-corporate controversy that falls under the original
exclusive jurisdiction of the regional trial courts.
RULING:
The Supreme Court, in a long line of cases, has decreed that
a corporate officer’s dismissal or removal is always a corporate act
and/or an intra-corporate controversy, over which the Securities and
Exchange Commission [SEC] (now the Regional Trial Court) 87 has
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
original and exclusive jurisdiction.
We have ruled that an intra-corporate controversy is one
which pertains to any of the following relationships: (1) between the
corporation, partnership or association and the public; (2) between
the corporation, partnership or association and the State insofar as
the former’s franchise, permit or license to operate is concerned; (3)
between the corporation, partnership or association and its
stockholders, partners, members or officers; and (4) among the
stockholders, partners or associates themselves. In Lozon v. National
Labor Relations Commission, we declared that Presidential Decree
No. 902-A confers on the SEC original and exclusive jurisdiction to
hear and decide controversies and cases involving intra-corporate
and partnership relations between or among the corporation,
officers and stockholders and partners, including their elections or
appointments x x x.
Before a dismissal or removal could properly fall within the
jurisdiction of the SEC, it has to be first established that the person
removed or dismissed was a corporate officer. "Corporate officers"
in the context of Presidential Decree No. 902-A are those officers of
the corporation who are given that character by the Corporation
Code or by the corporation’s by-laws. There are three specific
officers whom a corporation must have under Section 25 of the
Corporation Code. These are the president, secretary and the
treasurer. The number of officers is not limited to these three. A
corporation may have such other officers as may be provided for by
its by-laws like, but not limited to, the vice-president, cashier,
auditor or general manager. The number of corporate officers is thus
limited by law and by the corporation’s by-laws.
In the case before us, the by-laws of ETPI provide:
ARTICLE V
Officers
Section 1. Number. – The officers of the Company shall be a
Chairman of the Board, a President, one or more Vice-Presidents, a
Treasurer, a Secretary, an Assistant Secretary, and such other officers
P a g e | 30
as may be from time to time be elected or appointed by the Board
of Directors. One person may hold any two compatible offices.
Atty. Garcia tries to deny he is an officer of ETPI. Not being a
corporate officer, he argues that the Labor Arbiter has jurisdiction
over the case. One of the corporate officers provided for in the by-
laws of ETPI is the Vice-President. It can be gathered from Atty.
Garcia’s complaint-affidavit that he was Vice President for Business
Support Services and Human Resource Departments of ETPI when
his employment was terminated effective 16 April 2000. It is
therefore clear from the by-laws and from Atty. Garcia himself that
he is a corporate officer. One who is included in the by-laws of a
corporation in its roster of corporate officers is an officer of said
corporation and not a mere employee. Being a corporate officer, his
removal is deemed to be an intra-corporate dispute cognizable by
the SEC and not by the Labor Arbiter.
We agree with both the NLRC and the Court of Appeals that
Atty. Garcia’s ouster as Vice-President, who is a corporate officer of
ETPI, partakes of the nature of an intra-corporate controversy,
jurisdiction over which is vested in the SEC (now the RTC). The Labor
Arbiter thus erred in assuming jurisdiction over the case filed by
Atty. Garcia, because he had no jurisdiction over the subject matter
of the controversy.
 Renato Real vs. Sangu Philippines, Inc. et al., G.R. No.
168757, 1/19/2011
RENATO REAL vs. SANGU PHILIPPINES, INC. and/ or KIICHI ABE
FACTS:
Renato Real was the Manager of respondent corporation
Sangu Philippines, Inc. which is engaged in the business of providing
manpower for general services. He filed a complaint for illegal
dismissal against the respondents stating that he was neither
notified of the Board meeting during which his removal was
discussed nor was he formally charged with any infraction.
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S P a g e | 31

Respondents, on the other hand, said that Real committed

gross acts of misconduct detrimental to the company since 2000. Venue
The LA declared petitioner as having been illegally dismissed. Sangu  Case may be filed in the RAB having jurisdiction over the
appealed to NLRC and established petitioner’s status as a workplace of complainant or petitioner
stockholder and as a corporate officer and hence, his action against  Where two or more RABs have jurisdiction, venue resides in
respondent corporation is an intra-corporate controversy over which the RAB which first acquired it
the Labor Arbiter has no jurisdiction. NLRC modified the LA’s  No objection to venue before the filing of position papers,
decision. On appeal, the CA affirmed the decision of NLRC. issue is deemed waived
Hence, this petition.  May be by written agreement, or by motion for meritorious
ISSUE: cases
Whether or not petitioner’s complaint for illegal dismissal  Option of the worker
constitutes an intra-corporate controversy.
RULING: Case Flow, RAB
To determine whether a case involves an intra-corporate
controversy, and is to be heard and decided by the branches of the 2011 NLRC Rules of Procedure
RTC specifically designated by the Court to try and decide such  Significant changes from 2005 Rules (as discussed by Atty.
cases, two elements must concur: (a) the status or relationship of Ruben Del Rosario)
the parties, and (2) the nature of the question that is the subject of
their controversy.
The first element requires that the controversy must arise
out of intra-corporate or partnership relations between any or all of
the parties and the corporation x x . The second element requires
that the dispute among the parties be intrinsically connected with
the regulation of the corporation. If the nature of the controversy
involves matters that are purely civil in character, necessarily, the
case does not involve an intra-corporate controversy.
Guided by this recent jurisprudence, we thus find no merit
in respondents’ contention that the fact alone that petitioner is a
stockholder and director of respondent corporation automatically
classifies this case as an intra-corporate controversy. To reiterate,
not all conflicts between the stockholders and the corporation are
classified as intra-corporate. There are other factors to consider in
determining whether the dispute involves corporate matters as to
consider them as intra-corporate controversies.
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
1. Service of Notices, Resolutions, Orders and Decisions by Private
Courier (Section 4, Rule III). Under the 2005 Rules, service of
notices such as summons, notice of conference, resolutions, orders
and decisions is made through the NLRC’s messenger or sent by
registered mail only. In the 2011 Rules, service can be done by
private courier also.
2. Authority of the Labor Arbitration Associate to Conduct
Conciliation and Mediation Conference (Section 8a, Rule V). The
2005 Rules state that “the Labor Arbiter shall personally preside
over and take full control of the proceedings”. The 2011 Rules state
that the Labor Arbiter may be assisted by the Labor Arbitration
Associate in the conduct of the proceedings.
2011 NLRC Rules of Procedure
 5. Remedy of the Respondents (Manning Agents) When
Declared To Have Waived Their Right to File Position Paper
(Section 20, Rule V)
In instances where a party is declared to have waived
his/her right to file position paper, the 2011 NLRC Rules
have provided a remedy. The 2011 NLRC Rules states: A
party declared to have waived his/her right to file position
paper may, at any time after notice thereof and before a
case is submitted for decision, file a motion under oath to
set aside the order of waiver upon proper showing that
failure to appear during the hearings was due to justifiable
and meritorious grounds. If said motion is granted, the
manning agents can now file the necessary Position Paper.
 6. Limited Period to Conduct Hearing or Clarificatory
Conference (Section 14a, Rule V)
The concept of hearing or clarificatory conference referred
to in this rule is independent of and different from the
mediation or conciliation hearing wherein the seafarer and
the manning agents are encouraged to enter into an
amicable settlement. The clarificatory hearing is conducted
after the submission of the position papers
P a g e | 32
Briefly stated, a clarificatory hearing is rarely held and it is
discretionary on the part of the Labor Arbiter. As the term
connotes, its purpose is to ask the parties clarificatory
questions to further elicit facts or information which will
include obtaining relevant documentary evidence from any
party or witness.
The hearing or clarificatory conference shall be terminated
within thirty (30) calendar days from the date of the initial
clarificatory conference. The period now is shorter as it was
ninety (90) calendar days under the 2005 NLRC Rules.
In any event, under both the 2005 and 2011 Rules, cases
involving overseas Filipino workers (including seafarers) the
mandatory conciliation and mediation conferences and
clarificatory conferences must be terminated within sixty
(60) days from the acquisition of jurisdiction by the Labor
Arbiter over the person of the respondents.
 7. Procedure for Recovery of Amount Paid to the Seafarer
During Execution Proceedings (Section 14, Rule XI)
By way of brief background, if the case is lost in the Labor
Arbiter level, the manning agents/principals can file an
appeal before the Commission level to assail the Labor
Arbiter’s decision. If the appeal is dismissed, the remedy of
the manning agents is to file a Motion for Reconsideration.
The denial of the motion will render the Labor Arbiter’s
decision final and executory. Consequently, at this stage,
manning agents and their principals are required to pay the
seafarer based on said final award.
In the meantime, the case can still continue because the
manning agents has the remedy of elevating the matter to
the Court of Appeals and eventually, to the Supreme Court.
In some cases, the Court of Appeals and/or the Supreme
Court would either reverse (the seafarer is not entitled at all
to his claim) or modify (the judgment award is reduced) the
decision of the NLRC.
