against the petitioners for damages arising from what they claimed to be their malicious
G.R. No. 89621 September 24, 1991
PEPSI COLA DISTRIBUTORS OF THE PHILIPPINES, INC., represented by its Plant General
Manager ANTHONY B. SIAN, ELEAZAR LIMBAB, IRENEO BALTAZAR & JORGE HERAYA,
petitioners,
vs.
HON. LOLITA O. GAL-LANG, SALVADOR NOVILLA, ALEJANDRO OLIVA, WILFREDO CABAÑAS &
FULGENCIO LEGO, respondents.
Aurelio D. Menzon for petitioners.
Mario P. Nicolasora co-counsel for petitioners.
Papiano L. Santo for private respondents.
CRUZ, J.:
The question now before us has been categorically resolved in earlier decisions of the Court
that a little more diligent research would have disclosed to the petitioners. On the basis of
those cases and the facts now before us, the petition must be denied.
EE’s were indicted for theft then falsification  case, however was dismissed
The private respondents were employees of the petitioner who were suspected of complicity
in the irregular disposition of empty Pepsi Cola bottles. On July 16, 1987, the petitioners filed
a criminal complaint for theft against them but this was later withdrawn and substituted with
a criminal complaint for falsification of private documents. On November 26, 1987, after a
preliminary investigation conducted by the Municipal Trial Court of Tanauan, Leyte, the
complaint was dismissed. The dismissal was affirmed on April 8, 1988, by the Office of the
Provincial Prosecutor.
EE filed illegal dismissal with LA
Also filed damages with RTC for malicious prosecution
Meantime, allegedly after an administrative investigation, the private respondents were
dismissed by the petitioner company on November 23, 1987. As a result, they lodged a
complaint for illegal dismissal with the Regional Arbitration Branch of the NLRC in Tacloban
City on December 1, 1987, and decisions manded reinstatement with damages. In addition,
they instituted in the Regional Trial Court of Leyte, on April 4, 1988, a separate civil complaint
prosecution.
PETITIONER
The petitioners moved to dismiss the civil complaint on the ground that the trial court had no
jurisdiction over the case because it involved employee-employer relations that were
exclusively cognizable by the labor arbiter. The motion was granted on February 6, 1989. On
July 6, 1989, however, the respondent judge, acting on the motion for reconsideration,
reinstated the complaint, saying it was "distinct from the labor case for damages now
pending before the labor courts." The petitioners then came to this Court for relief.
PETITIONER
The petitioners invoke Article 217 of the Labor Code and a number of decisions of this Court
to support their position that the private respondents civil complaint for damages falls under
the jurisdiction of the labor arbiter. They particularly cite the case of Getz Corporation v.
Court of Appeals,1 where it was held that a court of first instance had no jurisdiction over the
complaint filed by a dismissed employee "for unpaid salary and other employment benefits,
termination pay and moral and exemplary damages."
We hold at the outset that the case is not in point because what was involved there was a
claim arising from the alleged illegal dismissal of an employee, who chose to complain to the
regular court and not to the labor arbiter. Obviously, the claim arose from employee-
employer relations and so came under Article 217 of the Labor Code which then provided as
follows:
ART. 217. Jurisdiction of Labor Arbiters and the Commission. — (a) The Labor Arbiters
shall have the original and exclusive jurisdiction to hear and decide within thirty (30)
working days after submission of the case by the parties for decision, the following cases
involving all workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Those that workers may file involving wages, hours of work and other terms and
conditions of employment;
3. All money claims of workers, including those based on non-payment or
underpayment of wages, overtime compensation, separation pay and other benefits
provided by law or appropriate agreement, except claims for employees' compensation,
social security, medicare and maternity benefits;

4. Cases involving household services; and
5. Cases arising from any violation of Article 265 of this Code, including questions
involving the legality of strikes and lockouts.
(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by
labor Arbiters.2
EE-ER not enough, there must be causality
It must be stressed that not every controversy involving workers and their employers can be
resolved only by the labor arbiters. This will be so only if there is a "reasonable causal
connection" between the claim asserted and employee-employer relations to put the case
under the provisions of Article 217. Absent such a link, the complaint will be cognizable by
the regular courts of justice in the exercise of their civil and criminal jurisdiction.
In Medina v. Castro-Bartolome,3 two employees filed in the Court of First Instance of Rizal a
civil complaint for damages against their employer for slanderous remarks made against
them by the company president. On the order dismissing the case because it came under the
jurisdiction of the labor arbiters, Justice Vicente Abad Santos said for the Court:
CIVIL CODE GOVERNS if there is no causality. ART 19?
It is obvious from the complaint that the plaintiffs have not alleged any unfair labor practice.
Theirs is a simple action for damages for tortious acts allegedly committed by the
defendants. Such being the case, the governing statute is the Civil Code and not the Labor
Code. It results that the orders under review are based on a wrong premise.
JURIS
In Singapore Airlines Ltd. v. Paño,4 where the plaintiff was suing for damages for alleged
violation by the defendant of an "Agreement for a Course of Conversion Training at the
Expense of Singapore Airlines Limited," the jurisdiction of the Court of First Instance of Rizal
over the case was questioned. The Court, citing the earlier case of Quisaba v. Sta. Ines Melale
Veneer and Plywood, Inc.,5 declared through Justice Herrera:
Stated differently, petitioner seeks protection under the civil laws and claims no benefits
under the Labor Code. The primary relief sought is for liquidated damages for breach of a
contractual obligation. The other items demanded are not labor benefits demanded by
workers generally taken cognizance of in labor disputes, such as payment of wages, overtime
compensation or separation pay. The items claimed are the natural consequences flowing
from breach of an obligation, intrinsically a civil dispute.
In Molave Sales, Inc. v. Laron,6 the same Justice held for the Court that the claim of the
plaintiff against its sales manager for payment of certain accounts pertaining to his purchase
of vehicles and automotive parts, repairs of such vehicles, and cash advances from the
corporation was properly cognizable by the Regional Trial Court of Dagupan City and not the
labor arbiter, because "although a controversy is between an employer and an employee, the
Labor Arbiters have nojurisdiction if the Labor Code is not involved."
The latest ruling on this issue is found in San Miguel Corporation v. NLRC,7 where the above
cases are cited and the changes in Article 217 are recounted. That case involved a claim of an
employee for a P60,000.00 prize for a proposal made by him which he alleged had been
accepted and implemented by the defendant corporation in the processing of one of its beer
products. The claim was filed with the labor arbiter, who dismissed it for lack of jurisdiction
but was reversed by the NLRC on appeal. In setting aside the appealed decision and
dismissing the complaint, the Court observed through Justice Feliciano:
RULE:
It is the character of the principal relief sought that appears essential, in this connection.
Where such principal relief is to be granted under labor legislation or a collective bargaining
agreement, the case should fall within the jurisdiction of the Labor Arbiter and the NLRC,
even though a claim for damages might be asserted as an incident to such claim.
xxx xxx xxx
IF THE CAUSE OF ACTION IS FOUND ELSEWHERE AND NOT THE CODE, RTC
Where the claim to the principal relief sought is to be resolved not by reference to the Labor
Code or other labor relations statute or a collective bargaining agreement but by the general
civil law, the jurisdiction over the dispute belongs to the regular courts of justice and not to
the Labor Arbiter and the NLRC. In such situations, resolution of the dispute requires
expertise, not in labor management relations nor in wage structures and other terms and
conditions of employment, but rather in the application of the general civil law. Clearly, such
claims fall outside the area of competence or expertise ordinarily ascribed to Labor Arbiters
and the NLRC and the rationale for granting jurisdiction over such claims to these agencies
disappears.
xxx xxx xxx
While paragraph 3 above refers to "all money claims of workers," it is not necessary to
suppose that the entire universe of money claims that might be asserted by workers against
their employers has been absorbed into the original and exclusive jurisdiction of Labor
Arbiters.
xxx xxx xxx
For it cannot be presumed that money claims of workers which do not arise out of or in
connection with their employer-employee relationship, and which would therefore fall within
the general jurisdiction of the regular courts of justice, were intended by the legislative
authority to be taken away from the jurisdiction of the courts and lodged with Labor Arbiters
on an exclusive basis. The Court, therefore, believes and so holds that the 'money claims of
workers" referred to in paragraph 3 of Article 217 embraces money claims which arise out of
or in connection with the employer- employee relationship, or some aspect or incident of
such relationship. Put a little differently, that money claims of workers which now fall within
the original and exclusive jurisdiction of Labor Arbiters are those money claims which have
some reasonable causal connection with the employer-employee relationship (Ibid.).
APPLYING THE RULE TO THE CASE:
The case now before the Court involves a complaint for damages for malicious prosecution
which was filed with the Regional Trial Court of Leyte by the employees of the defendant
company. It does not appear that there is a "reasonable causal connection" between the
complaint and the relations of the parties as employer and employees. The complaint did not
arise from such relations and in fact could have arisen independently of an employment
relationship between the parties. No such relationship or any unfair labor practice is
asserted. What the employees are alleging is that the petitioners acted with bad faith when
they filed the criminal complaint which the Municipal Trial Court said was intended "to
harass the poor employees" and the dismissal of which was affirmed by the Provincial
Prosecutor "for lack of evidence to establish even a slightest probability that all the
respondents herein have committed the crime imputed against them." This is a matter which
the labor arbiter has no competence to resolve as the applicable law is not the Labor Code
but the Revised Penal Code.
"Talents differ, all is well and wisely put," so observed the philosopher-poet.8 So it must be in
the case we here decide.
WHEREFORE, the order dated July 6, 1989, is AFFIRMED and the petition DENIED, with costs
against the petitioner.
SO ORDERED.
Narvasa (Chairman), Griño-Aquino and Medialdea, JJ., concur.
MOLAVE VS LARON
MELENCIO-HERRERA, J.:
Respondent Judge, presiding Branch XLIV of the Regional Trial Court in Dagupan City, had
dismissed the case below for lack of jurisdiction and had denied reconsi-deration for lack of
merit.
Petitioner, PLAINTIFF in the case below, is a corpo-ration engaged in the sale and repair of
motor vehicles in Dagupan City. Private respondent, the DEFENDANT in the case below, was,
or is, the sales manager of PLAINTIFF. Whether or not there was still a relationship of
employer and employee between the parties when the complaint was filed is an unsettled
question which need not be resolved in this instance.
Alleging that DEFENDANT was a former employee, PLAINTIFF had sued him, on March 22,
1983, for payment of accounts pleaded as follows:
PLAINTIFF
"That during his incumbency as such the defendant caused and without authority from the
plaintiff incurred accounts with the remaining balances in the total sum of P33,890.38
excluding interests, arising from
the purchases of vehicles and parts,
repair jobs of his personal cars and
cash advances,
faithful reproductions of the Vehicle Invoice, Debit Memos, Deed of Absolute Sale, Repair
Orders, Charge In-voices, Vouchers, Promissory Notes, Acknowledgement Letter and
Statement of Account, hereto attached and marked as Annexes 'A', 'B', 'C', 'D', 'E', 'F', 'G', 'H',
'I', 'J', 'K', 'L', 'M', and 'N' respectively and the contents of which being herein additionally
pleaded and made integral parts hereof;" (paragraphing supplied)
DEFENDANT
In his Answer, DEFENDANT denied defendants. Such being the case, the governing statute is the Civil Code and not the Labor
Code. It results that the orders under review are based on a wrong premise."

"x x x that he incurred any unpaid unauthorized accounts with the plaintiff in the total sum of
P33,890.38 excluding interests therefor, and,
specifically denies under oath that the annexed Vehicle Invoice, Debits Memos, Deed of
Absolute Sale, Repair Orders, Charge Invoices, Vouchers, Promissory Notes,
Acknowledgement Letter and Statement of Account
have remained unpaid as in fact the truth of the matter is as follows, to wit:" (paragraphing
supplied)
DEFENDANT further alleged in a counterclaim that he should still be considered an employee
of PLAINTIFF inasmuch as there has been no application for clearance in regards to his
separation.
At the pre-trial conference, the DEFENDANT raised the question of jurisdiction of the Court
stating that PLAINTIFF's complaint arose out of employer-employee relationship, and he
subsequently moved for dismissal. It was then when respondent Judge dismissed the case
finding that the sum of money and damages sued upon arose from employer-employee
relationship and that jurisdiction belonged to the Labor Arbiter and the NLRC.
JURIS
And in Singapore Airlines Limited vs. Paño, 122 SCRA 671, 677, the following was said:
"Stated differently, petitioner seeks protection under the civil laws and claims no benefits
under the Labor Code. The primary relief sought is for liquidated damages for breach of a
contractual obligation. The other items demanded are not labor benefits demanded by
workers generally taken cognizance of in labor disputes, such as payment of wages, overtime
compensation or separation pay. The items claimed are the natural consequences flowing
from breach of an obligation, intrinsically a civil dispute."
APPLYING THE RULE TO THE CASE
In the case below, PLAINTIFF had sued for monies loaned to DEFENDANT, the cost of repair
jobs made on his personal cars, and for the purchase price of vehicles and parts sold to him.
Those accounts have no relevance to the Labor Code. The cause of action was one under the
civil laws, and it does not breach any provision of the Labor Code or the contract of
employment of DEFENDANT. Hence, the civil courts, not the Labor Arbiters and the NLRC,
should have jurisdiction.

LAW HISTORY
BP Blg. 227 has amended Article 217 of the Labor Code to read as follows:
Before the enactment of BP Blg. 227 on June 1, 1982, Labor Arbiters, under paragraph 5 of
Article 217 of the Labor Code had jurisdiction over "all other cases arising from employer-
employee relation, unless expressly excluded by this Code." Even then, the principle followed
"ART. 217 - Jurisdiction of labor Arbiters and the Commission. - (a) The Labor Arbiters shall
by this Court was that, although a controversy is between an employer and an employee, the
have the original and exclusive jurisdiction to hear and decide within thirty (30) working days
Labor Arbiters have no juris-diction if the Labor Code is not involved. In Medina vs. Castro-
after submission of the case by the parties for decision, the following cases involving all
Bartolome, 116 SCRA 597, 604, in negating jurisdic-tion of the Labor Arbiter, although the
workers, whether agricultural or non-agricultural:
parties were an employer and two employees, Mr. Justice Abad Santos stated:

1. Unfair labor practice cases;

ISSUE
"The pivotal question to Our mind is whether or not the Labor Code has any relevance to the
reliefs sought by the plaintiffs. For if the Labor Code has no relevance, any discussion 2. Those that (involve) WORKERS MAY FILE INVOLVING wages, hours of work and other terms
concerning the statutes amend-ing it and whether or not they have retroactive effect is and conditions of employment;
unnecessary.

3. All money claims of workers, including those based on non-payment or underpayment of

CASE IS TORTS, ERGO NCC IS THE CAUSE OF ACTION
It is obvious from the complaint that the plain-tiffs have not alleged any unfair labor practice.
Theirs is a simple action for damages for tortious acts al-legedly committed by the
wages, overtime compensation, separation pay and other benefits provided by law or
appropriate agree-ment, except claims for employees compensation, social security, and
maternity benefits;
4. Cases involving household services; and
5. CASES ARISING FROM ANY VIOLATION OF ARTICLE 265 OF THIS CODE, INCLUDING
QUESTIONS INVOLVING THE LEGALITY OF STRIKES AND LOCKOUTS.
[6. All other claims arising from employer-employee relations, unless expressly excluded by
this Code]." (Italics and bracketed portions indicate the deletions, while the amendments
introduced are capitalized).
LOWER COURT DISMISSAL WAS IMPROPER
The dismissal of the case below on the ground that the sum of money and damages sued
upon arose from employer employee relationship was erroneous. Claims arising from
employer-employee relations are now limited to those mentioned in paragraphs 2 and 3 of
Article 217. There is no difficulty on our part in stating that those in the case below should
not be faulted for not being aware of the last amendment to the frequently changing Labor
Code.
APPLYING THE RULE
The claim of DEFENDANT that he should still be consi-dered an employee of PLAINTIFF,
because the latter has not sought clearance for his separation from the service, will not affect
the jurisdiction of respondent Judge to resolve the complaint of PLAINTIFF. DEFENDANT
could still be liable to PLAINTIFF for payment of the accounts sued for even if he remains an
employee of PLAINTIFF.
WHEREFORE, the Petition is granted, and respondent Judge is hereby ordered to take
cognizance of the case below and to render judgment therein accordingly.
No costs. SO ORDERED.
Teehankee, (Chairman), Plana, Relova, Gutierrez, Jr., and De La Fuente, JJ., concur.
G.R. No. 162420 April 22, 2008
JAGUAR SECURITY and INVESTIGATION AGENCY, petitioner,
vs.
RODOLFO A. SALES, JAIME L. MORON, MELVIN R. TAMAYO, JESUS B. SILVA, JR., DIONISIO C.
CARANYAGAN, DANETH FETALVERO and DELTA MILLING INDUSTRIES, INC., respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
Assailed in the present Petition for Review on Certiorari is the Court of Appeals (CA)
Decision1 dated October 21, 2002 and Resolution2 dated February 13, 2004, dismissing the
petition filed by Jaguar Security and Investigation Agency (petitioner) and affirming the
National Labor Relations Commission (NLRC) Resolutions dated September 19, 2000 and
November 9, 2001.
The facts of the case, as narrated by the CA, are undisputed:
Petitioner 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").
Private respondents 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.
On September 18, 1998, respondent security guards instituted the instant labor case before
the labor arbiter.
xxxx
LA
On May 25, 1999, the labor arbiter rendered a decision in favor of private respondents Sales,
et al., the dispositive portion of which provides:
"WHEREFORE, judgment is hereby rendered dismissing the charges of illegal dismissal on the
part of the complainants MELVIN R. TAMAYO and DIONISIO C. CARANYAGAN for lack of merit
but ordering respondents JAGUAR SECURITY AND INVESTIGATION AGENCY and DELTA
MILLING INDUSTRIES, INC., to jointly and severally pay all the six complainants, namely:
RODOLFO A. SALES, MELVIN R. TAMAYO, JAIME MORON and DANETH FETALVERO the
following money claims for their services rendered from April 24, 1995 to April 24, 1998:
a) wage differentials
b) overtime pay differentials (4 hours a day)
c) rest day pay
d) holiday pay
e) holiday premium pay
f) 13th month pay differentials
g) five days service incentive leave pay per year subject to the exception earlier cited.
The Research and Information Unit of this Commission is hereby directed to compute and
quantify the above awards and submit a report thereon within 15 days from receipt of this
decision.
For purposes of any appeal, the appeal bond is tentatively set at P100,000.00.
All other claims are DISMISSED for lack of merit.
SO ORDERED."
JAGUAR FILED A CROSS CLAIM AGAINST DELTA BEFORE NLRC
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, 2001.3
Petitioner filed a petition for certiorari with the CA, which, in the herein assailed Decision
dated October 21, 20024 and Resolution dated February 13, 2004,5 dismissed the petition
for lack of merit.
In the present petition, the following error is set forth as a ground for the modification of the
assailed Decision and Resolution:
WITH ALL DUE RESPECT, THE COURT OF APPEALS ERRED IN NOT RESOLVING PETITIONER'S
CROSS-CLAIM AGAINST PRIVATE RESPONDENT DELTA MILLING INDUSTRIES, INC.6
PETITIONER
Petitioner insists that its cross-claim should have been ruled upon in the labor case as the
filing of a cross-claim is allowed under Section 3 of the NLRC Rules of Procedure which
provides for the suppletory application of the Rules of Court. Petitioner argues that the claim
arose out of the transaction or occurrence that is the subject matter of the original action.
Petitioner further argues that as principal, Delta Milling Industries, Inc. (Delta Milling) is liable
for the awarded wage increases, pursuant to Wage Order Nos. NCR-04, NCR-05 and NCR-06;
and in line with the ruling in Eagle Security Agency, Inc. v. National Labor Relations
Commission,7 petitioner should be reimbursed of any payments to be made.
NO QUESTION AS TO SOLIDARITY
There is no question as regards the respective liabilities of petitioner and Delta Milling. Under
Articles 106, 107 and 109 of the Labor Code, the joint and several liability of the contractor
and the principal is mandated to assure compliance of the provisions therein including the
statutory minimum wage. The contractor, petitioner in this case, is made liable by virtue of
his status as direct employer. On the other hand, Delta Milling, as principal, is made the
indirect employer of the contractor's employees for purposes of paying the employees their
wages should the contractor be unable to pay them. This joint and several liability facilitates,
if not guarantees, payment of the workers' performance of any work, task, job or project,
thus giving the workers ample protection as mandated by the 1987 Constitution.8
THERE IS A RIGHT OF REIMBURSEMENT
However, in the event that petitioner pays his obligation to the guard employees pursuant to
the Decision of the Labor Arbiter, as affirmed by the NLRC and CA, petitioner has the right of
reimbursement from Delta Milling under Article 1217 of the Civil Code, which provides:
CAUSE OF ACTION
Art. 1217. Payment made by one of the solidary debtors extinguishes the obligation. If two or
more solidary debtors offer to pay, the creditor may choose which offer to accept.
He who made the payment may claim from his co-debtors only the share which corresponds
to each, with the interest for the payment already made. If the payment is made before the
debt is due, no interest for the intervening period may be demanded.
xxxx
ISSUE:
The question that now arises is whether petitioner may claim reimbursement from Delta
Milling through a cross-claim filed with the labor court.
This question has already been decisively resolved in Lapanday Agricultural Development
Corporation v. Court of Appeals,9 to wit:
We resolve first the issue of jurisdiction. 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 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.10 (Emphasis supplied)
LABOR COURTS STRICTLY REQUIRES EE ER REL
The jurisdiction of labor courts extends only to cases where an employer-employee
relationship exists.
CROSS-CLAIM IS CIVIL, NOT LABOR RELATED
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 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.

Moreover, the liability of Delta Milling to reimburse petitioner will only arise if and when
petitioner actually pays its employees the adjudged liabilities.11 Payment, which means not
only the delivery of money but also the performance, in any other manner, of the obligation,
is the operative fact which will entitle either of the solidary debtors to seek reimbursement
for the share which corresponds to each of the debtors.12 In this case, it appears that
petitioner has yet to pay the guard employees. As stated in Lapanday:
However, it is not disputed that the private respondent has not actually paid the security
guards the wage increases granted under the Wage Orders in question. Neither is it alleged
that there is an extant claim for such wage adjustments from the security guards concerned,
whose services have already been terminated by the contractor. Accordingly, private
respondent has no cause of action against petitioner to recover the wage increases. Needless
to stress, the increases in wages are intended for the benefit of the laborers and the
contractor may not assert a claim against the principal for salary wage adjustments that it
has not actually paid. Otherwise, as correctly put by the respondent, the contractor would be
unduly enriching itself by recovering wage increases, for its own benefit.13
Consequently, the CA did not commit any error in dismissing the petition and in affirming the
NLRC Resolutions dated September 19, 2000 and November 9, 2001.
WHEREFORE, the petition is DENIED.
Double costs against petitioner.
SO ORDERED.
Ynares-Santiago, Chairperson, Chico-Nazario, Nachura, Reyes, JJ., concur.
G.R. Nos. 109642-43 January 5, 1995
LESLIE W. ESPINO, petitioner,
vs.
HON. NATIONAL LABOR RELATIONS COMMISSION and PHILIPPINE AIR LINES, respondents.
ROMERO, J.:
The controversy generated in the instant case once again calls for the resolution of the issue
of whether or not the National Labor Relations Commission (NLRC) has jurisdiction over a
complaint filed by a corporate Executive Vice President-Chief Operating Officer for illegal
dismissal resulting from the termination of his services as such officer by virtue of four (4)
separate resolutions of the Board of Directors Air Lines (PAL).
The undisputed facts are as follows:
Petitioner Leslie W. Espino was the Executive Vice President-Chief Operating Officer of
private respondent Philippine Airlines (PAL) when his services were terminated sometime in
December 1990 by the Board of Directors of PAL as a result of the findings of the panels
created by then President Corazon C. Aquino to investigate the administrative charges filed
against him and other senior officers for their purported involvement in four, denominated
"Goldair," "Robelle," "Kasbah/La Primavera," and "Middle East" which allegedly prejudiced
the interests of both PAL and the Philippine Government.
Petitioner started his employment with PAL on February 25, 1960 as a Traffic and Sales
Trainee and, for 30 years, was successively promoted1 until he became, by virtue of an
election in March 1988 conducted by the Board of Directors, Executive Vice President and
Chief Operating Officer for a term of one (1) year and who holds said office until his successor
is elected and qualified, pursuant to Section 7, Article III in relation to Section 1, Article IV of
the Amended By-Laws of PAL. The last time he was elected as such was on October 20, 1989.
Sometime on July 2, 1990, petitioner and several other senior officers of PAL were
administratively charged by Romeo S. David, Senior Vice President for Corporate Services and
Logistics Group, for their purported involvement in four cases, labelled as "Goldair,"
"Robelle," "Kasbah/Primavera" and "Middle East."
Except for the conflict of interest charges in the "Robelle" case, petitioner and several other
senior officers of PAL were uniformly charged in the three (3) other aforementioned cases of
gross incompetence, mismanagement, inefficiency, negligence, mismanagement, dereliction
of duty, failure to observe and/or implement administrative and executive policies, and
related acts or omissions resulting in the concealment or coverup and prevention of the
seasonable discovery of anomalous transactions which, as a consequence, caused prejudice
to the best interest of PAL and the Government.
Pending investigation by the panels created by then President Corazon C. Aquino, petitioner
and other senior officers of PAL were placed under suspension by the Board of Directors.
On October 19, 1990, during the organizational meeting of the PAL Board of Directors, the
election or appointment of some senior officers of the company who, like petitioner, had
been charged administratively with various offenses and accordingly suspended, were
deferred by the Board of Directors. During the said organizational meeting, Feliciano
Belmonte was elected Chairman of the Board while Dante Santos was elected as President
and Chief Executive Officer.
ESPINO WAS FINALLY TERMINATED BY THE BOARD
On the basis of the findings submitted by the presidential investigating panels, the Board
issued separate resolutions dated January 19, 1991 in the "Goldair," "Robelle," and
Kasbah/La Primavera," cases and another dated August 9, 1991 in the "Middle East" case
wherein petitioner was considered resigned from the service effective immediately for loss of
confidence and for acts inimical to the interests of the company.
Ordering complainant's immediate reinstatement to his former position as Executive Vice
President-Chief Operating Officer without loss of seniority rights plus full backwages and
other benefits appurtenant thereto, without qualification or deduction, from the time of his
illegal dismissal up to the time of his actual reinstatement. His backwages as of February 29,
1992 as computed are in the total sum of P2,925,000.00 (P195,000.00 x 15 months, including
the one month suspension).
2)
Ordering respondent PAL to pay complainant Leslie Espino the following sums:
a)

Backwages as of February 1992

ESPINO NOW FILES ILLEGAL DISMISSAL
As a result of his termination, petitioner Espino filed a complaint for illegal dismissal against
PAL with the National Labor Relations Commission, Arbitration Branch, NCR, praying, among P2,925,000.00
others, for reinstatement with backwages, recovery of P50 Million as moral damages, P10
Million as exemplary damages and attorney's fees. The case was docketed as NLRC Case No.
00-05-03210-91. b)

PAL Cash equivalent of Annual trip passes

PAL justified the legality of petitioner Espino's dismissal from the service before the Labor
Arbiter but questioned the jurisdiction of the NLRC contending that, because the on first class, (1 for international, 1
investigating panels were created by President Corazon C. Aquino, it became, together with
the PAL Board of Directors, a "parallel arbitration unit" which substituted the NLRC. As such,
PAL argued that since the Board resolutions of the aforesaid cases; cannot be reviewed by for regional, and 1 for domestic)
the NLRC, the recourse of petitioner Espino should have been addressed, by way of an
appeal, to the Office of the President of the Republic of the Philippines.
for complainant, his spouse,
LA STILL EXCERCISED JURISDICTION
On February 20, 1992, Labor Arbiter Cresencio J. Ramos rendered a decision2 finding that qualified dependent and parents
petitioner Espino was dismissed without just and valid cause and accordingly ordered his
reinstatement to his former position as Executive Vice-President-Chief Operating Officer
without loss of seniority rights plus full backwages and other benefits appurtenant thereto, worth approximately US $45,000.00
without qualification or deduction from the time of his illegal dismissal up to the date of his
actual reinstatement. The dispositive portion reads:
at current rate of exchange rate of

WHEREFORE, premises considered, judgment is hereby rendered:

exchange P26.50/dollar P28,157,700.00

1,192,000.00 From the said decision, PAL filed on March 5, 1992 an appeal with the NLRC and submitted
on March 13, 1992 a supplemental memorandum on appeal. PAL argued that the Labor
Arbiter's decision is null and void for lack of jurisdiction over the subject matter as it is the
c) Securities and Exchange Commission, and not the NLRC, which has original and exclusive
jurisdiction over cases involving dismissal or removal of corporate officers.

Midyear and Christmas bonuses

Earlier, or more specifically, on February 25, 1992, petitioner Espino filed a motion for
issuance of writ of execution on the ground that the decision of the Labor Arbiter ordering
equivalent to two (2) months pay reinstatement is immediately executory even pending appeal pursuant to Article 223 of the
Labor Code, as amended.

390,000.00
On February 28, 1992, the Labor Arbiter issued a writ of execution.

3
PAL, for its part, filed a motion to quash the writ of execution reiterating its argument that
the Securities and Exchange Commission (SEC) and not the NLRC has original and exclusive
Awarding moral damages to complainant in jurisdiction over the subject matter involving the dismissal or removal of corporate officers.

the sum of P20 million plus exemplary damages of P2.0 On March 31, 1992, after an exchange of pleadings, Labor Arbiter Ramos denied PAL's
motion to quash the writ of execution. Thereafter, or on April 2, 1992, an alias writ of
execution was issued.
22,000,000.00

PAL then filed on April 23, 1992 with the NLRC a petition for injunction, later amended to
TOTAL implead the Labor Arbiter, praying for the issuance of a temporary restraining order to enjoin
the enforcement of said alias writ of execution.

P26,507,000.00
On April 27, 1992, the NLRC issued a temporary restraining order enjoining Espino, Sheriff
Anam Timbayan, their agents and all persons acting under them, from implementing the alias
writ of execution issued on April 2, 1992 upon PAL's posting of P400,000.00 cash or surety
4
bond. On May 5, 1992, PAL posted the P400,000.00 surety bond.

Granting attorney's fees of 10% of the total monetary award

NLRC OVERTURNED LA
On July 31, 1992, the NLRC promulgated a resolution3 dismissing the complaint for illegal
2,650,700 dismissal for lack of jurisdiction and declaring the nullity of the alias writ of execution.
Petitioner Espino, Labor Arbiter Cresencio Ramos and Sheriff Anam Timbayan were
permanently enjoined from enforcing the said alias writ of execution.
GRAND TOTAL
Petitioner Espino filed a motion for reconsideration but the same was denied on January 8,
1993.4
(d) Petitions of corporations, partnerships or associations to be declared in the state of
suspension of payments in cases where the corporation, partnership or association possesses
sufficient property to cover all its debts but foresees the impossibility of meeting them when
Dissatisfied, petitioner filed the instant petition for certiorari contending mainly that it is the
they respectively fall due or in cases where the corporation, partnership or association has
NLRC which has jurisdiction under Article 217, par. (2) of the Labor Code, as amended, to
no sufficient assets to cover its liabilities, but is under the management of a Rehabilitation
hear the illegal dismissal case he filed against PAL as it involves the termination of a regular
Receiver or Management Committee created pursuant to this Decree.
and permanent employee and the issues in the dispute involved, not only his removal from
office, but also his claim for backwages and other benefits and damages; that PAL is estopped
from questioning the jurisdiction of the NLRC.
In intra-corporate concerning the election or appointment of officers of a corporation,
Section 5, PD 902-A specifically provides:
We rule that the petition lacks merit.
Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and
Exchange Commission over corporations, partnerships and other forms of associations
The Court, citing Presidential Decree No. 902-A, laid down the rule in the case of Philippine
registered with it as expressly granted under existing laws and decrees, it shall have original
School of Business Administration v. Leano,5 and consequently reiterated in three (3) other
and exclusive jurisdiction to hear and decide cases involving:
cases6 that it is the Securities and Exchange Commission (SEC) and not the NLRC which has
original and exclusive jurisdiction over cases involving the removal from employment of
corporate officers.
xxx xxx xxx

Sec. 5. of Presidential Decree No. 902-A regarding the jurisdiction of the Securities and
(c) Controversies in the election or appointments of directors, trustees, officers or
Exchange Commission provides, as follows:
managers of such corporations, partnerships or associations.

Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and
Indisputably, the position of Executive Vice President-Chief Operating Officer from which
Exchange Commission over corporations, partnerships and other forms of associations
petitioner Espino claims to have been illegally dismissed, is an elective office under Section 7,
registered with it as expressly granted under existing laws and decrees, it shall have original
Article III is an elective corporate office under Section 1, Article IV of the Amended by-Laws of
and exclusive jurisdiction to hear and decide cases involving:
PAL. The said corporate office has a fixed term of one (1) year and the one elected shall hold
office until a successor shall have been elected and qualified. He lost that position when his
appointment or election as Executive Vice President-Chief Operating Officer, together with
(a) Devices or schemes employed by or any acts of the board of directors, business
other senior officers who were similarly charged administratively, were deferred by the
associates, its officers or partners, amounting to fraud and misrepresentation which may be
Board of Directors in its organizational meeting on October 19, 1990. He was later considered
detrimental to the interest of the public and/or of the stockholders, partners, members of
by the Board as resigned from the service, for reasons earlier stated, and the said position
associations or organizations registered with the Commission.
was later abolished.

(b) Controversies arising out of intracorporate or partnership relations, between and

among stockholders, members, or associates; between any or all of them and the
corporation, partnership or association of which they are stockholders, members, or
associates, respectively; and between such corporation, partnership or association and the
state insofar as it concerns their individual franchise or right to exist as such entity.
(c) Controversies in the election or appointments of directors, trustees, officers or
managers of such corporations, partnerships or associations.
The matter of petitioner's not being elected to the office of Executive
Vice-President-Chief Operating Officer thus falls squarely within the purview of Section 5 par.
(c) of P.D. 902-A. In the case of PSBA v. Leano, supra, which involved an Executive Vice
President who was not re-elected to the said position during the election of officers on
September 5, 1981 by the PSBA's newly elected Board of Directors, the Court emphatically
stated:
This is not a case of dismissal. The situation is that of a corporate office having been declared association and the state in so far as its franchise, permit or license to operate is concerned,
vacant, and that of TAN's not having been elected thereafter. The matter of whom to elect is and (d) among the stockholders, partners or associates themselves.
a prerogative that belongs to the Board, and involves the exercise of deliberate choice and
the faculty of discriminative selection. Generally speaking, the relationship of a person to a
corporation, whether as officer or as agent or employee, is not determined by the nature of Subject matter is not the controlling part but the relationship
the services performed, but by the incidents of the relationship as they actually exists.
The fact that petitioner sought payment of his backwages, other benefits, as well as moral
and exemplary damages and attorney's fees in his complaint for illegal dismissal will not
operate to prevent the SEC from exercising its jurisdiction under PD 902-A. While the
A corporate officer's dismissal is always a corporate act and/or an intra-corporate
affirmative reliefs and monetary claims sought by petitioner in his complaint may, at first
controversy and that nature is not altered by the reason or wisdom which the Board of
glance, mislead one into placing the case under the jurisdiction of the Labor Arbiter, a closer
Directors may have in taking such action.7
examination reveals that they are actually part of the perquisites of his elective position;
hence, intimately linked with his relations with the corporation. In Dy v. NLRC, et al.,9 the
Court, confronted with the same issue ruled, thus:
Furthermore, it must be noted that the reason behind the non-election of petitioner to the
position of Executive Vice President-Chief Operating Officer arose from, or is closely
connected with, his involvement in the alleged irregularities in the aforementioned cases
The question of remuneration, involving as it does, a person who is not a mere employee but
which, upon investigation and recommendation, were resolved by the PAL Board of Directors
a stockholder and officer, an integral part, it might be said, of the corporation, is not a simple
against him and other senior officers. Evidently, this intra-corporate ruling places the instant
labor problem but a matter that comes within the area of corporate affairs and management,
case under the specialized competence and expertise of the SEC.
and is in fact a corporate controversy in contemplation of the Corporation Code.

JURIS
The jurisdiction of the SEC has likewise been clarified by this Court in the case of Union Glass
and Container Corporation, et al. v. SEC, et al.,8 thus:
This grant of jurisdiction must be viewed in the light of the nature and function of the SEC
under the law. Section 3 of PD No. 902-A confers upon the latter "absolute jurisdiction,
supervision, and control over all corporations, partnerships or associations, who are grantees
of primary franchise and/or license or permit issued by the government to operate in the
Philippines . . . ." The principal function of the SEC is the supervision and control over
corporations, partnerships and associations with the end in view that investment in these
entities may be encouraged and protected, and their activities pursued for the promotion of
economic development.
It is in aid of this office that the adjudicative power of the SEC must be exercised. Thus the
law explicitly specified and delimited its jurisdiction to matters intrinsically connected with
the regulations of corporations, partnerships and associations and those dealing with the
internal affairs of such corporations, partnerships or associations.
The Court has likewise ruled in the case of Andaya v. Abadia 10 that in
intra-corporate matters, such as those affecting the corporation, its directors, trustees,
officers and shareholders, the issue of consequential damages may just as well be resolved
and adjudicated by the SEC. Undoubtedly, it is still within the competence and expertise of
the SEC to resolve all matters arising from or closely connected with all intra-corporate
disputes.
ESTOPPEL CRAP
Petitioner's reliance on the principle of estoppel to justify the exercise or jurisdiction by the
NLRC over the instant complaint is misplaced. it is not accurate for petitioner to conclude
that PAL did not raise the issue of jurisdiction at the initial stages of the case, for, while it may
be predicated on a different ground, i.e., that appeal from the resolution of the Board of
Directors of PAL as regards termination of his services, is to the Office of the President, PAL
did in fact question the jurisdiction of the Labor Arbiter. An error of this nature, under the
circumstances, could not justify petitioner's insistence that PAL did not raise the issue of
jurisdiction at the outset, but only before the NLRC.

RULE: SEC JURISDICTION REQUISITES
Otherwise stated, in order that the SEC can take cognizance of a case, the controversy must
pertain to any of the following relationships: (a) between the corporation, partnership or
association and the public; (b) between the corporation, partnership or association and its
stockholders, partners, members, or officers; (c) between the corporation, partnership or
It is well-settled that jurisdiction over the subject matter is conferred by law and the question
of lack of jurisdiction may be raised at anytime even on appeal. 11 The principle of estoppel
cannot be invoked to prevent this Court from taking up the question, which has been
apparent on the face of the pleadings since the start of the litigation before the Labor
Arbiter. In the case of Dy v. NLRC, supra, the Court, citing the case of Calimlim v. Ramirez 12
reiterated that the decision of a tribunal not vested with appropriate jurisdiction is null and
void. Again, the Court in Southeast Asian Fisheries Development Center-Aquaculture
Department v. NLRC 13 restated the rule that the invocation of estoppel with respect to the
issue of jurisdiction is unavailing because estoppel does not apply to confer jurisdiction upon
a tribunal that has none over the cause of action. The instant case does not provide an
exception to the said rule.
In fine, the issue of the SEC's jurisdiction is settled and the Court finds it unnecessary to dwell
further on other questions raised by petitioner. Thus, finding no grave abuse of discretion on
the part of NLRC in dismissing the complaint for illegal dismissal, the instant petition must be
dismissed.
WHEREFORE, the instant petition for certiorari is DISMISSED for lack of merit. The resolution
of the National Labor Relations Commission dated July 31, 1992 dismissing the complaint for
illegal dismissal for lack of jurisdiction is AFFIRMED, without prejudice to petitioner's seeking
relief, if so minded, in the proper forum.
SO ORDERED.
Bidin, Melo and Vitug, JJ., concur.
ROSARIO MANEJA, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and MANILA
MIDTOWN HOTEL, respondents.
DECISION
MARTINEZ, J.:
Assailed in this petition for certiorari under Rule 65 of the Revised Rules of Court are the
Resolution[1] dated June 3, 1994 of the respondent National Labor Relations Commission in
NLRC NCR-00-10-05297-90, entitled "Rosario Maneja, Complainant, vs. Manila Midtown
Hotel, Respondent," which dismissed the illegal dismissal case filed by petitioner against
private respondent company for lack of jurisdiction of the Labor Arbiter over the case; and its
Resolution[2] dated October 20, 1995 denying petitioner's motion for reconsideration.
Petitioner Rosario Maneja worked with private respondent Manila Midtown Hotel beginning
January, 1985 as a telephone operator. She was a member of the National Union of Workers
in Hotels, Restaurants and Allied Industries (NUWHRAIN) with an existing Collective
Bargaining Agreement (CBA) with private respondent.
In the afternoon of February 13, 1990, a fellow telephone operator, Rowena Loleng received
a Request for Long Distance Call (RLDC) form and a deposit of P500.00 from a page boy of the
hotel for a call by a Japanese guest named Hirota Ieda. The call was unanswered. The
P500.00 deposit was forwarded to the cashier. In the evening, Ieda again made an RLDC and
the page boy collected another P500.00 which was also given to the operator Loleng. The
second call was also unanswered. Loleng passed on the RLDC to petitioner for follow-up.
Petitioner monitored the call.
On February 15, 1990, a hotel cashier inquired about the P1,000.00 deposit made by Ieda.
After a search, Loleng found the first deposit of P500.00 inserted in the guest folio while the
second deposit was eventually discovered inside the folder for cancelled calls with deposit
and official receipts.
When petitioner saw that the second RLDC form was not time-stamped, she immediately
placed it inside the machine which stamped the date February 15, 1990. Realizing that the
RLDC was filed 2 days earlier, she wrote and changed the date to February 13, 1990. Loleng
then delivered the RLDC and the money to the cashier. The second deposit of P500.00 by
Ieda was later returned to him.
On March 7, 1990, the chief telephone operator issued a memorandum[3] to petitioner and
Loleng directing the two to explain the February 15 incident. Petitioner and Loleng thereafter
submitted their written explanation.[4]
On March 20, 1990, a written report[5] was submitted by the chief telephone operator, with
the recommendation that the offenses committed by the operators concerned covered
violations of the Offenses Subject to Disciplinary Actions (OSDA): (1) OSDA 2.01: forging,
falsifying official document(s), and (2) OSDA 1.11: culpable carelessness - negligence or
failure to follow specific instruction(s) or established procedure(s).
On March 23, 1990, petitioner was served a notice of dismissal[6] effective April 1, 1990.
Petitioner refused to sign the notice and wrote therein "under protest."
Meanwhile, a criminal case[7] for Falsification of Private Documents and Qualified Theft was
filed before the Office of the City Prosecutor of Manila by private respondent against Loleng
and petitioner. However, the resolution recommending the filing of a case for estafa was
reversed by 2nd Asst. City Prosecutor Virgilio M. Patag.
Petitioner filed illegal dismissal with LA
On October 2, 1990, petitioner filed a complaint for illegal dismissal against private P2,540 x 7.26/mos. P18,440.40
respondent before the Labor Arbiter. The complaint was later amended to include a claim for
unpaid wages, unpaid vacation leave conversion and moral damages.
11/1/90 - 1/7/91 = 2.23/mos.

Position papers were filed by the parties. Thereafter, the motion to set the case for hearing
filed by private respondent was granted by the Labor Arbiter and trial on the merits ensued. P3,224.16 x 2.23/mos. 7,189.87

LA IN FAVOR OF PETITIONER EE 1/8/91 - 4/29/92 = 15.7/mos.

In his decision[8] dated May 29, 1992, Labor Arbiter Oswald Lorenzo found that the
petitioner was illegally dismissed. However, in the decision, the Labor Arbiter stated that:
P3,589.16 x 15.7/mos. 56,349.89

Preliminarily, we hereby state that on the face of the instant complaint, it is one that revolves
on the matter of the implementation and interpretation of existing company policies, which P81,980.08
per the last par. of Art. 217 of the Labor Code, as amended, is one within the jurisdictional
ambit of the grievance procedure under the CBA and thereafter, if unresolved, one proper
for voluntary arbitration. This observation is re-entrenched by the fact, that complainant Moreover, respondent is ordered to pay the 13th month pay due the complainant in the
claims she is a member of NUWHRAIN with an existing CBA with respondent hotel. amount of P6,831.67 including moral and exemplary damages of P15,000.00 and P10,000.00
respectively, as well as attorney's fees equivalent to ten (10) percent of the total award
herein in the amount of P11,381.17;
On this score alone, this case should have been dismissed outright.[9]

Finally, all other claims are hereby dismissed for lack of merit.
Despite the aforequoted preliminary statement, the Labor Arbiter still assumed jurisdiction
since Labor Arbiters under Article 217 of the same Labor Code, are conferred original and
exclusive jurisdiction of all termination case(sic.). The dispositive portion of the decision "SO ORDERED."
states that:

"WHEREFORE, premises considered, judgment is hereby rendered as follows:
Declaring complainant's dismissal by respondent hotel as illegally effected;
Private respondent appealed the decision to the respondent commission on the ground inter
alia that the Labor Arbiter erred in assuming jurisdiction over the illegal dismissal case after
finding that the case falls within the jurisdictional ambit of the grievance procedure under
the CBA, and if unresolved, proper for voluntary arbitration.[10] An Opposition[11] was filed
by petitioner.

Ordering respondent to immediately reinstate complainant to her previous position without
loss of seniority rights;
Ordering further respondent to pay complainant the full backwages due her, which is
computed as follows:
NLRC OVERTURNED PETITIONER EE
In the assailed Resolution[12] dated June 3, 1994, respondent NLRC dismissed the illegal
dismissal case for lack of jurisdiction of the Labor Arbiter because the same should have
instead been subjected to voluntary arbitration.
Petitioners motion for reconsideration[13] was denied by respondent NLRC for lack of merit.

3/23/90 - 10/31/90 = 7.26/mos.

In this petition for certiorari, petitioner ascribes to respondent NLRC grave abuse of
discretion in -
Ruling that the Labor Arbiter was without jurisdiction over the illegal dismissal case;
Not ruling that private respondent is estopped by laches from questioning the jurisdiction of
the Labor Arbiter over the illegal dismissal case;
Reversing the decision of the Labor Arbiter based on a technicality notwithstanding the
merits of the case.
PETITIONER
Petitioner contends that Article 217(a)(2) and (c) relied upon by respondent NLRC in divesting
the labor arbiter of jurisdiction over the illegal dismissal case, should be read in conjunction
with Article 261[14] of the Labor Code. It is the view of petitioner that termination cases
arising from the interpretation or enforcement of company personnel policies pertaining to
violations of Offenses Subject to Disciplinary Actions (OSDA), are under the jurisdiction of the
voluntary arbitrator only if these are unresolved in the plant-level grievance machinery.
Petitioner insists that her termination is not an unresolved grievance as there has been no
grievance meeting between the NUWHRAIN union and the management. The reason for this,
petitioner adds, is that it has been a company practice that termination cases are not
anymore referred to the grievance machinery but directly to the labor arbiter.
In its comment, private respondent argues that the Labor Arbiter should have dismissed the
illegal dismissal case outright after finding that it is within the jurisdictional ambit of the
grievance procedure. Moreover, private respondent states that the issue of jurisdiction may
be raised at any time and at any stage of the proceedings even on appeal, and is not in
estoppel by laches as contended by the petitioner.
For its part, public respondent, through the Office of the Solicitor General, cited the ruling of
this Court in Sanyo Philippines Workers Union-PSSLU vs. Caizares[15] in dismissing the case
for lack of jurisdiction of the Labor Arbiter.
iSSUE:
The legal issue in this case is whether or not the Labor Arbiter has jurisdiction over the illegal
dismissal case. -- YES
The respondent Commission, in holding that the Labor Arbiter lacks jurisdiction to hear the
illegal dismissal case, cited as basis therefor Article 217 of the Labor Code, as amended by
Republic Act No. 6715. It said:
While it is conceded that under Article 217(a), Labor Arbiters shall have original and exclusive
jurisdiction over cases involving termination disputes, the Supreme Court, in a fairly recent
case ruled:
The procedure introduced in RA 6715 of referring certain grievances originally and exclusively
to the grievance machinery, and when not settled at this level, to a panel of voluntary
arbitrators outlined in CBAs does not only include grievances arising from the interpretation
or implementation of the CBA but applies as well to those arising from the implementation of
company personnel policies. No other body shall take cognizance of these cases. x x x. (Sanyo
vs. Caizares, 211 SCRA 361, 372)[16]
We find that the respondent Commission has erroneously interpreted the aforequoted
portion of our ruling in the case of Sanyo, as divesting the Labor Arbiter of jurisdiction in a
termination dispute.
LAW
Article 217 of the Labor Code gives us the clue as to the jurisdiction of the Labor Arbiter, to
wit:
Article 217. Jurisdiction of Labor Arbiters and the Commission. a) Except as otherwise
provided under this Code the Labor Arbiters shall have original and exclusive jurisdiction to
hear and decide within thirty (30) calendar days after the submission of the case by the
parties for decision without extension even in the absence of stenographic notes, the
following cases involving all workers, whether agricultural or non-agricultural:
1.Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file involving
wages, rates of pay, hours of work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from the
employer-employee relations;

5. Cases arising from any violation of Article 264 of this Code, including questions involving
the legality of strikes and lockouts;
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.
b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor
Arbiters.
c) Cases arising from the interpretation or implementation of collective bargaining
agreements and those arising from the interpretation or enforcement of company personnel
policies shall be disposed of by the Labor Arbiter by referring the same to the grievance
machinery and voluntary arbitration as may be provided in said agreements.
As can be seen from the aforequoted Article, termination cases fall under the original and
exclusive jurisdiction of the Labor Arbiter. It should be noted, however, that in the opening
paragraph there appears the phrase: Except as otherwise provided under this Code x x x. It is
paragraph (c) of the same Article which respondent Commission has erroneously interpreted
as giving the voluntary arbitrator jurisdiction over the illegal dismissal case.
217 and 261 must be read together
However, Article 217 (c) should be read in conjunction with Article 261 of the Labor Code
which grants to voluntary arbitrators original and exclusive jurisdiction to hear and decide all
unresolved grievances arising from the interpretation or implementation of the collective
bargaining agreement and those arising from the interpretation or enforcement of company
personnel policies. Note the phrase unresolved grievances. In the case at bar, the
termination of petitioner is not an unresolved grievance.
RULE:
The stance of the Solicitor General in the Sanyo case is totally the reverse of its posture in the
case at bar. In Sanyo, the Solicitor General was of the view that a distinction should be made
between a case involving interpretation or implementation of Collective Bargaining
Agreement or interpretation or enforcement of company personnel policies, on the one hand
and a case involving termination, on the other hand. It argued that the dismissal of the
private respondents does not involve an interpretation or implementation of a Collective
Bargaining Agreement or interpretation or enforcement of company personnel policies but
involves termination. The Solicitor General further said that where the dispute is just in the
interpretation, implementation or enforcement stage, it may be referred to the grievance
machinery set up in the Collective Bargaining Agreement or by voluntary arbitration. Where
there was already actual termination, i.e., violation of rights, it is already cognizable by the
Labor Arbiter.[17] We fully agree with the theory of the Solicitor General in the Sanyo case,
which is radically apposite to its position in this case.
P’s grievance does not come from interpretation of CBA
Moreover, the dismissal of petitioner does not fall within the phrase grievances arising from
the interpretation or implementation of collective bargaining agreement and those arising
from the interpretation or enforcement of company personnel policies, the jurisdiction of
which pertains to the grievance machinery or thereafter, to a voluntary arbitrator or panel of
voluntary arbitrators. It is to be stressed that under Article 260 of the Labor Code, which
explains the function of the grievance machinery and voluntary arbitrator, (T)he parties to a
Collective Bargaining Agreement shall include therein provisions that will ensure the mutual
observance of its terms and conditions. They shall establish a machinery for the adjustment
and resolution of grievances arising from the interpretation or implementation of their
Collective Bargaining Agreement and those arising from the interpretation or enforcement of
company personnel policies. Article 260 further provides that the parties to a CBA shall name
or designate their respective representative to the grievance machinery and if the grievance
is unsettled in that level, it shall automatically be referred to the voluntary arbitrators
designated in advance by the parties to a CBA of the union and the company. It can thus be
deduced that only disputes involving the union and the company shall be referred to the
grievance machinery or voluntary arbitrators.[18]
IT HAS BEEN THE PRACTICE OF THE EE’s TO GO DIRECTLY TO LA: not sure if relevant bro
In the case at bar, the union does not come into the picture, not having objected or voiced
any dissent to the dismissal of the herein petitioner. The reason for this, according to
petitioner is that the practice in said Hotel in cases of termination is that the latter cases are
not referred anymore to the grievance committee; and that the terminated employee who
wishes to question the legality of his termination usually goes to the Labor Arbiter for
arbitration, whether the termination arose from the interpretation or enforcement of the
company personnel policies or otherwise.[19]
THERE HAS BEEN AN ACTUAL TERMINATION HENCE LA
As we ruled in Sanyo, Since there has been an actual termination, the matter falls within the
jurisdiction of the Labor Arbiter. The aforequoted doctrine is applicable foursquare in
petitioners case. The dismissal of the petitioner does not call for the interpretation or
enforcement of company personnel policies but is a termination dispute which comes under
the jurisdiction of the Labor Arbiter.
It should be explained that company personnel policies are guiding principles stated in broad,
long-range terms that express the philosophy or beliefs of an organizations top authority
regarding personnel matters. They deal with matters affecting efficiency and well-being of
employees and include, among others, the procedure in the administration of wages,
benefits, promotions, transfer and other personnel movements which are usually not spelled
out in the collective agreement. The usual source of grievances, however, are the rules and
regulations governing disciplinary actions.[20]
The case of Pantranco North Express, Inc. vs. NLRC[21] sheds further light on the issue of
jurisdiction where the Court cited the Sanyo case and quoted the decision of therein Labor
Arbiter Olairez in this manner:
In our honest opinion we have jurisdiction over the complaint on the following grounds:
First, this is a complaint of illegal dismissal of which original and exclusive jurisdiction under
Article 217 has been conferred to the Labor Arbiters. The interpretation of the CBA or
enforcement of the company policy is only corollary to the complaint of illegal dismissal.
Otherwise, an employee who was on AWOL, or who committed offenses contrary to the
personnel policies(sic) can no longer file a case of illegal dismissal because the discharge is
premised on the interpretation or enforcement of the company policies(sic).
Second. Respondent voluntarily submitted the case to the jurisdiction of this labor tribunal. It
adduced arguments to the legality of its act, whether such act may be retirement and/or
dismissal, and prayed for reliefs on the merits of the case. A litigant cannot pray for reliefs on
the merits and at the same time attacks(sic) the jurisdiction of the tribunal. A person cannot
have ones cake and eat it too. x x x.
LACHES CRAP
As to the second ground, petitioner correctly points out that respondent NLRC should have
ruled that private respondent is estopped by laches in questioning the jurisdiction of the
Labor Arbiter.
Clearly, estoppel lies. The issue of jurisdiction was mooted by herein private respondents
active participation in the proceedings below. In Marquez vs. Secretary of Labor,[22] the
Court said:
x x x. The active participation of the party against whom the action was brought, coupled
with his failure to object to the jurisdiction of the court or quasi-judicial body where the
action is pending, is tantamount to an invocation of that jurisdiction and a willingness to
abide by the resolution of the case and will bar said party from later on impugning the court
or bodys jurisdiction.
In the assailed Resolution,[23] respondent NLRC cited La Naval Drug Corporation vs. Court of
Appeals[24] in holding that private respondent is not in estoppel. Thus,
The operation of the principle of estoppel on the question of jurisdiction seemingly depends
upon whether the lower court actually had jurisdiction or not. If it had no jurisdiction, but the
case was tried and decided upon the theory that it had jurisdiction, the parties are not
barred, on appeal, from assailing such jurisdiction, for the same must exist as a matter of law,
and may not be conferred by consent of the parties or by estoppel (5 C.J.S., 861-863).
However, if the lower court had jurisdiction, and the case was heard and decided upon a
given theory, such, for instance, as that the court had no jurisdiction, the party who induced
it to adopt such theory will not be permitted, on appeal, to assume an inconsistent position
that the lower court had jurisdiction. Here, the principle of estoppel applies. The rule that
jurisdiction is conferred by law, and does not depend upon the will of the parties, has no
bearing thereon. (Underscoring ours)
Again, the respondent NLRC has erroneously interpreted our ruling in the La Naval case.
Under the said ruling, estoppel lies in this case. Private respondent is estopped from
questioning the jurisdiction of the Labor Arbiter before the respondent NLRC having actively
participated in the proceedings before the former. At no time before or during the trial on
the merits did private respondent assail the jurisdiction of the Labor Arbiter. Private
respondent took the cue only from the preliminary statement in the decision of the Labor
Arbiter, which was a mere obiter, and raised the issue of jurisdiction before the Commission.
It was then too late. Estoppel had set in.
Turning now to the merits of the case, We uphold the ruling of the Labor Arbiter that
petitioner was illegally dismissed.
The requisites of a valid dismissal are (1) the dismissal must be for any of the causes
expressed in Article 282 of the Labor Code,[25] and (2) the employee must be given an
opportunity to be heard and to defend himself.[26] The substantive and procedural laws
must be strictly complied with before a worker can be dismissed from his employment
because what is at stake is not only the employees position but his livelihood.[27]
Petitioners dismissal was grounded on culpable carelessness, negligence and failure to follow
specific instruction(s) or established procedure(s) under OSDA 1.11; and, having forged or
falsified official document(s) under OSDA 2.01.
Private respondent blames petitioner for failure to follow established procedure in the hotel
on a guests request for long distance calls. Petitioner, however, explained that the usual or
established procedures are not followed by the operators and hotel employees when
circumstances warrant. For instance, the RLDC forms and the deposits are brought by the
page boy directly to the operators instead of the cashiers if the latter are busy and cannot
attend to the same. Furthermore, she avers that the telephone operators are not conscious
of the serial numbers in the RLDCs and at times, the used RLDCs are recycled. Even the page
boys do not actually check the serial numbers of all RLDCs in one batch, except for the first
and the last.
On the charge of taking of the money by petitioner, it is to be noted that the second P500.00
deposit made by the Japanese guest Ieda was later discovered to be inserted in the folder for
cancelled calls with deposit and official receipts. Thus, there exists no basis for personal
appropriation by the petitioner of the money involved. Another reason is the alleged
tampering of RLDC No. 862406.[28] While petitioner and her co-operator Loleng admitted
that they indeed altered the date appearing therein from February 15, 1990 to February 13,
the same was purposely made to reflect the true date of the transaction without any malice
whatsoever on their part.
As pointed out by Labor Arbiter Oswald B. Lorenzo, thus:
The specifics of the grounds relied by respondent hotels dismissal of complainant are those
stated in Annex F of the latters POSITION PAPER, which is the Notice of Dismissal, notably:
OSDA 2.01 - Forging, falsifying official document(s)
OSDA 1.11 - Culpable negligence or failure to follow specific instruction(s) or established
procedure(s)
On this score, we are persuaded by the complainants arguments that under OSDA 1.11,
infractions of this sort is not without qualifications, which is, that the alleged culpable
carelessness, negligence or failure to follow instruction(s) or established procedure(s),
RESULTING IN LOSS OR DAMAGE TO COMPANY PROPERTY. From the facts obtaining in this
case, there is no quantum of proof whatsoever, except the general allegations in respondents
POSITION PAPER and other pleadings that loss or damage to company property resulted from
the charged infraction. To our mind, this is where labor tribunals should come in and help
correct interpretation of company policies which in the enforcement thereof wreaks havoc to
the constitutional guarantee of security of tenure. Apparently, the exercise of little flexibility
by complainant and co-employees which is predicated on good faith should not be taken
against them and more particularly against the complainant herein. In this case, to sustain
the generalized charge of respondent hotel under OSDA 1.11 would unduly be sanctioning
the imposition of too harsh a penalty - which is dismissal.
In the same tenor, the respondents charge under OSDA 1.11 on the alleged falsification of
private document is also with a qualification, in that the alleged act of falsification must have
been done IN SUCH A WAY AS TO MISLEAD THE USER(S) THEREOF. Again, based on the facts
of the complained act, there appeared no one to have been misled on the change of date
from RLDC #862406 FROM 15 TO 13 February 1990.
As a matter of fact, we are in agreement with the jurisprudence cited by VIRGILIO M. PATAG,
the 2nd Asst. City Prosecutor of the City of Manila, who exculpated complainant MANEJA
from the charges of falsification of private documents and qualified theft under IS No. 90-
11083 and marked Annex H of complainants POSITION PAPER, when he ruled that an
altercation which makes the document speak the truth cannot be the foundation of a
criminal action. As to the charge of qualified theft, we too are of the finding, like the city
prosecutor above-mentioned that there was no evidence on the part of MANEJA to have
unlawfully taken the P500.00 either from the hotel or from guest IEDA on 13 February 1990
and moreover, we too, find no evidence that complainant MANEJA had the intention to
profit thereby nor had misappropriated the P500.00 in question.[29]
Given the factual circumstances of the case, we cannot deduce dishonesty from the act and
omission of petitioner. Our norms of social justice demand that we credit employees with the
presumption of good faith in the performance of their duties,[30] especially petitioner who
has served private respondent since 1985 up to 1990 without any tinge of dishonesty and
was even named Model Employee for the month of April, 1989.[31]
Petitioner has been charged with a very serious offense - dishonesty. This can irreparably
wreck her life as an employee for no employer will take to its bosom a dishonest employee.
Dismissal is the supreme penalty that can be meted to an employee and its imposition
cannot be justified where the evidence is ambivalent.[32] It must, therefore, be based on a
clear and not on an ambiguous or ambivalent ground. Any ambiguity or ambivalence on the
ground relied upon by an employer in terminating the services of an employee denies the
latter his full right to contest its legality. Fairness cannot countenance such ambiguity or
ambivalence.[33]
An employer can terminate the services of an employee only for valid and just causes which
must be supported by clear and convincing evidence. The employer has the burden of
proving that the dismissal was indeed for a valid and just cause.[34] Failure to do so results in
a finding that the dismissal was unjustified.[35]
DUE PROCESS CRAP
Finding that there was no just cause for dismissal of petitioner, we now determine if the
rudiments of due process have been duly accorded to her.
Well-settled is the dictum that the twin requirements of notice and hearing constitute the
essential elements of due process in the dismissal of employees. It is a cardinal rule in our
jurisdiction that the employer must furnish the employee with two written notices before the
termination of employment can be effected: (a) the first apprises the employee of the
particular acts or omissions for which his dismissal is sought; and, (b) the second informs the
employee of the employers decision to dismiss him. The requirement of a hearing, on the
other hand, is complied with as long as there was an opportunity to be heard, and not
necessarily that an actual hearing was conducted.[36]
In the case at bar, petitioner and her co-operator Loleng were issued a memorandum on
March 7, 1990. On March 11, 1990, they submitted their written explanation thereto. On
March 20, 1990, a written report was made with a recommendation that the offenses
committed by them were covered by OSDA 1.11 and 2.01. Thereafter, on March 23, 1990,
petitioner was served with a notice of dismissal for said violations effective April 1, 1990.
An examination of the record reveals that no hearing was ever conducted by private
respondent before petitioner was dismissed. While it may be true that petitioner submitted a
written explanation, no hearing was actually conducted before her employment was
terminated. She was not accorded the opportunity to fully defend herself.
Consultations or conferences may not be a substitute for the actual holding of a hearing.
Every opportunity and assistance must be accorded to the employee by the management to
enable him to prepare adequately for his defense, including legal representation.[37]
Considering that petitioner denied having allegedly taken the second P500.00 deposit of the
Japanese guest which was eventually found; and, having made the alteration of the date on
the second RLDC merely to reflect the true date of the transaction, these circumstances
should have at least warranted a separate hearing to enable petitioner to fully ventilate her
side. Absent such hearing, petitioners right to due process was clearly violated.[38]
It bears stressing that a workers employment is property in the constitutional sense. He
cannot be deprived of his work without due process of law. Substantive due process
mandates that an employee can only be dismissed based on just or authorized causes.
Procedural due process requires further that he can only be dismissed after he has been
given an opportunity to be heard. The import of due process necessitates the compliance of
these two aspects.
Accordingly, we hold that the labor arbiter did not err in awarding full backwages in view of
his finding that petitioner was dismissed without just cause and without due process.
We ruled in the case of Bustamante vs. NLRC[39] that the amount of backwages to be
awarded to an illegally dismissed employee must be computed from the time he was
dismissed to the time he is actually reinstated, without deducting the earnings he derived
elsewhere pending the resolution of the case.
Petitioner is likewise entitled to the thirteenth-month pay. Presidential Decree No. 851, as
amended by Memorandum Order No. 28, provides that employees are entitled to the
thirteenth-month pay benefit regardless of their designation and irrespective of the method
by which their wages are paid.[40]
The award of moral and exemplary damages to petitioner is also warranted where there is
lack of due process in effecting the dismissal.
Where the termination of the services of an employee is attended by fraud or bad faith on
the part of the employer, as when the latter knowingly made false allegations of a supposed
valid cause when none existed, moral and exemplary damages may be awarded in favor of
the former.[41]
The anti-social and oppressive abuse of its right to investigate and dismiss its employees
constitute a violation of Article 1701 of the New Civil Code which prohibits acts of oppression
by either capital or labor against the other, and Article 21 on human relations. The grant of
moral damages to the employees by reason of such conduct on the part of the company is
sanctioned by Article 2219, No. 10 of the Civil Code, which allows recovery of such damages
in actions referred to in Article 21.[42]
The award of attorneys fees amounting to ten percent (10%) of the total award by the labor
arbiter is justified under Article 111 of the Labor Code.
WHEREFORE, premises considered, the petition is GRANTED and the assailed resolutions of
the respondent National Labor Relations Commission dated June 3, 1994 and October 20,
1995 are hereby REVERSED AND SET ASIDE. The decision dated May 29, 1992 of the Labor
Arbiter is therefore REINSTATED.
SO ORDERED.
Regalado (Chairman), Puno and Mendoza, JJ., concur.
Melo, J., on leave.
G.R. No. 101619 July 8, 1992