L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
In case of reversal or modification by the Court of Appeals
or Supreme Court of the Labor Arbiter’s decision, the next
recourse of the manning agents is to recover the amount it
has previously paid to the seafarer.
The present 2011 NLRC Rules of Procedure explicitly
provides for the steps on how to recover the said amount
from the seafarer. Under the 2011 NLRC Rules the Labor
Arbiters of the NLRC can issue orders of restitution to
enable the manning agents to recover the amount they
previously paid to the claimants as a result of the reversed
or modified decisions of the NLRC. This provision was not
present under the 2005 NLRC Rules.
 8. Extraordinary Remedy Available to the Manning
Agents/Principals Other Than Appeal (Rule XII)
One of, if not, the most critical stage in NLRC proceedings is
during execution of the judgment award. It is at this point
that the seafarer can now collect from the manning agents
or the bonding company the amount mentioned in the
Labor Arbiter’s decision.
The writ of execution is the basic document which would
empower the NLRC Sheriff to collect the judgment award
from manning agent which is the losing party. Under the
2005 NLRC Rules of Procedure, once the writ is issued, the
manning agents are already helpless to stop the NLRC
Sheriff from enforcing the judgment award unless of course,
and this is very rare, the Court of Appeals issues a
Temporary Restraining Order and/or Writ of Injunction.
The 2011 NLRC Rules of Procedure provides for a specific
remedy. It is not in the form of an appeal but a verified
petition with the NLRC Commission the purpose of which is
to annul or modify the order of the Labor Arbiter issuing the
writ of execution.
The immediate effect of the filing of the said verified
Petition is that the NLRC Sheriff cannot, in the meantime,
P a g e | 33
enforce the writ of execution or the NLRC Sheriff, in
layman’s term, cannot collect the amount stated in the
decision from the manning agents or from the bonding
company.
Please note that the mere filing of the verified Petition will
prevent the bank of either the manning agents or the
bonding company from releasing the garnished amount to
the seafarer within fifteen (15) calendar days from the filing
of the Petition. Of course, the period can be longer if the
NLRC issues a Temporary Restraining Order or Writ of
Preliminary Injunction which has a lifetime of twenty (20) or
sixty (60) days, respectively. It can also go beyond said
period if the NLRC issues a final injunction.
However, the Temporary Restraining Order or the Writ of
Preliminary Injunction only becomes effective upon posting
by the manning agents of a cash bond, not surety bond,
amounting to Php50,000.00 or a higher amount as may be
required by the NLRC.
Important Note: While the extraordinary remedy described
above can be availed of during execution proceedings, Rule
XII of the 2011 NLRC Rules can be availed of by “any party
aggrieved by an order or resolution of the Labor Arbiter”. It
is thus not confined to just execution proceedings but on all
orders or resolutions of the Labor Arbiter. For example, if
the manning agent files a Motion to Dismiss on the ground
that the seafarer has already been paid his disability
benefits and it is denied by the Labor Arbiter, the manning
agent can avail of the extraordinary remedy under Rule XII
of the 2011 NLRC Rules.
The above are the currently perceived significant changes
but we are continually reviewing the 2011 NLRC Rules and
will report on any other significant developments in
subsequent updates.
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
2011 NLRC Rules, amendments
 En Banc Resolution 11-12 amended the 2011 NLRC Rules of
Procedure.
 Venue: When venue is not objected to before the first
scheduled mandatory conference, such issue or objection
will be deemed waived. (Rule IV, Section 1, par. c)
 Confidentiality of Commission Records: access to pleadings
and other documents filed by parties to a case are
restricted. Reports, drafts of decisions, records of
deliberations, and other documents involving private rights
are made confidential. Nevertheless, decisions, resolutions
and orders of the NLRC are open to the parties and their
counsel or authorized representative during office hours.
(Rule XIII, Section 8)
 RULE V, SECTION 11. AMENDMENT OF
COMPLAINT/PETITION. An amended complaint or petition
may be filed before the Labor Arbiter at any time before the
filing of position paper, with proof of service of a copy
thereof to the opposing party/ies. If the amendment of the
complaint or petition involves impleading additional
respondent/s, service of another summons in accordance
with Section 3 hereof is necessary to acquire jurisdiction
over the person of the said respondent/s.
 RULE V, SECTION 20. DEATH OF PARTIES. In case a
complainant dies during the pendency of the proceedings,
he/she may be substituted by his/her heirs. If it is the
individual respondent, the provision of Section 20, Rule 3 of
the Rules of Court shall apply.
 RULE XI, SECTION 5. EFFECT OF A MOTION TO LIFT ENTRY OF
JUDGMENT. In case a motion to lift Entry of Judgment is
filed, the execution proceedings shall not be suspended and
the records of the case shall not be elevated to the
Commission unless ordered otherwise.
P a g e | 34
 RULE XI, SECTION 11 EXECUTION IN CASE OF DEATH OF
PARTY. Where a party dies after the entry of judgment or
issuance of certificate of finality, execution thereon may
issue or one already issued may be enforced in accordance
with the applicable provisions of the Rules of Court. The
sheriff shall submit to the Commission or Labor Arbiter a
report before and after the sale. Proceeds of the sale should
be deposited with the Cashier for proper disposition by the
Commission or Labor Arbiter.
 The foregoing provisions provide mechanisms to: a) amend
complaints b) substitute heirs in case of death of a party and
c) execute judgments. The amendments also clarify certain
ambiguities in the rules. For instance, the amended rules
specify the reckoning point of the five (5) year effectivity of
the writ of execution, which is the date of entry of judgment
or issuance of certificate of finality. (Rule XI, Section 7)
 In respect of execution of monetary judgments, the
amended rules state the manner by which a losing party
may voluntarily tender payment. The amended rules also
enumerate the order of funds and properties against which
the judgment may be enforced in the event the losing party
refuses or fails to pay. Notably, the prevailing party may
even file a motion for the issuance of a “break open order”
with the Commission or the Labor Arbiter if the losing party
prevents the sheriff from entering the place where the
property subject of execution is kept. (Rule XI, Section 9 and
10)
 The amended rules introduced a new provision, which
would have a significant effect during execution
proceedings. It contemplates a situation where a case is
elevated to the Court of Appeals and subsequently to the
Supreme Court. The new provision states that a total or
partial reversal of judgment by the Court of Appeals has the
effect of suspending the execution insofar as the reversal is
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
concerned even during the pendency of a motion for
reconsideration on such judgment. Where the judgment of
the Court of Appeals is reversed by the Supreme Court,
execution proceedings shall commence upon presentation
of a certified true copy of the decision and entry of
judgment. (Section 17, Rule XI)
Doctrine of Forum Non Conveniens
 Manila Hotel Corporation vs. NLRC (GR No. 120077,
October 13, 2000) – The NLRC has no jurisdiction when the
main aspects of the case transpired in foreign jurisdictions
and the only link that the Philippines has with the case is
that the employee is a Filipino citizen.
Manila Hotel Corporation vs. National Labor Relations Commission
FACTS:
In May 1988, Marcelo Santos was an overseas worker in
Oman. In June 1988, he was recruited by Palace Hotel in Beijing,
China. Due to higher pay and benefits, Santos agreed to the hotel’s
job offer and so he started working there in November 1988. The
employment contract between him and Palace Hotel was however
without the intervention of the Philippine Overseas Employment
Administration (POEA). In August 1989, Palace Hotel notified Santos
that he will be laid off due to business reverses. In September 1989,
he was officially terminated.
In February 1990, Santos filed a complaint for illegal
dismissal against Manila Hotel Corporation (MHC) and Manila Hotel
International, Ltd. (MHIL). The Palace Hotel was impleaded but no
summons were served upon it. MHC is a government owned and
controlled corporation. It owns 50% of MHIL, a foreign corporation
(Hong Kong). MHIL manages the affair of the Palace Hotel. The labor
arbiter who handled the case ruled in favor of Santos. The National
Labor Relations Commission (NLRC) affirmed the labor arbiter.
P a g e | 35
ISSUE:
Whether or not the NLRC has jurisdiction over the case.
RULING:
No. The NLRC is a very inconvenient forum for the following
reasons:
1. The only link that the Philippines has in this case is the fact
that Santos is a Filipino;
2. However, the Palace Hotel and MHIL are foreign
corporations – MHC cannot be held liable because it merely owns
50% of MHIL, it has no direct business in the affairs of the Palace
Hotel. The veil of corporate fiction can’t be pierced because it was
not shown that MHC is directly managing the affairs of MHIL. Hence,
they are separate entities.
3. Santos’ contract with the Palace Hotel was not entered into
in the Philippines;
4. Santos’ contract was entered into without the intervention
of the POEA (had POEA intervened, NLRC still does not have
jurisdiction because it will be the POEA which will hear the case);
5. MHIL and the Palace Hotel are not doing business in the
Philippines; their agents/officers are not residents of the Philippines;
Due to the foregoing, the NLRC cannot possibly determine
all the relevant facts pertaining to the case. It is not competent to
determine the facts because the acts complained of happened
outside our jurisdiction. It cannot determine which law is applicable.
And in case a judgment is rendered, it cannot be enforced against
the Palace Hotel (in the first place, it was not served any summons).
The Supreme Court emphasized that 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
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
its decision.
None of the above conditions are apparent in the case at
bar.
 PNB vs. Cabansag (GR No. 157010, June 21, 2005) – when
the employee is directly hired in a foreign country but
nonetheless secures a (POEA) employment certificate, she is
an OFW and thus the case falls under the jurisdiction of the
labor arbiter.
PHILIPPINE NATIONAL BANK, petitioner, vs. FLORENCE O.
CABANSAG, respondent.
FACTS:
In late 1998, [herein Respondent Florence Cabansag] arrived
in Singapore as a tourist. She applied for employment, with the
Singapore Branch of the Philippine National Bank. At the time, the
Singapore PNB Branch was under the helm of Ruben C. Tobias, a
lawyer, as General Manager, with the rank of Vice-President of the
Bank. She applied for employment as Branch Credit Officer, at a total
monthly package of $SG4,500.00, effective upon assumption of
duties after approval. Ruben C. Tobias found her eminently qualified
and wrote on October 26, 1998, a letter to the President of the Bank
in Manila, recommending the appointment of Florence O. Cabansag,
for the position.
On December 7, 1998, Ruben C. Tobias wrote a letter to
Florence O. Cabansag offering her a temporary appointment, as
Credit Officer, at a basic salary of Singapore Dollars 4,500.00, a
month and, upon her successful completion of her probation to be
determined solely, by the Bank, she may be extended at the
discretion of the Bank, a permanent appointment and that her
temporary appointment was subject to certain terms and
conditions.
Cabansag accepted the position and assumed office. In the
meantime, the Philippine Embassy in Singapore processed the
P a g e | 36
employment contract of Florence O. Cabansag and, on March 8,
1999, she was issued by the Philippine Overseas Employment
Administration, an ‘Overseas Employment Certificate,’ certifying that
she was a bona fide contract worker for Singapore.
Barely three (3) months in office Tobias told Cabansag that
her resignation was imperative as a ‘cost-cutting measure’ of the
Bank. Tobias, likewise, told Cabansag that the PNB Singapore Branch
will be sold or transformed into a remittance office and that, in
either way, she had to resign from her employment. She then asked
Ruben C. Tobias that she be furnished with a ‘Formal Advice’ from
the PNB Head Office in Manila. However, Ruben C. Tobias flatly
refused. Florence O. Cabansag did not submit any letter of
resignation.
On April 16, 1999, Ruben C. Tobias again summoned
Florence O. Cabansag to his office and demanded that she submit
her letter of resignation, with the pretext that he needed a Chinese-
speaking Credit Officer to penetrate the local market, with the
information that a Chinese-speaking Credit Officer had already been
hired and will be reporting for work soon. She was warned that,
unless she submitted her letter of resignation, her employment
record will be blemished with the notation ‘DISMISSED’ spread
thereon. Without giving any definitive answer, Florence O. Cabansag
asked Ruben C. Tobias that she be given sufficient time to look for
another job. Ruben C. Tobias told her that she should be ‘out’ of her
employment by May 15, 1999.
However, on April 19, 1999, Ruben C. Tobias again
summoned Florence O. Cabansag and adamantly ordered her to
submit her letter of resignation. She refused. On April 20, 1999, she
received a letter from Ruben C. Tobias terminating her employment
with the Bank.
On January 18, 2000, the Labor Arbiter rendered judgment
in favor of the Complainant and against the Respondents. PNB
appealed the labor arbiter’s Decision to the NLRC. In a Resolution
dated June 29, 2001, the Commission affirmed that Decision.
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
Petitioner appealed to the Court of Appeals which rendered
a decision in favor of Florence Cabansag.
ISSUE:
Whether or not the arbitration branch of the NLRC in the
National Capital Region has jurisdiction over the instant controversy.
RULING:
The jurisdiction of labor arbiters and the NLRC is specified in
Article 217 of the Labor Code and more specifically, Section 10 of RA
8042 reads in part:
“SECTION 10. Money Claims. — Notwithstanding any
provision of law to the contrary, the Labor Arbiters of the National
Labor Relations Commission (NLRC) shall have the original and
exclusive jurisdiction to hear and decide, within ninety (90) calendar
days after the filing of the complaint, the claims arising out of an
employer-employee relationship or by virtue of any law or contract
involving Filipino workers for overseas deployment including claims
for actual, moral, exemplary and other forms of damages.
Based on the foregoing provisions, labor arbiters clearly
have original and exclusive jurisdiction over claims arising from
employer-employee relations, including termination disputes
involving all workers, among whom are overseas Filipino workers
(OFW). We are not unmindful of the fact that respondent was
directly hired, while on a tourist status in Singapore, by the PNB
branch in that city state. Prior to employing respondent, petitioner
had to obtain an employment pass for her from the Singapore
Ministry of Manpower. Securing the pass was a regulatory
requirement pursuant to the immigration regulations of that
country.
Noteworthy is the fact that respondent likewise applied for
and secured an Overseas Employment Certificate from the POEA
through the Philippine Embassy in Singapore. The Certificate, issued
on March 8, 1999, declared her a bona fide contract worker for
Singapore. Under Philippine law, this document authorized her
working status in a foreign country and entitled her to all benefits
P a g e | 37
and processes under our statutes. Thus, even assuming arguendo
that she was considered at the start of her employment as a “direct
hire” governed by and subject to the laws, common practices and
customs prevailing in Singapore 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.
For purposes of venue, workplace shall be understood as
the place or locality where the employee is regularly assigned when
the cause of action arose. It shall include the place where the
employee is supposed to report back after a temporary detail,
assignment or travel. In the case of field employees, as well as
ambulant or itinerant workers, their workplace is where they are
regularly assigned, or where they are supposed to regularly receive
their salaries/wages or work instructions from, and report the
results of their assignment to their employers.
Under the “Migrant Workers and Overseas Filipinos Act of
1995” (RA 8042), a migrant worker “refers to a person who is to be
engaged, is engaged or has been engaged in a remunerated activity
in a state of which he or she is not a legal resident; to be used
interchangeably with overseas Filipino worker.”[21] Undeniably,
respondent was employed by petitioner in its branch office in
Singapore. Admittedly, she is a Filipino and not a legal resident of
that state. She thus falls within the category of “migrant worker” or
“overseas Filipino worker.”
Counter claims of employers
 Banez vs. Valdevilla (GR No. 128024, May 9, 2000) – Art.
217 (now 223) is comprehensive enough to include claims
for all forms of damages arising from Er-Ee relations,
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
including Er’s claims for actual damages against a dismissed
Ee.
BEBIANO M. BAÑEZ vs. HON. DOWNEY C. VALDEVILLA and ORO
MARKETING, INC.
FACTS:
Bañez was the sales operations manager of Oro Marketing in
Iligan City. In 1993, Oro Marketing "indefinitely suspended" Bañez
and the latter filed a complaint for illegal dismissal with the NLRC in
Iligan City. In a decision dated July 7, 1994, Labor Arbiter Nicodemus
G. Palangan found Bañez to have been illegally dismissed and
ordered the payment of separation pay in lieu of reinstatement, and
of backwages and attorney's fees. The decision was appealed to the
NLRC, which dismissed the same for having been filed out of time.
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, Oro Marketing filed a complaint for
damages before the RTC of Misamis Oriental . On January 30, 1996,
Bañez filed a motion to dismiss the above complaint. He interposed
in the court below that the action for damages, having arisen from
an employer-employee relationship, was squarely under the
exclusive original jurisdiction of the NLRC under Article 217(a),
paragraph 4 of the Labor Code and is barred by reason of the final
judgment in the labor case. He accused private respondent of
splitting causes of action, stating that the latter could very well have
included the instant claim for damages in its counterclaim before the
Labor Arbiter. He also pointed out that the civil action of private
respondent is an act of forum-shopping and was merely resorted to
after a failure to obtain a favorable decision with the NLRC.
Ruling upon the motion to dismiss, the RTC declared itself as
having jurisdiction over the subject matter of the instant controversy
P a g e | 38
on the ground that the 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 RTC has a jurisdiction of the case.
RULING:
Article 217(a), paragraph 4 of the Labor Code, which was
already in effect at the time of the filing of this case, reads: Exsm
ART. 217. Jurisdiction of Labor Arbiters and the
Commission. --- (a) Except as otherwise provided
under this Code the Labor Arbiters shall have
original and exclusive jurisdiction to hear and
decide, within thirty (30) calendar days after the
submission of the case by the parties for decision
without extension, even in the absence of
stenographic notes, the following cases involving all
workers, whether agricultural or non-agricultural:
4. Claims for actual, moral, exemplary and
other forms of damages arising from the
employer-employee relations;
The above provisions are a result of the amendment by
Section 9 of Republic Act ("R.A.") No. 6715, which took effect on
March 21, 1989, and which put to rest the earlier confusion as to
who between Labor Arbiters and regular courts had jurisdiction over
claims for damages as between employers and employees. Sppedjo
It will be recalled that years prior to R.A. 6715, jurisdiction
over all money claims of workers, including claims for damages, was
originally lodged with the Labor Arbiters and the NLRC by Article 217
of the Labor Code. On May 1, 1979, however, Presidential Decree
("P.D.") No. 1367 amended said Article 217 to the effect that
"Regional Directors shall not indorse and Labor Arbiters shall not
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
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".