SANYO PHILIPPINES WORKERS UNION-PSSLU LOCAL CHAPTER NO. 109 AND/OR ANTONIO
DIAZ, PSSLU NATIONAL PRESIDENT, petitioners,
vs.
HON. POTENCIANO S. CANIZARES, in his capacity as Labor Arbiter, BERNARDO YAP, RENATO
BAYBON, SALVADOR SOLIBEL, ALLAN MISTERIO, EDGARDO TANGKAY, LEONARDO DIONISIO,
ARNEL SALVO, REYNALDO RICOHERMOSO, BENITO VALENCIA, GERARDO LASALA AND
ALEXANDER ATANASIO, respondents.
MEDIALDEA, J.:
This petition seeks to nullify: 1) the order of respondent Labor Arbiter Potenciano Cañizares
dated August 6, 1991 deferring the resolution of the motion to dismiss the complaint of
private respondents filed by petitioner Sanyo Philippines Workers Union-PSSLU Local Chapter
No. 109 (PSSLU, for brevity) on the ground that the labor arbiter had no jurisdiction over said
complaint and 2) the order of the same respondent clarifying its previous order and ruling
that it had jurisdiction over the case.
The facts of the case are as follows:
PSSLU had an existing CBA with Sanyo Philippines Inc. (Sanyo, for short) effective July 1, 1989
to June 30, 1994. The same CBA contained a union security clause which provided:
PERTINENT CBA PROVISION
Sec. 2. All members of the union covered by this agreement must retain their membership
in good standing in the union as condition of his/her continued employment with the
company. The union shall have the right to demand from the company the dismissal of the
members of the union by reason of their voluntary resignation from membership or willful
refusal to pay the Union Dues or by reasons of their having formed, organized, joined,
affiliated, supported and/or aided directly or indirectly another labor organization, and the
union thus hereby guarantees and holds the company free and harmless from any liability
whatsoever that may arise consequent to the implementation of the provision of this article.
(pp. 5-6, Rollo)
PSSLU RECOMMENDS TERMINATION OF EES DAHIL BALIMBING
In a letter dated February 7, 1990, PSSLU, through its national president, informed the
management of Sanyo that the following employees were notified that their membership
with PSSLU were cancelled for anti-union, activities, economic sabotage, threats, coercion
and intimidation, disloyalty and for joining another union: Benito Valencia, Bernardo Yap,
Arnel Salvo, Renato Baybon, Eduardo Porlaje, Salvador Solibel, Conrado Sarol, Angelito
Manzano, Allan Misterio, Reynaldo Ricohermoso, Mario Ensay and Froilan Plamenco. The
same letter informed Sanyo that the same employees refused to submit themselves to the
union's grievance investigation committee (p. 53, Rollo). It appears that many of these
employees were not members of PSSLU but of another union, KAMAO.
On February 14, 1990, some officers of KAMAO, which included Yap, Salvo, Baybon, Solibel,
Valencia, Misterio and Ricohermoso, executed a pledged of cooperation with PSSLU
promising cooperation with the latter union and among others, respecting, accepting and
honoring the CBA between Sanyo and specifically:
1. That we shall remain officers and members of KAMAO until we finally decide to
rejoin Sanyo Phil. Workers Union-PSSLU;
2. That henceforth, we support and cooperate with the duly elected union officers of
Sanyo Phil. Workers Union-PSSLU in any and all its activities and programs to insure industrial
peace and harmony;
3. That we collectively accept, honor, and respect the Collective Bargaining
Agreement entered into between Sanyo Phil. Inc. and Sanyo Phil. Workers Union-PSSLU
dated February 7, 1990;
4 That we collectively promise not to engage in any activities inside company
premises contrary to law, the CBA and existing policies;
5 That we are willing to pay our individual agency fee in accordance with the
provision of the Labor Code, as amended;
6 That we collectively promise not to violate this pledge of cooperation. (p. 55, Rollo)
NON UNION WORKERS WERE ALSO RECOMMENDED TO BE DISMISSED
On March 4, 1991, PSSLU through its national and local presidents, wrote another letter to
Sanyo recommending the dismissal of the following non-union workers: Bernardo Yap, Arnel
Salvo, Renato Baybon, Reynaldo Ricohermoso, Salvador Solibel, Benito Valencia, and Allan
Misterio, allegedly because: 1) they were engaged and were still engaging in anti-union
activities; 2) they willfully violated the pledge of cooperation with PSSLU which they signed
and executed on February 14, 1990; and 3) they threatened and were still threatening with
5. Edgardo Tangkay
bodily harm and even death the officers of the union (pp. 37-38, Rollo).

6. Leonardo Dionisio
MORE UNION WORKERS WERE ALSO RECOMMENDED TO BE DISMISSED
Also recommended for dismissal were the following union members who allegedly joined,
supported and sympathized with a minority union, KAMAO: Gerardo Lasala, Legardo 7. Arnel Salvo
Tangkay, Alexander Atanacio, and Leonardo Dionisio.

8. Reynaldo Ricohermoso
The last part of the said letter provided:

9. Benito Valencia
The dismissal of the above-named union members is without prejudice to receive (sic) their
termination pay if management decide (sic) to grant them benefits in accordance with law.
The union hereby holds the company free and harmless from any liability that may arise 10. Gerardo Lasala
consequent to the implementation by the company of our recommendations for the
dismissal of the above-mentioned workers.
11. Alexander Atanacio

It is however suggested that the Grievance Machinery be convened pursuant to Section 3,

Article XV of the Collective Bargaining Agreement (CBA) before their actual dismissal from The above listed employees shall not be allowed within company premises without the
the company. (p. 38, Rollo) permission of management.

Pursuant to the above letter of the union, the company sent a memorandum to the same As per request of the union's letter to management, should the listed employees fail to
workers advising them that: appeal the decision of the union for dismissal, then effective March 23, 1991, said listed
employees shall be considered dismissed from the company. (p 39, Rollo)

As per the attached letter from the local union President SPWU and the federation President,
PSSLU, requesting management to put the herein mentioned employees on preventive
suspension, effective immediately, preliminary to their subsequent dismissal, please be
informed that the following employees are under preventive suspension effective March 13,
1991 to wit:
EE’S WERE DISMISSED
The company received no information on whether or not said employees appealed to PSSLU.
Hence, it considered them dismissed as of March 23, 1991 (p. 40, Rollo).

1. Bernardo Yap EE FILED W NLRC ILLEGAL DISMISSAL

On May 20, 1991, the dismissed employees filed a complaint (pp. 32-35, Rollo) with the NLRC
for illegal dismissal. Named respondent were PSSLU and Sanyo.
2. Renato Baybon

PSSLU
3. Salvador Solibel
On June 20, 1991, PSSLU filed a motion to dismiss the complaint alleging that the Labor
Arbiter was without jurisdiction over the case, relying on Article 217 (c) of P.D. 442, as
4. Allan Misterio amended by Section 9 of Republic Act No. 6715 which provides that cases arising from the
interpretation or implementation of the collective bargaining agreements shall be disposed
of by the labor arbiter by referring the same to the grievance machinery and voluntary
arbitration.
The complainants opposed the motion to dismiss complaint on these grounds: 1) the series
of conferences before the National Conciliation and Mediation Board had been terminated;
2) the NLRC Labor Arbiter had jurisdiction over the case which was a termination dispute
pursuant to Article 217 (2) of the Labor Code; and 3) there was nothing in the CBA which
needs interpretation or implementation (pp. 44-46, Rollo).
On August 7, 1991, the respondent Labor Arbiter issued the first questioned order. It held
that:
xxx xxx xxx
While there are seemingly contradictory provisions in the aforecited article of the Labor
Code, the better interpretation will be to give effect to both, and termination dispute being
clearly spelled as falling under the jurisdiction of the Labor Arbiter, the same shall be
respected. The jurisdiction of the grievance machinery and voluntary arbitration shall cover
other controversies.
However, the resolution of the instant issue shall be suspended until both parties have fully
presented their respective positions and the said issue shall be included in the final
determination of the above-captioned case.
WHEREFORE, the instant Motions to Dismiss are hereby held pending.
Consequently, the parties are hereby directed to submit their position papers and supporting
documents pursuant to Section 2, Rule VII of the Rules of the Commission on or before the
hearing on the merit of this case scheduled on August 29, 1991 at 11:00 a.m. (p. 23, Rollo)
On August 27, 1991, PSSLU filed another motion to resolve motion to dismiss complaint with
a prayer that the Labor Arbiter resolve the issue of jurisdiction.
On September 4, 1991, the respondent Labor Arbiter issued the second questioned order
which held that it was assuming jurisdiction over the complaint of private respondents, in
effect, holding that it had jurisdiction over the case.
On September 19, 1991, PSSLU filed this petition alleging that public respondent Labor
Arbiter cannot assume jurisdiction over the complaint of public respondents because it had
no jurisdiction over the dispute subject of said complaint. It is their submission that under
Article 217 (c) of the Labor Code, in relation to Article 261 thereof, as well as Policy
Instruction No. 6 of the Secretary of Labor, respondent Arbiter has no jurisdiction and
authority to take cognizance of the complaint brought by private respondents which involves
the implementation of the union security clause of the CBA. The function of the Labor Arbiter
under the same law and rule is to refer this case to the grievance machinery and voluntary
arbitration.
In its comment, private respondents argue that Article 217(a) 2 and 4 of the Labor Code is
explicit, to wit:
Art. 217. Jurisdiction of the Labor Arbiters and the Commission.
a) Except as otherwise provided under this Code, the Labor Arbiters shall have original
and exclusive jurisdiction to hear and decide . . . the following cases involving all workers, . . .
:
xxx xxx xxx
2) Termination disputes,
xxx xxx xxx
4) Claims for actual, moral, exemplary and other forms of damages arising from the
employer-employee relations.
The private respondents also claimed that insofar as Salvo, Baybon, Ricohermoso, Solibel,
Valencia, Misterio and Lasala were concerned, they joined another union, KAMAO during the
freedom period which commenced on May 1, 1989 up to June 30, 1989 or before the
effectivity of the July 1, 1989 CBA. Hence, they are not covered by the provisions of the CBA
between Sanyo and PSSLU. Private respondents Tangkay, Atanacio and Dionisio admit that in
September 1989, they resigned from KAMAO and rejoined PSSLU (pp.
66(a)-68, Rollo).
RESPONDENT
For its part, public respondent, through the Office of the Solicitor General, is of the view that
a distinction should be made between a case involving "interpretation or implementation of
collective bargaining agreement or "interpretation" or "enforcement" of company personnel
policies, on the one hand and a case involving termination, on the other hand. It argued that
the case at bar does not involve an "interpretation or implementation" of a collective
bargaining agreement or "interpretation or enforcement" of company policies but involves a
"termination." Where the dispute is just in the interpretation, implementation or
enforcement stage, it may be referred to the grievance machinery set up in the CBA or by
voluntary arbitration. Where there was already actual termination, i.e., violation of rights, it
is already cognizable by the Labor Arbiter.
Article 217 of the Labor Code defines the jurisdiction of the Labor Arbiter.
Art. 217. Jurisdiction of Labor Arbiters and the Commission. a) Except as otherwise provided
under this Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and
decide within thirty (30) calendar days after the submission of the case by the parties for
decision without extension even in the absence of stenographic notes, the following cases
involving all workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file
involving wages, rates of pay, hours of work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from the
employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions
involving the legality of strikes and lockouts;
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.
(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by
Labor Arbiters.
(c) Cases arising from the interpretation or implementation of collective bargaining
agreements and those arising from the interpretation or enforcement of company personnel
policies shall be disposed of by the Labor Arbiter by referring the same to the grievance
machinery and voluntary arbitration as may be provided in said agreements.
LAW
It is clear from the above article that termination cases fall under the jurisdiction of the Labor
Arbiter. It should be noted however that said article at the outset excepted from the said
provision cases otherwise provided for in other provisions of the same Code, thus the phrase
"Except as otherwise provided under this Code . . . ." Under paragraph (c) of the same article,
it is expressly provided that "cases arising from the interpretation or implementation of
collective bargaining agreements and those arising from the interpretation and enforcement
of company personnel policies shall be disposed of by the Labor Arbiter by referring the same
to the grievance machinery and voluntary arbitration as may be provided in said agreements.
It was provided in the CBA executed between PSSLU and Sanyo that a member's voluntary
resignation from membership, willful refusal to pay union dues and his/her forming,
organizing, joining, supporting, affiliating or aiding directly or indirectly another labor union
shall be a cause for it to demand his/her dismissal from the company. The demand for the
dismissal and the actual dismissal by the company on any of these grounds is an enforcement
of the union security clause in the CBA. This act is authorized by law provided that
enforcement should not be characterized by arbitrariness (Manila Mandarin Employee Union
v. NLRC, G.R. No. 76989, 29 Sept. 1987, 154 SCRA 368) and always with due process (Tropical
Hut Employees Union v. Tropical Food Market, Inc., L-43495-99, Jan. 20, 1990).
GRIEVANCE MACHINERY EXPLAINED
The reference to a Grievance Machinery and Voluntary Arbitrators for the adjustment or
resolution of grievances arising from the interpretation or implementation of their CBA and
those arising from the interpretation or enforcement of company personnel policies is
mandatory. The law grants to voluntary arbitrators original and exclusive jurisdiction to hear
and decide all unresolved grievances arising from the interpretation or implementation of
the Collective Bargaining Agreement and those arising from the interpretation or
enforcement of company personnel policies (Art. 261, Labor Code).
LA RATIO FOR ASSUMING JURIS
In its order of September 4, 1991, respondent Labor Arbiter explained its decision to assume
jurisdiction over the complaint, thus:
The movants failed to show (1) the provisions of the CBA to be implemented, and (2) the
grievance machinery and voluntary arbitrator already formed and properly named. What
Sec. 2. The voluntary Arbitrator shall have thirty (30) days to decide the issue presented to
self-respecting judge would refer a case from his responsibility to a shadow? To whom really
him and his decision shall be final, binding and executory upon the parties. He shall have no
and specifically shall the case be indorsed or referred? In brief, they could have shown the (1)
authority to add or subtract from and alter any provision of this agreement. The expenses of
existence of the grievance machinery and (2) its being effective.
voluntary arbitration including the fee of the arbitrator shall be shared equally by the
company and the union. In the event the arbitrator chosen either by the mutual agreement
of the company and the union by (the) way of voluntary arbitration or by the National
Furthermore, the aforecited law merely directs the "referral" cases. It does not expressly
Conciliation and Mediation Board (NCMB) failed to assume his position, died, become
confer jurisdiction on the grievance machinery or voluntary arbitration panel, created or to
disabled or any other manner failed to function and or reach a decision, the company and the
be created. Article 260 of the Labor Code describes the formation of the grievance and
union shall by mutual agreement choose another arbitrator; in the event of failure to agree
voluntary arbitration. All this of course shall be on voluntary basis. Is there another meaning
on the choice of a new voluntary arbitrator, the matter shall again be referred back to the
of voluntary arbitration? (The herein complainant have strongly opposed the motion to
NCMB who shall be requested again to choose a new arbitrator as above provided. Any
dismiss. Would they go willingly to the grievance machinery and voluntary arbitration which
grievance not elevated or processed as above provided within the stipulated period shall be
are installed by their opponents if directed to do so?) (p. 26, Rollo)
deemed settled and terminated.

The failure of the parties to the CBA to establish the grievance machinery and its
Sec. 3. It is hereby agreed that decisions of the union relative to their members, for
unavailability is not an excuse for the Labor Arbiter to assume jurisdiction over disputes
implementation by the COMPANY, should be resolved for review thru the Grievance
arising from the implementation and enforcement of a provision in the CBA. In the existing
Machinery; and management be invited to participate in the Grievance procedure to be
CBA between PSSLU and Sanyo, the procedure and mechanics of its establishment had been
undertaken by the union relative to (the) case of the union against members. (pp. 134-135,
clearly laid out as follows:
Rollo)