Whereas this Court in a number of occasions had applied
the jurisdictional provisions of Article 217 to claims for damages
filed by employees, we hold that by the designating clause "arising
from the employer-employee relations" Article 217 should apply
with equal force to the claim of an employer for actual damages
against its dismissed employee, where the basis for the claim arises
from or is necessarily connected with the fact of termination, and
should be entered as a counterclaim in the illegal dismissal case.
 Domondon vs. NLRC (GR No. 154376, Sept. 30, 2005)
ROBERTO T. DOMONDON vs. NLRC and NIELS H.B. HAVE
FACTS:
On November 20, 1998, Roberto T. Domondon filed a
complaint before the Regional Arbitration Branch of the NLRC,
Quezon City, against Van Melle Phils., Inc. (VMPI) and its President
and General Manager, Niels H.B. Have. He claimed illegal dismissal
and prayed for reinstatement, payment of full backwages inclusive
of allowances, 14th month pay, sick and vacation leaves, share in the
profits, moral and exemplary damages and attorney’s fees.
VMPI hired Domondon as Materials Manager through its
then President and General Manager Victor M. Endaya. He was
tasked to supervise the Inventory Control, Purchasing, and
Warehouse and Distribution Sections of the company. He was given
a guaranteed monthly salary of ninety-eight thousand (P98,000.00)
pesos for fourteen (14) months with annual merit adjustment, profit
P a g e | 39
sharing bonus from 0-2 months based on individual, company and
corporate performance, and a brand new
1600cc Honda VTEC with 300 liters monthly gas allowance.
When Endaya was transferred to China in August 1997, he
was replaced Have, a Dutch national. Have immediately set a one-
on-one meeting with him and requested his courtesy resignation.
Domondon refused to resign and life got difficult for him. His
decisions were always questioned by Have. He was subjected to
verbal abuse. His competence was undermined by baseless and
derogatory memos, which lay the bases for his removal from the
company. He also did not receive his 14th month pay.
On June 10, 1998, in another one-on-one meeting with
Have, Have informed Domondon that things would get more
difficult for him if he does not resign. Have threw a veiled threat at
Domondon to the effect that "a dignified resignation would be
infinitely better than being fired for a fabricated lawful cause."Have
offered financial assistance if Domondon would leave peacefully but
the offer must be accepted immediately or it would be withdrawn.
Thus, Domondon signed a "ready-made" resignation letter without
deliberation and evaluation of the consequences. His main concern
then was to prevent the "end of his professional career."
On the same day that he handed in his resignation letter,
VMPI posted a memorandum with information of his replacement.
He claimed that to lend a semblance of credibility to his forced
resignation, private respondents released to him a portion of the
offered financial package.
On their part, private respondents admitted hiring petitioner
under the circumstances set forth by him but denied illegally
dismissing him. They maintained that with his educational and
professional background, petitioner could not have been coerced
and intimidated into resigning from the company. Instead, they
claimed that he voluntarily resigned "to embark on management
consultancy in the field of strategic planning and import/export."
They stated that petitioner informed them about his intention to
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
resign and requested a "soft landing" financial support in the
amount of three hundred thousand (P300,000.00) pesos on top of
accrued benefits due him upon resignation. Private respondents
granted the request. Subsequently, however, petitioner proposed
the transfer of ownership of the car assigned to him in lieu of the
financial assistance from the company. Since company policy
prohibits disposition of assets without valuable consideration, the
parties agreed that petitioner shall pay for the car with
the P300,000.00 "soft landing" financial assistance from private
respondent VMPI.
Private respondents averred that petitioner, who was then
in charge of the disposition of the assets of the company, effected
the registration of the car in his name. Joannes Cornelis Kuiten, then
Vice-President for Finance, signed for the company. On July 30,
1998, P300,000.00 was credited to petitioner’s payroll account but
he did not use it to pay for the car as agreed upon. Repeated
demands for payment were unheeded. In its letter of demand dated
October 28, 1998, private respondent VMPI gave petitioner an
option to apply theP169,368.32 total cash conversion of his sick and
vacation leave credits, 13th and 14th months’ pay less taxes as
partial payment for the car and pay the balance of P130,631.68,
or return the car to the company. Petitioner did not exercise either
option. Instead, on November 20, 1998, he filed a complaint for
illegal dismissal against private respondents.
The Labor Arbiter dismissed the complaint for illegal
dismissal. The NLRC affirmed the Decision of the Labor Arbiter on
January 26, 2001 and denied petitioner’s motion for reconsideration
on March 5, 2001. Petitioner went to the Court of Appeals on a
special civil action for certiorari but failed for the third time. The
appellate court dismissed the petition on February 28, 2002 and
denied petitioner’s motion for reconsideration on July 17, 2002;
hence, this petition for review on certiorari.
ISSUE:
Whether or not Domondon was illegally dismissed.
P a g e | 40
Whether or not the Labor Arbiter has the jurisdiction over
the award of the car.
RULING:
Our jurisdiction is limited to reviewing errors of law. Not
being a trier of facts, the Court cannot re-examine and re-evaluate
the probative value of evidence presented to the Labor Arbiter, the
NLRC and the Court of Appeals, which formed the basis of the
questioned decision and resolution. Indeed, their findings when in
absolute agreement are accorded not only respect but even finality
as long as they are supported by substantial evidence.
In any event, we combed the records of the case at bar and
found no compelling reason to disturb the uniform findings and
conclusions of the Court of Appeals, the NLRC and the Labor Arbiter.
There was no arbitrary disregard or misapprehension of evidence of
such nature as to compel a contrary conclusion if properly
appreciated. Petitioner’s letter of resignation, his educational
attainment, and the circumstances antecedent and
contemporaneous to the filing of the complaint for illegal dismissal
are substantial proof of petitioner’s voluntary resignation.
Petitioner’s letter of resignation was categorical that he was
resigning "to embark on management consultancy in the field of
strategic planning and import/export." Petitioner was holding a
managerial position at private respondent VMPI and he was
previously Vice-President for strategic planning at LG Collins
Electronics. Thus, "management consultancy in the field of strategic
planning" was a logical reason for the resignation, which either
petitioner or private respondents may provide.
"Import/export," whether inclusive or exclusive of the
clause "managerial consultancy," on the other hand, could neither
be inferred from petitioner’s nature of work with private respondent
VMPI nor from his past work experiences. Thus, even if petitioner
was correct in arguing that he could not have considered it given the
state of the country’s economy, anyone may provide it as reason for
the resignation, including him and private respondents.
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
But assuming that private respondents prepared the letter
of resignation for petitioner to sign as claimed, the Court is not
convinced that petitioner was coerced and intimidated into signing
it. Petitioner is no ordinary employee with limited education. He has
a Bachelor of Arts Degree in Economics from the University of Santo
Tomas, has completed academic requirements for Masters of
Business Economics from the University of Asia and the Pacific, and
studied law for two (2) years at Adamson University. He also has a
good professional record, which highlights his marketability.
In termination cases, the employer decides for the
employee. It is different in resignation cases for resignation is a
formal pronouncement of relinquishment of an office. It is made
with the intention of relinquishing the office accompanied by an act
of relinquishment. In the instant case, petitioner relinquished his
position when he submitted his letter of resignation. His subsequent
act of receiving and keeping his requested "soft landing" financial
assistance of P300,000.00, and his retention and use of the car
subject of his arrangement with private respondents showed his
resolve to relinquish his post.
Thus, we affirm the findings of the Labor Arbiter, the NLRC
and the Court of Appeals that private respondents were able to
prove through substantial evidence that petitioner was not illegally
dismissed.
The jurisdiction of Labor Arbiters is provided under Article
217(a) of the Labor Code. The matrix is the existence of an
employer-employee relationship. In the case at bar, there is no
dispute that petitioner is an employee of the respondents. In Bañez
v. Valdevilla, we held:
x x x Presently, and as amended by R.A. 6715, the
jurisdiction of Labor Arbiters and the NLRC in Article 217 is
comprehensive enough to include claims for all forms of damages
"arising from the employer-employee relations."
Whereas this Court in a number of occasions had applied
the jurisdictional provisions of Article 217 to claims of damages filed
P a g e | 41
by employees, we hold that by the designating clause "arising from
the employer-employee relations" Article 217 should apply with
equal force to the claim of an employer for actual damages against
its dismissed employee, where the basis for the claim arises from or
is necessarily connected with the fact of termination, and should be
entered as a counterclaim in the illegal dismissal case.
Bañez is in accord with paragraph 6 of Article 217(a), which
covers "all other claims, arising from employer-employee
relations," viz:
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 the case at bar, petitioner claims illegal dismissal and
prays for reinstatement, payment of full backwages inclusive of
allowances, 14th month pay, sick and vacation leaves, share in the
profits, moral and exemplary damages and attorney’s fees. These
causes of action clearly fall within the jurisdiction of the Labor
Arbiter, specifically under paragraphs 2, 3 and 4 of Article 217(a).
On the other hand, private respondents made a counterclaim
involving the transfer of ownership of a company car to petitioner.
They maintain that he failed to pay for the car in accordance with
their agreement. The issue is whether this claim of private
respondents arose from the employer-employee relationship of the
parties pursuant to paragraph 6 of Article 217(a) under the general
clause as quoted above.
NLRC, Jurisdiction: Two kinds
 Original Jurisdiction
o Injunction in ordinary labor disputes
o Injunction in strikes and lockouts under Article 270,
LC
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
o Certified labor disputes in industries indispensable
to the national interest, where work stoppage is
likely or has already occurred
 Exclusive Appellate Jurisdiction
o Cases decided by the labor arbiters
o Cases decided by DOLE regional directors under
Article 129
Labor Arbiters & NLRC, distinction of jurisdictions
 NLRC has exclusive appellate jurisdiction on all cases
decided by the labor arbiters.
 NLRC does not have original jurisdiction on the cases over
which labor arbiters have original and exclusive jurisdiction.
 If the labor arbiter does not exercise original and exclusive
jurisdiction over a case, the NLRC has no appellate
jurisdiction over it.
Appeals
 Labor Arbiters’ decisions – ordinary appeal to the NLRC,
w/in 10 calendar days from receipt. NLRC’s decision on
appeal is elevated to the CA by way of special civil action
(Rule 65), and then under ordinary appeal (Rule 45) to the
SC
Grounds of Appeal
 Prima facie evidence of abuse of discretion on the part of
the labor arbiter
 Decision, order or award was secured through fraud or
coercion, including graft and corruption
 Purely on questions of law
 Serious errors in the findings of facts which would cause
grave or irreparable damage or injury to appellant
Perfection of Appeal, requisites
P a g e | 42
 Filed within reglementary period (ten days from receipt of
decision by party seeking appeal)
 Under oath
 Appeal fee
 Posting of cash or surety bond (where judgment involves
monetary award)
 Proof of service to adverse party
Appeal
 Note the following:
 Labor arbiter loses jurisdiction upon perfection of appeal
 Lack of verification is not fatal nor jurisdictional
 Appeal is still valid despite failure to pay docket fee, but
refusal to pay despite directive is fatal
 Raising new issues or changing theory on appeal is not
allowed.
Reinstatement Order
 Reinstatement is immediately executory even pending
appeal
 Pioneer Texturizing Corporation vs. NLRC – employer is
duty-bound to inform employee of reinstatement
PIONEER TEXTURIZING CORP. and/or JULIANO LIM vs. NLRC and
PIONEER TEXTURIZING WORKERS UNION and LOURDES A. DE
JESUS
FACTS:
Lourdes A. de Jesus is petitioners’ reviser/trimmer since
1980. As reviser/trimmer, de Jesus based her assigned work on a
paper note posted by petitioners. The posted paper which contains
the corresponding price for the work to be accomplished by a
worker is identified by its P.O. Number. On August 15, 1992, de
Jesus worked on P.O. No. 3853 by trimming the cloths’ ribs. She
thereafter submitted tickets corresponding to the work done to her
supervisor. Three days later, de Jesus received from petitioners’
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
personnel manager a memorandum requiring her to explain why no
disciplinary action should be taken against her for dishonesty and
tampering of official records and documents with the intention of
cheating as P.O. No. 3853 allegedly required no trimming. The
memorandum also placed her under preventive suspension for
thirty days starting from August 19, 1992. In her handwritten
explanation, de Jesus maintained that she merely committed a
mistake in trimming P.O. No. 3853 as it has the same style and
design as P.O. No. 3824 which has an attached price list for trimming
the ribs and admitted that she may have been negligent in
presuming that the same work was to be done with P.O. No. 3853,
but not for dishonesty or tampering Petitioners’ personnel
department, nonetheless, terminated her from employment and
sent her a notice of termination dated September 18, 1992.
On September 22, 1992, de Jesus filed a complaint for illegal
dismissal against petitioners. The Labor Arbiter who heard the case
noted that de Jesus was amply accorded procedural due process in
her termination from service. Nevertheless, after observing that de
Jesus made some further trimming on P.O. No. 3853 and that her
dismissal was not justified, the Labor Arbiter held petitioners guilty
of illegal dismissal. Petitioners were accordingly ordered to reinstate
de Jesus to her previous position without loss of seniority rights and
with full backwages from the time of her suspension on August 19,
1992. Dissatisfied with the Labor Arbiter’s decision, petitioners
appealed to the public respondent National Labor Relations
Commission (NLRC). In its July 21, 1994 decision, the NLRC ruled
that de Jesus was negligent in presuming that the ribs of P.O. No.
3853 should likewise be trimmed for having the same style and
design as P.O. No. 3824, thus petitioners cannot be entirely faulted
for dismissing de Jesus. The NLRC declared that the
status quo between them should be maintained and affirmed the
Labor Arbiter’s order of reinstatement, but without backwages. The
NLRC further “directed petitioner to pay de Jesus her back salaries
from the date she filed her motion for execution on September 21,
P a g e | 43
1993 up to the date of the promulgation of [the]
decision.” Petitioners filed their partial motion for reconsideration
which the NLRC denied, hence this petition anchored substantially
on the alleged NLRC’s error in holding that de Jesus is entitled to
reinstatement and back salaries.
ISSUE:
Whether or not an order for reinstatement needs a writ of
execution.
RULING:
We note that prior to the enactment of R.A. No. 6715,
Article 223of the Labor Code contains no provision dealing with the
reinstatement of an illegally dismissed employee. The amendment
introduced by R.A. No. 6715 is an innovation and a far departure
from the old law indicating therby the legislature’s unequivocal
intent to insert a new rule that will govern the reinstatement aspect
of a decision or resolution in any given labor dispute. In fact, the
law as now worded employs the phrase “shall immediately be
executory” without qualification emphasizing the need for prompt
compliance. As a rule, “shall” in a statute commonly denotes an
imperative obligation and is inconsistent with the idea of discretion
and that the presumption is that the word “shall”, when used in a
statute, is mandatory. An appeal or posting of bond, by plain
mandate of the law, could not even forestall nor stay the executory
nature of an order of reinstatement. The law, moreover, is
unambiguous and clear. Thus, it must be applied according to its
plain and obvious meaning, according to its express terms.
And in conformity with the executory nature of the
reinstatement order, Rule V, Section 16 (3) of the New Rules of
Procedure of the NLRC strictly requires the Labor Arbiter to direct
the employer to immediately reinstate the dismissed employee
 An employer may not stay execution of reinstatement, even
when he has posted a bond
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 Roquero vs. PAL (GR No. 152329, April 2003) - Labor arbiter
has ministerial duty to implement reinstatement order
Roquero vs. PAL
FACTS
Petitioner Alejandro Roquero was dismissed by PAL for
violating the PAL Code of Discipline regarding the use of prohibited
drugs while on company premises or on duty. He alleged that he was
merely instigated by PAL to take the drugs through a certain Joseph
Ocul. The Labor Arbiter upheld the dismissal but also found PAL
guilty of enticing the complainants into committing the infraction.
Pending appeal at the NLRC, Roquero and another employee was
acquitted by the RTC in the criminal case which charged them with
“conspiracy for possession and use of regulated drug” on the ground
of instigation.
The NLRC ruled in favor of Roquero as it likewise found PAL
guilty of instigation and ordered reinstatement but without
backwages. PAL refused to execute the writ of execution issued by
the Labor Arbiter on the ground that they have filed a petition for
review before the SC, which was subsequently referred to the CA.
The CA reversed the decision of the NLRC and reinstated the
decision of the Labor Arbiter insofar as it upheld the dismissal of
Roquero but denied the award of separation pay and attorney’s fees.
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 reinstatement order can be halted
without a 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
RULING:
P a g e | 44
1. Petitioner is guilty of serious misconduct. It is of public
knowledge that drugs damage the mental faculties of the user. He is
tasked with the repair and maintenance of PAL’s airplanes. He
cannot discharge that duty if he is a drug user. It can mean great loss
of lives and property. Instigation is only a defense against criminal
liability but not against dismissal from employment especially when
the position involves the safety of human lives.
2. The order of reinstatement is immediately executor. 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.
3. 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.
Reinstatement by Employer
 Actual reinstatement of the employee to his work under the
same terms and conditions prior to dismissal or separation,
or
 Reinstatement in the payroll of the company, without
requiring actual return to work
Bureau of Labor Relations
FUNCTIONS OF THE BUREAU OF LABOR RELATIONS ABSORBED BY
NCMB
 Pursuant to E.O. 126, the National Conciliation and
Mediation Board (NCMB) has absorbed the conciliation,
mediation and voluntary arbitration functions of the BLR.
 The BLR functions, as it now stands are confined largely to
union matters, collective bargaining and labor education.