ARTICLE XV — GRIEVANCE MACHINERY

All that needs to be done to set the machinery into motion is to call for the convening
thereof. If the parties to the CBA had not designated their representatives yet, they should
be ordered to do so.
Sec. 1. Whenever any controversy should arise between the company and the union as to the
interpretation or application of the provision of this agreement, or whenever any difference
shall exist between said parties relative to the terms and conditions of employment, an
The procedure introduced in RA 6715 of referring certain grievances originally and exclusively
earnest effort shall be made to settle such controversy in substantially the following manner:
to the grievance machinery and when not settled at this level, to a panel of voluntary
arbitrators outlined in CBA's does not only include grievances arising from the interpretation
or implementation of the CBA but applies as well to those arising from the implementation of
First step.(Thru Grievance) The dispute shall initially be resolved by conference between the company personnel policies. No other body shall take cognizance of these cases. The last
management to be represented by the Management's authorized representatives on the one paragraph of Article 261 enjoins other bodies from assuming jurisdiction thereof:
hand, and the Union to be represented by a committee composed of the local union
president and one of the local union officer appointed by the local union president, on the
other hand within three days from date of concurrence of grievance action. In the absence of
The commission, its Regional Offices and the Regional Directors of the Department of Labor
the local union president, he (shall) appoint another local union officer to take over in his
and Employment shall not entertain disputes, grievances or matters under the exclusive and
behalf. Where a controversy personally affects an employee, he shall not be allowed to be a
original jurisdiction of the Voluntary Arbitrator or panel of voluntary arbitrators and shall
member of the committee represented by the union.
immediately dispose and refer the same to the grievance machinery or voluntary arbitration
provided in the Collective Bargaining Agreement.
Second step. (Thru Arbitrator mutually chosen) Should such dispute remain unsettled
after twenty (20) days from the first conference or after such period as the parties may agree
upon in specified cases, it shall be referred to an arbitrator chosen by the consent of the
company and the union. In the event of failure to agree on the choice of voluntary arbitrator, ISSUE: WON LA HAS JURIS. YES
the National Conciliation and Mediation Board, Department of Labor and Employment shall
be requested to choose an Arbitrator in accordance with voluntary arbitration procedures.
LA HAS JURIS
In the instant case, however, We hold that the Labor Arbiter and not the Grievance
Machinery provided for in the CBA has the jurisdiction to hear and decide the complaints of
the private respondents. While it appears that the dismissal of the private respondents was
made upon the recommendation of PSSLU pursuant to the union security clause provided in
the CBA, We are of the opinion that these facts do not come within the phrase "grievances
arising from the interpretation or implementation of (their) Collective Bargaining Agreement
and those arising from the interpretation or enforcement of company personnel policies,"
the jurisdiction of which pertains to the Grievance Machinery or thereafter, to a voluntary
arbitrator or panel of voluntary arbitrators. LAW Article 260 of the Labor Code on grievance
machinery and voluntary arbitrator states that "(t)he parties to a Collective Bargaining
Agreement shall include therein provisions that will ensure the mutual observance of its
terms and conditions. They shall establish a machinery for the adjustment and resolution of
grievances arising from the interpretation or implementation of their Collective Bargaining
Agreement and those arising from the interpretation or enforcement of company personnel
policies." It is further provided in said article that the parties to a CBA shall name or designate
their respective representatives to the grievance machinery and if the grievance is not settled
in that level, it shall automatically be referred to voluntary arbitrators (or panel of voluntary
arbitrators) designated in advance by the parties. It need not be mentioned that the parties
to a CBA are the union and the company. Hence, only disputes involving the union and the
company shall be referred to the grievance machinery or voluntary arbitrators.
APPLYING THE RULE
NO UNION-COMPANY DISPUTE HERE, HENCE GRIEVANCE MACHINERY DOES NOT OPERATE
In the instant case, both the union and the company are united or have come to an
agreement regarding the dismissal of private respondents. No grievance between them exists
which could be brought to a grievance machinery. The problem or dispute in the present case
is between the union and the company on the one hand and some union and non-union
members who were dismissed, on the other hand. The dispute has to be settled before an
impartial body. The grievance machinery with members designated by the union and the
company cannot be expected to be impartial against the dismissed employees. Due process
demands that the dismissed workers grievances be ventilated before an impartial body. Since
there has already been an actual termination, the matter falls within the jurisdiction of the
Labor Arbiter.
ACCORDINGLY, the petition is DISMISSED. Public respondent Labor Arbiter is directed to
resolve the complaints of private respondents immediately.
SO ORDERED.
LABOR REL 18
G.R. No. 101619 July 8, 1992
SANYO PHILIPPINES WORKERS UNION-PSSLU LOCAL CHAPTER NO. 109 AND/OR ANTONIO
DIAZ, PSSLU NATIONAL PRESIDENT, petitioners,
vs.
HON. POTENCIANO S. CANIZARES, in his capacity as Labor Arbiter, BERNARDO YAP, RENATO
BAYBON, SALVADOR SOLIBEL, ALLAN MISTERIO, EDGARDO TANGKAY, LEONARDO DIONISIO,
ARNEL SALVO, REYNALDO RICOHERMOSO, BENITO VALENCIA, GERARDO LASALA AND
ALEXANDER ATANASIO, respondents.
MEDIALDEA, J.:
This petition seeks to nullify: 1) the order of respondent Labor Arbiter Potenciano Cañizares
dated August 6, 1991 deferring the resolution of the motion to dismiss the complaint of
private respondents filed by petitioner Sanyo Philippines Workers Union-PSSLU Local Chapter
No. 109 (PSSLU, for brevity) on the ground that the labor arbiter had no jurisdiction over said
complaint and 2) the order of the same respondent clarifying its previous order and ruling
that it had jurisdiction over the case.
The facts of the case are as follows:
PSSLU had an existing CBA with Sanyo Philippines Inc. (Sanyo, for short) effective July 1, 1989
to June 30, 1994. The same CBA contained a union security clause which provided:
Sec. 2. All members of the union covered by this agreement must retain their membership in
good standing in the union as condition of his/her continued employment with the company.
The union shall have the right to demand from the company the dismissal of the members of
the union by reason of their voluntary resignation from membership or willful refusal to pay
the Union Dues or by reasons of their having formed, organized, joined, affiliated, supported
and/or aided directly or indirectly another labor organization, and the union thus hereby
guarantees and holds the company free and harmless from any liability whatsoever that may
arise consequent to the implementation of the provision of this article. (pp. 5-6, Rollo)
In a letter dated February 7, 1990, PSSLU, through its national president, informed the
management of Sanyo that the following employees were notified that their membership
with PSSLU were cancelled for anti-union, activities, economic sabotage, threats, coercion
and intimidation, disloyalty and for joining another union: Benito Valencia, Bernardo Yap,
Arnel Salvo, Renato Baybon, Eduardo Porlaje, Salvador Solibel, Conrado Sarol, Angelito
Manzano, Allan Misterio, Reynaldo Ricohermoso, Mario Ensay and Froilan Plamenco. The
same letter informed Sanyo that the same employees refused to submit themselves to the
union's grievance investigation committee (p. 53, Rollo). It appears that many of these
employees were not members of PSSLU but of another union, KAMAO.
On February 14, 1990, some officers of KAMAO, which included Yap, Salvo, Baybon, Solibel,
Valencia, Misterio and Ricohermoso, executed a pledged of cooperation with PSSLU
promising cooperation with the latter union and among others, respecting, accepting and
honoring the CBA between Sanyo and specifically:
1. That we shall remain officers and members of KAMAO until we finally decide to rejoin
Sanyo Phil. Workers Union-PSSLU;
2. That henceforth, we support and cooperate with the duly elected union officers of Sanyo
Phil. Workers Union-PSSLU in any and all its activities and programs to insure industrial peace
and harmony;
3. That we collectively accept, honor, and respect the Collective Bargaining Agreement
entered into between Sanyo Phil. Inc. and Sanyo Phil. Workers Union-PSSLU dated February
7, 1990;
4 That we collectively promise not to engage in any activities inside company premises
contrary to law, the CBA and existing policies;
5 That we are willing to pay our individual agency fee in accordance with the provision of the
Labor Code, as amended;
6 That we collectively promise not to violate this pledge of cooperation. (p. 55, Rollo)
On March 4, 1991, PSSLU through its national and local presidents, wrote another letter to
Sanyo recommending the dismissal of the following non-union workers: Bernardo Yap, Arnel
Salvo, Renato Baybon, Reynaldo Ricohermoso, Salvador Solibel, Benito Valencia, and Allan
Misterio, allegedly because: 1) they were engaged and were still engaging in anti-union
activities; 2) they willfully violated the pledge of cooperation with PSSLU which they signed
and executed on February 14, 1990; and 3) they threatened and were still threatening with
bodily harm and even death the officers of the union (pp. 37-38, Rollo).
Also recommended for dismissal were the following union members who allegedly joined,
supported and sympathized with a minority union, KAMAO: Gerardo Lasala, Legardo
Tangkay, Alexander Atanacio, and Leonardo Dionisio.
The last part of the said letter provided:
The dismissal of the above-named union members is without prejudice to receive (sic) their
termination pay if management decide (sic) to grant them benefits in accordance with law.
The union hereby holds the company free and harmless from any liability that may arise
consequent to the implementation by the company of our recommendations for the
dismissal of the above-mentioned workers.
It is however suggested that the Grievance Machinery be convened pursuant to Section 3,
Article XV of the Collective Bargaining Agreement (CBA) before their actual dismissal from
the company. (p. 38, Rollo)
Pursuant to the above letter of the union, the company sent a memorandum to the same
workers advising them that:
As per the attached letter from the local union President SPWU and the federation President,
PSSLU, requesting management to put the herein mentioned employees on preventive
suspension, effective immediately, preliminary to their subsequent dismissal, please be
informed that the following employees are under preventive suspension effective March 13,
1991 to wit:
1. Bernardo Yap
2. Renato Baybon
3. Salvador Solibel
4. Allan Misterio
5. Edgardo Tangkay
6. Leonardo Dionisio
7. Arnel Salvo
8. Reynaldo Ricohermoso
9. Benito Valencia
10. Gerardo Lasala
11. Alexander Atanacio
The above listed employees shall not be allowed within company premises without the
permission of management.
As per request of the union's letter to management, should the listed employees fail to
appeal the decision of the union for dismissal, then effective March 23, 1991, said listed
employees shall be considered dismissed from the company. (p 39, Rollo)
The company received no information on whether or not said employees appealed to PSSLU.
Hence, it considered them dismissed as of March 23, 1991 (p. 40, Rollo).
On May 20, 1991, the dismissed employees filed a complaint (pp. 32-35, Rollo) with the NLRC
for illegal dismissal. Named respondent were PSSLU and Sanyo.
On June 20, 1991, PSSLU filed a motion to dismiss the complaint alleging that the Labor
Arbiter was without jurisdiction over the case, relying on Article 217 (c) of P.D. 442, as
amended by Section 9 of Republic Act No. 6715 which provides that cases arising from the
interpretation or implementation of the collective bargaining agreements shall be disposed
of by the labor arbiter by referring the same to the grievance machinery and voluntary
arbitration.
The complainants opposed the motion to dismiss complaint on these grounds: 1) the series
of conferences before the National Conciliation and Mediation Board had been terminated;
2) the NLRC Labor Arbiter had jurisdiction over the case which was a termination dispute
pursuant to Article 217 (2) of the Labor Code; and 3) there was nothing in the CBA which
needs interpretation or implementation (pp. 44-46, Rollo).
On August 7, 1991, the respondent Labor Arbiter issued the first questioned order. It held
that:
xxx xxx xxx
While there are seemingly contradictory provisions in the aforecited article of the Labor
Code, the better interpretation will be to give effect to both, and termination dispute being
clearly spelled as falling under the jurisdiction of the Labor Arbiter, the same shall be
respected. The jurisdiction of the grievance machinery and voluntary arbitration shall cover
other controversies.
However, the resolution of the instant issue shall be suspended until both parties have fully
presented their respective positions and the said issue shall be included in the final
determination of the above-captioned case.
WHEREFORE, the instant Motions to Dismiss are hereby held pending.
Consequently, the parties are hereby directed to submit their position papers and supporting
documents pursuant to Section 2, Rule VII of the Rules of the Commission on or before the
hearing on the merit of this case scheduled on August 29, 1991 at 11:00 a.m. (p. 23, Rollo)
On August 27, 1991, PSSLU filed another motion to resolve motion to dismiss complaint with
a prayer that the Labor Arbiter resolve the issue of jurisdiction.
On September 4, 1991, the respondent Labor Arbiter issued the second questioned order
which held that it was assuming jurisdiction over the complaint of private respondents, in
effect, holding that it had jurisdiction over the case.
On September 19, 1991, PSSLU filed this petition alleging that public respondent Labor
Arbiter cannot assume jurisdiction over the complaint of public respondents because it had
no jurisdiction over the dispute subject of said complaint. It is their submission that under
Article 217 (c) of the Labor Code, in relation to Article 261 thereof, as well as Policy
Instruction No. 6 of the Secretary of Labor, respondent Arbiter has no jurisdiction and
authority to take cognizance of the complaint brought by private respondents which involves
the implementation of the union security clause of the CBA. The function of the Labor Arbiter
under the same law and rule is to refer this case to the grievance machinery and voluntary
arbitration.
In its comment, private respondents argue that Article 217(a) 2 and 4 of the Labor Code is
explicit, to wit:
Art. 217. Jurisdiction of the Labor Arbiters and the Commission.
a) Except as otherwise provided under this Code, the Labor Arbiters shall have original and
exclusive jurisdiction to hear and decide . . . the following cases involving all workers, . . . :
xxx xxx xxx
2) Termination disputes,
xxx xxx xxx
4) Claims for actual, moral, exemplary and other forms of damages arising from the
employer-employee relations.
The private respondents also claimed that insofar as Salvo, Baybon, Ricohermoso, Solibel,
Valencia, Misterio and Lasala were concerned, they joined another union, KAMAO during the
freedom period which commenced on May 1, 1989 up to June 30, 1989 or before the
effectivity of the July 1, 1989 CBA. Hence, they are not covered by the provisions of the CBA
between Sanyo and PSSLU. Private respondents Tangkay, Atanacio and Dionisio admit that in
September 1989, they resigned from KAMAO and rejoined PSSLU (pp.
66(a)-68, Rollo).
For its part, public respondent, through the Office of the Solicitor General, is of the view that
a distinction should be made between a case involving "interpretation or implementation of
collective bargaining agreement or "interpretation" or "enforcement" of company personnel
policies, on the one hand and a case involving termination, on the other hand. It argued that
the case at bar does not involve an "interpretation or implementation" of a collective
bargaining agreement or "interpretation or enforcement" of company policies but involves a
"termination." Where the dispute is just in the interpretation, implementation or
enforcement stage, it may be referred to the grievance machinery set up in the CBA or by
voluntary arbitration. Where there was already actual termination, i.e., violation of rights, it
is already cognizable by the Labor Arbiter.
Article 217 of the Labor Code defines the jurisdiction of the Labor Arbiter.
Art. 217. Jurisdiction of Labor Arbiters and the Commission. a) Except as otherwise provided
under this Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and
decide within thirty (30) calendar days after the submission of the case by the parties for
decision without extension even in the absence of stenographic notes, the following cases
involving all workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file involving
wages, rates of pay, hours of work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from the
employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions involving
the legality of strikes and lockouts;
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.
(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor
Arbiters.
(c) Cases arising from the interpretation or implementation of collective bargaining
agreements and those arising from the interpretation or enforcement of company personnel
policies shall be disposed of by the Labor Arbiter by referring the same to the grievance
machinery and voluntary arbitration as may be provided in said agreements.
It is clear from the above article that termination cases fall under the jurisdiction of the Labor
Arbiter. It should be noted however that said article at the outset excepted from the said
provision cases otherwise provided for in other provisions of the same Code, thus the phrase
"Except as otherwise provided under this Code . . . ." Under paragraph (c) of the same article,
it is expressly provided that "cases arising from the interpretation or implementation of
collective bargaining agreements and those arising from the interpretation and enforcement
of company personnel policies shall be disposed of by the Labor Arbiter by referring the same
to the grievance machinery and voluntary arbitration as may be provided in said agreements.
It was provided in the CBA executed between PSSLU and Sanyo that a member's voluntary
resignation from membership, willful refusal to pay union dues and his/her forming,
organizing, joining, supporting, affiliating or aiding directly or indirectly another labor union behalf. Where a controversy personally affects an employee, he shall not be allowed to be a
shall be a cause for it to demand his/her dismissal from the company. The demand for the member of the committee represented by the union.
dismissal and the actual dismissal by the company on any of these grounds is an enforcement
Second step. (Thru Arbitrator mutually chosen) Should such dispute remain unsettled after
of the union security clause in the CBA. This act is authorized by law provided that
twenty (20) days from the first conference or after such period as the parties may agree upon
enforcement should not be characterized by arbitrariness (Manila Mandarin Employee Union
in specified cases, it shall be referred to an arbitrator chosen by the consent of the company
v. NLRC, G.R. No. 76989, 29 Sept. 1987, 154 SCRA 368) and always with due process (Tropical
and the union. In the event of failure to agree on the choice of voluntary arbitrator, the
Hut Employees Union v. Tropical Food Market, Inc., L-43495-99, Jan. 20, 1990).
National Conciliation and Mediation Board, Department of Labor and Employment shall be
The reference to a Grievance Machinery and Voluntary Arbitrators for the adjustment or requested to choose an Arbitrator in accordance with voluntary arbitration procedures.
resolution of grievances arising from the interpretation or implementation of their CBA and
Sec. 2. The voluntary Arbitrator shall have thirty (30) days to decide the issue presented to
those arising from the interpretation or enforcement of company personnel policies is
him and his decision shall be final, binding and executory upon the parties. He shall have no
mandatory. The law grants to voluntary arbitrators original and exclusive jurisdiction to hear
authority to add or subtract from and alter any provision of this agreement. The expenses of
and decide all unresolved grievances arising from the interpretation or implementation of
voluntary arbitration including the fee of the arbitrator shall be shared equally by the
the Collective Bargaining Agreement and those arising from the interpretation or
company and the union. In the event the arbitrator chosen either by the mutual agreement
enforcement of company personnel policies (Art. 261, Labor Code).
of the company and the union by (the) way of voluntary arbitration or by the National
In its order of September 4, 1991, respondent Labor Arbiter explained its decision to assume Conciliation and Mediation Board (NCMB) failed to assume his position, died, become
jurisdiction over the complaint, thus: disabled or any other manner failed to function and or reach a decision, the company and the
union shall by mutual agreement choose another arbitrator; in the event of failure to agree
The movants failed to show (1) the provisions of the CBA to be implemented, and (2) the
on the choice of a new voluntary arbitrator, the matter shall again be referred back to the
grievance machinery and voluntary arbitrator already formed and properly named. What
NCMB who shall be requested again to choose a new arbitrator as above provided. Any
self-respecting judge would refer a case from his responsibility to a shadow? To whom really
grievance not elevated or processed as above provided within the stipulated period shall be
and specifically shall the case be indorsed or referred? In brief, they could have shown the (1)
deemed settled and terminated.
existence of the grievance machinery and (2) its being effective.
Sec. 3. It is hereby agreed that decisions of the union relative to their members, for
Furthermore, the aforecited law merely directs the "referral" cases. It does not expressly
implementation by the COMPANY, should be resolved for review thru the Grievance
confer jurisdiction on the grievance machinery or voluntary arbitration panel, created or to
Machinery; and management be invited to participate in the Grievance procedure to be
be created. Article 260 of the Labor Code describes the formation of the grievance and
undertaken by the union relative to (the) case of the union against members. (pp. 134-135,
voluntary arbitration. All this of course shall be on voluntary basis. Is there another meaning
Rollo)
of voluntary arbitration? (The herein complainant have strongly opposed the motion to
dismiss. Would they go willingly to the grievance machinery and voluntary arbitration which All that needs to be done to set the machinery into motion is to call for the convening
are installed by their opponents if directed to do so?) (p. 26, Rollo) thereof. If the parties to the CBA had not designated their representatives yet, they should
be ordered to do so.
The failure of the parties to the CBA to establish the grievance machinery and its
unavailability is not an excuse for the Labor Arbiter to assume jurisdiction over disputes The procedure introduced in RA 6715 of referring certain grievances originally and exclusively
arising from the implementation and enforcement of a provision in the CBA. In the existing to the grievance machinery and when not settled at this level, to a panel of voluntary
CBA between PSSLU and Sanyo, the procedure and mechanics of its establishment had been arbitrators outlined in CBA's does not only include grievances arising from the interpretation
clearly laid out as follows: or implementation of the CBA but applies as well to those arising from the implementation of
company personnel policies. No other body shall take cognizance of these cases. The last
ARTICLE XV — GRIEVANCE MACHINERY
paragraph of Article 261 enjoins other bodies from assuming jurisdiction thereof:
Sec. 1. Whenever any controversy should arise between the company and the union as to the
The commission, its Regional Offices and the Regional Directors of the Department of Labor
interpretation or application of the provision of this agreement, or whenever any difference
and Employment shall not entertain disputes, grievances or matters under the exclusive and
shall exist between said parties relative to the terms and conditions of employment, an
original jurisdiction of the Voluntary Arbitrator or panel of voluntary arbitrators and shall
earnest effort shall be made to settle such controversy in substantially the following manner:
immediately dispose and refer the same to the grievance machinery or voluntary arbitration
First step. (Thru Grievance) The dispute shall initially be resolved by conference between the provided in the Collective Bargaining Agreement.
management to be represented by the Management's authorized representatives on the one
In the instant case, however, We hold that the Labor Arbiter and not the Grievance
hand, and the Union to be represented by a committee composed of the local union
Machinery provided for in the CBA has the jurisdiction to hear and decide the complaints of
president and one of the local union officer appointed by the local union president, on the
the private respondents. While it appears that the dismissal of the private respondents was
other hand within three days from date of concurrence of grievance action. In the absence of
made upon the recommendation of PSSLU pursuant to the union security clause provided in
the local union president, he (shall) appoint another local union officer to take over in his
the CBA, We are of the opinion that these facts do not come within the phrase "grievances
arising from the interpretation or implementation of (their) Collective Bargaining Agreement Relations Commission2 in an illegal dismissal case brought by private respondent. In its
and those arising from the interpretation or enforcement of company personnel policies," assailed Resolution, the public respondent affirmed the decision of the Labor Arbiter Ricardo
the jurisdiction of which pertains to the Grievance Machinery or thereafter, to a voluntary N. Olairez dated March 26, 19903 declaring that the compulsory retirement of private
arbitrator or panel of voluntary arbitrators. Article 260 of the Labor Code on grievance respondent constituted illegal dismissal, ordering his reinstatement and granting him
machinery and voluntary arbitrator states that "(t)he parties to a Collective Bargaining backwages.
Agreement shall include therein provisions that will ensure the mutual observance of its
The Antecedent Facts
terms and conditions. They shall establish a machinery for the adjustment and resolution of
grievances arising from the interpretation or implementation of their Collective Bargaining CBA CONTAINED EARLY RETIREMENT AGE Private respondent was hired by petitioner in 1964
Agreement and those arising from the interpretation or enforcement of company personnel as a bus conductor. He eventually joined the Pantranco Employees Association-PTGWO. He
policies." It is further provided in said article that the parties to a CBA shall name or designate continued the petitioner's employ until August 12, 1989, when he was retired at the age of
their respective representatives to the grievance machinery and if the grievance is not settled fifty-two (52) after having rendered twenty five years' service. The basis of his retirement
in that level, it shall automatically be referred to voluntary arbitrators (or panel of voluntary was the compulsory retirement provision of the collective bargaining agreement between
arbitrators) designated in advance by the parties. It need not be mentioned that the parties the petitioner and the aforenamed union. Private respondent received P49,300.00 as
to a CBA are the union and the company. Hence, only disputes involving the union and the retirement pay.
company shall be referred to the grievance machinery or voluntary arbitrators.
ILLEGAL DISMISSAL FILED On February 15, 1990, private respondent filed a complaint4 for
In the instant case, both the union and the company are united or have come to an illegal dismissal against petitioner with the Sub-Regional Arbitration Branch of the
agreement regarding the dismissal of private respondents. No grievance between them exists respondent Commission in Dagupan City. The complaint was consolidated with two other
which could be brought to a grievance machinery. The problem or dispute in the present case cases of illegal dismissal5 having similar facts and issues, filed by the other employees, non-
is between the union and the company on the one hand and some union and non-union union members.
members who were dismissed, on the other hand. The dispute has to be settled before an
impartial body. The grievance machinery with members designated by the union and the LA ADJUDICATED After hearings were held and position papers submitted, on March 26,
company cannot be expected to be impartial against the dismissed employees. Due process 1990, Labor Arbiter Olairez rendered his decision, the dispositive portion of which reads:
demands that the dismissed workers grievances be ventilated before an impartial body. Since WHEREFORE, with all the foregoing considerations, we find the three complainants illegally
there has already been an actual termination, the matter falls within the jurisdiction of the and unjustly dismissed and we hereby order the respondent to reinstate them to their
Labor Arbiter. former or substantially equivalent positions without loss of seniority rights with full
ACCORDINGLY, the petition is DISMISSED. Public respondent Labor Arbiter is directed to backwages and other benefits, computed as follows:
resolve the complaints of private respondents immediately. xxx xxx xxx
SO ORDERED 3. Urbano Suñiga
P 27,375.00 — Backwages, Aug. 16/89 to
March 31/90 (P3,650.00 x 7.5 mos.)
LABOR REL 19 1,368.75 — 13th month pay for 1989
G.R. No. 95940 July 24, 1996 (P16,425.00 over 12)
PANTRANCO NORTH EXPRESS, INC., petitioner, ——————
vs. P 28,743.75
NATIONAL LABOR RELATIONS COMMISSION and URBANO SUÑIGA, respondents. 2,874.37 — 10% attorney's fees
PANGANIBAN, J.:p ——————
Is a Collective Bargaining Agreement provision allowing compulsory retirement before age 60 P 31,618.12 — Total as of March 31/90 plus
but after twenty five years of service legal and enforceable? Who has jurisdiction over a case
additional backwages and
involving such a question — the labor arbiter or arbitrators authorized by such CBA?
other benefits but not to
The foregoing questions are presented in the instant petition for Certiorari seeking the
nullification of the Resolution1promulgated September 28, 1990 by the National Labor exceed 3 years and the
corresponding attorney's fees.
The amounts already received by complainants shall be considered as advanced payment of
their retirement pay which shall be deducted when they shall actually retire or (be)
separated from the service.
The order of reinstatement is immediately executory even pending appeal.
Petitioner appealed to public respondent, which issued the questioned Resolution affirming
the labor arbiter's decision in toto. Hence, this petition.
The Issues
Petitioner raises the following issues for decision:
PETITIONER I. The National Labor Relations Commission gravely abused its discretion in
holding that the Labor Arbiter has jurisdiction over the case.
II. Assuming that the Labor Arbiter has jurisdiction over the case, the National Labor
Relations Commission gravely abused its discretion in affirming the Labor Arbiter's decision
that private respondent Urbano Zuniga (sic) was illegally dismissed.
Of course, it is obvious that the underlying and pivotal issue is whether the CBA stipulation
on compulsory retirement after twenty-five years of service is legal and enforceable. If it is,
private respondent has been validly retired. Otherwise, petitioner is guilty of illegal dismissal.
The answer to said question will settle the issue of the validity of the questioned resolution
of the public respondent.
The Court's Ruling
On the key issue, the Court finds the petition meritorious, thus warranting reversal of the
questioned Resolution.
First Issue: Jurisdiction of Labor Arbiter
Petitioner contends that the labor arbiter had no jurisdiction because the dispute concerns a
provision of the CBA and its interpretation. It claims that the case falls under the jurisdiction
of the voluntary arbitrator or panel of arbitrators under Article 261 of the Labor Code, which
provides:
LAW Art. 261. Jurisdiction of Voluntary Arbitrators or Panel of Voluntary Arbitrators. — The
Voluntary Arbitrator or panel of Voluntary Arbitrators shall have original and exclusive
jurisdiction to hear and decide all unresolved grievances arising from the interpretation or
implementation of the Collective Bargaining Agreement and those arising from the
interpretation or enforcement of company personnel policies referred to in the immediately
preceding Article. Accordingly, violations of a Collective Bargaining Agreement, except those
which are gross in character, shall no longer be treated as unfair labor practice and shall be
resolved as grievances under the Collective Bargaining Agreement. For purposes of this
Article, gross violations of a Collective Bargaining Agreement shall mean flagrant and/or
malicious refusal to comply with the economic provisions of such agreement.
The Commission, its Regional Offices and the Regional Directors of the Department of Labor
and Employment shall not entertain disputes, grievances or matters under the exclusive and
original jurisdiction of the Voluntary Arbitrator or panel of Voluntary Arbitrators and shall
immediately dispose and refer the same to the Grievance Machinery or Voluntary Arbitration
provided in the Collective Bargaining Agreement.
LA The Labor Arbiter believed otherwise. In his decision6 , he stated,:
In our honest opinion we have jurisdiction over the complaint on the following grounds:
First, this is a complaint of illegal dismissal of which original and exclusive jurisdiction under
Article 217 has been conferred to the Labor Arbiters. The interpretation has been conferred
to the Labor Arbiters. The interpretation of the CBA or enforcement of the company policy is
only corollary to the complaint of illegal dismissal. Otherwise, an employee who was on
AWOL, or who committed offenses contrary to the personnel policies (sic) can no longer file a
case of illegal dismissal because the discharge is premised on the interpretation or
enforcement of the company policies (sic).
LA FURTHER Second, Respondent voluntarily submitted the case to the jurisdiction of this
labor tribunal. It adduced arguments to the legality of its act, whether such act may be
retirement and/or dismissal, and prayed for reliefs on the merits of the case. A litigant cannot
pray for reliefs on the merits and at the same time attacks (sic) the jurisdiction of the
tribunal. A person cannot have one's cake and eat it too. . . .
The Court agrees with the public respondent's affirmance of the arbiter's decision in respect
of the question of jurisdiction.
RULE In Sanyo Philippines Workers Union — psslU vs. Cañizares,7 a case cited by the
petitioner, this Court ruled:
. . . Hence, only disputes involving the union and the company shall be referred to the
grievance machinery or voluntary arbitrators.
In the instant case, both the union and the company are united or have come to an
agreement regarding the dismissal of private respondents. No grievance between them exists
which could be brought to a grievance machinery. The problem or dispute in the present case
is between the union and the company on the one hand and some union and non-union
members who were dismissed, on the other hand. The dispute has to be settled before an
impartial body. The grievance machinery with members designated by the union and the
company cannot be expected to be impartial against the dismissed employees. Due process
demands that the dismissed workers grievances be ventilated before an impartial body. Since
there has already been an actual termination, the matter falls within the jurisdiction of the
Labor Arbiter.
SANYO IS APPLICABLE IN THE CASE AT BAR Applying the same rationale to the case at the bar,
it cannot be said that the "dispute" is between the union and petitioner company because
both have previously agreed upon the provision on "compulsory retirement" as embodied in
the CBA. Also, it was only private respondent on his own who questioned the compulsory
retirement. Thus, the case is properly denominated as a "termination dispute" which comes
under the jurisdiction of labor arbiters.
Therefore, public respondent did not commit a grave abuse of discretion in upholding the
jurisdiction of the labor arbiter over this case.
Second Issue: Private Respondent's
Compulsory Retirement Is
Not Illegal Dismissal
The bone of contention in this case is the provision on compulsory retirement after 25 years
of service.
THE CBAArticle XI, Section 1(e)(5) of the May 2, 1989 Collective Bargaining Agreement8
between petitioner company and the union states:
Sec. 1. The COMPANY shall formulate a retirement plan with the following main features:
xxx xxx xxx
(e) The COMPANY agrees to grant the retirement benefits herein provided to regular
employees who may be separated from the COMPANY for any of the following reasons:
xxx xxx xxx
(5) Upon reaching the age of sixty (60) years or upon the completing twenty-five (25) years of
service to the COMPANY, whichever comes first, and the employee shall be compulsorily
retired and paid the retirement benefits herein provided.
Petitioner contends that the aforequoted provision is valid an in consonance with Article 287
of the Labor Code. The respondent Commission holds otherwise.
LAW The said Code provides:
Art. 287. Retirement — Any employee may be retired upon reaching the retirement age
established in the Collective Bargaining Agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits as
he may have earned under existing laws and any collective bargaining or other agreement.
The Solicitor General, in his Manifestation in Lieu of Comment,9 agrees with petitioner's
contention that the law leaves to the employer and employees the fixing of the age of
retirement. He cites Section 13, Rule I, Book VI of the Omnibus Rules Implementing the Labor
Code, which reads:
LAW FURTHER Retirement — In the absence of any collective bargaining agreement or other
applicable agreement concerning terms and conditions of employment which provides for
retirement at an older age, an employee may be retired upon reaching the age of sixty (60)
years.
Arguing that the law on compulsory retirement age is open-ended, as indicated by the use of
the word "may", the Solicitor General maintains that there is no prohibition against parties
fixing a lower age for retirement. 10
Additionally, the Solicitor General and the petitioner contend that a CBA provision lowering
compulsory retirement age to less than sixty (60) is not contrary to law because it does not
diminish the employee's benefits. Rather, they argue that early retirement constitutes a
reward of employment, and therefore, retirement pursuant to the CBA provision in question
cannot be considered a dismissal following this Court's ruling in Soberano vs. Clave,10a the
relevant portions of which read as follows:
SOL GEN IS CORREcT Retirement and dismissal are entirely different from each other.
Retirement is the result of a bilateral act of the parties, a voluntary agreement between the
employer and the employees whereby the latter after reaching a certain age agrees and/or
consents to severe his employment with the former. On the other hand, dismissal refers to
the unilateral act of the employer in terminating services of an employee with or without
cause. In fine, in the case of dismissal, it is only the employer who decides when to terminate
the services of an employee. . . . Moreover, concomitant with the provisions on retirement in
a Labor Agreement is a stipulation regarding retirement benefits pertaining to a retired
employee. Here again, the retirement benefits are subject to stipulation by the parties unlike
in dismissals where separation pay is fixed by law in cases of dismissals without just cause.
Evident, therefore, from the foregoing is that retirements which are agreed upon by the
employer and the employee in their collective bargaining agreement are not dismissals. . . .
To further fortify the aforesaid conclusion, it is noteworthy that even the New Labor Code
recognizes this distinction when it treats retirement from service under a separate title from
that of a dismissal or termination of employment, aside from expressly recognizing the right
of the employer to retire any employee who has reached the retirement age established in
the collective bargaining agreement or other applicable employment contract and the latter
to receive such retirement benefits as he may have earned under existing laws and any
collective bargaining or other agreement (Art. 277, New Labor Code).
We agree with petitioner and the Solicitor General. Art. 287 of the Labor Code as worded
permits employers and employees to fix the applicable retirement age at below 60 years.
Moreover, providing for early retirement does not constitute diminution of benefits. In
almost all countries today, early retirement, i.e., before age 60, is considered a reward for
services rendered since it enables an employee to reap the fruits of his labor — particularly
retirement benefits, whether lump-sum or otherwise — at an earlier age, when said
employee, in presumably better physical and mental condition, can enjoy them better and
longer. As a matter of fact, one of the advantages of early retirement is that the
corresponding retirement benefits, usually consisting of a substantial cash windfall, can early
on be put to productive and profitable uses by way of income-generating investments,
thereby affording a more significant measure of financial security and independence for the
retiree who, up till then, had to contend with life's vicissitudes within the parameters of his
fortnightly or weekly wages. Thus we are now seeing many CBA's with such early retirement
provisions. And the same cannot be considered a diminution of employment benefits.
It is also further argued that, being a union member, private respondent is bound by the CBA
because its terms and conditions constitute the law between the parties. 11 The parties are
bound not only to the fulfillment of what has been expressly stipulated but also to all the
consequences which, according to their nature, may be in keeping with good faith, usage and
law. 12 It binds not only the union but also its members. 13 Thus, the Solicitor General 14
said:
Private respondent cannot therefore claim illegal dismissal when he was compulsorily retired
after rendering twenty-five (25) years of service since his retirement is in accordance with the
CBA.
We again concur with the Solicitor General's position. A CBA incorporates the agreement
reached after negotiations between employer and bargaining agent with respect to terms
and conditions of employment. A CBA is not an ordinary contract. "(A)s a labor contract
within the contemplation of Article 1700 of the Civil Code of the Philippines which governs
the relations between labor and capital, (it) is not merely contractual in nature but impressed
with public interest, thus it must yield to the common good. As such, it must be construed
liberally rather than narrowly and technically, and the courts must place a practical and
realistic construction upon it, giving due consideration to the context in which it is negotiated
and purpose which it is intended to serve. 15
Being a product of negotiation, the CBA between the petitioner and the union intended the
provision on compulsory retirement to be beneficial to the employees-union members,
including herein private respondent. When private respondent ratified the CBA with the
union, he not only agreed to the CBA but also agreed to conform to and abide by its
provisions. Thus, it cannot be said that he was illegally dismissed when the CBA provision on
compulsory retirement was applied to his case.
Incidentally, we call attention to Republic Act No. 7641, known as "The Retirement Pay Law",
which went into effect on January 7, 1993. Although passed many years after the compulsory
retirement of herein private respondent, nevertheless, the said statute sheds light on the
present discussion when it amended Art. 287 of the Labor Code, to make it read as follows:
Art. 287. Retirement — Any employee may be retired upon reaching the retirement age
established in the collective bargaining agreement or other applicable employment contract.
xxx xxx xxx
In the absence of a retirement plan or agreement providing for retirement benefits of
employees in the establishment, an employee upon reaching the age of sixty (60) years or
more, but not beyond sixty-five (65) years which is hereby declared the compulsory
retirement age, who has served at least five (5) years in the said establishment may retire . . .
. During the time that petitioner was confined at the hospital, her husband and son stayed
The aforequoted provision makes clear the intention of spirit of the law to give employers
and employees a free hand to determine and agree upon the terms and conditions of
retirement. Providing in a CBA for compulsory retirement of employees after twenty-five (25)
years of service is legal and enforceable so long as the parties agree to be governed by such
CBA. The law presumes that employees know what they want and what is good for them
absent any showing that fraud or intimidation was employed to secure their consent thereto.
On this point then, public respondent committed a grave abuse of discretion in affirming the
decision of the labor arbiter. The compulsory retirement of private respondent effected in
accordance with the CBA is legal and binding.
WHEREFORE, premises considered, the petition is granted and the questioned Resolution is
hereby set aside. No costs.
SO ORDERED.
LABOR REL 20
G.R. No. 166377 November 28, 2008
MA. ISABEL T. SANTOS, represented by ANTONIO P. SANTOS,petitioner,
vs.
SERVIER PHILIPPINES, INC. and NATIONAL LABOR RELATIONS COMMISSION, respondents.
DECISION
NACHURA, J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court,
seeking to set aside the Court of Appeals (CA) Decision,1 dated August 12, 2004 and its
Resolution2 dated December 17, 2004, in CA-G.R. SP No. 75706.
The facts, as culled from the records, are as follows:
Petitioner Ma. Isabel T. Santos was the Human Resource Manager of respondent Servier
Philippines, Inc. since 1991 until her termination from service in 1999. On March 26 and 27,
1998, petitioner attended a meeting3 of all human resource managers of respondent, held in
Paris, France. Since the last day of the meeting coincided with the graduation of petitioner’s
only child, she arranged for a European vacation with her family right after the meeting. She,
thus, filed a vacation leave effective March 30, 1998.4
On March 29, 1998, petitioner, together with her husband Antonio P. Santos, her son, and
some friends, had dinner at Leon des Bruxelles, a Paris restaurant known for mussels5 as
their specialty. While having dinner, petitioner complained of stomach pain, then vomited.
Eventually, she was brought to the hospital known as Centre Chirurgical de L’Quest where
she fell into coma for 21 days; and later stayed at the Intensive Care Unit (ICU) for 52 days.
The hospital found that the probable cause of her sudden attack was "alimentary allergy," as
she had recently ingested a meal of mussels which resulted in a concomitant uticarial
eruption.6
with her in Paris. Petitioner’s hospitalization expenses, as well as those of her husband and
son, were paid by respondent.7
In June 1998, petitioner’s attending physicians gave a prognosis of the former’s condition;
and, with the consent of her family, allowed her to go back to the Philippines for the
continuation of her medical treatment. She was then confined at the St. Luke’s Medical
Center for rehabilitation.8 During the period of petitioner’s rehabilitation, respondent
continued to pay the former’s salaries; and to assist her in paying her hospital bills.
SHE IS NOT FIT TO WORK ANYMORE SAYS THE COMPANY In a letter dated May 14, 1999,
respondent informed the petitioner that the former had requested the latter’s physician to
conduct a thorough physical and psychological evaluation of her condition, to determine her
fitness to resume her work at the company. Petitioner’s physician concluded that the former
had not fully recovered mentally and physically. Hence, respondent was constrained to
terminate petitioner’s services effective August 31, 1999.9
RETIREMENT PACKAGE GIVEN HER As a consequence of petitioner’s termination from
employment, respondent offered a retirement package which consists of:
Retirement Plan Benefits: P 1,063,841.76
Insurance Pension at 20,000.00/month for 60 months from company-sponsored group life
policy: P 1,200,000.00
Educational assistance: P 465,000.00
Medical and Health Care: P 200,000.0010
KULANG ANG BINIGAY NI COMPANY Of the promised retirement benefits amounting to
P1,063,841.76, only P701,454.89 was released to petitioner’s husband, the balance11
thereof was withheld allegedly for taxation purposes. Respondent also failed to give the
other benefits listed above.12
Petitioner, represented by her husband, instituted the instant case for unpaid salaries;
unpaid separation pay; unpaid balance of retirement package plus interest; insurance
pension for permanent disability; educational assistance for her son; medical assistance;
reimbursement of medical and rehabilitation expenses; moral, exemplary, and actual
damages, plus attorney’s fees. The case was docketed as NLRC-NCR (SOUTH) Case No. 30-06-
02520-01.
LA ADJUDICATED IN FAVOR OF COMPANY On September 28, 2001, Labor Arbiter Aliman D.
Mangandog rendered a Decision13 dismissing petitioner’s complaint. The Labor Arbiter
stressed that respondent had been generous in giving financial assistance to the
petitioner.14 He likewise noted that there was a retirement plan for the benefit of the
employees. In denying petitioner’s claim for separation pay, the Labor Arbiter ratiocinated
that the same had already been integrated in the retirement plan established by respondent.
Thus, petitioner could no longer collect separation pay over and above her retirement
benefits.15 The arbiter refused to rule on the legality of the deductions made by respondent
from petitioner’s total retirement benefits for taxation purposes, as the issue was beyond the
jurisdiction of the NLRC.16 On the matter of educational assistance, the Labor Arbiter found
that the same may be granted only upon the submission of a certificate of enrollment.17
Lastly, as to petitioner’s claim for damages and attorney’s fees, the Labor Arbiter denied the
same as the former’s dismissal was not tainted with bad faith.18
NLRC OVERTURNED LA AND IN FAVOR OF EE BUT DENIED SOME OF THE PRAYERS On appeal
to the National Labor Relations Commission (NLRC), the tribunal set aside the Labor Arbiter’s
decision, ruling that:
WHEREFORE, premises considered, Complainant’s appeal is partly GRANTED. The Labor
Arbiter’s decision in the above-entitled case is hereby SET ASIDE. Respondent is ordered to
pay Complainant’s portion of her separation pay covering the following: 1) P200,000.00 for
medical and health care from September 1999 to April 2001; and 2) P35,000.00 per year for
her son’s high school (second year to fourth year) education and P45,000.00 per semester for
the latter’s four-year college education, upon presentation of any applicable certificate of
enrollment.
SO ORDERED.19
The NLRC emphasized that petitioner was not retired from the service pursuant to law,
collective bargaining agreement (CBA) or other employment contract; rather, she was
dismissed from employment due to a disease/disability under Article 28420 of the Labor
Code.21 In view of her non-entitlement to retirement benefits, the amounts received by
petitioner should then be treated as her separation pay.22 Though not legally obliged to give
the other benefits, i.e., educational assistance, respondent volunteered to grant them, for
humanitarian consideration. The NLRC therefore ordered the payment of the other benefits
promised by the respondent.23 Lastly, it sustained the denial of petitioner’s claim for
damages for the latter’s failure to substantiate the same.24
Unsatisfied, petitioner elevated the matter to the Court of Appeals which affirmed the NLRC
decision.25
Hence, the instant petition.
At the outset, the Court notes that initially, petitioner raised the issue of whether she was
entitled to separation pay, retirement benefits, and damages. In support of her claim for
separation pay, she cited Article 284 of the Labor Code, as amended. However, in coming to
this Court via a petition for review on certiorari, she abandoned her original position and
alleged that she was, in fact, not dismissed from employment based on the above provision.
She argued that her situation could not be characterized as a disease; rather, she became
disabled. In short, in her petition before us, she now changes her theory by saying that she is
not entitled to separation pay but to retirement pay pursuant to Section 4,26 Article V of the
Retirement Plan, on disability retirement. She, thus, prayed for the full payment of her
retirement benefits by giving back to her the amount deducted for taxation purposes.
In our Resolution27 dated November 23, 2005 requiring the parties to submit their
respective memoranda, we specifically stated:
No new issues may be raised by a party in the Memorandum and the issues raised in the
pleadings but not included in the Memorandum shall be deemed waived or abandoned.
Being summations of the parties’ previous pleadings, the Court may consider the
Memoranda alone in deciding or resolving this petition.
Pursuant to the above resolution, any argument raised in her petition, but not raised in her
Memorandum,28 is deemed abandoned.29 Hence, the only issue proper for determination is
the propriety of deducting P362,386.87 from her total benefits, for taxation purposes.
Nevertheless, in order to resolve the legality of the deduction, it is imperative that we settle,
once and for all, the ground relied upon by respondent in terminating the services of the
petitioner, as well as the nature of the benefits given to her after such termination. Only then
can we decide whether the amount deducted by the respondent should be paid to the
petitioner.
Respondent dismissed the petitioner from her employment based on Article 284 of the Labor
Code, as amended, which reads:
Art. 284. DISEASE AS GROUND FOR TERMINATION
An employer may terminate the services of an employee who has been found to be suffering
from any disease and whose continued employment is prohibited by law or is prejudicial to
his health as well as to the health of his co-employees: Provided, That he is paid separation
pay equivalent to at least one (1) month salary or to one-half (1/2) month salary for every
year of service, whichever is greater, a fraction of at least six (6) months being considered as
one (1) whole year.
As she was dismissed on the abovementioned ground, the law gives the petitioner the right
to demand separation pay. However, respondent established a retirement plan in favor of all
its employees which specifically provides for "disability retirement," to wit:
Sec. 4. DISABILITY RETIREMENT
In the event that a Member is retired by the Company due to permanent total incapacity or
disability, as determined by a competent physician appointed by the Company, his disability
retirement benefit shall be the Full Member’s Account Balance determined as of the last
valuation date. x x x.30
On the basis of the above-mentioned retirement plan, respondent offered the petitioner a
retirement package which consists of retirement plan benefits, insurance pension, and
educational assistance.31 The amount of P1,063,841.76 represented the disability retirement
benefit provided for in the plan; while the insurance pension was to be paid by their insurer;
and the educational assistance was voluntarily undertaken by the respondent as a gesture of
compassion to the petitioner.32
We have declared in Aquino v. National Labor Relations Commission33 that the receipt of
retirement benefits does not bar the retiree from receiving separation pay. Separation pay is
a statutory right designed to provide the employee with the wherewithal during the period
that he/she is looking for another employment. On the other hand, retirement benefits are
intended to help the employee enjoy the remaining years of his life, lessening the burden of
worrying about his financial support, and are a form of reward for his loyalty and service to
the employer.34 Hence, they are not mutually exclusive. However, this is only true if there is
no specific prohibition against the payment of both benefits in the retirement plan and/or in
the Collective Bargaining Agreement (CBA).35
In the instant case, the Retirement Plan bars the petitioner from claiming additional benefits
on top of that provided for in the Plan. Section 2, Article XII of the Retirement Plan provides:
Section 2. NO DUPLICATION OF BENEFITS
No other benefits other than those provided under this Plan shall be payable from the Fund.
Further, in the event the Member receives benefits under the Plan, he shall be precluded
from receiving any other benefits under the Labor Code or under any present or future
legislation under any other contract or Collective Bargaining Agreement with the
Company.36
There being such a provision, as held in Cruz v. Philippine Global Communications, Inc.,37
petitioner is entitled only to either the separation pay under the law or retirement benefits
under the Plan, and not both.
Clearly, the benefits received by petitioner from the respondent represent her retirement
benefits under the Plan. The question that now confronts us is whether these benefits are
taxable. If so, respondent correctly made the deduction for tax purposes. Otherwise, the
deduction was illegal and respondent is still liable for the completion of petitioner’s
retirement benefits.
Respondent argues that the legality of the deduction from petitioner’s total benefits cannot
be taken cognizance of by this Court since the issue was not raised during the early stage of
the proceedings.38
ISSUE: ONE OF THE PRAYERS WAS RECOVERY OF ALLEGED TAX DEDUCTION, WON LA/NLRC
HAS JURIS OVER THE SUBJECT MATTER  YES
We do not agree.
Records reveal that as early as in petitioner’s position paper filed with the Labor Arbiter, she
already raised the legality of said deduction, albeit designated as "unpaid balance of the
retirement package." Petitioner specifically averred that P362,386.87 was not given to her by
respondent as it was allegedly a part of the former’s taxable income.39 This is likewise
evident in the Labor Arbiter and the NLRC’s decisions although they ruled that the issue was
beyond the tribunal’s jurisdiction. LA/NLRC They even suggested that petitioner’s claim for
illegal deduction could be addressed by filing a tax refund with the Bureau of Internal
Revenue.40
LA AND NLRC HAS JURIS BECAUSE ISSUE IS MONEY CLAIMS Contrary to the Labor Arbiter and
NLRC’s conclusions, petitioner’s claim for illegal deduction falls within the tribunal’s
jurisdiction. It is noteworthy that petitioner demanded the completion of her retirement
benefits, including the amount withheld by respondent for taxation purposes. The issue of
deduction for tax purposes is intertwined with the main issue of whether or not petitioner’s
benefits have been fully given her. It is, therefore, a money claim arising from the employer-
employee relationship, which clearly falls within the jurisdiction41 of the Labor Arbiter and
the NLRC.
This is not the first time that the labor tribunal is faced with the issue of illegal deduction. In
Intercontinental Broadcasting Corporation (IBC) v. Amarilla,42 IBC withheld the salary
differentials due its retired employees to offset the tax due on their retirement benefits. The
retirees thus lodged a complaint with the NLRC questioning said withholding. They averred
that their retirement benefits were exempt from income tax; and IBC had no authority to
withhold their salary differentials. The Labor Arbiter took cognizance of the case, and this
Court made a definitive ruling that retirement benefits are exempt from income tax,
provided that certain requirements are met.
Nothing, therefore, prevents us from deciding this main issue of whether the retirement
benefits are taxable.
We answer in the affirmative.
Section 32 (B) (6) (a) of the New National Internal Revenue Code (NIRC) provides for the
exclusion of retirement benefits from gross income, thus:
(6) Retirement Benefits, Pensions, Gratuities, etc. –
a) Retirement benefits received under Republic Act 7641 and those received by officials and
employees of private firms, whether individual or corporate, in accordance with a reasonable
private benefit plan maintained by the employer: Provided, That the retiring official or
employee has been in the service of the same employer for at least ten (10) years and is not
less than fifty (50) years of age at the time of his retirement: Provided further, That the
benefits granted under this subparagraph shall be availed of by an official or employee only
once. x x x.
Thus, for the retirement benefits to be exempt from the withholding tax, the taxpayer is
burdened to prove the concurrence of the following elements: (1) a reasonable private
benefit plan is maintained by the employer; (2) the retiring official or employee has been in
the service of the same employer for at least ten (10) years; (3) the retiring official or
employee is not less than fifty (50) years of age at the time of his retirement; and (4) the
benefit had been availed of only once.43
As discussed above, petitioner was qualified for disability retirement. At the time of such permit, you may handle recovery cases for the company for which you will be entitled to
retirement, petitioner was only 41 years of age; and had been in the service for more or less fifteen (15%) per cent legal fees for amount actually recovered." (par. 4)
eight (8) years. As such, the above provision is not applicable for failure to comply with the
age and length of service requirements. Therefore, respondent cannot be faulted for
deducting from petitioner’s total retirement benefits the amount of P362,386.87, for "As computed, complainant’s legal fees for the recovery cases he handled for the company
taxation purposes. are as follows:chanrob1es virtual 1aw library
WHEREFORE, the petition is DENIED for lack of merit. The Court of Appeals Decision dated
August 12, 2004 and its Resolution dated December 17, 2004, in CA-G.R. SP No. 75706 are
AFFIRMED. 1. Sentinel Insurance v. Mt.