 Jurisdiction over labor-management problems or disputes is
also exercised by other offices such as the DOLE regional
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
offices, the Office of the Secretary of Labor, NLRC, POEA,
OWWA, SSS-ECC, the regional wage and productivity boards,
NWPC, and even the regular courts over intra-corporate
disputes.
Exclusive and Original Jurisdiction of the BLR
 To act on its own initiative or upon the request of either or
both parties on all:
o INTRA-union conflicts;
o INTER-union conflicts; and
o OTHER RELATED Labor Relations Disputes
Other Related Labor Relations Disputes (Sec. 2, Rule XI D.O. 40-03)
 Shall include any conflict between a labor organization and
the employer or any individual, entity, or group that is NOT a
labor organization or worker’s association.
 This includes:
o Cancellation of registration of unions and worker’s
associations; and
o A petition for interpleader.
EO 251, S. 1987
 removed from the jurisdiction of the BLR “all” labor-
management disputes. The effect of E.O. 251 is to transfer
to the NCMB the mediation, conciliation, and arbitration
functions of the BLR.
 The parties may, by agreement, settle their differences by
submitting their case to a voluntary arbitrator rather than
taking the case to the BLR.
 This category of labor relations disputes as the name
suggests is related to inter/intra union disputes to
differentiate it from other labor-management disputes, such
as those under
o Article 128: Visitorial and enforcement power
P a g e | 45
o Article 129: recovery of wages, simple money claims
and other benefits
o Article 223: Jurisdiction of the LA and NLRC
o Article 267: Jurisdiction of VA
o Article 270(g): Secretary of Labor, on possibility of
strikes and lockouts
Functions and Authority of BLR under the 1987 Administrative
Code
 Sec. 16. Bureau of Labor Relations – The BLR shall:
 Set policies, standards, and procedures on the registration
and supervision of legitimate labor union activities including
denial, cancellation, and revocation of labor union permits;
 Set policies, standards and procedures relating to collective
bargaining agreements, and the examination of financial
records of accounts of labor organization to determine
compliance with relevant laws;
 Provide proper orientation to workers on their schemes and
projects for improvement of the standards of living of
workers and their families.
Union Disputes
 Intra-Union Disputes – refer to any conflict between and
among union members, including grievances arising from
any violation of the rights and conditions of membership,
violation of or disagreement over any provision of the
union’s constitution and by-laws, or disputes arising from
chartering or affiliation.
 Inter-Union Disputes – refer to any conflict between and
among legitimate labor organizations involving
representation questions for purposes of collective
bargaining or to any other conflict or dispute between
legitimate labor organizations based on any violations of
their rights as labor organizations.
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
Coverage of Inter/Intra-Union Disputes (Sec. 1 Rule XI, D.O. 40-03)
 Cancellation of registration of a labor organization filed by
its members or by any other labor organization;
 Conduct of election of union and worker’s association
officers/nullification of election of union and worker’s
association officers;
 Audit/accounts examination of union or worker’s
association funds;
 De-registration of CBA;
 Validity/invalidity of union affiliation or disaffiliation;
 Validity/invalidity of acceptance/non-acceptance for union
membership;
 Validity/invalidity of impeachment/expulsion of union and
worker’s association officers;
 Validity/invalidity of voluntary recognition;
 Opposition to application for union and CBA registration;
 Violations of or disagreements over any provision in a union
or worker’s association constitution and by-laws;
 Disagreements over chartering or registration of labor
organizations and CBAs;
 Violations of the rights and conditions of union or worker’s
association membership;
 Violations of the rights of legitimate labor organizations,
except interpretation of CBAs; and
 Such other disputes or conflicts involving the rights to self-
organization, union membership, and collective bargaining
o Between and among legitimate labor organizations;
and
o Between and among members of a union or
worker’s association.
Special Requirements as to the Filing of Cases
 Involving Entire Membership
P a g e | 46
o The complaint must be signed by at least 30% of the
entire membership of the union; and
o It must also show exhaustion of administrative
remedies.
 Involving a Member Only
o In such case, only the affected member may file the
complaint. Redress must first be sough within the
union itself in accordance with its constitution and
by-laws EXCEPT under any of the following
circumstances:
 Futility of intra-union remedies;
 Improper expulsion procedure;
 Undue delay in appeal as to constitute
substantial injustice;
 The action is for damages;
 Involving a Member Only
o In such case, only the affected member may file the
complaint. Redress must first be sough within the
union itself in accordance with its constitution and
by-laws EXCEPT under any of the following
circumstances:
 Lack of jurisdiction of the investigating
body;
 Action of the administrative agency is
patently illegal, arbitrary, and oppressive;
 Issue is purely a question of law;
 Where the administrative agency had
already prejudged the case; and
 Where the administrative agency was
practically given the opportunity to act on
the case but did not.
Effects of Filing or Pendency of Inter/Intra-Union Dispute and other
Labor Relations Disputes (Sec. 3, Rule XI, D.O. 40-03)
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
 The rights, relationships and obligations of the part-
litigants against each other and other parties-in-interest
prior to the institution of the petition shall continue to
remain during the pendency of the petition and until the
date of finality of the decision rendered therein.
Thereafter, the rights, relationships and obligations of the
party litigants against each other and other parties-in-
interest shall be governed by the decision so ordered.
Modes of Appeal in Intra/Inter-Union Disputes (Rule XI, D.O. 40-03
Summary of Rules on Inter/Intra Union Disputes
Who:
 For grounds under Section 1: any LLO members thereof
specially concerned
 For grounds under Section 2: any party-in-interest
Where
 RO that issued its certificate of registration or certificate of
creation of chartered local – if it involves labor unions with
P a g e | 47
independent registration, chartered locals, workers
association, its officers or members.
 Directly with the BLR if it involves a federation/national
union/industry union, its officers or members
Effects of Filing or Pendency of Inter/Intra-Union Dispute and other
Labor Relations Disputes (Sec. 3, Rule XI, D.O. 40-03)
 The filing or pendency of any inter/intra-union disputes is
not a prejudicial question to any petition for certification
election and shall not be a ground for the dismissal of a
petition for certification election or suspension of
proceedings for certification election.
Summary of Rules on Inter/Intra Union Disputes
Formal requirements
 In writing
 Verified under oath
 Contains:
o Name, address and other personal circumstances of
the complainant or petitioner
o Name, address and other personal circumstances of
the respondent or person charged
o Nature of complaint or petition
o Facts and circumstances surrounding complaint or
petition
o Causes of action
o Statement on exhaustion of Administrative
Remedies
o Reliefs prayed for
o Certification of non-forum shopping
o Other relevant matters
Administrative functions of BLR
 Regulation and registration of labor unions
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
 Keeping of registry of labor unions
 Maintenance of a file of CBA’s
 Maintenance of a file of all settlements or final decisions of
the SC, CA, NLRC and other agencies on labor disputes
 BLR has no jurisdiction over implementation or
interpretation of CBAs, which shall be subject of grievance
procedure and/or Voluntary arbitration.
Compromise Agreements
 Purpose: Parties agree to
o Avoid litigation, or
o Put an end to one already in place
 How: making reciprocal concessions
o Win-win
 Substantial requirements
o Voluntary, devoid of coercion
o Not contrary to law, morals, public policy
o Reasonable
 Formal requirements
o In writing
o Signed in the presence of person before whom case
is filed
 When effected:
o At any stage of the proceedings, even when there is
already a final & executory judgment
o EXCEPT when judgment is in process of execution
 Validity: Valid and binding on both parties, with or without
DOLE assistance
 Repudiation:
o If done without DOLE assistance
o In case of non-compliance with agreement
o Prima facie evidence of fraud, misrepresentation,
coercion
P a g e | 48
 Options when agreement is violated:
o Enforce compliance
o Regard as rescinded, revert to original demand
 Quitclaim: A formal renunciation or relinquishing of a claim
o Usually integral in compromise agreements
 Cases:
o Mindoro Lumber vs. Baay, et.al., GR No. 158753,
June 2005
MINDORO LUMBER AND HARDWARE vs. EDUARDO D. BACAY, ET AL
FACTS:
The private respondents are employees of Mindoro Lumber.
On July 1, 1998, the private respondents, through then union
president Eduardo Bacay, filed a Complaint against Mindoro Lumber
before the Region IV Office of the Department of Labor and
Employment (DOLE) for non-payment of overtime pay, legal holiday
pay, 13th month pay, non-payment/underpayment of minimum
wage and allowances. Pursuant to the said complaint, the DOLE
conducted an inspection on July 10 and determined that Mindoro
Lumber committed several violations
Meanwhile, on August 9, 1998, the private respondents
executed several Affidavits (Sinumpaang Salaysay), declaring therein
that since they each started working on July 1, 1995, they were
made to work for seven days a week starting 7:00 a.m. until 5:00
p.m., with lunch break from 11:30 a.m. to 1:00 p.m. They further
declared that their wages were below the rates prescribed by the
applicable wage orders, and that they were not paid overtime pay,
holiday pay or premium pay. The private respondents stated that the
total amount each of them were entitled to, aside from what they
were actually receiving by way of salary and other emoluments,
ranged from P6,744.20 toP242,626.90. They further averred that
their wages were made compliant with the prevailing regional
minimum wages starting July 16, 1998, and for the first time, payroll
and daily time records were being kept.
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
The counsel for the private respondents then filed a
Manifestation before the Regional Office of the DOLE, praying that
an order be issued directing Mindoro Lumber to pay the amounts
due to them as reflected in their respective Sinumpaang
Salaysay totaling P3,577,276.10.
On September 2, 1998, the private respondents executed
a Sama-samang Salaysay sa Pag-uurong ng Sakdal(Joint Affidavit of
Withdrawal of Complaint), declaring therein that by virtue of the
amount each of them received (which amount was eitherP3,000.00
or P6,000.00 per employee), they were withdrawing their claim
against Mindoro Lumber. Pursuant thereto, their counsel filed a
motion to dismiss.
It appears, however, that based on an affidavit executed by
Eduardo Bacay, he had resigned from Mindoro Lumber as of June 6,
1998. Relative thereto, he had also filed a complaint for Unfair Labor
Practice and Illegal Dismissal. However, on September 2, 1998, Bacay
executed an Affidavit declaring that he was no longer interested in
pursuing the said case and that he had voluntarily resigned from
Mindoro Lumber. By virtue of Bacay’s affidavit, Labor Arbiter Nieves
V. De Castro issued an Order dismissing NLRC Case.
Meanwhile, Elmer Lanot was elected as the new union
president.
On June 27, 1999, the private respondents executed
a Sama-Samang Salaysay (Joint Affidavit), declaring therein that
before Bacay resigned from Mindoro Lumber, he persuaded them to
execute the Sama-samang Salaysay sa Pag-uurong ng Sakdal, in
exchange for receiving the amount of P6,000.00 each. Such amount,
however, was grossly disproportionate to their entitlement under
the law; hence, they were withdrawing the said Sama-samang
Salaysay sa Pag-uurong ng Sakdal, and were authorizing Lanot to
pursue their claim against Mindoro Lumber. Pursuant thereto, Lanot
filed a motion before the Regional Office of the DOLE, praying that
the employees be paid the amounts due to each of them, and that
the Sama-samang Salaysay sa Pag-uurong ng Sakdal be declared
P a g e | 49
null and void.
On November 4, 1999, Regional Director Alex E. Maraan
issued an Order dismissing the case and declared that the Sama-
samang Salaysay executed by the employees of Mindoro Lumber
was valid.
The private respondents then filed an appeal before the
Office of the Secretary of Labor, questioning the propriety of the
November 4, 1999 Order of the Regional Director.
On March 27, 2001, Labor Secretary Patricia A. Sto. Tomas
issued an Order granting the appeal, and ordered the entire records
of the case remanded to the Regional Office for further proceedings,
without prejudice to the deduction of whatever amount received by
the complainant workers. Mindoro Lumber forthwith elevated the
matter to the CA by way of a petition for certiorari. On November
22, 2002, the CA rendered its decision dismissing the petition. A
motion for reconsideration proved futile.
ISSUE:
Whether or not the Sama-samang Salaysay sa Pag-uurong
ng Sakdal constitutes a valid compromise agreement as defined
under Article 227 of the Labor Code of the Philippines, as amended.
RULING:
The petitioner points out that while the Sama-samang
Salaysay sa Pag-uurong ng Sakdal was executed without the
assistance of the Bureau of Labor Relations (BLR) or the DOLE
Regional Office, the November 4, 1999 Order of the Regional
Director in Case No. LSED-RO400-9807-CI-001 nonetheless shows
that when Eduardo Bacay appeared before the said office, he was
assisted by counsel.
The petitioner’s pose is bereft of merit.
Article 227 of the Labor Code, as amended, provides:
Art. 227. Compromise Agreements .― Any compromise settlement,
including those involving labor standard laws, voluntarily agreed
upon by the parties with the assistance of the Bureau or the regional
office of the Department of Labor, shall be final and binding upon
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
the parties. The National Labor Relations Commission or any court
shall not assume jurisdiction over issues involved therein except in
case of non-compliance thereof or if there is prima facieevidence
that the settlement was obtained through fraud, misrepresentation,
or coercion.
The assistance of the BLR or the regional office of the DOLE
in the execution of a compromise settlement is a basic
requirement; without it, there can be no valid compromise
settlement. In this case, the petitioner admits that the purported
compromise settlement was executed by the private respondents
without such required assistance. The closest form of assistance
adverted to by the petitioner in this case was that of Bacay’s counsel
when the latter appeared before the Office of the Regional Director
to file the following: the Sama-samang Salaysay sa Pag-uurong ng
Sakdal executed by the private respondents; a Sinumpaang
Salaysay executed by Bacay withdrawing the complaint; and the
Motion to Dismiss. Such assistance, however, is not the "assistance"
required by Article 227. As such, the Sama-samang Salaysay sa Pag-
uurong ng Sakdal executed by the respondents cannot qualify as a
valid compromise settlement.
o Veloso and Liguaton vs. DOLE, Noah’s Ark Sugar
Carriers, GR No. 87297, Aug. 1991
ALFREDO VELOSO and EDITO LIGUATON vs. DEPARTMENT OF
LABOR AND EMPLOYMENT, NOAH'S ARK SUGAR CARRIERS AND
WILSON T. GO
FACTS:
Veloso and Ligutan claim that they were forced to sign their
respective releases in favor of their employer by reason of their dire
necessity. Noah’s Ark insists that the Veloso and Ligutan entered into
the compromise agreement freely and with open eyes and should
not now be permitted to reject their solemn commitments.
The controversy began when Veloso and Ligutan, along with
several co-employees, filed a complaint against the Noah’s Ark for
P a g e | 50
unfair labor practices, underpayment, and non-payment of
overtime, holiday, and other benefits. This was decided in favor of
the complainants on October 6,1987.
On February 23, 1988, the Noah’s Ark filed a motion for
reconsideration and recomputation of the amount awarded to the
petitioners. On April 15, 1988, while the motion was pending,
petitioner Alfredo Veloso, through his wife Connie, signed a
Quitclaim and Release for and in consideration of P25,000.00, and
on the same day his counsel, Atty. Gaga Mauna, manifested
"Satisfaction of Judgment" by receipt of the said sum by Veloso. For
his part, petitioner Liguaton filed a motion to dismiss dated July 16,
1988, based on a Release and Quitclaim dated July 19,1988 , for and
in consideration of the sum of P20,000.00 he acknowledged to have
received from the private respondent.
These releases were later impugned by the Veloso and
Ligutan on September 20, 1988, on the ground that they were
constrained to sign the documents because of their "extreme
necessity." In an Order dated December 16, 1988, the
Undersecretary of Labor rejected their contention
Reconsideration of the order having been denied on March
7, 1989, the petitioners have come to this Court oncertiorari. They
ask that the quitclaims they have signed be annulled and that writs
of execution be issued for the sum of P21,267.92 in favor of Veloso
and the sum of P26,267.92 in favor of Liguaton in settlement of their
claims.
ISSUE:
Whether or not the quitclaim should be annulled.
RULING:
"Dire necessity" is not an acceptable ground for annulling
the releases, especially since it has not been shown that the
employees had been forced to execute them. It has not even been
proven that the considerations for the quitclaims were
unconscionably low and that the petitioners had been tricked into
accepting them. While it is true that the writ of execution dated
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
November 24, 1987, called for the collection of the amount of
P46,267.92 each for the petitioners, that amount was still subject to
recomputation and modification as the private respondent's motion
for reconsideration was still pending before the DOLE. The fact that
the petitioners accepted the lower amounts would suggest that the
original award was exorbitant and they were apprehensive that it
would be adjusted and reduced. In any event, no deception has
been established on the part of the Private respondent that would
justify the annulment of the Petitioners' quitclaims.
The applicable law is Article 227 of the Labor Code providing
clearly as follows:
Art. 227. Compromise agreements. — Any
compromise settlement, including those involving
labor standard laws, voluntarily agreed upon by the
parties with the assistance of the Bureau or the
regional office of the Department of Labor, shall be
final and binding upon the parties. The National
Labor Relations Commission or any court shall not
assume jurisdiction over issues involved therein
except in case of non-compliance thereof or if there
is prima facie evidence that the settlement was
obtained through fraud, misrepresentation or
coercion.
The petitioners cannot renege on their agreement simply
because they may now feel they made a mistake in not awaiting the
resolution of the private respondent's motion for reconsideration
and recomputation. The possibility that the original award might
have been affirmed does not justify the invalidation of the perfectly
valid compromise agreements they had entered into in good faith
and with full voluntariness. In General Rubber and Footwear Corp.
vs. Drilon, we "made clear that the Court is not saying that accrued
money claims can never be effectively waived by workers and
employees." As we later declared in Periquet v. NLRC:
Not all waivers and quitclaims are invalid as
P a g e | 51
against public policy. If the agreement was
voluntarily entered into and represents a reasonable
settlement, it is binding on the parties and may not
later be disowned simply because of a change of
mind. It is only where there is clear proof that the
waiver was wangled from an unsuspecting or
gullible person, or the terms of settlement are
unconscionable on its face, that the law will step in
to annul the questionable transaction. But where it
is shown that the person making the waiver did so
voluntarily, with full understanding of what he was
doing, and the consideration for the quitclaim is
credible and reasonable, the transaction must be
recognized as a valid and binding undertaking. As in
this case.