SO ORDERED.
Ampiro Timber, et als.

(P147,583.87 x 15%) P22,137.58

LABOR REL 21
G.R. No. L-55774 February 20, 1984
2. Sentinel Insurance v.

SENTINEL INSURANCE COMPANY, INC., Petitioner,

Carmel Corporation
v.
PORFIRIO M. BAUTISTA and THE NATIONAL LABOR RELATIONS COMMISSION,
Respondents. (P240,000.00 x 15%) P36,000.00

3. Maritime Company of the

DECISION
Phil. v. Sea Gems Fishing

DE CASTRO, J.: Corporation (P183,000.00

x 15%) = P27,450.00 -
Petition for certiorari with writ of preliminary injunction seeking review of the resolution of
the National Labor Relations Commission which affirmed the decision of the Labor Arbiter
P10,000.00) P17,450.00
awarding to private respondent the sum of P84,587.58 representing unpaid legal fees. The
pertinent portion of the decision was as follows:jgc:chanrobles.com.ph

4. Rose Industries v. Nemesio

"Coming now to the money claim raised by complainant, we noted that the position paper,
as well as the documentary evidence submitted by respondent never did touch on this issue.
Respondent’s silence on this point has led us to the inevitable conclusion that complainant is Ascuetas (P60,000.00 x 15%) P9,000.00
indeed entitled to these monetary claims. More so, in the light of the fact that the contract of
employment entered into by he parties provides among others that "Should your duties
—————
Total P84,587.58
=========
"WHEREFORE, in the light of the foregoing considerations, the complaint for illegal dismissal
should be, as it is hereby DISMISSED for lack of merit.
"However, respondent is hereby ordered to pay complainant the amount indicated above." 1
Petitioner, Sentinel Insurance Company, was in accord with the portion of the decision
dismissing the complaint of respondent, Porfirio Bautista; however, it disagreed with the
portion which awarded P84,587.58 to Bautista because contending that the Labor Arbiter
was without jurisdiction to make such award, the same being within the exclusive jurisdiction
of the civil courts.chanrobles virtual lawlibrary
The factual background of the case is as follows:chanrob1es virtual 1aw library
Porfirio M. Bautista was hired as Legal Officer by Sentinel and his letter of appointment
provided, among others, the following:jgc:chanrobles.com.ph
"4. Should your duties permit, you may handle recovery cases for the company for which you
will be entitled fifteen (15%) per cent legal fees for amount actually recovered." 2
HINAYAAN NIYA NA ANG COMMISSION WHEN NALULUGI ANG COMPANY In the course of his
employment, Bautista handled a number of cases for which he was paid fifteen (15) per cent
on amounts recovered except for the four cases in question which, according to Bautista, he
deferred the billing and collection of his percentage on said cases because of his awareness
of the tight financial condition of the company.
NAWALAN NG TIWALA SI COMPANY KAY EE, HENCE TERMINATION Bautista also handled
thirteen other cases which, according to petitioner, were defaulted and/or dismissed for
reasons attributable to him. Believing that the defaults/dismissals of the thirteen cases were
the results of the wanton connivance of Bautista with the adverse parties and/or gross
negligence sufficient to warrant his dismissal for loss of trust and confidence, petitioner
served private respondent notice of termination of his services on April 2, 1979 to take effect
March 31, 1979. On March 29, 1979, petitioner applied for clearance to terminate
employment with the Ministry of Labor and Employment but which was opposed by Bautista
on May 31, 1979. In his opposition, Bautista questioned the legality of his dismissal and at
the same time asserted his claim for unpaid legal fees in the sum of P87,800.00 pursuant to
the terms and conditions of his employment, particularly the provision on legal
fees.chanroblesvirtualawlibrary
No settlement having been arrived at in the conciliatory hearing, the case was referred to the
National Capital Region of the Ministry of Labor and Employment. In the position-paper
submitted, petitioner presented its reasons for the application for clearance but remained
silent on the matter of the money claim.
LA AWARDED MONEY CLAIM, BUT EE IS DISSATISFIED On September 28, 1979, the Labor
Arbiter rendered the questioned decision. Dissatisfied with the portion awarding the money
claim, petitioner appealed to the National Labor Relations Commission and argued that the
Labor Arbiter erred in assuming that Bautista was entitled to the legal fees irrespective of the
means by which he effected recoveries for the company.
NLRC AFFIRMED Considering that there was no dispute that the appointment of Bautista
provided for the 15% legal fees on top of his basic salary and finding that there appeared to
be no qualification for entitlement of the disputed fees and there being no denial that
Bautista handled the four cases subjects of the controversy and succeeded in recovering for
the company, the National Labor Relations Commission on August 29, 1980 affirmed the
decision of the Labor Arbiter and dismissed the appeal.
Sentinel Insurance sought reconsideration of the dismissal which was however denied on
December 10, 1980. Hence this petition for certiorari. On January 12, 1981, We issued a
temporary restraining order enjoining the National Labor Relations Commission from
enforcing and/or carrying out any writ of execution issued or might be issued pursuant to its
resolution and to continue until otherwise ordered.chanrobles.com.ph : virtual law library
PETITIONER It is alleged that at the time Bautista instituted his money claim by way of
opposition, the employer-employee relationship has ceased. The allegation is without basis.
Bautista filed a timely opposition to the application for authority to terminate his
employment. The employer-employee tie certainly existed at that point of time. Although
Bautista did not seek reinstatement, he demanded compliance with one of the express terms
of his employment, thus the dispute is one arising from employer-employee relationship.
PETITIONER The main argument of petitioner is that the money claim is civil in character
cognizable only by regular courts and therefore beyond the jurisdiction and competence of
the Labor Arbiter. Petitioner invoked the ruling in Jose D. Calderon, Sr. v. Court of Appeals 3
promulgated on October 28, 1980 where this Court held that an alleged oppressive act of
non-payment of salaries, allowances and other reimbursable expenses is intrinsically a civil
dispute within the jurisdiction of regular courts to resolve and beyond that of Labor Arbiters.
The Calderon case was based on PD No. 1367 enacted May 1, 1978 and which removed from
the exclusive jurisdiction of Labor Arbiters money claims arising from employer-employee
relations, the jurisdiction of said Labor Arbiters over said cases being expressly limited to
those which are duly endorsed by the Regional Directors in accordance with the provisions of
the Labor Code and which in no case shall include claims for moral or other forms of
damages. 4  THIS contention however is obsolete since there is a new law
ISSUE: WHAT IS THE LAW APPLICABLE WHEN THE COMMISSION AND DATE OF DECISION ARE
COVERED BY TWO DIFF LAWS? THE LATTER
The Calderon case, however, is no longer controlling because the law upon which said
decision was based, Article 217 of the Labor Code as amended by PD No. 1367, has been
superseded by PD NO. 1691 which took effect May 1, 1980 and which restored to the Labor
Arbiters original and exclusive jurisdiction over claims, monetary or otherwise, provided by
law or by appropriate agreement, arising from employer-employee relations, except those
expressly excluded therefrom. 5
Although the cause of action arose when PD No. 1367 was then the prevailing law and upon
which the Calderon case was premised, said Decree was no longer applicable when the case
was resolved by the National Labor Relations Commission on August 29, 1980. The law then
in force was PD No. 1691.
LAW HISTORY AND THE PREVAILING LAW Article 217 as amended by PD No. 1367 and PD No.
1691 was again amended by Batas Pambansa Bilang 130 which took effect August 21, 1981.
On June 1, 1982, said Article 217 was amended anew by Batas Pambansa Bilang 227 vesting
on Labor Arbiters jurisdiction over cases that workers may file involving wages, hours of work
and other terms and conditions of employment and all money claims of workers, except
claims for employees’ compensation, social security, medicare and maternity benefits.
Undoubtedly, the claim of 15% legal fees arose out of employer-employee relationship and
clearly falls within the coverage of Article 217 as amended by PD No. 1691 and Batas
Pambansa Bilang. 227.
THE AMENDMENT IS CURATIVE IN NATURE HENCE RETROACTIVE EFFECT IS IN ORDER In
Garcia v. Martinez, 6 promulgated May 28, 1979, PD No. 1367 was held to be an amendatory
decree in the nature of a curative statute with retrospective application to a pending
proceeding which cured the lack of jurisdiction of the Court of First Instance of Davao City
over a complaint for damages allegedly arising from the dismissal of a radio station manager
which was filed on August 2, 1976. PD No. 1691 and BP No. 227 are likewise curative statutes
which cured the lack of jurisdiction of the Labor Arbiter at the start of the proceeding and
should be given retrospective application to this pending proceedings, as the precise purpose
of the amendments was to settle once and for all the conflict of jurisdiction between regular
courts and labor agencies.chanrobles.com:cralaw:red
Moreover, petitioner is estopped from questioning the jurisdiction of the Labor Arbiter to
award the money claim considering that in the position paper it submitted to the Labor
Arbiter, it never objected but in fact remained silent as to the claim which was asserted not
only in the opposition for termination of employment but also raised as an issue at the
conciliation hearing.
Also, as correctly argued by respondent Bautista, it was petitioner who commenced the
action for dismissal, and he merely asserted a claim expressly provided by the terms of his
employment so much so that petitioner cannot pretend that the Labor Arbiter possessed
jurisdiction over issues of illegal dismissal, as in fact, it did not question the portion of the
decision which sustained the dismissal because it was in its favor, but alleged that the Labor
Arbiter did not have the authority to adjudicate the claim for legal fees although part of the
express terms of the contract of employment because it is to its disadvantage. 7
Furthermore, to state that this case involves both a labor controversy and a civil dispute
would be to sanction split jurisdiction which is obnoxious to the orderly administration of
justice. 8 In a number of cases this Court expounded on this holding that evidently, the
lawmaking authority had second thoughts about depriving Labor Arbiters and the National
Labor Relations Commission of the jurisdiction to award damages in labor cases because that
setup means duplicity of suits, splitting the cause of action and possible conflicting findings
and conclusions by two tribunals of one and the same claim. 9
In view of the foregoing, We hold that the National Labor Relations Commission did not
commit grave abuse of discretion in sustaining the money claim granted by the Labor Arbiter
which arose out of an employer-employee relationship and which, as we hereby hold, was
within the exclusive jurisdiction of the Labor Arbiter.
WHEREFORE, the instant petition is hereby dismissed. The temporary restraining order
heretofore issued is hereby lifted. No costs.
SO ORDERED.
LABOR REL 22
----------------------
G.R. No. 120506 October 28, 1996
PHILIPPINE AIRLINES, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, HON. LABOR ARBITER CORNELIO LINSANGAN,
UNICORN SECURITY SERVICES, INC., and FRED BAUTISTA, et al., respondents.
DAVIDE, JR., J.:p
This is a petition for certiorari under Rule 65 of the Rules of Court to annul the decision of the
Labor Arbiter dated 12 August 1991 in NLRC Case No. 00-11-06008-90 and the resolutions of
public respondent National Labor Relations Commission (NLRC) promulgated on 27 October
1994 and 31 May 1995 dismissing the appeal filed by the petitioner and denying the motion
for reconsideration, respectively.
The dispute arose from these antecedents:
On 23 December 1987, private respondent Unicorn Security Services, Inc. (USSI) and
petitioner Philippine Airlines, Inc. (PAL) executed a security service agreement. 1 USSI was
designated therein as the CONTRACTOR. Among the pertinent terms and conditions of the
agreement are as follows:
(4) THE CONTRACTOR shall assign to PAL an initial force of EIGHTY ONE (81) bodies . . . which
may be decreased or increased by agreement in writing . . . . It is, of course, understood that
the CONTRACTOR undertakes to pay the wages or salaries and cost of living allowance of the
guards in accordance with the provisions of the Labor Code, as amended, the different
President Decrees, Orders and with the rules and regulations promulgated by competent
authorities implementing said acts, assuming all responsibilities therefor. . . .
xxx xxx xxx
(6) Without any expense on the part of PAL, CONTRACTOR shall see to it that the guards
assigned to PAL . . . are provided, at the expense of CONTRACTOR, with the necessary
firearms, ammunitions and facilities needed for the rendition of the security services as
aforesaid;
(7) CONTRACTOR shall select, engage and discharge the guards, employees, or agents, and
shall otherwise direct and control their services herein provided or heretofore to be set forth
or prescribed. The determination of wages, salaries and compensation of the guards or
employees of the CONTRACTOR shall be within its full control but shall in no way contravene
existing laws on the matter. It is further understood that CONTRACTOR as the employer of
the security guards agrees to comply with all relevant laws and regulations, including
compulsory coverage under the Social Security Act, Labor Code, as amended and the Medical
Care Act, in its operations. Although it is understood agreed between parties hereto that
CONTRACTOR in the performance of its obligations under this Agreement, is subject to the
control and direction of PAL merely as to the result as to be accomplished by the work or
services herein specified, and not as to the means and methods for accomplishing such
result, CONTRACTOR hereby warrants that it will perform such work or services in such
manner as will achieve the result herein desired by PAL.
(8) Discipline and administration of the security guards shall be the sole responsibility of the
CONTRACTOR to the end that CONTRACTOR shall be able to render the desired security
service requirements of PAL CONTRACTOR, therefore, shall conform to such rules and
regulations that may be issued by PAL. For this purpose, Annex "A", which forms part of this
Agreement, contains such rules and regulations and CONTRACTOR is expected to comply
with them. At its discretion, PAL may, however, work out with CONTRACTOR such rules and
regulations before their implementation.
(9) Should PAL at any time have any justifiable objection to the presence in its premises of
any of CONTRACTOR's officer, guard or agent under this Agreement, it shall send such
objection in writing to CONTRACTOR and the latter shall immediately take proper action.
(10) The security guards employed by CONTRACTOR in performing this Agreement shall be
paid by the CONTRACTOR and it is distinctly understood that there is no employee-employer
relations between CONTRACTOR and/or his guards on the one hand, and PAL on the other.
CONTRACTOR shall have entire charge, control and supervision of the work and services
herein agreed upon, and PAL shall in no manner be answerable or accountable for any
accident or injury of any kind which may occur to any guard or guards of the CONTRACTOR in
the course of, or as a consequence of, their performance of work and services under this
Agreement, or for any injury, loss or damage arising from the negligence of or carelessness of
the guards of the CONTRACTOR or of anyone of its employ to any person to persons or to its
or their property whether in the premises of PAL or elsewhere; and the CONTRACTOR hereby
covenants and agrees to assume, as it does hereby assume, any and all liability or on account
of any such injury, loss or damage, and shall indemnify PAL for any liability or expense it may
incur by reason thereof and to hold PAL free and harmless from any such liability.
xxx xxx xxx
(13) For and in consideration of the services to be rendered by CONTRACTOR under these
presents, PAL shall pay CONTRACTOR the amount of PESOS NINE & 40/100 CTVS (P9.40) PER
HOUR multiplied by 905 hours equivalent to PESOS TWO HUNDRED SEVENTY FIVE
THOUSAND NINE HUNDRED NINE & 58/100 CTVS, Philippine currency, — (P275,909.58) the
basis of eight (8) working hours per office/guard a day, Sundays and holidays included, the
same to be payable on or before the 15th of each month for services on the first half of the
month and on or before the end of the month for services for the 2nd half of the month.
Nothing herein contained shall prevent the parties from meeting for a review of the rates
should circumstances warrant.
xxx xxx xxx
(20) This Agreement shall take effect on 06 December 1987 and shall be in force for a period
of SIX (6) MONTHS — 05 JUNE 1988 thereafter it shall continue indefinitely unless sooner
terminated upon thirty (30) days notice served upon by one party to the other, except as
provided for in Articles 16, 17 & 18 hereof.
Sometime in August of 1988, PAL requested 16 additional security guards. USSI provided
what was requested; however, PAL insisted that what USSI did was merely to pick out 16
guards from the 86 already assigned by it and directed them to render overtime duty.
On 16 February 1990, PAL terminated the security service agreement with USSI without
giving the latter the 30-day prior notice required in paragraph 20 thereof. Instead, PAL paid
each of the security guards actually assigned at the time of the termination of the agreement
an amount equivalent to their one-month salary to compensate for the lack of notice.
In November 1990, USSI, allegedly "in its capacity as Trustee for Sixteen or on Security
Guards," filed with the NLRC Arbitration Branch, National Capital Region, a complaint 2
against PAL for the recovery of P75,600.00 representing termination pay benefit due the
alleged 16 additional security guards, which PAL failed and refused to pay despite demands.
It further asked for an award of not less than P15,000.00 for each of the 16 guards as
damages for the delay in the performance of PAL's obligation, and also for attorney's fees in
an amount equivalent to 10% of whatever might be recovered. Pertinent portions of the
complaint read as follows:
3. By virtue of said contract and upon its effectivity, respondent required eighty-six (86)
security guards whom complaint USSI supplied; on or sometime in August 1989, respondent
asked sixteen (16) security guards to render twelve (12) hours each.
4. In February 1990 and for reasons of its own, respondent caused to terminate not only the
contract but also the services of the security guards; in effecting such termination, said
respondent caused to pay the equivalent of one (1) month's notice unto all the security
guards, except the 16 who, as aforementioned were rendering 12 hours each from date of
assignment up to and until their termination.
5. As computed, the termination pay benefits due the 16 security guards amount to
P75,600.00, more or less, which, despite demands, respondent fails, neglects or refuses to
pay, as it continue refusing, failing or neglecting to so do up to the present time.
6. Respondent has not only incurred in delay in the performance of its obligation but also
contravened the tenor thereof; hence, complainants are, by law, entitled to be indemnified
with damages for no less than P15,000.00 each for all complainants though the correct
amount is left solely to the sound discretion of the Honorable Labor Arbiter.
7. Complainants are now compelled to litigate their plainly valid, just or demandable claim on
account of which services of counsel have been required and thereby obligated themselves
to pay, for and as attorney's fees, the sum equivalent to ten percent (10%) of whatever sums
or sum may be recovered in the case.
The complaint was docketed as NLRC-NCR Case No. 00-11-06008-90 and assigned to Labor
Arbiter Cornelio L. Linsangan.
PAL filed a motion to dismiss the complaint 3 on the grounds that the Labor Arbiter had no
jurisdiction over the subject matter or nature of the complaint and that USSI had no cause of
action against PAL. In amplification thereof, PAL argued that the case involved the
interpretation of the security service agreement, which is purely civil in character and falls
outside of the Labor Arbiter's jurisdiction. It is clear from Article 217 of the Labor Code that
for claims to be within the jurisdiction of Labor Arbiters, they must arise from an employer-
employee relationship. PAL claimed that USSI did not allege the existence of an employer-
employee relationship between PAL and USSI or its guards, and that in fact, paragraph 10 of
the agreement provides that there is no employer-employee relationship between the
CONTRACTOR and/or his guards on the one hand and PAL on the other.
In its Opposition, 4 USSI pointed out that PAL forgot or overlooked the fact that "insofar as
labor standards, benefits, etc. have to be resolved or adjudicated, liability therefor is shifted
to, or assumed by, respondent [herein petitioners] which, in law, has been constituted as an
indirect employer."
PAL filed a supplemental motion to dismiss 5 wherein it cites the following reasons for the
dismissal of the complaint: (1) the clear stipulations in the agreement (paragraphs 4 and 10)
that there exists no employer-employee relationship between PAL on the one hand and USSI
and the guards on the other; (2) there were no 16 additional guards, as the 16 guards who
were required to render 12-hour shifts were picked out from the original 86 guards already
assigned and were already given a one-month salary in lieu of the 30-day notice of
termination of the agreement; (3) USSI had no legal personality to file the case as alleged
trustee of the 16 security guards; and (4) the real parties in interest — the 16 security guards
— never showed any interest in the case either by attending any hearing or conference, or by
following up the status of the case.
Attached to the supplemental motion to dismiss were, among other things, xerox copies of
confirmation letters of USSI to PAL to show that no additional guards were in fact provided. 6
Labor Arbiter Linsangan did not resolved the motion to dismiss and the supplemental motion
to dismiss. On 12 August 1991, he handed down a decision 7 ordering PAL to pay: (1) the sum
of P75,600.00 representing the equivalent of one-month's separation pay due the 16
individual security guards, plus 10% interest from the date of filing of the case until the whole
obligation shall have been fully settled; (2) the sum of P5,000.00 by way of exemplary
damages due each of the 16 security guards; and (3) another sum equivalent to 10% of the
total award for and as attorney's fees.
It was in that decision that Labor Arbiter Linsangan mentioned for the first time that the
resolution of the motion to dismiss and supplemental motion to dismiss "was deferred until
[the] case is decided on the merits" considering "the ground not to be indubitable." In
holding that he had jurisdiction over the case, he stated:
As heretofore and invariably held in similar cases, the issue of whether or not Labor Arbiters
have jurisdiction over money claims affecting security guards assigned by security agencies
(like complainant herein) to their client-companies such as PAL is, more or less, settled,
especially since, as the law views such as peculiar relationship, such money claims insofar as
they have to be paid, are the ultimate responsibility of the client-firms. In effect, the security
guards have been constituted as indirectemployees of the client just as the client becomes
the indirect employer of the guards. Art. 107 and 109 of the Labor Code expressly provide
that. . . .
To justify the awards, Labor Arbiter Linsangan opined:
Evidence adduced clearly show that sometime in December 1987, aforementioned security
service contract was executed, based on which the required number of security guards were
assigned to, or posted at, the various premises of respondent — PAL. Said number of security
guards may, as the contract provides, be increased or reduced at respondent's request, such
that the original number of eighty-six (86) guards, an additional sixteen (16) were needed
and, accordingly supplied who, pursuant to PAL's instructions, were required to render
twelve (12) hours each, per day.
In February 1990, and for reasons of its own, PAL caused to terminate, as it did, the contract
of security service. Unequivocably, it caused to pay the separation pay benefits of the 86-
security guards for the equivalent amount of one (1) month's pay. As to the additional 16, it
failed and refused to grant similar equivalent, without any valid reasons therefor.
As earlier stated, respondent opted to rely solely on the ground set forth in its Motion to
Dismiss as well as Supplement thereto. It failed to file, despite directive made thereon, its
position paper. Neither did it submit, nor adduce, evidence (documentary or otherwise) to
rebut or contravert complainant's claims especially since the money equivalent of the one
month separation pay due the 16 guards has been duly quantified as amounting to Seventy
Five Thousand Six Hundred (P75,600.00) Pesos. Thus established, it is clear that there was
absolutely no legal/justifiable reason why said 16 guards applied and who rendered 12 hours
each per day had to be discriminated against.
Following PAL's failure or refusal to pay, demands were made by complainant, asking at the
same time why that was so. Conceivably, respondent has smarted itself on its mistaken belief
that there was, as between the guards and itself, no employer-employee relationship and,
hence, there is no legal basis for it to pay. If that was so, why did it pay separation pay unto
the 86 regular employed guards.
PAL being widely known as a progressively-minded employer, it should be the first to show
good example for emulation. In this instant case, it did not; in fact, its actuations were not
consistent with good faith. It should, therefore, be held liable for exemplary damages and
having required complainant to litigate a plainly valid, just or demandable claim, an award for
attorney's fees must perforce be assessed.
On 3 September 1991, PAL filed its Appeal 8 wherein it indicated that it received a copy of
the decision on 26 August 1991. Attached thereto was a machine copy of the Notice of
Judgment/Final Order, with the date of its receipt, i.e., 26 August 1991, 9 having been
stamped on the upper right hand corner by PAL's Legal Department.
USSI countered this Appeal with a motion foe execution of judgment 10 on the ground that
since PAL, received a copy of the decision on the 23rd, not on the 26th, of August 1991 it had
until 2 September 1991 to appeal; hence, the appeal interposed on 3 September was late by
one day. The decision had then become final and executory.
In its opposition 11 to this motion, PAL insisted that it received a copy of the decision on 26
August 1991; thus, it had until 5 September 1991 to file its appeal.
On 30 September 1991, Labor Arbiter Linsangan issued a writ of execution. 12
On 1 October 1991, PAL filed a motion to quash 13 the writ of execution. It tried to explain
therein why it thought all along that it received a copy of the decision on 26 August 1991,
thus:
4. Upon investigation the undersigned counsel learned that on 23 August 1991 (Friday) a
server-messenger went to PAL Legal Department to serve said decision. The receiving clerks
at that time were all out of the office so that the server persuaded a secretary, Ms. April Rose
del Rosario to receive the same, notwithstanding the fact that Ms. Del Rosario told him
(server) that she was not authorized to receive documents for and in behalf of PAL. Ms. Del
Rosario then stamped the date of receipt on the service's copy without stamping (the date of
receipt) PAL's copy of the decision which was left by the server. Thereafter, Ms. del Rosario
placed PAL's copy of the Decision on the incoming documents rack of the receiving clerk.
Attached herewith is the affidavit of Ms. Del Rosario and as Annex "A" hereof.
5. On 26 August 1991 (Monday), the receiving clerk/messenger Mr. Greg Soriano upon
finding the Decision among the documents in the incoming documents rack, immediately
stamped "Received 26 August 1991" thereon, on the honest and sincere belief that the same
just arrived that day (26 August 1991). He then forwarded the same to the secretary of the
undersigned counsel.
Attached herewith is the affidavit of Mr. Greg Soriano marked as Annex "B" hereof.
6. The undersigned counsel believing that the said decision was received on 26 August 1991
reckoned/counted the ten (10) day period for appeal from said date.
7. Considering the foregoing circumstances, the undersigned counsel's innocent reliance on
the date of receipt stamped on the copy of the Decision furnished him was clearly due to an
innocent mistake and/or excusable neglect. Hence, justice and equity dictates that
respondent PAL should be considered to have filed its Appeal within the reglementary period
for Appeal. 14
On 8 October 1991, Labor Arbiter Linsangan issued an order 15 denying the motion to quash.
On 10 October 1991, PAL appealed 16 to the NLRC the aforesaid order of 8 October 1991 on
the ground that it was issued with grave abuse of discretion.
In its resolution of 27 October 1994, 17 the Second Division of the NLRC dismissed PAL's
appeal for having been filed out of time. It sustained the Labor Arbiter's finding that PAL had
received a copy of the decision on 23 August 1991, and hence the last day to appeal was 2
September 1991. It ruled that whether or not the decision was received by an employee
other than the receiving clerk or messenger was of no moment, as the proper performance
of employee's duties was PAL's concern.
On 31 May 1995, the NLRC denied the motion for reconsideration 18 for the reason that it
cannot accept PAL's excuse as it may "open the floodgates to abuse"; and that the lapse of
the period to appeal had already deprived the Commission of jurisdiction over the case. 19
PAL then filed this special civil action for certiorari under Rule 65 of the Rules of Court
alleging that (1) public respondent committed serious and patent error in failing to declare
that the Labor Arbiter had no jurisdiction over the instant case; (2) The Labor Arbiter gravely
abused its discretion in ordering PAL to pay the separation pay of the 16 security guards
assigned at PAL's premises by USSI; and (3) respondent NLRC committed grave abuse of
discretion in declaring PAL's appeal to have been filed out of time.
PAL argues that since USSI's cause of action was founded on the security service agreement,
and that thereunder no employer-employee relationship existed between PAL and the
security guards who were USSI's employees, the Labor Arbiter had no jurisdiction over the
complaint. Moreover, assuming arguendo that the claims of the security guards were valid,
USSI had no personality to file the complaint, for there is nothing whatsoever to show that it
was expressly authorized by the security guards to act as their "trustee."
As to the second assigned error, PAL asserts that it is not liable to pay separation pay because
(1) it was not the employer of the security guards; (2) even as an indirect employer, as held
by the Labor Arbiter, its liability was limited to violations of labor standards law, and non-
payment of the separation pay is not a violation of the said law; (3) the security service
agreement with USSI did not provide for payment of separation pay; (4) the payment made
to the 86 security guards upon the termination of the agreement without the prior 30-day
notice was not for separation pay but a benefit in lieu of the 30-day notice required under
paragraph 20 of the agreement; and (5) since PAL was not employer of the security guards, in
no way could it terminate their services.
In its third assigned error, PAL submits that rules of procedure ought not to be applied in a
very rigid technical sense, sense they are used only to help secure and not override
substantial justice, especially in this case where the appeal was meritorious. Moreover, the
delay in the perfection of the appeal, reckoned from the finding of the Labor Arbiter, was
only one day; but if reckoned from what its counsel innocently believed to be PAL's date of
receipt of the decision, which was 26 August 1991, the appeal could be said to have been
seasonably filed.
In its Comment, USSI points out that the grounds relied upon by PAL are based on factual a
issue, namely, the discrimination made by PAL in paying the 86 and not the 16 security
guards. It argues that the case touched upon the rights of the 16 security guards as
employees; thus, the same was within the jurisdiction of the Labor Arbiter. As regards PAL's
plea for the relaxation of the rule on perfection of appeals, USSI contends that the negligence
of PAL's counsel should not be deemed "compelling reason to warrant relaxation of the rule."
In its Manifestation and Motion in Lieu of Comment, 20 the Office of the Solicitor General
agrees with PAL that the Labor Arbiter did not have jurisdiction over the complaint because
there was no employer-employee relationship between PAL and the 16 security guards; that
Article 107 and 109 of the Labor Code which provide for joint and several liability for
payment of wages by the direct and indirect employer find no application in the present case
because the 16 security guards employed by USSI were not after unpaid wags; and that in the
interest of justice and considering that the appeal was filed only one day late, the rule on
perfection of appeals should have been relaxed to prevent a miscarriage of justice.
In view of the stand of the Office of the Solicitor General, we advised public respondents to
file their own comment if they so desired.
In their Comment, the NLRC and Labor Arbiter Linsangan maintain that they had jurisdiction
over the case because of Articles 107 and 109 of the Labor Code which constitute PAL as
indirect employer of the 16 security guards, there being a question involving separation pay
due the latter; that the 16 security guards were entitled to separation pay, because PAL paid
the other 86 security guards when the service agreement was terminated; and that for the
NLRC to excuse the delay of one day in filing the appeal would open the floodgates of abuse.
The instant petition is impressed with merit.
LA HAS NO JURISDICTION We agree with petitioner PAL that the Labor Arbiter was without
jurisdiction over the subject matter of NLRC-NCR Case No. 00-11-06008-90, because no
employer-employee relationship existed between PAL and the security guards provided by
USSI under the security service agreement, including the alleged 16 additional security
guards.
We have pronounced in numerous cases 21 that in determining the existence of an
employer-employee relationship, the following elements are generally considered: (1) the
selection and engagement of the employee; (2) the payment of wages; (3) the power to
dismiss; and (4) the power to control the employee's conduct.
APPLYING THE FOUR-fold rule In the instant case, the security service agreement between
PAL and USSI provides the key to such consideration. A careful perusal thereof, especially the
terms and conditions embodied in paragraphs 4, 6, 7, 8, 9, 10, 13 and 20 quoted earlier in
this ponencia, demonstrates beyond doubt that USSI — and not PAL — was the employer of
the security guards. It was USSI which (a) selected, engaged or hired and discharged the
security guards; (b) assigned them to PAL according to the number agreed upon; (c)
provided, at its own expense, the security guards with firearms and ammunitions; (d)
disciplined and supervised them or controlled their conduct; and (e) determined their wages,
salaries, and compensation; and (f) paid them salaries or wages. Even if we disregard the
explicit covenant in said agreement that "there exists no employer-employee relationship
between CONTRACTOR and/or his guards on the one hand, and PAL on the other" all other
considerations confirm the fact that PAL was not the security guards' employer. Analogous to
the instant case is Canlubang Security Agency Corp. vs. NLRC. 22
Considering then that no employer-employee relationship existed between PAL and the
security guards, the Labor Arbiter had no jurisdiction over the claim in NLRC-NCR Case No.
00-11-06008-90. Article 217 of the Labor Code (P.D. No. 442), as amended, vests upon Labor
Arbiters exclusive original jurisdiction only over the following:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file involving
wages, rates of pay, hours of work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from employer-
employee relations;
5. Cases arising from any violation of Article 265 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.
The Labor Arbiter cannot avoid the jurisdictional issue or justify his assumption of jurisdiction
on the pretext that PAL was the indirect employer of the security guards under Article 107 in
relation to Articles 106 and 109 of the Labor Code and, therefore, it is solidarily liable with
USSI. We agree with the Solicitor General that these Articles are inapplicable to PAL under
the facts of this case. Article 107 provides:
Art. 107. Indirect employer. — The provisions of the immediately preceding Article shall
likewise apply to any person, partnership, association or corporation which, not being an
employer, contracts with an independent contractor for the performance of any work, task,
job or project.
The preceding Article referred to, which is Article 106, partly reads as follows:
Art. 106. Contractor or subcontractor. — Whenever an employer enters into a contract with
another person for the performance of the former's work, the employees of the contractor
and of the latter's subcontractor, if any, shall be paid in accordance with the provisions of
this Code.
In the event that the contractor or subcontractor fails to pay the wages of his employees in
accordance with this Code, the employer shall be jointly and severally liable with his
contractor or subcontractor to such employees to the extent of the work performed under
the contract, in the same manner and extent that he is liable to employees directly employed
by him.
While USSI is an independent contractor under the security service agreement and PAL may the security service agreement, the higher interest of justice favors a relaxation of the rule on
be considered an indirect employer, that status did not make PAL the employer to the perfection of appeals in labor cases.
security guards in every respect. As correctly posited by the Office of the Solicitor General,
While it is an established rule that the perfection of an appeal in the manner and within the
PAL may be considered an indirect employer only for purposes of unpaid wages since Article
period prescribed by law is not only mandatory but jurisdictional, and failure to perfect an
106, which is applicable to the situation contemplated in Section 107, speaks of wages. The
appeal has the effect of rendering the judgment final and executory, it is equally settled that
concept of indirect employer only relates or refers to the liability for unpaid wages. Read
the NLRC may disregard the procedural lapse where there is an acceptable reason to excuse
together, Articles 106 and 109 simply mean that the party with whom an independent
tardiness in the taking of the appeal. 25 Among the acceptable reasons recognized by this
contractor deals is solidarily liable with the latter for unpaid wages, and only to that extent
Court are (a) counsel's reliance on the footnote of the notice of the decision of the Labor
and for that purpose that the latter is considered a direct employer. The term "wages" is
Arbiter that "the aggrieved party may appeal . . . within ten (10) working days"; 26 (b)
defined in Article 97(f) of the Labor Code as "the remuneration or earnings, however
fundamental consideration of substantial justice; 27 (c) prevention of miscarriage of justice
designated, capable of being expressed in terms of money, whether fixed or ascertained on a
or of unjust enrichment, as where the tardy appeal is from a decision granting separation pay
time, task, piece, or commission basis, or other method of calculating the unwritten contract
which was already granted in an earlier final decision; 28 and (d) special circumstances of the
of employment for work done or to be done, or for services rendered or to be rendered and
case combined with its legal merits 29 or the amount and the issue involved. 30 A one-day
includes the fair and reasonable value, as determined by the Secretary of Labor, of board,
delay in the perfection of the appeal was excused in Pacific Asia Overseas Shipping Corp. vs.
lodging, or other facilities customarily furnished by the employer to the employee."
NLRC, 31 Insular life Assurance Co. vs. NLRC, 32 and City Fair Corp. vs. NLRC. 33
CAUSE OF ACTION ALTHOUGH VALID IS NOT FOUND ON THE CONTRACT, HENCE NCC
In the instant case, the Labor Arbiter's lack of jurisdiction — so palpably clear on the face of
GOVERNS NOT LC No valid claim for wages or separation pay can arise from the security
the complaint — and the perpetuation of unjust enrichment if the appeal is disallowed are
service agreement in question by reason of its termination at the instance of PAL. The
enough combination of reasons that warrant a relaxation of the rules on perfection of
agreement contains no provision for separation pay. A breach thereof could only give rise to
appeals in labor cases.
damages under the Civil Code, which is cognizable by the appropriate regular court of justice.
Besides, there is no substantial proof that USSI in fact provided 16 additional guards. On the WHEREFORE, the instant petitioner is hereby GRANTED. The questioned decision of the Labor
contrary, PAL was able to prove in the annexes attached to its supplemental motion to Arbiter dated 12 August 1991 and the resolutions of the Second Division of the National
dismiss that the 16 guards were actually picked out from the original group and were just Labor Relations Commission promulgated on 27 October 1994 and 31 May 1995 are hereby
required to render overtime service. SET ASIDE, and NLRC-NCR Case No. 00-11-06008-90 is DISMISSED.
The Labor Arbiter's lack of jurisdiction was too obvious from the allegations in the complaint SO ORDERED.
and its annex (the security service agreement) in NLRC-NCR Case No. 00-11-06008-90. The
Labor Arbiter then should have forthwith resolved the motion to dismiss and the
supplemental motion to dismiss. As correctly pointed out by PAL, under Section 15 of Rule V
of the New Rules of Procedure of the NLRC, any motion to dismiss on the ground of lack of
jurisdiction, improper venue, res judicata, or prescription shall be immediately resolved by LABOR REL 23
the Labor Arbiter by a written order. Yet, the Labor Arbiter did not, and it was only in his
G.R. No. 71589 December 17, 1990
decision that he mentioned that the resolution of the motion to dismiss "was deferred until
this case is decided on the merits" because the ground therefore was not "indubitable." On
this score the Labor Arbiter acted with grave abuse of discretion for disregarding the rules he
CAGAYAN DE ORO COLISEUM, INC., Petitioner, v. OFFICE OF THE MINISTER OF LABOR AND
was bound to observe.
EMPLOYMENT, represented by Deputy Minister VICENTE LEOGARDO, JR. and ANGEL
We shall now turn to the issue of tardiness of the appeal. The record does indeed show that CHAVES, Respondents.
on the original copy of the Notice of Judgment/Final Order, 23 there is stamped by the PAL
Legal Department the date of its receipt of the decision, viz., "AUG. 23, 1991."
DECISION
It is not also denied by respondents that on the right upper hand corner of PAL's copy of the
Notice of Judgment/Final Orders, 24 there is stamped the date of receipt thereof by PAL
Legal Department, viz., "AUG. 26, 1991." PAL explained how this discrepancy occurred and
how its counsel was misled into believing that PAL received a copy of the decision only on 26
August 1991. This belief in good faith rendered excusable any negligence it might have FERNAN, J.:
committed. Besides, the delay in the perfection of the appeal was only one day. Considering
that the Labor Arbiter had no jurisdiction over the subject matter of NLRC-NCR Case No. 00-
11-06008-90 and that the 16 security guards are not in fact entitled to separation pay under
In this special civil action for certiorari, petitioner Cagayan de Oro Coliseum, Inc. questions
the jurisdiction of the Ministry of Labor and Employment (MOLE) over FSD Case No. R-134-77
filed by private respondent Angel Chaves for unpaid salaries, per diems and allowances for
the fiscal year 1976-1977.
The undisputed facts are as follows:chanrob1es virtual 1aw library
Cagayan de Oro Coliseum, Inc. is a corporation duly organized and existing under Philippine
laws having been issued a certificate of registration by the Securities and Exchange
Commission (SEC) on September 15, 1961. 1 Its principal line of business is the holding of
cockfights and occasional boxing matches. 2 Angel Chaves, or the other hand, is an
incorporator and major stockholder of the corporation who, for sometime, served as its
director and officer. 3
Since its incorporation until 1977, the compensation of the corporation’s directors, as
provided by Section 5 of Article IV of its By-laws, was from time to time fixed by its Board of
Directors. On December 17, 1963, a copy of said By-laws was returned by the SEC to the
corporation with a request that a correction be made on said Section 5 by changing the
phrase "Board of Directors" to the word "stockholders." The change, however, was effected
only in 1978. 4
At the stockholders’ regular meeting on February 7, 1975, Chaves was elected member of the
Board of Directors. For fiscal year 1975-1976, he was elected vice-president and on March
13, 1976, with the unanimous approval of the members of the Board, he assumed the
presidency following the resignation of the then incumbent president. Chaves held the
position of president until the end of his term in February, 1977. 5
Shortly after Chaves assumed the presidency, or on April 8, 1976, the Board of Directors
passed a resolution fixing the monthly compensation of the president at P500.00 and his
monthly allowance at P100.00. The Board also provided a P100.00 per diem for the
president’s attendance in board meetings. 6
Claiming that he had not been paid for services rendered, Chaves filed on June 3, 1977 a
letter complaint with the Field Services Division of the then Department of Labor, Regional
Office No. 10. Consequently, said office investigated the corporation and found the following:
(1) unpaid wages for officers and office personnel; (2) nonpayment of emergency cost of
living allowance (ECOLA) under P.D. No. 525; (3) nonpayment of 13th month pay under P.D.
No. 851; and (4) nonpayment of special/regular holiday pay. The investigation also disclosed
that although Atty. Angel Quimpo, general manager of the corporation, had signified his
intention to pay the corporation’s obligation to its employees or officers in the amount of
P79,773.72 for per diems, allowances, 13th month pay and others as duly certified to by the
corporation’s bookkeeper and treasurer, no resolution was passed by its stockholders or the
Board to implement said plan. 7
On June 20, 1977, another complaint was filed by Angel Chaves with the same division of the
Department of Labor against the corporation on the basis of the findings of said
investigation. Two years later or on November 28, 1979, the labor arbiter rendered a decision
awarding Chaves P5,500.00 as salary from March 13, 1976 to February 14, 1977, P462.50 as
13th month pay, P1,700 as monthly allowance from February 1976 to June 1977, and P3,100
as per diem compensation from February 1976 to June 19, 1977. 8
The corporation appealed to then Ministry of Labor and Employment (now Department of
Labor and Employment) but in its order dated December 24, 1982, the Ministry, through
Deputy Minister Vicente Leogardo, Jr., affirmed the decision of the labor arbiter. 9 Its motion
for reconsideration of said order having been denied, the corporation filed the instant
petition which we find to be impressed with merit.
The crucial issue in this case is which of the two, the MOLE (now DOLE) and the SEC has
jurisdiction over the present controversy.
An intracorporate controversy would call for the jurisdiction of the SEC while a labor dispute,
that of the NLRC or the MOLE as the case may be. 10 But when a case is between a
stockholder and the corporation of which he holds stocks, the controversy is intracorporate
and well within the jurisdiction of the SEC. 11 These rulings are in consonance with the
following provisions of Presidential Decree No. 902-A which took effect on March 11, 1976:
"Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and
Exchange Commission over corporations, partnerships and other forms of associations
registered with it as expressly granted under existing laws and decrees, it shall have original
and exclusive jurisdiction to hear and decide cases involving:
"(a) . . .
"(b) Controversies arising out of intracorporate or partnership relations, between and among
stockholders, members, or associates; between any or all of them and the corporation,
partnership or association of which they are stockholders, members or associates,
respectively; and between such corporation, partnership or association and the State insofar
as it concerns their individual franchise or right to exist as such entity."cralaw virtua1aw
library
Thus, in Abejo v. De la Cruz, 12 the Court held that "an intracorporate controversy is one
which arises between a stockholder and the corporation. There is no distinction,
qualification, nor any exemption whatsoever. The provision is broad and covers all kinds of
controversies between stockholders and corporations." The SEC, being clothed with
additional adjudicatory powers over intracorporate and kindred disputes to promote
dispatch arising from expertise enhanced by specialization in the settlement of said
controversies, 13 is the proper agency to settle the controversy in this case.
Although the reliefs sought by Chaves appear to fall under the jurisdiction of the labor arbiter
as they are claims for unpaid salaries and other remunerations for services rendered, a close
scrutiny thereof shows that said claims are actually part of the perquisites of his position in,
and therefore interlinked with his relations with the corporation. In Dy v. NLRC, 14 the Court
said:" (t)he question of remuneration involving as it does, a person who is not a mere
employee but a stockholder and officer, an integral part, it might be said, of the corporation,
is not a simple labor problem but a matter that comes within the area of corporate affairs
and management, and is in fact a corporate controversy in contemplation of the Corporation
Code."
Finding that the MOLE has no jurisdiction to take cognizance of the herein controversy, there
is no need to resolve the other issues raised in this petition.
WHEREFORE, the questioned decision of the labor arbiter and the order of the MOLE are set
aside for having been rendered without jurisdiction, but without prejudice to private
respondent’s seeking recourse with the appropriate forum.
SO ORDERED.
LABOR REL 24
G.R. No. 118088 November 23, 1995
MAINLAND CONSTRUCTION, CO., INC., and/or LUCITA LU CARABUENA, ROBERT L.
CARABUENA, ELLEN LU CARABUENA, and MARTIN LU, petitioners,
vs.
MILA MOVILLA, ERNESTO MOVILLA, JR., MILA JUDITH C. MOVILLA, JUDE BRIX C. MOVILLA,
JONARD ELLERY C. MOVILLA, AND MAILA JONAH M. QUIMBO, surviving heirs of ERNESTO
MOVILLA, and THE HONORABLE COMMISSIONER of the NATIONAL LABOR RELATIONS
COMMISSION-5TH DIVISION, respondents.
HERMOSISIMA, JR., J.:
Petitioners urge this Court to set aside the Decision of the National Labor Relations
Commission (NLRC), dated May 30, 1994, in NLRC-CA No.
M-000949-92 for having been rendered with grave abuse of discretion amounting to lack of
jurisdiction. This reversed the decision of the Labor Arbiter in case No. RAB-11-10-99883-91.
Petitioners' motion for reconsideration of the NLRC decision was denied in a Resolution,
dated August 31, 1994.
Mainland Construction Co., Inc. is a domestic corporation, duly organized and existing under
Philippine laws, having been issued a certificate of registration by the Securities and
Exchange Commission (SEC) on July 26, 1977, under Registry Number 74691. Its principal line
of business is the general construction of roads and bridges and the operation of a service
shop for the maintenance of equipment. Respondents on the other hand, are the surviving
heirs of complainant, Ernesto Movilla, who died during the pendency of the action with the
Labor Arbiter.
Records show that Ernesto Movilla, who was a Certified Public Accountant during his lifetime,
was hired as such by Mainland in 1977. Thereafter, he was promoted to the position of
Administrative Officer with a monthly salary of P4,700.00.1
Ernesto Movilla, recorded as receiving a fixed salary of P4,700.00 a month, was registered
with the Social Security System (SSS) as an employee of petitioner Corporation. His
contributions to the SSS, Medicare and Employees Compensation Commission (ECC) were
deducted from his monthly earnings by his said employer.2
On April 12, 1987, during petitioner corporation's annual meeting of stockholders, the
following were elected members of the Board of Directors, viz.: Robert L. Carabuena, Ellen L.
Carabuena, Lucita Lu Carabuena, Martin G. Lu and Ernesto L. Movilla.
On the same day, an organizational meeting was held and the Board of Directors elected
Ernesto Movilla as Administrative Manager.3 He occupied the said position up to the time of
his death.
On April 2, 1991, the Department of Labor and Employment (DOLE) conducted a routine
inspection on petitioner corporation and found that it committed such irregularities in the
conduct of its business as:
1. Underpayment of wages under R.A. 6727 and RTWPB-XI-01;
2. Non-implementation of Wage Order No. RTWPB-XI-02;
3. Unpaid wages for 1989 and 1990;
4. Non-payment of holiday pay and service incentive leave pay; and
5. Unpaid 13th month pay (remaining balance for 1990).4
On the basis of this finding, petitioner corporation was ordered by DOLE to pay to its thirteen
employees, which included Movilla, the total amount of P309,435.89, representing their
salaries, holiday pay, service incentive leave pay differentials, unpaid wages and 13th month
pay.
All the employees listed in the DOLE's order were paid by petitioner corporation, except
Ernesto Movilla.
On October 8, 1991, Ernesto Movilla filed a case against petitioner corporation and/or Lucita,
Robert, and Ellen, all surnamed Carabuena, for unpaid wages, separation pay and attorney's
fees, with the Department of Labor and Employment, Regional Arbitration, Branch XI, Davao
City.
On February 29, 1992, Ernesto Movilla died while the case was being tried by the Labor
Arbiter and was promptly substituted by his heirs, private respondents herein, with the
consent of the Labor Arbiter.
The Labor Arbiter rendered judgment on June 26, 1992, dismissing the complaint on the
ground of lack of jurisdiction. Specifically, the Labor Arbiter made the following ratiocination:
It is clear that in the case at bar, the controversy presented by complainant is intra-corporate
in nature and is within the jurisdiction of the Securities and Exchange Commission, pursuant
to P.D. 902-A (Phil. School of Business Administration, et al. v. Leano, G.R. No. L-58468,
February 24, 1984; Dy et al. v. NLRC, et al., G.R. No. L-68544, October 27, 1986). What
Movilla is claiming against respondents are his alleged unpaid salaries and separation pay as
Administrative Manager of the corporation for which position he was appointed by the Board
of Directors. His claims therefore fall under the jurisdiction of the Securities and Exchange
Commission because this is not a simple labor problem; but a matter that comes within the
area of corporate affairs and management, and is in fact a corporate controversy in
contemplation of the Corporation Code. (Fortune Cement Corporation v. NLRC, et al., G.R.
No. 79762, January 24, 1991).5
Aggrieved by this decision, respondents appealed to the National Labor Relations
Commission (NLRC). The NLRC ruled that the issue in the case was one which involved a labor
dispute between an employee and petitioner corporation and, thus, the NLRC had
jurisdiction to resolve the case. The dispositive portion of the NLRC decision reads:
WHEREFORE, the assailed decision is Reversed and Set Aside. Respondents are ordered to
pay the heirs of complainant the following:
1. Unpaid salaries from January 1989 to September 1991 in the sum of P155,100.00;
2. Separation pay in the sum of P65,800.00;
3. Moral damages in the sum of P10,000.00;
4. Indemnity in the sum of P3,000.00; and,
5. Attorney's fees equivalent to 10% of the total award.6
The pivotal issue in this case is which of the two agencies of the government — the NLRC or
the SEC — has jurisdiction over the controversy.
As we stated earlier, it is of course the contention of petitioners that the NLRC committed
grave abuse of discretion when it nullified the decision of the Labor Arbiter which dismissed
the complaint of Movilla for unpaid wages, separation pay and attorney's fees on the ground
of lack of jurisdiction. Petitioners take the position that, since Ernesto Movilla was a
corporate officer, the controversy as to his compensation is within the jurisdiction of the SEC
as mandated by P.D. 902-A and not with the NLRC.
We find for the respondents, it appearing that petitioners' contention is bereft of merit.
LIST OF CASES UNDER SEC JURISDICTION
In order that the SEC can take cognizance of a case, the controversy must pertain to any of
the following relationships: a) between the corporation, partnership or association and
the public; b) between the corporation, partnership or association and its stockholders,
partners, members or officers;
c) between the corporation, partnership or association and the State as far as its
franchise, permit or license to operate is concerned; and d) among the stockholders,
partners or associates themselves.7
THE BETTER RULE THAN THE ABOVE The fact that the parties involved in the controversy are
all stockholders or that the parties involved are the stockholders and the corporation does
not necessarily place the dispute within the ambit of the jurisdiction of SEC. The better policy
to be followed in determining jurisdiction over a case should be to consider concurrent
factors such as the status or relationship of the parties or the nature of the question that is
the subject of their controversy.8 In the absence of any one of these factors, the SEC will not
have jurisdiction. Furthermore, it does not necessarily follow that every conflict between the
corporation and its stockholders would involve such corporate matters as only the SEC can
resolve in the exercise of its adjudicatory or quasi-judicial powers.9
APPLYING THE RULE: THE CASE IS ER EEIn the case at bench, the claim for unpaid wages and
separation pay filed by the complainant against petitioner corporation involves a labor
dispute. It does not involve an intra-corporate matter, even when it is between a stockholder
and a corporation. It relates to an employer-employee relationship which is distinct from the
corporate relationship of one with the other. Moreover, there was no showing of any change
in the duties being performed by complainant as an Administrative Officer and as an
Administrative Manager after his election by the Board of Directors. What comes to the fore
is whether there was a change in the nature of his functions and not merely the
nomenclature or title given to his job.
Indeed, Ernesto Movilla worked as an administrative officer of the company for several years
and was given a fixed salary every month. To further sustain this assertion Movilla also
submitted a joint affidavit executed by Juanito S. Malubay and Delia S. Luciano, Project
Engineer and Personnel-In-Charge, respectively, of petitioner corporation, attesting that they
personally knew Movilla and that he was employed in the company. A Premium Certification
issued by an authorized representative of petitioners was also presented to show his actual
monthly earnings as well as his monthly contributions to the SSS, Medicare and ECC.10
Movilla's registration in the SSS by petitioner corporation added strength to the conclusion
that he was petitioner corporation's employee as coverage by the said law is predicated on
the existence of an employer-employee relationship. 11 Furthermore, petitioner corporation
failed to present evidence which showed that, after his election as Administrative Manager,
he was excluded from the coverage of the SSS, Medicare and ECC.
He also presented, appearing to be relevant to the issue, the result of the investigation
conducted by DOLE which found that petitioner corporation has transgressed several labor
standard laws against its employees.
As correctly ruled by the NLRC:
The claims for unpaid salaries/monetary benefits and separation pay, are not a corporate
conflict as respondents presented them to be. If complainant is not an employee, respondent
should have contested the DOLE inspection report, What they did was to exclude
complainant from the order of payment . . . and worse, he was not both given responsibilities
and paid his salaries for the succeeding months . . . . This is a clear case of constructive
dismissal without due process . . .12
The existence of an employer-employee relationship is a factual question and public
respondent's findings are accorded great weight and respect as the same are supported by
substantial evidence.13 Hence, we uphold the conclusion of public respondent that Ernesto
Movilla was an employee of petitioner corporation.
It is pertinent to note that petitioner corporation is not prohibited from hiring its corporate
officers to perform services under a circumstance which will make him an employee.14
Moreover, although a director of a corporation is not, merely by virtue of his position, its
employee, said director may act as an employee or accept duties that make him also an
employee.15
Since Ernesto Movilla's complaint involves a labor dispute, it is the NLRC, under Article 217 of
the Labor Code of the Philippines, which has jurisdiction over the case at bench.
WHEREFORE, the petition is DISMISSED for lack of showing of any grave abuse of discretion
on the part of public respondent NLRC. The assailed decision of public respondent is thus
AFFIRMED.
SO ORDERED.
LABOR REL 25
G.R. No. 85197 March 18, 1991
NESTLÉ PHILIPPINES, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, EUGENIA C. NUNEZ, LIZA T. VILLANUEVA,
EMMANUEL S. VILLENA, RUDOLPH C. ARMAS, RODOLFO M. KUA and RODOLFO A. SOLIDUM,
respondents.
GRIÑO-AQUINO, J.:
This petition for certiorari seeks a review of the resolutions dated May 28, 1988 and
September 1, 1988 of the National Labor Relations Commission (NLRC) in Injunction Case No.
1582 granting the injunction prayed for by the private respondents, to hold in abeyance the
cancellation of their car loans and payments of the monthly amortizations thereon pending
the resolution of their complaints for illegal dismissal.
The private respondents were employed by the petitioner either as sales representatives or
medical representatives. By reason of the nature of their work they were each allowed to
avail of the company's car loan policy. Under that policy, the company advances the purchase
price of a car to be paid back by the employee through monthly deductions from his salary,
the company retaining the ownership of the motor vehicle until it shall have been fully paid
for. All of the private respondents availed of the petitioner's car loan policy.
On September 14, 1987, private respondents Nuñez, Villanueva, Villena and Armas were
dismissed from the service for having participated in an illegal strike. On December 26, 1987,
respondents Kua and Solidum were also dismissed for certain irregularities. All the private
respondents filed complaints for illegal dismissal in the Arbitration Branch of the NLRC. The
Labor Arbiter dismissed their complaints and upheld the legality of their dismissal. They
appealed to the NLRC where their appeals are still pending.
In the Notices of Dismissal which they received from Nestlé, the private respondents had
been directed to either settle the remaining balance of the cost of their respective cars, or
return them to the company for proper disposition.
As they failed and refused to avail of either option, the company filed in the Regional Trial
Court of Makati a civil suit to recover possession of the cars. The Court issued an Order dated
March 7, 1988 directing the Deputy Sheriff to take the motor vehicles into his custody.
The private respondents sought a temporary restraining order in the NLRC to stop the
company from cancelling their car loans and collecting their monthly amortizations pending
the final resolution of their appeals in the illegal dismissal case.
On May 27, 1988, the NLRC en banc, issued a resolution granting their petition for injunction.
Its order reads:
Acting on the Urgent Petition for the Issuance of a Temporary Restraining Order, the
Commission sitting en banc after deliberation, Resolved to hold in abeyance the cancellation
of the petitioners' car loans and the payment of the monthly amortizations thereof pending
resolution of their illegal dismissal cases. (p. 5, Rollo.)
The company filed a motion for reconsideration, but it was denied for tardiness. Hence, this
petition for certiorarialleging that the NLRC acted with grave abuse of discretion amounting
to lack of jurisdiction when it issued a labor injunction without legal basis and in the absence
of any labor dispute related to the same.
The private respondents, in their comment on the petition, alleged that there is a labor
dispute between the petitioner and the private respondents and that their default in paying
the amortizations for their cars was brought about by their illegal dismissal from work by the
petitioner as punishment for their participation in the illegal strike of the Union of Filipro
Employees of which they are members. If they had not participated in the strike, they would
not have been dismissed from work and they would not have defaulted in the payment of
their amortizations. Private respondents admitted their civil obligation to the petitioner.
The Office of the Solicitor General filed a manifestation on June 13, 1989, stating that "after
judicious scrutiny of the records, . . . and in consonance with the applicable law and
jurisprudence on the matter, the Office of the Solicitor General is convinced that it cannot,
without violating the law, sustain the findings of the National Labor Relations Commission in
the case at bar. So as not to prejudice NLRC's case, the OSG deems it best to refrain from
filing its Comment, even as it begs leave of the Honorable Court to be excused from further
appearing in behalf of the NLRC in this particular case" (p. 173, Rollo).
Filing its own comment, the NLRC argued that as the illegal dismissal case is a labor dispute
which is still pending resolution before it, "it is clothed with authority to issue the contested
resolutions because under the law, PD 442, otherwise known as the Labor Code of the
Philippines as amended, it is vested with the authority to resolve labor disputes" (p. 252,
Rollo).
The power of the NLRC to issue writs of injunction is found in Article 218 of the Labor Code,
which provides:
Art. 218 Powers of the Commission. — The Commission shall have the power and authority:
xxx xxx xxx
(e) To enjoin or restrain any actual or threatened commission of any or all prohibited or
unlawful acts or to require the performance of a particular act in any labor dispute which, if
not restrained or performed forthwith, may cause grave or irreparable damage to any party
or render ineffectual any decision in favor of such party: . . . (Emphasis ours.)
That power, as the statute provides, can only be exercised in a labor dispute. Paragraph (1) of
Article 212 of the Labor Code defines a labor dispute as follows:
(1) "Labor dispute" includes any controversy or matters 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.
Nestlé's demand for payment of the private respondents' amortizations on their car loans, or,
in the alternative, the return of the cars to the company, is not a labor, but a civil, dispute. It
involves debtor-creditor relations, rather than employee-employer relations.
Petitioner Nestlé Philippines, Inc., correctly pointed out that:
The twin directives contained in petitioner's letters to the private respondents to either (1)
settle the remaining balance on the value of their assigned cars under the company car plan
or return the cars to the company for proper disposition; or (2) to pay all outstanding
accountabilities to the company — are matters related to the enforcement of a civil
obligation founded on contract. It is not dependent on or related to any labor aspect under
which a labor injunction can be issued. Whether or not the private respondents remain as
employees of the petitioner, there is no escape from their obligation to pay their outstanding
accountabilities to the petitioner; and if they cannot afford it, to return the cars assigned to
them.
As noted, the options given to the private respondents are civil in nature arising from
contractual obligations. There is no labor aspect involved in the enforcement of those
obligations. (p. 7, Rollo.)
The NLRC gravely abused its discretion and exceeded its jurisdiction by issuing the writ of
injunction to stop the company from enforcing the civil obligation of the private respondents
under the car loan agreements and from protecting its interest in the cars which, by the
terms of those agreements, belong to it (the company) until their purchase price shall have
been fully paid by the employee. The terms of the car loan agreements are not in issue in the
labor case. The rights and obligations of the parties under those contracts may be enforced
by a separate civil action in the regular courts, not in the NLRC.
WHEREFORE, the petition for certiorari is granted. The questioned resolution dated May 27,
1988 of the NLRC in Injunction Case No. 1582 (Annex A) is hereby annulled and set aside.
Costs against the private respondents.
SO ORDERED.
LABOR REL 26
G.R. No. 80039 April 18, 1989
ERNESTO M. APODACA, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, JOSE M. MIRASOL and INTRANS PHILS., INC.,
respondents.
GANCAYCO, J.:
Does the National Labor Relations Commission (NLRC) have jurisdiction to resolve a claim for
non-payment of stock subscriptions to a corporation? Assuming that it has, can an obligation
arising therefrom be offset against a money claim of an employee against the employer?
These are the issues brought to this court through this petition for review of a decision of the
NLRC dated September 18, 1987.
The only remedy provided for by law from such a decision is a special civil action for certiorari
under Rule 65 of the Rules of Court based on jurisdictional grounds or on alleged grave abuse
of discretion amounting to lack or excess of jurisdiction, not by way of an appeal by
certiorari. Nevertheless, in the interest of justice, this petition is treated as a special civil
action for certiorari.
Petitioner was employed in respondent corporation. On August 28, 1985, respondent Jose M.
Mirasol persuaded petitioner to subscribe to 1,500 shares of respondent corporation at
P100.00 per share or a total of P150,000.00. He made an initial payment of P37,500.00. On
September 1, 1975, petitioner was appointed President and General Manager of the
respondent corporation. However, on January 2, 1986, he resigned.
On December 19, 1986, petitioner instituted with the NLRC a complaint against private
respondents for the payment of his unpaid wages, his cost of living allowance, the balance of
his gasoline and representation expenses and his bonus compensation for 1986. Petitioner
and private respondents submitted their position papers to the labor arbiter. Private
respondents admitted that there is due to petitioner the amount of P17,060.07 but this was
applied to the unpaid balance of his subscription in the amount of P95,439.93. Petitioner
questioned the set-off alleging that there was no call or notice for the payment of the unpaid
subscription and that, accordingly, the alleged obligation is not enforceable.
In a decision dated April 28, 1987, the labor arbiter sustained the claim of petitioner for
P17,060.07 on the ground that the employer has no right to withhold payment of wages
already earned under Article 103 of the Labor Code. Upon the appeal of the private
respondents to public respondent NLRC, the decision of the labor arbiter was reversed in a
decision dated September 18, 1987. The NLRC held that a stockholder who fails to pay his
unpaid subscription on call becomes a debtor of the corporation and that the set-off of said
obligation against the wages and others due to petitioner is not contrary to law, morals and
public policy.
Hence, the instant petition.
The petition is impressed with merit.
Firstly, the NLRC has no jurisdiction to determine such intra-corporate dispute between the
stockholder and the corporation as in the matter of unpaid subscriptions. This controversy is
within the exclusive jurisdiction of the Securities and Exchange Commission. 1
Secondly, assuming arguendo that the NLRC may exercise jurisdiction over the said subject
matter under the circumstances of this case, the unpaid subscriptions are not due and
payable until a call is made by the corporation for payment. 2 Private respondents have not
presented a resolution of the board of directors of respondent corporation calling for the
payment of the unpaid subscriptions. It does not even appear that a notice of such call has
been sent to petitioner by the respondent corporation.
What the records show is that the respondent corporation deducted the amount due to
petitioner from the amount receivable from him for the unpaid subscriptions. 3 No doubt
such set-off was without lawful basis, if not premature. As there was no notice or call for the
payment of unpaid subscriptions, the same is not yet due and payable.
Lastly, assuming further that there was a call for payment of the unpaid subscription, the
NLRC cannot validly set it off against the wages and other benefits due petitioner. Article 113
of the Labor Code allows such a deduction from the wages of the employees by the
employer, only in three instances, to wit:
ART. 113. Wage Deduction. — No employer, in his own behalf or in behalf of any person,
shall make any deduction from the wages of his employees, except:
(a) In cases where the worker is insured with his consent by the employer, and the deduction
is to recompense the employer for the amount paid by him as premium on the insurance;
(b) For union dues, in cases where the right of the worker or his union to checkoff has been
recognized by the employer or authorized in writing by the individual worker concerned; and