We find that the questioned quitclaims were voluntarily and
knowingly executed and that the petitioners should not be relieved
of their waivers on the ground that they now feel they were
improvident in agreeing to the compromise. What they call their
"dire necessity" then is no warrant to nullify their solemn
undertaking, which cannot be any less binding on them simply
because they are laborers and deserve the protection of the
Constitution. The Constitution protects the just, and it is not the
petitioners in this case.
o JAG & Haggar Jeans vs. NLRC, GR No. 105710, Feb.
1995
JAG & HAGGAR JEANS AND SPORTSWEAR CORPORATION vs.
NATIONAL LABOR RELATIONS COMMISSION, ET AL
FACTS:
In September 1988, the Lakas Manggagawa sa Jag (Union)
composed of the rank-and-file employees of Jag & Haggar Jeans and
Sportswear Corporation staged a strike. Jag filed a petition to
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
declare the strike illegal.
On November 29, 1988, Labor Arbiter Eduardo Madriaga
rendered a decision, declaring the strike illegal and ordering the
dismissal of the officers, as well as the members of the Union who
took part in the illegal strike.
The affected officers and members of the Union appealed
the decision to NLRC. On August 31, 1989, NLRC rendered its
decision setting aside the Labor Arbiter's decision and ordering the
reinstatement of the affected employees
Again, the aggrieved officers and members of the Union
filed a motion for reconsideration while petitioner filed a
Manifestation/Motion for Clarification.
Pending resolution of the two motions by NLRC, both parties
agreed to negotiate a settlement and to defer the enforcement of
the decision.
On July 30, 1990, the two motions were dismissed by the
NLRC.On October 23, 1990, a compromise agreement was executed
and signed by petitioner and the Union represented by its officers
(Rollo, pp. 16-18).
Out of a total of 114 affected employees, 90 of them availed
of the benefits provided for under the Compromise Agreement.
On May 15, 1991, 24 of the affected employees moved for
the execution of the May 31, 1990 Decision of NLRC.
Petitioner filed an opposition, citing the Compromise
Agreement, which had been availed of by 90 of the affected
employees.
On September 12, 1991, Labor Arbiter Salimathar Nambi
issued an order, denying the motion for execution. In the meantime,
12 of the 24 affected employees also availed of the benefits under
the Compromise Agreement. The remaining 12 employees appealed
to NLRC from the denial of their motion for execution. On February
26, 1992, NLRC set aside the order of Labor Arbiter Nambi and
directed petitioner to accept the union members to their former or
equivalent position with back wages from July 30, 1990 until they
P a g e | 52
were reinstated.
A motion for reconsideration was filed by petitioner but this
was denied on April 22, 1992. On May 19, 1992, petitioner filed with
this Court a petition for certiorari with prayer for issuance of a
restraining order and/or writ of preliminary injunction. However, the
petition was dismissed by the First Division in a resolution dated
May 27, 1992 for failure to comply with the Revised Rules of Court
and Circular Nos. 1-88 and 28-91 (G.R. No. 105184, Rollo, p. 35).
On June 19, 1992, petitioner filed a motion for leave to refile
its petition for certiorari (G.R. No. 105710). In a resolution dated
June 29, 1992, the Third Division of this Court granted the petition
and resolved to issue a temporary restraining order. The case was
reassigned to the First Division.
ISSUE:
Whether or not the Compromise Agreement entered into by
petitioner and the Union is binding upon private respondents.
RULING:
It will be noted that the Compromise Agreement provides in
paragraphs 2 and 3 thereof that:
2. The union Board Members and Shop Stewards
may be dismissed by respondent-appellee subject to
the payment of separation pay equivalent to one-
half month for every year of service; and
3. The mere union members are directed to report
for work within 10 days from receipt of this Decision
and management is ordered to accept them to their
former or equivalent position (Rollo, pp. 16-17).
The Decision dated May 8, 1990 ordered the reinstatement
of the union members to their former or equivalent position while in
the case of the Union board members and shop stewards, petitioner
was given the option to dismiss them subject to the payment of
separation pay. However, in the Compromise Agreement, not only
the union officers, board members and shop stewards were
considered dismissed from the service but also the union members
 L A B O R L AW : P O W E R P O I N T P R E S E N TAT I O N A N D D I G E S T E D C A S E S
subject to the payment of separation pay and financial assistance.
The waiver of reinstatement, like waivers of money claims,
must be regarded as a personal right which must be exercised
personally by the workers themselves. "For a waiver thereof to be
legally effective, the individual consent or ratification of the workers
or employees involved must be shown. Neither the officers nor the
majority of the union had any authority to waive the accrued rights
pertaining to the dissenting minority members, . . . . The members
of the union need the protective shield of this doctrine not only vis-
a-vis their employer but also, at times,vis-a-vis the management of
their own union, and at other times even against their own
imprudence or impecuniousaess" (General Rubber and Footwear
Corporation v. Drilon, 169 SCRA 808 [1989]).
We have ruled that ". . . when it comes to individual benefits
accruing to members of a union from a favorable final judgment of
any court, the members themselves become the real parties in
interest and it is for them, rather than for the union, to accept or
reject individually the fruits of litigation" (Esso Philippines, Inc. v.
Malayang Manggagawa sa Esso (MME), 75 SCRA 73 [1977]).
The authority to compromise cannot lightly be presumed
and should be duly established by evidence (General Rubber and
Footwear Corporation v. Drilon, supra; Kaisahan ng mga
Manggagawa sa La Campana v. Sarmiento, 133 SCRA 220, [1984]).
We also find no reason for the union members to enter into
a compromise when the decision of NLRC ordering their
reinstatement is more advantageous to them than their being
dismissed from their jobs under said Compromise Agreement.
The Compromise Agreement does not apply to private
respondents who did not sign the Compromise Agreement, nor avail
of its benefits.
However, while respondents Domingo Namia and Rizalde
Flores are not bound by the terms of the Compromise Agreement,
they are bound by the amended decision of NLRC rendered on May
3, 1990 which provides that members of the board of directors of
P a g e | 53
the union may be dismissed by petitioner subject to the payment of
separation pay. The two respondents did not appeal the amended
decision after the denial by NLRC of their motion for reconsideration
thereof.
WHEREFORE, the Decision dated February 26, 1992 of the
NLRC is AFFIRMED with the modification stated above with respect
to respondents Domingo Namia and Rizalde Flores. The temporary
restraining order is lifted except with respect to aforementioned
respondents.
o Magbanua vs. Uy, GR No.161003, May 2005
FELIPE O. MAGBANUA, CARLOS DE LA CRUZ, REMY ARNAIZ, BILLY
ARNAIZ, ROLLY ARNAIZ, DOMINGO SALARDA, JULIO CAHILIG and
NICANOR LABUEN, vs. RIZALINO UY
FACTS:
As a final consequence of the final and executory decision of
the Supreme Court which affirmed with modification the decision of
the NLRC, hearings were conducted to determine the amount of
wage differentials due the eight petitioners. The petitioners filed a
Motion for Issuance of Writ of Execution. Rizalino Uy filed a
Manifestation requesting that the cases be terminated and closed,
stating that the judgment award as computed had been complied
with to the satisfaction of petitioners. Said Manifestation was also
signed by the eight petitioners. Together with the manifestation is a
Joint Affidavit dated May 5, 1997 of petitioners, attesting to the
receipt of payment from respondent and waiving all other benefits
due them in connection with their complaint. On October 20, 1997,
six of the eight petitioners filed a Manifestation requesting that the
cases be considered closed and terminated as they are already
satisfied of what they have received from respondent. Together with
said Manifestation is a Joint Affidavit in the local dialect, of the six
petitioners attesting that they have no more collectible amount from
respondent and if there is any, they are abandoning and waiving the
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same.
ISSUES:
1. Whether or not the final and executory judgment of the
Supreme Court could be subject to compromise settlement;
2. Whether or not the petitioners’ affidavit waiving their
awards in the labor case executed without the assistance of
their counsel and labor arbiter is valid.
RULING:
1. There is no justification to disallow a compromise
agreement, solely because it was entered into after final judgment.
The validity of the agreement is determined by compliance with the
requisites and principles of contracts, not by when it was entered
into. Petitioners voluntarily entered into the compromise
agreement. Circumstances also reveal that respondent has already
complied with its obligation pursuant to the compromise
agreement. Having already benefited from the agreement, estoppel
bars petitioners from challenging it.
2. The presence or the absence of counsel when a waiver is
executed does not determine its validity. There is no law requiring
the presence of a counsel to validate a waiver. The test is whether it
was executed voluntarily, freely and intelligently; and whether the
consideration for it was credible and reasonable. Where there is
clear proof that a waiver was wangled from an unsuspecting or a
gullible person, the law must step in to annul such transaction. In
the present case, petitioners failed to present any evidence to show
that their consent had been vitiated.