(c) In cases where the employer is authorized by law or regulations issued by the Secretary of
Labor. 4
WHEREFORE, the petition is GRANTED and the questioned decision of the NLRC dated
September 18, 1987 is hereby set aside and another judgment is hereby rendered ordering
private respondents to pay petitioner the amount of P17,060.07 plus legal interest computed
from the time of the filing of the complaint on December 19, 1986, with costs against private
respondents.
SO ORDERED.
LABOR REL 27
G.R. No. 85517 October 16, 1992
DOROTEO OCHEDA, petitioner,
vs.
THE HONORABLE COURT OF APPEALS and THE HEIRS OF EDUARDO SANTOS, respondents.
DAVIDE, JR., J.:
The trial court's jurisdiction over an action for damages arising from a quasi-delict which
resulted in the death of an employee while in the performance of his duty is challenged in
this case.
The late Eduardo Santos was, at the time of his death, employed as a painter by the
petitioner who was a sub-contractor for the painting job on M.J. Building then being
constructed along Salcedo Street, Makati, Metro Manila. The C.E. Construction Corporation,
Inc. (CECCI) was the principal contractor thereof by virtue of a contract it entered into with
M.J. Development Corporation, the owner of the building. Another corporation, Fujitec
Philippines Industrial Company, Inc. (FUJITEC), was contracted by M.J. Development
Corporation to install two (2) standard scenic elevator units in the building.
When the painting job was almost complete, i.e., all that remained to be painted was the
wall of the shaft for the second elevator, the petitioner trimmed his work forces to two (2)
employees, Hernani Gozun and Eduardo Santos; these employees were tasked to finish the
painting. On 5 February 1981, they started work on the inner wall of the elevator shaft; to
paint the same, they had to stand on top of the elevator which was then on the second floor
of the building. After they finished, they called on the boy operating the elevator to ask him
to bring the same down to the first floor. Instead of lowering the elevator, however, the boy
brought it up to the sixth floor. The sudden upward movement caused the elevator to jerk
and the two (2) painters to lose their balance. Hernani was able to cling to the cable but
Eduardo fell off the top, found himself pinned between the shaft and the elevator as the
latter was moving upward and then fell to the ground when the elevator finally stopped on
the sixth floor. Hernani rushed to Eduardo's aid upon hearing the latter's cry for help. The
former lifted Eduardo in his arms and, with the help of another man, brought him to the
Makati Medical Center where he later died. While the elevator boy was never identified, it is
alleged that he worked for CECCI.
On 11 September 1981, the spouses Catalino and Ester Santos, together with Wilma
Palabasan-Santos, parents and widow, respectively, of Eduardo, filed a Complaint 1 for
damages against Doroteo Ocheda and CECCI before the then Court of First instance (now
Regional Trial Court) of Pampanga. The case was docketed as Civil Case No. 6263 and was
assigned to Branch 42 thereof. The complaint alleges the foregoing facts and, in addition,
specifically states that while Eduardo was employed by the petitioner in 1979 and received a
daily wage of P35.00, the petitioner did not place him within "any SSS, Medicare and
Workmen's Compensation coverage." It is further averred that the elevator boy was
inexperienced for the work assigned to him. Then they asked for judgment ordering the
defendants, jointly and severally, to pay P10,000.00 as burial expenses, P30,000.00 as moral
damages, attorney's fees and compensatory damages as may be proved at the trial and costs.
Petitioner filed an Answer with a Counterclaim against the plaintiff, and a Cross-Claim against
CECCI. 2 He alleges therein that Eduardo was employed by him only a week before the
accident and purely on a casual basis for the particular painting job. As affirmative defense,
he avers that Eduardo's death was due to the negligence and carelessness of the elevator
boy, an employee of CECCI. Thus, the latter is solely liable for the said death and no cause of
action exists against him. Moreover, it is postulated that the trial court has no jurisdiction
over the claims involving SSS, Medicare, Workmen's Compensation and insurance benefits.
Such jurisdiction is vested in other administrative or quasi-judicial bodies; furthermore, he
avers that the allegation concerning such claims (paragraph 8 of the complaint) is not
essential to the plaintiffs' cause of action which is the negligent operation of the elevator. In
this counterclaim, petitioner asks for an award of attorney's fees in the amount of
P10,000.00, and the expenses of litigation.
In due course, CECCI likewise filed its Answer with a Third-Party Complaint 3 against FUJITEC
which it alleged to be liable, being the employer of the elevator boy. FUJITEC filed its Answer
to the said Third-Party Complaint 4 denying the allegations made therein and asserting that
the operation of the elevator was turned over the building owner long before the fatal
accident.
Pre-trial was conducted on 23 September 1983. The pre-trial order issued by the trial court
embodies the respective positions of the parties. As to herein petitioners, the Pre-trial order
summarized his stand as follows:
2. Defendant Ocheda's Case:
Defendant Doroteo Ocheda denies liability. He claims that the complaint states no cause of
action against him; that the death of the deceased Eduardo Santos resulted from the
operation of the elevator at the construction site; that he had nothing to do with the
operation, or control, or management of the elevator in question, hence, the death of
Eduardo Santos is not attributable to him; that his participation in the construction of the
building was limited solely to painting specific portions thereof; that he filed a cross-claim
against defendant C.E. Construction Corp. because the said corporation was the general
contractor of the building, operator/maintainer of the elevator, and employer of the elevator
boy. 5
During the trial of the case on the merits, petitioner presented two (2) witnesses — Josefino
Rivera and himself. 6
On 24 February 1986, the trial court rendered its decision 7 finding both the petitioner and
CECCI liable for the death of Eduardo. The dispositive portion of the decision reads as follows:
WHEREFORE, in view of the foregoing considerations, judgment is hereby rendered as
follows:
1. The defendant (sic) Doroteo Ocheda and C.E. Construction Corporation, Inc. are ordered to
pay jointly and severally the plaintiffs the following amounts:
a) Seven Thousand Three Hundred Fifty Pesos (P7,350.00) as burial expenses;
b) Thirty Thousand Pesos (P30,000.00) as moral damages;
c) Five Thousand pesos (P5,000.00) as attorney's fees; and
d) Costs of suit.
2. The third-party complaint is hereby dismissed and the third-party plaintiff C.E.
Construction Corporation, Inc. is ordered to pay the third-party defendant Fujitec the sum of
Fifteen Thousand Pesos (P15,000.00) as attorney's fees plus the cost of suit;
3. The cross-claim and counterclaim of defendant Ocheda and the counterclaim of defendant
C.E. Construction are hereby dismissed.
SO ORDERED. 8
This determination of liability is based on the trial court's findings that:
It has been sufficiently established that it was defendant Ocheda who caused the accident to
happen. It was defendant Ocheda who ordered the late Eduardo Santos and Hernani Gozun
to use the top of the elevator as stepping board while painting the wall of the elevator shaft.
And defendant Ocheda failed to exercise the diligence of a good father of a family in the
supervision of his employees.
It has likewise been shown that C.E. Construction was, at the time of the incident in question,
in full control of the building since the same was not yet accepted by the owner thereof. C.E.
Construction was the general contractor of the building, hence it was in full management and
control of the elevator because the same was already turned over to and accepted by the
building owner from Fujitec. As such C.E. Construction should have guarded against the
unauthorized use of the elevator by people working in the building. At the time of the
incident, the late Eduardo Santos was an employee of defendant Ocheda, a sub-contractor of
C.E. Construction. In view of all these, C.E. Construction is equally liable with defendant
Ocheda pursuant to Article 2180, in conjunction with Article 2176 of the civil Code. The
elevator which caused the injury and subsequent death of Eduardo Santos was under the
management and control of C.E. Construction. Consequently, had C.E. Construction used
proper care in the management and operation of the elevator, and had it exercised the
diligence of a good father of a family in the supervision of its employees, then the fatal
incident would not have happened. 9
Petitioner and CECCI appealed this adverse decision to the respondent Court of Appeals
which docketed the case as C.A.-G.R. CV No. 09574. In the Brief he submitted, petitioner
made the following assignment of errors:
I THE LOWER COURT ERRED IN HOLDING THAT THE REGIONAL TRIAL COURT HAD
JURISDICTION OVER THE COMPLAINT;
II THE LOWER COURT ERRED IN HOLDING THAT OCHEDA WAS GUILTY OF NEGLIGENCE FOR
THE DEATH OF SANTOS;
III THE LOWER COURT ERRED IN APPLYING ARTICLE 2180 OF THE NEW CIVIL CODE TO
OCHEDA;
IV THE LOWER COURT ERRED IN HOLDING OCHEDA JOINTLY AND SEVERALLY LIABLE WITH
C.E. CONSTRUCTION CORP. TO THE PLAINTIFFS FOR DAMAGES. 10
On the other hand, CECCI, in its Brief, contended that the trial court gravely erred in finding it
solidarily liable with the herein petitioner for the death of Eduardo, in awarding moral
damages, in dismissing the third-party complaint and in not holding the plaintiffs therein
liable for damages, attorney's fees and costs of the suit. 11
On 1 September 1988, the respondent Court promulgated its decision 12 upholding the
findings of the trial court but reducing the amount of damages; it likewise eliminated the
grant of attorney's fees in favor of FUJITEC. Thus:
WHEREFORE, the decision appealed from is hereby AFFIRMED in all respects, except as
modified herein by reducing the award for actual or compensatory damages to only
P5,880.00; reducing the damage caused by death to only P24,000.00; and eliminating the
award of P15,000.00 attorney's fees to third party defendant Fujitec. No costs.
SO ORDERED. 13
The reduction in the award of damages was based on the respondent Court's finding of Petitioner's unusual patience and tenacity on the first assigned error merits him no reward.
contributory negligence on the part of Eduardo Santos when he failed to heed the order to In the first place, he did not raise in his answer that defense with respect to the claim for
tie a rope around his waist while working. damages arising from a quasi-delict. His affirmative defense of lack of jurisdiction specifically
refers to the allegation in paragraph 8 of the complaint concerning the SSS, Medicare,
As to the issue of lack of jurisdiction on the part of the trial court, the respondent Court held:
Workmen's Compensation and insurance benefits the award of which, according to him, falls
The case at bar is being prosecuted in behalf of a deceased, not dismissed, employee for within the competence and jurisdiction of other administrative or quasi-judicial bodies. In
damages arising from the death of the employee based on quasi-delict founded on an fact, he even considers such allegation to be non-essential to the complaint's cause of action
undoubted principle of justice recognized by all legislations that every injury, loss or damage — the negligent operation of the elevator. This is how he worded that particular affirmative
which a person received in his right (sic), be it by act or by omission, creates a juridical defense:
relation from which is derived the right which the aggrieved party has to be indemnified and
SECOND AFFIRMATIVE DEFENSE
the consequent obligation by the other party.
12. He need not deny nor (sic) admit the allegations in paragraph 8 regarding the alleged SSS,
In the present case of Floresca vs. Philex Mining Corporation, 136 SCRA 141, the Supreme
Medicare, Workmen's Compensation, and insurance coverage since this Honorable Court has
Court ruled that recovery under the new Civil Code for damages arising from negligence is
no jurisdiction over disputes involving cases of these sorts, jurisdiction thereof being vested
not barred by Article 173 of the New Labor Code. In this case, it was further held that an
in other administrative or quasi-judicial bodies. Furthermore, the allegations in said
ordinary court has jurisdiction over complaints for damages filed by heirs of mining
paragraph 8 of the plaintiff's cause of action which is the negligent operation of the elevator
employees against the mining corporation for the death of the former allegedly caused by
resulting in the death of Eduardo (sic) Santos. 21
the negligence of their employer. 14
Obviously, he did not even have Labor Arbiters in mind for such cases. He knew, or at least
His motion to reconsider the decision having been denied in the resolution of the respondent
ought to have known, that expressly excepted from the broad jurisdiction of labor Arbiters in
Court dated 18 October 1988, 15 petitioner took this recourse under Rule 45 of the Rules of
Section 217 of the Labor Code are "claims for employees compensation, social security,
Court. He reiterates in the instant petition for review the assignment of errors submitted
medicate and maternity benefits."
before the respondent Court.
In the second place, during the pre-trial conference, petitioner failed to raise the issue of
This Court grave due course to the petition and required the parties to submit their
jurisdiction. He instead harped on the lack of a cause of action — his first affirmative defense
respective Memoranda 16 after the submission of the Comment to the petition by the
— which was based on the theory that the proximate cause of Eduardo's death was the
private respondent, the Reply thereto by the petitioner and the Rejoinder to the latter by the
negligence of the elevator boy who was an employee of CECCI; in fact, it was against the
private respondents.
latter that he filed a cross-claim.
We find no merit in the petition.
In the third place, petitioner openly and unqualifiedly involved and submitted to the
Regarding the issue of the factual findings upon which the second, third and fourth assigned jurisdiction of the trial court by setting up a counterclaim, asking for relief in the concept of
errors are based. We find no cogent reason to disturb such findings of both the trial and attorney's fees and expenses of litigation against the private respondents and filing a cross-
respondent courts. Petitioner does not even attempt to show that this case falls under any of claim against CECCI, whom he alleged to be the employer of the elevator boy.
the accepted exceptions to the well-settled and oft-repeated rule that findings of facts of the
Finally, he presented evidence to prove that the proximate cause of the accident and
Court of Appeals are biding upon this Court. 17
resulting death of Eduardo was the negligence of the elevator boy. He concludes that as
Anent the alleged lack of jurisdiction on the part of the trial court, petitioner admits that the employer of the said boy, CECCI is solely liable to the private respondents for the damages
private respondents cause of action, as expressed in the complaint, is based on a quasi-delict. claimed by the latter.
The former submits, however, that since the monetary award is sought in connection with
Petitioner was, therefore, effectively estopped from raising the issue of jurisdiction with
the employer-employee relationship which existed between him and the late Eduardo
respect to the damages arising from a quasi-delict. While it is true that jurisdiction over the
Santos, only Labor Arbiters, pursuant to Article 217 of the Labor Code of the Philippines as it
subject matter of a case may be raised at any stage of the proceedings as the same is
was then worded, 18 have original and exclusive jurisdiction over them. Under the said
conferred by law, 22 it is nevertheless settled that a party may be barred from arising it on
provision, "all money claims of workers" and "all other claims arising from employer-
the ground of estoppel. 23 The reason for this is that after voluntarily submitting a cause and
employee relations" are exclusively cognizable by Labor Arbiters. We ruled in Getz Corp. vs.
encountering an adverse decision on the merits, it would be improper and too late, to say the
Court of Appeals 19 that pursuant to P.D. No. 1691, such claims include moral and exemplary
least, for the lower to question the jurisdiction or power of the court. It is not correct for a
damages. Petitioner further contends that Floresca vs. Philex Mining Corp., 20 which the
party who has invoked the jurisdiction of a court in a particular matter to secure affirmative
respondent Court relied upon, is not applicable because the cause of action involved therein
relief, to afterwards deny that very jurisdiction to escape penalty.
accrued on 28 June 1967, or before the enactment of the Labor Code and P.D. No. 1691; he
asserts that the decision therein constituted "judicial legislation". And even granting, for the sake of argument, that the issue of jurisdiction can still be raised in
connection with its specific reference to the damages arising out of a quasi-delict,
petitioner's thesis would still fail. Such damages may not be awarded in accordance with
Section 217 of the Labor Code, as amended, for there is no reasonable causal connection
with the employer-employee relationship. At the time the cause of action accrued, Article
217 of the Labor Code required that in order that the Labor Arbiter may adjudicate claims not
included in the other paragraphs, the same must arise out of employer-employee relations.
In San Miguel Corporation vs. National Labor Relations Commission, 24 this Court ruled, with
respect to Article 217, as amended by B.P. Blg. 227:
While paragraph 3 above refers to "all money claims of workers," it is not necessary to
suppose that the entire universe of money claims that might be asserted by workers against
their employers has been absorbed into the original and exclusive jurisdiction of Labor
Arbiters. In the first place, paragraph 3 should be read not in isolation from but rather within
the context formed by paragraph 1 (relating to unfair labor practices), paragraph 2 (relating
to claims concerning terms and conditions of employment), paragraph 4 (claims relating to
household services, a particular species of employer-employee relations), and paragraph 5
(relating to certain activities prohibited to employees or to employers). It is evident that
there is a unifying element which runs through paragraphs 1 to 5 and that is, that they all
refer to cases or disputes arising out of or in connection with an employer-employee
relationship. This is, in other words, a situation where the rule of noscitur a sociis may be
usefully invoked in clarifying the scope of paragraph 3, and any other paragraph of Article
217 of the Labor Code, as amended. We reach the above conclusion from an examination of
the terms themselves of Article 217, as last amended by B.P. Blg. 227, and even though
earlier versions of Article 217 of the Labor Code expressly brought within the jurisdiction of
the Labor Arbiters and the NLRC "cases arising from employer-employee relations," which
clause was not expressly carried over, in printer's ink, in Article 217 as it exists today. For it
cannot be presumed that money claims of workers which do not arise out of or in connection
with their employer-employee relationships, and which would therefore fall within the
general jurisdiction of the courts of justice, were intended by the legislative authority to be
taken away from the jurisdiction of the courts and lodged with Labor Arbiters on an exclusive
basis. The Court, therefore, believes and so holds that the "money claims of workers"
referred to in paragraph 3 of Article 217 embraces money claims which arise out of or in
connection with the employer-employee relationship, or some aspect or incident of such
relationship. Put a little differently, that money claims of workers which now fall within the
original and exclusive jurisdiction of labor Arbiters are those money claims which have some
reasonable causal connection with the employer-employee relationship.
Said article presently reads as follows: 25
Art. 217. Jurisdiction of Labor Arbiters and the Commission. — (a) Except as otherwise
provided under this Code, the Labor Arbiters shall have original and exclusive jurisdiction to
hear and decide, within thirty (30) calendar days after the submission of the case by the
parties for decision without extension, even in the absence of stenographic notes, the
following cases involving all workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination of disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file involving
wages, rates of pay, hours of work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from the
employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions involving
the legality of strike 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.
(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor
Arbiters.
(c) Cases involving from the interpretation or implementation of collective bargaining
agreement and those arising from the interpretation or enforcement of company personnel
policies shall be disposed of by the Labor Arbiter by referring the same to the grievance
machinery and voluntary arbitration as may be provided in said agreements.
In the instant case, the source of the obligation upon which the private respondents' cause of
action is based is a quasi-delict or tort which has no reasonable connection with any of the
claims provided for in the aforesaid Article 217 of the Labor Code. It would have been
entirely different if the claim for damages arose out of, for instance, the illegal dismissal of
Eduardo, in which case the Labor Arbiter would have exclusive jurisdiction thereon. 26
It would have also been different if the petitioner had grounded his claim of lack of
jurisdiction on the basis of the Workmen's Compensation Law. Unfortunately, he adroitly
avoided this issue from the very beginning not only because of his claim that the allegation
on this matter is irrelevant to the private respondents' theory but, and more importantly, he
did not, as revealed by the latter, register Eduardo with the Social Security System pursuant
to the Amended Rules on Employees Compensation in relation to Chapter II, Title II, Book IV
of the Labor Code of the Philippines (P.D. No. 442), as amended. To avoid possible liability
thereunder, and more particularly the criminal and civil sanctions under Section 4, Rule II of
said Rules which reads:
Sec. 4. Penalty. — Any violation of this Rule shall be penalized as follows:
(1) In case of failure or refusal to register employees, the employer or responsible official
who committed the violation shall be punished with a fine of not less than P1,000 nor more
than P10,000 and/or imprisonment for the duration of the violation or noncompliance or
until such time that rectification of the violation has been made, at the discretion of the
court.
(2) In case a compensable contingency occurs after 30 days from employment and before the
System receives any report for coverage about the employee or EC contribution on his
behalf, his employer shall be liable to the System for the lump sum equivalent to the benefits
to which he or his dependents may be entitled.
petitioner unabashedly asserted in his Answer that the late Eduardo Santos was his
employee for barely a week and that he was hired on a casual basis only for the particular
painting job on the M.J. Building. Having done so, he cannot now be heard to make a strained
and tenuous analysis of Floresca vs. Philex mining Corporation. 27
WHEREFORE, for lack of merit, the instant petition is DENIED with costs against the
petitioner.
This decision is immediately executory.
SO ORDERED.
LABOR REL 28
G.R. No. L-59825 September 11, 1982
ERNESTO MEDINA and JOSE G. ONG, petitioners,
vs.
HON. FLORELIANA CASTRO-BARTOLOME in her capacity as Presiding Judge of the Court of
First Instance Cf Rizal, Branch XV, Makati, Metro Manila, COSME DE ABOITIZ and PEPSI-COLA
BOTTLING COMPANY OF THE PHILIPPINES, INC., respondents.
ABAD SANTOS, J.:
Civil Case No. 33150 of the Court of First Instance of Rizal Branch XV, was filed in May, 1979,
by Ernesto Medina and Jose G. Ong against Cosme de Aboitiz and Pepsi-Cola Bottling Co. of
the Philippines, Inc. Medina was the former Plant General Manager and Ong was the former
Plant Comptroller of the company. Among the averments in the complaint are the following:
3. That on or about 1:00 o'clock in the afternoon of December 20, 1977, defendant Cosme de
Aboitiz, acting in his capacity as President and Chief Executive Officer of the defendant Pepsi-
Cola Bottling Company of the Philippines, Inc., went to the Pepsi-Cola Plant in Muntinlupa,
Metro Manila, and without any provocation, shouted and maliciously humiliated the
plaintiffs with the use of the following slanderous language and other words of similar import
uttered in the presence of the plaintiffs' subordinate employees, thus-
GOD DAMN IT. YOU FUCKED ME UP ... YOU SHUT UP! FUCK YOU! YOU ARE BOTH SHIT TO
ME! YOU ARE FIRED (referring to Ernesto Medina). YOU TOO ARE FIRED! '(referring to Jose
Ong )
4. That on January 9, 1978, the herein plaintiffs filed a joint criminal complaint for oral
defamation against the defendant Cosme de Aboitiz duly supported with respective affidavits
and corroborated by the affidavits of two (2) witnesses: Isagani Hernandez and Jose Ganseco
II, but after conducting a preliminary investigation, Hon. Jose B. Castillo, dismissed the
complaint allegedly because the expression "Fuck you and "You are both shit to me" were
uttered not to slander but to express anger and displeasure;
5. That on February 8, 1978, plaintiffs filed a Petition for Review with the office of the
Secretary of Justice (now Ministry of Justice) and on June 13, 1978, the Deputy Minister of
Justice, Catalino Macaraig, Jr., issued a resolution sustaining the plaintiff's complaint,
reversing the resolution of the Provincial Fiscal and directing him to file against defendant
Cosme de Aboitiz an information for Grave Slander. ... ;
6. That the employment records of plaintiffs show their track performance and impeccable
qualifications, not to mention their long years of service to the Company which undoubtedly
caused their promotion to the two highest positions in Muntinlupa Plant having about 700
employees under them with Ernesto Medina as the Plant General Manager receiving a
monthly salary of P6,600.00 excluding other perquisites accorded only to top executives and
having under his direct supervision other professionals like himself, including the plaintiff
Jose G. Ong, who was the Plant Comptroller with a basic monthly salary of P4,855.00;
7. That far from taking these matters into consideration, the defendant corporation, acting
through its President, Cosme de Aboitiz, dismissed and slandered the plaintiffs in the
presence of their subordinate employees although this could have been done in private;
8. That the defendants have evidently enjoyed the act of dismissing the plaintiffs and such
dismissal was planned to make it as humiliating as possible because instead of allowing a
lesser official like the Regional Vice President to take whatever action was necessary under
the circumstances, Cosme de Aboitiz himself went to the Muntinlupa Plant in order to
publicly upbraid and dismiss the plaintiffs;
9. That the defendants dismissed the plaintiffs because of an alleged delay in the use of
promotional crowns when such delay was true with respect to the other Plants, which is
therefore demonstrative of the fact that Cosme de Aboitiz did not really have a strong reason
for publicly humiliating the plaintiffs by dismissing them on the spot;
10. That the defendants were moved by evil motives and an anti-social attitude in dismissing
the plaintiffs because the dismissal was effected on the very day that plaintiffs were awarded
rings of loyalty to the Company, five days before Christmas and on the day when the
employees' Christmas party was held in the Muntinlupa Plant, so that when plaintiffs went
home that day and found their wives and children already dressed up for the party, they
didn't know what to do and so they cried unashamedly;
xxx xxx xxx
20. That because of the anti-social manner by which the plaintiffs were dismissed from their
employment and the embarrassment and degradation they experience in the hands of the
defendants, the plaintiffs have suffered and will continue to suffer wounded feelings,
sleepless nights, mental torture, besmirched reputation and other similar injuries, for which
the sum of P150,000.00 for each plaintiff, or the total amount. of P300,000.00 should be
awarded as moral damages;
21. That the defendants have demonstrated their lack of concern for the rights and dignity of
the Filipino worker and their callous disregard of Philippine labor and social legislation, and to
prevent other persons from following the footsteps of defendants, the amount of P50,000.00
for each plaintiff, or the total sum of P100,000.00, should be awarded as exemplary
damages;
22. That plaintiffs likewise expect to spend no less than P5,000.00 as litigation expenses and
were constrained to secure the services of counsel for the protection and enforcement of
their rights for which they agreed to pay the sum of P10,000.00 and P200.00 per appearance
as and for attorney's fees.
The complaint contains the following:
PRAYER
WHEREFORE, in view of all the foregoing. it is most respectfully that after proper notice and
hearing, judgment be rendered for the plaintiffs and against the defendants ordering them,
jointly and solidarily, to pay the plaintiffs the sums of:
1. Unrealized income in such sum as will be established during the trial;
2. P300,000.00 as moral damages;
3. P100,000.00 by way of exemplary damages:
4. P5,000.00 as litigation expenses;
5. P10,000.00 and P200.00 per appearance as and for attorney's fees; and
6. Costs of this suit.
Plaintiffs also pray for such further reliefs and remedies as may be in keeping with justice and
equity.
On June 4, 1979, a motion to dismiss the complaint on the ground of lack of jurisdiction was
filed by the defendants. The trial court denied the motion on September 6, 1979, in an order
which reads as follows:
Up for resolution by the Court is the defendants' Motion to Dismiss dated June 4, 1979,
which is basically anchored on whether or not this Court has jurisdiction over the instant
petition.
The complaint alleges that the plaintiffs' dismissal was without any provocation and that
defendant Aboitiz shouted and maliciously humiliated plaintiffs and used the words quoted
in paragraph 3 thereof. The plaintiffs further allege that they were receiving salaries of
P6,600.00 and P4,855.00 a month. So the complaint for civil damages is clearly not based on
an employer-employee relationship but on the manner of plaintiffs' dismissal and the effects
flowing therefrom. (Jovito N. Quisaba vs, Sta. Ines-Melale Veneer & Plywood Co., Inc., et al.,
No. L-38088, Aug. 30,1974.)
This case was filed on May 10, 1979. The amendatory decree, P.D. 1367, which took effect on
May 1, 1978 and which provides that Regional Directors shall not indorse and Labor Arbiters
shall not entertain claims for moral or other forms of damages, now expressly confers
jurisdiction on the courts in these cases, specifically under the plaintiff's causes of action.
Because of the letter dated January 4, 1978 and the statement of plaintiff Medina that his
receipt of the amount from defendant company was done "under strong protest," it cannot
be said that the demands set forth in the complaint have been paid, waived or other
extinguished. In fact, in defendants' Motion to Dismiss, it is stated that 'in the absence of a
showing that there was fraud, duress or violence attending said transactions, such Release
and Quitclaim Deeds are valid and binding contracts between them, which in effect admits
that plaintiffs can prove fraud, violence, duress or violence. Hence a cause of action for
plaintiffs exist.
It is noticed that the defamatory remarks standing alone per se had been made the sole
cause under the first cause of action, but it is alleged in connection with the manner in which
the plaintiffs had been dismissed, and whether the statute of limitations would apply or not
would be a matter of evidence.
IT has been alreadly settled by jurisprudence that mere asking for reinstatement does not
remove from the CFI jurisdiction over the damages. The case must involve unfair labor
practices to bring it within the jurisdiction of the CIR (now NLRC).
WHEREFORE, the defendants' Motion to Dismiss dated June 4, 1979 is hereby denied.
The defendants are hereby directed to interpose their answer within ten (10) days from
receipt hereof.
While the trial was underway, the defendants filed a second motion to dismiss the complaint
dated January 23, 1981, because of amendments to the Labor Code immediately prior
thereto. Acting on the motion, the trial court issued on May 23, 1981, the following order:
Up for resolution by the Court is the defendants' Motion to Dismiss dated January 23, 1981,
on grounds not existing when the first Motion to Dismiss dated June 4, 1979 was interposed.
The ground relied upon is the promulgation of P.D. No. 1691 amending Art. 217 of the Labor
Code of the Philippines and Batasan Pambansa Bldg. 70 which took effect on May 1, 1980,
amending Art. 248 of the Labor Code.
The Court agrees with defendants that the complaint alleges unfair labor practices which
under Art. 217 of the Labor Code, as amended by P.D. 1691, has vested original and exclusive
jurisdiction to Labor Arbiters, and Art. 248, thereof ... "which may include claims for damages
and other affirmative reliefs." Under the amendment, therefore, jurisdiction over employee-
employer relations and claims of workers have been removed from the Courts of First
Instance. If it is argued that this case did not arise from employer-employee relation, but it
cannot be denied that this case would not have arisen if the plaintiffs had not been
employees of defendant Pepsi-Cola. Even the alleged defamatory remarks made by
defendant Cosme de Aboitiz were said to plaintiffs in the course of their employment, and
the latter were dismissed from such employment. Hence, the case arose from such
employer-employee relationship which under the new Presidential Decree 1691 are under
the exclusive, original jurisdiction of the labor arbiters. The ruling of this Court with respect
to the defendants' first motion to dismiss, therefore, no longer holds as the positive law has
been subsequently issued and being a curative law, can be applied retroactively (Garcia v.
Martinez, et al., L-47629, May 28, 1979; 90 SCRA 331-333).
It will also logically follow that plaintiffs can reinterpose the same complaint with the
Ministry of Labor.
WHEREFORE, let this case be, as it is hereby ordered, dismissed, without pronouncement as
to costs.
A motion to reconsider the above order was filed on July 7, 1981, but it was only on February
8, 1982, or after a lapse of around seven (7) months when the motion was denied.
Plaintiffs have filed the instant petition pursuant to R. A. No. 5440 alleging that the
respondent court committed the following errors:
IN DIVESTING ITSELF OF ITS JURISDICTION TO HEAR AND DECIDE CIVIL CASE NO. 33150
DESPITE THE FACT THAT JURISDICTION HAD ALREADY ATTACHED WHICH WAS NOT OUSTED
BY THE SUBSEQUENT ENACTMENT OF PRESIDENTIAL DECREE 1691;
IN HOLDING THAT PRESIDENTIAL DECREE 1691 SHOULD BE GIVEN A RETROSPECTIVE EFFECT
WHEN PRESIDENTIAL DECREE 1367 WHICH WAS IN FORCE WHEN CIVIL CASE NO. 33150 WAS
FILED AND TRIAL THEREOF HAD COMMENCED, WAS NEVER EXPRESSLY REPEALED BY
PRESIDENTIAL DECREE 1691, AND IF EVER THERE WAS AN IMPLIED REPEAL, THE SAME IS NOT
FAVORED UNDER PREVAILED JURISPRUDENCE;
IN HOLDING THAT WITH THE REMOVAL BY PRESIDENTIAL DECREE 1691 OF THE PROVISO
INSERTED IN ARTICLE 217 OF THE LABOR CODE BY PRESIDENTIAL DECREE 1367, THE LABOR
ARBITERS HAVE ACQUIRED JURISDICTION OVER CLAIMS FOR DAMAGES ARISING FROM
EMPLOYER-EMPLOYEE RELATIONS TO THE EXCLUSION OF THE REGULAR COURTS, WHEN A
READING OF ARTICLE 217 WITHOUT THE PROVISO IN QUESTION READILY REVEALS THAT
JURISDICTION OVER DAMAGE CLAIMS IS STILL VESTED WITH THE REGULAR COURTS;
IN DISMISSING FOR LACK OF JURISDICTION CIVIL CASE NO. 33150 THEREBY VIOLATING THE
CONSTITUTIONAL RIGHTS OF THE PETITIONERS NOTABLY THEIR RIGHT TO DUE PROCESS.
The pivotal question to Our mind is whether or not the Labor Code has any relevance to the
reliefs sought by the plaintiffs. For if the Labor Code has no relevance, any discussion
concerning the statutes amending it and whether or not they have retroactive effect is
unnecessary.
It is obvious from the complaint that the plaintiffs have not alleged any unfair labor practice.
Theirs is a simple action for damages for tortious acts allegedly committed by the
defendants. Such being the case, the governing statute is the Civil Code and not the Labor
Code. It results that the orders under review are based on a wrong premise.
WHEREFORE, the petition is granted; the respondent judge is hereby ordered to reinstate
Civil Case No. 33150 and render a decision on the merits. Costs against the private
respondents.
SO ORDERED.
LABOR REL 29
G.R. No. 112940 November 21, 199
DAI-CHI ELECTRONICS MANUFACTURING CORPORATION, petitioner,
vs.
HON. MARTIN S. VILLARAMA, JR., Presiding Judge, Regional Trial Court, Branch 156, Pasig,
Metro Manila and ADONIS C. LIMJUCO, respondents.
QUIASON, J.:
This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court in
relation to R.A. No. 5440 and Circular No. 2-90 of the following orders of the Regional Trial
Court, Branch 156, Pasig, Metro Manila, in Civil Case No. 63448: 1) Order dated September
20, 1993, dismissing the complaint of petitioner on the ground of lack of jurisdiction over the
subject matter of the controversy; and 2) Order dated November 29, 1993, denying
petitioner's motion for reconsideration.
I without extension, even in the absence of stenographic notes, the following cases involving
On July 29, 1993, petitioner filed a complaint for damages with the Regional Trial Court,
Branch 156, Pasig, Metro Manila, against private respondent, a former employee.
Petitioner alleged that private respondent violated paragraph five of their Contract of
Employment dated August 27, 1990, which provides:
That for a period of two (2) years after termination of service from EMPLOYER, EMPLOYEE
shall not in any manner be connected, and/or employed, be a consultant and/or be an
informative body directly or indirectly, with any business firm, entity or undertaking engaged
in a business similar to or in competition with that of the EMPLOYER (Rollo, p. 24).
Petitioner claimed that private respondent became an employee of Angel Sound Philippines
Corporation, a corporation engaged in the same line of business as that of petitioner, within
two years from January 30, 1992, the date of private respondent's resignation from
petitioner's employ. Petitioner further alleged that private respondent is holding the position
of Head of the Material Management Control Department, the same position he held while in
the employ of petitioner.
Petitioner sought to recover liquidated damages in the amount of One Hundred Thousand
Pesos (P100,000.00), as provided for in paragraph seven of the contract, which provides:
That a violation of the conditions set forth in provisions Nos. (2) and (5) of this contract shall
entitle the EMPLOYER to collect from the EMPLOYEE the sum of ONE HUNDRED THOUSAND
PESOS (P100,000.00) by way of liquidated damages and likewise to adopt appropriate legal
measures to prevent the EMPLOYEE from accepting employment and/or engaging, directly or
indirectly, in a business similar to or in competition with that of the EMPLOYER, before the
lapse of the aforesaid period of TWO (2) YEARS from date of termination of service from
EMPLOYER (Rollo, p. 25).
Respondent court, in its Order dated September 20, 1993, ruled that it had no jurisdiction
over the subject matter of the controversy because the complaint was for damages arising
from employer-employee relations. Citing Article 217(4) of the Labor Code of the Philippines,
as amended by R.A.
No. 6715, respondent court stated that it is the Labor Arbiter which had original and
exclusive jurisdiction over the subject matter of the case (Rollo, pp. 28-32).
In this petition, petitioner asks for the reversal of respondent court's dismissal of the civil
case, contending that the case is cognizable by the regular courts. It argues that the cause of
action did not arise from employer-employee relations, even though the claim is based on a
provision in the employment contract.
II
This issue is: Is petitioner's claim for damages one arising from employer-employee relations?
We answer in the negative.
Article 217, as amended by Section 9 of R.A. No. 6715, provides as follows:
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
all workers, whether agricultural or non-agricultural:
xxx xxx xxx
4. Claims for actual, moral, exemplary and other forms of damages arising from the
employer-employee relations; (Emphasis supplied)
xxx xxx xxx
Petitioner does not ask for any relief under the Labor Code of the Philippines. It seeks to
recover damages agreed upon in the contract as redress for private respondent's breach of
his contractual obligation to its "damage and prejudice" (Rollo, p. 57). Such cause of action is
within the realm of Civil Law, and jurisdiction over the controversy belongs to the regular
courts. More so when we consider that the stipulation refers to the post-employment
relations of the parties.
A case in point is Singapore Airlines Limited v. Paño, 122 SCRA 671 (1983), which also dealt
with the employee's breach of an obligation embodied in a written employment agreement.
Singapore Airlines filed a complaint in the trial court for damages against its employee for
"wanton failure and refusal" without just cause to report to duty and for having "maliciously
and with bad faith" violated the terms and conditions of its "Agreement for a Course of
Conversion Training at the Expense of Singapore Airlines Limited." This agreement provided
that the employee shall agree to remain in the service of the employer for a period of five
years from the date of the commencement of the training program. The trial court dismissed
the complaint on the grounds that it did not have jurisdiction over the subject matter of the
controversy.
On appeal to this court, we held that jurisdiction over the controversy belongs to the civil
courts. We stated that the action was for breach of a contractual obligation, which is
intrinsically a civil dispute. We further stated that while seemingly the cause of action arose
from employer-employee relations, the employer's claim for damages is grounded on
"wanton failure and refusal" without just cause to report to duty coupled with the averment
that the employee "maliciously and with bad faith" violated the terms and conditions of the
contract to the damage of the employer. Such averments removed the controversy from the
coverage of the Labor Code of the Philippines and brought it within the purview of Civil Law.
Jurisprudence has evolved the rule that claims for damages under paragraph 4 of Article 217,
to be cognizable by the Labor Arbiter, must have a reasonable causal connection with any of
the claims provided for in that article. Only if there is such a connection with the other claims
can the claim for damages be considered as arising from employer-employee relations.
In San Miguel Corporation v. National Labor Relations Commission, 161 SCRA 719 (1988), we
had occasion to construe Article 217, as amended by B.P. Blg. 227. Article 217 then provided
that the Labor Arbiter had jurisdiction over all money claims of workers, but the phrase
"arising from employer-employee relation" was deleted. We ruled thus:
While paragraph 3 above refers to "all money claims of workers," it is not necessary to
suppose that the entire universe of money claims that might be asserted by workers against
their employers has been absorbed into the original and exclusive jurisdiction of Labor
Arbiters. In the first place, paragraph 3 should be read not in isolation from but rather within
the context formed by paragraph 1 (relating to unfair labor practices), paragraph 2 (relating
to claims concerning terms and conditions of employment), paragraph 4 (claims relating to
household services, a particular species of employer-employee relations), and paragraph 5
(relating to certain activities prohibited to employees or to employers). It is evident that
there is a unifying element which runs through paragraphs 1 to 5 and that is, that they all
refer to cases or disputes arising out of or in connection with an employer-employee
relationship. This is, in other words, a situation where the rule of noscitur a sociis may be
usefully invoked in clarifying the scope of paragraph 3, and any other paragraph of Article
217 of the Labor Code, as amended. We reach the above conclusion from an examination of
the terms themselves of Article 217, as last amended by B.P Blg. 227, and even though earlier
versions of Article 217 of the Labor Code expressly brought within the jurisdiction of the
Labor Arbiters and the NLRC "cases arising from employer-employee relations," which clause
was not expressly carried over, in printer's ink, in Article 217 as it exists today. For it cannot
be presumed that money claims of workers which do not arise out of or in connection with
their employer-employee relationship, and which would therefore fall within the general
jurisdiction of regular courts of justice, were intended by the legislative authority to be taken
away from the jurisdiction of the courts and lodged with Labor Arbiters on an exclusive basis.
The Court, therefore, believes and so holds that the "money claims of workers" referred to in
paragraph 3 of Article 217 embraces money claims which arise out of or in connection with
the employer-employee relationship or some aspect or incident of some relationship. Put a
little differently, that money claims of workers which now fall within the original and
exclusive jurisdiction of Labor Arbiters are those money claims which have some reasonable
causal connection with the employer-employee relationship (Emphasis supplied).
San Miguel was cited in Ocheda v. Court of Appeals, 214 SCRA 629 (1992), where we held
that when the cause of action is based on a quasi-delict or tort, which has no reasonable
causal connection with any of the claims provided for in Article 217, jurisdiction over the
action is with the regular courts.
We also applied the "reasonable causal connection rule" in Pepsi-Cola Distributors of the
Philippines, Inc. v. Gallang, 201 SCRA 695 (1991), where we held that an action filed by
employees against an employer for damages for the latter's malicious filing of a criminal
complaint for falsification of private documents against them came under the jurisdiction of
the regular courts (See also Honiron Philippines, Inc. v. Intermediate Appellate Court, G.R.
No. 66929, August 13, 1990 and Abejaron v. Court of Appeals, 208 SCRA 899 [1992]).
The rationale behind the holdings in these cases is that the complaint for damages was
anchored not on the termination of the employee's services per se, but rather on the manner
and consequent effects of such termination.
Cases decided under earlier versions of Article 217 were consistent also in that intrinsically
civil disputes, even if these involve an employer and his employee, are cognizable by the
regular courts. In Medina vs. Castro-Bartolome, 116 SCRA 597 (1982), a civil complaint for
damages against the employer for slanderous remarks made against them, we upheld the
regular court's jurisdiction after finding that the plaintiffs did not allege any unfair labor
practice, their complaint being a simple action for damages for tortious acts allegedly
committed by the defendants. In Molave Sales, Inc. v. Laron, 129 SCRA 485 (1984), we held
that the claim of the plaintiff against its sales manager for payment of certain accounts and
cash advances was properly cognizable by the regular courts because "although a
controversy is between an employer and an employee, the Labor Arbiters have no
jurisdiction if the Labor Code is not involved."
Private respondent also raises the issue of forum shopping. He asserts that the petition
should be dismissed pursuant to Circular No. 28-91 because petitioner merely "mentioned in
passing a labor case between petitioner and private respondent which is being handled by
petitioner's other counsel" (Rollo, p. 42). Private respondent is referring to NLRC NCR Case
No. 00-11-0689493 filed by him on November 8, 1993.
Petitioner asserts that the case before the Labor Arbiter was filed by private respondent
against petitioner for alleged illegal dismissal, underpayment of wages and non-payment of
overtime and premium pay with prayer for moral and exemplary damages, to which
petitioner, through its other counsel, "logically raised as one of its several counterclaims
against private respondent the liquidated damages mentioned in the contract of
employment between the parties" (Rollo, p. 69).
Petitioner did not fail to disclose the pending labor case in the certification required under
Circular No. 28-91. Thus, petitioner cannot be considered to have submitted a false
certification warranting summary dismissal of the petition (Par. 3[a] of Circular No. 28-91).
Petitioner did not commit forum shopping. It set up its counterclaim for liquidated damages
merely as a defense against private respondent's complaint before the Labor Arbiter.
ACCORDINGLY, the Orders of the Regional Trial Court dated September 20, 1993 and
November 29, 1993 are SET ASIDE. The trial court is ORDERED to continue with the
proceedings in Civil Case No. 63448.
SO ORDERED.
LABOR REL 30
G.R. No. L-47739 June 22, 1983
SINGAPORE AIRLINES LIMITED, petitioner,
vs.
HON. ERNANI CRUZ PAÑO as Presiding Judge of Branch XVIII, Court of First Instance of Rizal,
CARLOS E. CRUZ and B. E. VILLANUEVA, respondents.
MELENCIO-HERRERA, J.:
On the basic issue of lack of jurisdiction, petitioner company has elevated to us for review the
two Orders of respondent Judge dated October 28, 1977 and January 24, 1978 dismissing
petitioner's complaint for damages in the first Order, and denying its Motion for
Reconsideration in the second.
On August 21, 1974, private respondent Carlos E. Cruz was offered employment by petitioner
as Engineer Officer with the opportunity to undergo a B-707 I conversion training course,"
which he accepted on August 30, 1974. An express stipulation in the letter-offer read:
3. BONDING. As you win be provided with conversion training you are required to enter into
a bond with SIA for a period of 5 years. For this purpose, please inform me of the names and
addresses of your sureties as soon as possible.
Twenty six days thereafter, or on October 26, 1974, Cruz entered into an "Agreement for a
Course of Conversion Training at the Expense of Singapore Airlines Limited" wherein it was
stipulated among others:
4. The Engineer Officer shall agree to remain in the service of the Company for a period of
five years from the date of commencement of such aforesaid conversion training if so
required by the Company.
5. In the event of the Engineer Officer:
1. Leaving the service of the company during the period of five years referred to in Clause 4
above, or
2. Being dismissed or having his services terminated by the company for misconduct,
the Engineer Officer and the Sureties hereby bind themselves jointly and severally to pay to
the Company as liquidated damages such sums of money as are set out hereunder:
(a) during the first year of the period of five years referred to in Clause 4 above
...................................................................................... $ 67,460/
(b) during the second year of the period of five years referred to in Clause 4 above
................................................................................. $ 53,968/
(c) during the third year of the period of five years referred to in Clause 4 above
...................................................................................... $ 40,476/
(d) during the fourth year of the period of five years referred to in Clause 4 above
.................................................................................. $ 26,984/
(e) during the fifth year of the period of five years referred to in Clause 4 above
....................................................................................... $ 13,492/
6. The provisions of Clause 5 above shall not apply in a case where an Engineer Officer has his
training terminated by the Company for reasons other than misconduct or where,
subsequent to the completion of training, he -
1. loses his license to operate as a Flight Engineer due to medical reasons which can in no
way be attributable to any act or omission on his part;
2. is unable to continue in employment with the Company because his employment pass or
work permit, as the case may be, has been withdrawn or has not been renewed due to no act
or omission on his part;
3. has his services terminated by the Company as a result of being replaced by a national
Flight Engineer;
4. has to leave the service of the Company on valid compassionate grounds stated to and
accepted by the Company in writing. 1
Cruz signed the Agreement with his co-respondent, B. E. Villanueva, as surety.
Claiming that Cruz had applied for "leave without pay" and had gone on leave without
approval of the application during the second year of the Period of five years, petitioner filed
suit for damages against Cruz and his surety, Villanueva, for violation of the terms and
conditions of the aforesaid Agreement. Petitioner sought the payment of the following sums:
liquidated damages of $53,968.00 or its equivalent of P161,904.00 (lst cause of action);
$883.91 or about P2,651.73 as overpayment in salary (2nd clause of action); $61.00 or about
P183.00 for cost of uniforms and accessories supplied by the company plus $230.00, or
roughly P690.00, for the cost of a flight manual (3rd cause of action); and $1,533.71, or
approximately P4,601.13 corresponding to the vacation leave he had availed of but to which
he was no longer entitled (4th cause Of action); exemplary damages attorney's fees; and
costs.
In his Answer, Cruz denied any breach of contract contending that at no time had he been
required by petitioner to agree to a straight service of five years under Clause 4 of the
Agreement (supra) and that he left the service on "valid compassionate grounds stated to
and accepted by the company so that no damages may be awarded against him. And because
of petitioner-plaintiff's alleged ungrounded causes of action, Cruz counterclaimed for
attorney's fees of P7,000.00.
The surety, Villanueva, in his own Answer, contended that his undertaking was merely that of
one of two guarantors not that of surety and claimed the benefit of excussion, if at an found
liable. He then filed a cross-claim against Cruz for damages and for whatever amount he may
be held liable to petitioner-plaintiff, and a counterclaim for actual, exemplary, moral and
other damages plus attorney's fees and litigation expenses against petitioner-plaintiff.
The issue of jurisdiction having been raised at the pre-trial conference, the parties were
directed to submit their respective memoranda on that question, which they complied with
in due time. On October 28, 1977, respondent Judge issued the assailed Order dismissing the
complaint, counterclaim and cross-claim for lack of jurisdiction stating.
2. The present case therefore involves a money claim arising from an employer-employee
relation or at the very least a case arising from employer-employee relations, which under
Art. 216 of the Labor Code is vested exclusively with the Labor Arbiters of the National Labor
Relations Commission. 2
Reconsideration thereof having been denied in the Order of January 24, 1978, petitioner
availed of the present recourse. We gave due course.
We are here confronted with the issue of whether or not this case is properly cognizable by
Courts of justice or by the Labor Arbiters of the National Labor Relations Commission.
Upon the facts and issues involved, jurisdiction over the present controversy must be held to
belong to the civil Courts. While seemingly petitioner's claim for damages arises from
employer-employee relations, and the latest amendment to Article 217 of the Labor Code
under PD No. 1691 and BP Blg. 130 provides that all other claims arising from employer-
employee relationship are cognizable by Labor Arbiters, 3 in essence, petitioner's claim for
damages is grounded on the "wanton failure and refusal" without just cause of private
respondent Cruz to report for duty despite repeated notices served upon him of the
disapproval of his application for leave of absence without pay. This, coupled with the further
averment that Cruz "maliciously and with bad faith" violated the terms and conditions of the
conversion training course agreement to the damage of petitioner removes the present
controversy from the coverage of the Labor Code and brings it within the purview of Civil
Law.
Clearly, the complaint was anchored not on the abandonment per se by private respondent
Cruz of his job as the latter was not required in the Complaint to report back to work but on
the manner and consequent effects of such abandonment of work translated in terms of the
damages which petitioner had to suffer.
Squarely in point is the ruling enunciated in the case of Quisaba vs. Sta. Ines Melale Veneer &
Plywood, Inc.4 the pertinent portion of which reads:
Although the acts complied of seemingly appear to constitute "matter involving employee
employer" relations as Quisaba's dismiss was the severance of a pre-existing employee-
employer relations, his complaint is grounded not on his dismissal per se, as in fact he does
not ask for reinstatement or backwages, but on the manner of his dismiss and the
consequent effects of such
Civil law consists of that 'mass of precepts that determine or regulate the relations ... that
exist between members of a society for the protection of private interest (1 Sanchez Roman
3).
The "right" of the respondents to dismiss Quisaba should not be confused with the manner in
which the right was exercised and the effects flowing therefrom. If the dismiss was done anti-
socially or oppressively, as the complaint alleges, then the respondents violated article 1701
of the Civil Code which prohibits acts of oppression by either capital or labor against the
other, and article 21, which makers a person liable for damages if he wilfully causes loss or
injury to another in a manner that is contrary to morals, good customs or public policy, the
sanction for which, by way of moral damages, is provided in article 2219, No. 10 (Cf,
Philippine Refining Co. vs. Garcia, L-21962, Sept. 27, 1966, 18 SCRA 107).
Stated differently, petitioner seeks protection under the civil laws and claims no benefits
under the labor Code. The primary relief sought is for liquidated damages for breach of a
contractual obligation. The other items demanded are not labor benefits demanded by
workers generally taken cognizance of in labor disputes, such as payment of wages, overtime
compensation or separation pay. The items claimed are the natural consequences flowing
from breach of an obligation, intrinsically a civil dispute.
Additionally, there is a secondary issue involved that is outside the pale of competence of
Labor Arbiters. Is the liability of Villanueva one of suretyship or one of guaranty?
Unquestionably, this question is beyond the field of specialization of Labor Arbiters.
WHEREFORE, the assailed Orders of respondent Judge are hereby set aside. The records are
hereby ordered remanded to the proper Branch of the Regional Trial Court of Quezon City, to
which this case belongs, for further proceedings. No costs.
SO ORDERED.
LABOR REL 31
G.R. No. L-32891 April 29, 1971
RUSTAN SUPERVISORY UNION, MAHADI LIMBAO, LOLITO PEPITO, ARTURO SOLIS, WINSTON
BALATBAT and ISIDRO BALCITA, JR., petitioners,
vs.
HON. MOISES DALISAY, Presiding Judge of the Court of First Instance of Lanao del Norte,
Branch II, and RUSTAN PULP AND PAPER MILLS, INC., respondents.
TEEHANKEE, J.:
An original action for certiorari and prohibition challenging the jurisdiction of the Court of
First Instance of Lanao del Norte to issue the injunction orders complained of.
Petitioner union is a legitimate labor organization and individual petitioners are the union's
principal officers. On September 23, 1970, the union wrote respondent company that a great
number of the supervisory personnel of respondent's plant had affiliated with it and
presented a set of proposals for incorporation into a collective bargaining agreement. On
October 25, 1970, after its ultimatum letter of October 12, 1970 for union recognition had
been unheeded by respondent, the union declared a strike and picketed the company
premises. Several conferences were thereafter held at the Iligan City Labor Office between petitioners, the Court issued its writ preliminary injunction enjoining the enforcement of the
the parties' representatives to no avail. Petitioner alleges that the company refused to order and writ of preliminary injunction of November 13, 1970 issued by respondent court.
negotiate with it while respondent claims in its answer that "it is petitioners who refused to
The Court finds merit in the petition.
negotiate in good faith."1
1. On the very face of the complaint, for all its artful wording and meticulous avoidance of
On November 13, 1970, respondent company as plaintiff filed with respondent court a
any reference to petitioner union's strike and picketing activities, and carrying of union
complaint for actual, moral and exemplary damages with preliminary injunction against the
placards in front of the company's premises, it is quite clear, particularly from the fact that
union and its principal officers as defendants (petitioners herein) alleging inter alia that
the union and its principal officers were impleaded as principal defendants, that there
"defendant union, its officers, members and the defendants herein have stationed
existed a labor dispute between the parties, which pertains to the exclusive jurisdiction of
themselves in front of the gates of plaintiff's plant in such a coercive, violent and intimidating
the Court of Industrial Relations rather than to respondent court. This is the teaching of Phil.
manner as to prevent, as they have in fact, prevented, the incoming and outgoing of
Communications Workers Federation vs. Nolasco,3 where the complaint in the regular court
plaintiff's trucks and heavy equipment as well as the delivery of some 120 tons of abaca and
of first instance alleged that the striking union's pickets "prevented non-striking employees
trim waste paper at petitioner's plant. On the same date, respondent court issued ex parte
from entering the compound and performing their work therein" — whereas here,
and without hearing any witness in open court, upon a P5,000.00-bond, its order and writ of
respondent company, evading any reference to the union's pickets, alleged in its complaint
November 13, 1970, enjoining "defendants singly and collectively from stationing themselves
below that "defendant union, its officers, members and defendants named herein have
in front of the gates of plaintiff's plant and preventing the incoming and outgoing of plaintiff's
stationed themselves in front of the gates of plaintiff's plant" to prevent the entry and egress
truck and heavy equipment, and from preventing plaintiff from delivering to its plant in Baloi,
of the company's trucks and heavy equipment and the delivery of goods and raw materials to
Lanao del Norte, the goods or materials mentioned above, and such other goods and raw
its premises.
materials as may be necessary for plaintiff's business which may be delivered to plaintiff from
time to time from wharf at Iligan City to its plant in Baloi Lanao del Norte, until further orders 2. Respondent court should have placed itself on guard, therefore, in the face of the
from this Court." complaint's allegations strongly indicating the existence of a labor dispute beyond its
jurisdiction, more so, when it was informed in petitioner's urgent motion for dissolution of
On November 16, 1970, petitioners filed with respondent court an urgent motion to dissolve
injunction that the union was on strike because of the company's alleged refusal to bargain
or lift the writ of preliminary injunction, informing respondent court that they were engaged
collectively which constitutes unfair labor practice under section 4 (a) (6) of the Industrial
in an industrial dispute with respondent company, which was guilty of unfair labor practice in
Peace Act — and was made known to it precisely to deter its hand from maintaining its
refusing to negotiate with them as the duly selected bargaining unit, by virtue of which they
injunction. For while in regular civil actions, the question of jurisdiction is determined by the
had struck and picketed the company's premises since October 25, 1970, and therefore
allegations of the complaint, the rule differs in labor disputes in that the Court has set the
impugning respondent court's jurisdiction to issue the injunction which in effect enjoined
criterion that "whether the acts complained of in the petition for injunction arose out of, or
their concerted strike and picketing activities. Petitioners further assailed the validity of the
are connected or interwoven with, the unfair labor practice case [presents] a question of fact
ex-parte injunction issued without their having been given the benefit of due notice and
that should be brought to the attention of the court a quo to enable it to pass upon the issue
hearing as required by section 9 of the Industrial Peace Act (Rep. Act
whether it has jurisdiction or not over the case,"4and "the court is duty bound to find out if
875).2 there really is a labor dispute by reception of evidence."5 And such ex-parte injunctions, even
if proper, should be automatically vacated after five days under section 9 (d) of Republic Act
Respondent court, in its order of November 20, 1970, however, denied dissolution of the
875, and the hearing for determination of the existence of a labor dispute that divests the
injunction, ruling that "(T)he defendant movant maintained that there is an alleged labor
lower court of jurisdiction, as emphasized by Mr. Justice Reyes in his concurring opinion in
dispute existing between the defendant labor union and the plaintiff corporation but the
the very case of ALU vs. Ramolete5 cited by respondent court, should not be deferred
lawyer of the movant admitted that he has not filed a case in the Court of Industrial Relations
beyond the statutory five-day period thereby "maintaining an injunction beyond the
and neither has he filed a notice of strike in the Department of Labor regarding the matter."
maximum period authorized by law even if the court had jurisdiction to issue it ... (and)
Respondent court further ruled out the industrial courts jurisdiction notwithstanding the
nullifying a statutory provision expressly designed to protect labor."
existence of picketing in the premises stating that "(I)f this is so, then a mere allegation on
the existence of a labor dispute is enough to base jurisdiction on the Court of Industrial 3. The Court stressed the exclusive jurisdiction of the industrial court as against the regular
Relations. This view is not shared by this court for the reason that jurisdiction of the Court courts over unfair labor practices in Veterans Security Free Workers Union vs. Cloribel6 thus:
can not be made to depend upon the pleas or defenses by the defendant in his answer or "(I)t has long been accepted as dogma that cases involving unfair labor practice fall within the
motion to dismiss. If such were the rule, the question of jurisdiction will depend entirely exclusive jurisdiction of the Court of Industrial Relations, by virtue of the explicit provisions of
upon the defendant." Section 5(a) of the Industrial Peace Act that said Court 'shall have jurisdiction over the
prevention of unfair labor practices and is empowered to prevent any person from engaging
Hence, this petition filed by the union. Respondent company filed its answer, seeking to
in any unfair labor practice. This power shall be exclusive and shall not be affected by any
sustain the jurisdiction of respondent court, on the principal grounds that its action was an
other means of adjustment or prevention that has been or may be established by an
ordinary complaint for damages with preliminary injunction and that Petitioner union was
agreement, code, law or otherwise.' The strike and picketing restrained by the questioned
"never engaged in legitimate labor activities." Upon the filing of a P200-00-bond by
orders of respondent judge arose out of unfair labor practice of respondent company in industrial court's jurisdiction is exclusive. 10 If the purpose of the action is to obtain some
allegedly refusing to, bargain in good faith and dismissing for union activities the union injunctive relief against certain acts of the union members, the same can be obtained from
officials and members, which are the very subject-matter of the unfair labor charge filed by the industrial court which is given ample powers to act
the union in the Industrial Court. These were facts expressly alleged by petitioner in its
thereon. 11
Urgent Motion for Reconsideration, asking respondent judge to set aside the questioned
orders and raising respondent Court's lack of jurisdiction. The very complaint of respondent 7. The labor dispute between the parties must therefore be settled and any injunctive relief
in the case below, for all its artful wording, was sufficient on its face to apprise respondent must be sought at the industrial court, which has exclusive jurisdiction over the subject
Court that the matter presented before it involved an unfair labor practice case falling within matter, and to which the case must properly be brought at the instance of either party. This
the Industrial Court's exclusive competence and jurisdiction ... ." jurisdictional question has long received the Court's attention and Mr. Justice Castro,
speaking for the Court in Regal Mfg. Employees Ass'n. vs. Reyes 12 indicated that actions for
4. Respondent court's stated reasons for denying dissolution of the injunction, to wit, that
damages brought by the company against the union as a result of the union's concerted
petitioner union had not filed a case in the industrial court nor a strike notice with the Labor
activities must await the prior resolution of the industrial court which is vested with exclusive
Department constituted grave error. As emphasized by the Court in the Veterans Security
jurisdiction over the labor dispute. The proper course for regular courts to observe in such
Free Workers Union case, supra, "It is settled doctrine that labor disputes arising out of unfair
cases was thus stated: "(U)nder the environmental circumstances obtaining, the respondent
labor practices committed by any of the parties do not present a question of concurrent
court should have dismissed the original petition for injunction outright, or, later, dismissed
jurisdiction between the Court of First Instance and the Industrial Court, but that jurisdiction
the amended petition for injunction, without prejudice, or, in the very least, suspended
over such matters is vested exclusively in the Court of Industrial Relation. As succinctly
action thereon in so far as the question of damages is concerned, until the CIR shall have
restated by Mr. Justice Sanchez in Phil. Communications Workers vs. Nolasco, supra, 'CIR's
finally decided the two labor disputes pending before it." The fact that in the case at bar, the
jurisdiction stays even if no unfair labor practice case has been filed with CIR. It is enough
labor dispute has not yet reached the industrial court at the instance of either party does not
that unfair labor practice is involved.'" As to the lack of strike notice, it is equally settled
affect the cited ruling. The company may well take the initiative, as already indicated, of
doctrine that in strikes arising out of and against a company's unfair labor practice, a strike
seeking injunctive relief as well as the damages claimed by it in the industrial court — as it
notice is not necessary in view of the strike being founded on urgent necessity and directed
must, if it has basis for its allegations of violence, intimidation and coercion on the union's
against practices condemned by public policy, such notice being legally required only in cases
part.
of economic strikes.
ACCORDINGLY, the writ of certiorari and prohibition prayed for is hereby granted, and the
5. Even assuming for the nonce respondent court's jurisdiction over the ease below,
preliminary injunction heretofore issued by the Court is hereby made permanent.
however, respondent court failed to heed the controlling statute as embodied in section 9 of
Respondent court is hereby directed to dismiss the case for damages with preliminary
the Industrial Peace Act. The issuance of injunctions in connection with labor disputes is
injunction before it, Civil Case Non 1637, without prejudice. With costs against private
governed by the statutory restrictions therein provided and not by the Rules of Court.7 And
respondent. So ordered.
injunctions in labor disputes are not favored and may issue only after a strict and rigorous
compliance with the statutory requisites.8 It will be readily seen that the injunction order and
writ of respondent court must be overturned for the same failure to comply with the
statutory restrictions as in the Philippine Communications Workers case, viz: "For one, there
is the absence of a showing that the court heard the testimony of witnesses required in
Section 9(d) to support the allegations of the complaint and testimony in opposition thereto.
Then, the court did not make any 'finding of fact' as to the existence or non-existence of the
facts required to be shown under the afore-quoted Section 9(d) and also under Section 9(f)
of the Industrial Peace Act. Nor was notice given 'to the chief of those public officials of the ...
city ... charged with the duty to protect complainant's property,' also a prerequisite in said
Section 9(d) heretofore mentioned. And finally, the record is barren as to whether or not
complainant exerted 'every reasonable effort to settle such dispute by negotiation or with
the aid of any available governmental machinery of mediation or by voluntary arbitration
another condition exacted by law this time Section 9 (e) of the Industrial Peace Act — before
a restraining order or injunction may be granted. Failure to comply with even one of these
requirements will suffice to deny the issuance of the writ."9
6. It has likewise long been settled that where the acts complained of by the company are
directly interwoven with the unfair labor practice charged against it by the union, "the main
case does not come under the jurisdiction of the [regular] trial court, even if it involves
violence, intimidation and coercion as averred in the complaint," as in the case below, for the