Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
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.:p
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.
The private respondents were employees of the petitioner who were suspected of complicity in the
irregular disposition of empty Pepsi Cola bottles. On July 16, 1987, the petitioners filed a criminal
complaint for theft against them but this was later withdrawn and substituted with a criminal
complaint for falsification of private documents. On November 26, 1987, after a preliminary
investigation conducted by the Municipal Trial Court of Tanauan, Leyte, the complaint was
dismissed. The dismissal was affirmed on April 8, 1988, by the Office of the Provincial Prosecutor.
Meantime, allegedly after an administrative investigation, the private respondents were dismissed
by the petitioner company on November 23, 1987. As a result, they lodged a complaint for illegal
dismissal with the Regional Arbitration Branch of the NLRC in Tacloban City on December 1, 1987,
and decisions manded reinstatement with damages. In addition, they instituted in the Regional
Trial Court of Leyte, on April 4, 1988, a separate civil complaint against the petitioners for damages
arising from what they claimed to be their malicious prosecution.
The petitioners moved to dismiss the civil complaint on the ground that the trial court had no
jurisdiction over the case because it involved employee-employer relations that were exclusively
cognizable by the labor arbiter. The motion was granted on February 6, 1989. On July 6, 1989,
however, the respondent judge, acting on the motion for reconsideration, reinstated the
complaint, saying it was "distinct from the labor case for damages now pending before the labor
courts." The petitioners then came to this Court for relief.
The petitioners invoke Article 217 of the Labor Code and a number of decisions of this Court to
support their position that the private respondents civil complaint for damages falls under the
jurisdiction of the labor arbiter. They particularly cite the case of Getz Corporation v. Court of
Appeals, 1 where it was held that a court of first instance had no jurisdiction over the complaint
filed by a dismissed employee "for unpaid salary and other employment benefits, termination pay
and moral and exemplary damages."
We hold at the outset that the case is not in point because what was involved there was a claim
arising from the alleged illegal dismissal of an employee, who chose to complain to the regular
court and not to the labor arbiter. Obviously, the claim arose from employee-employer relations
and so came under Article 217 of the Labor Code which then provided as follows:
ART. 217. Jurisdiction of Labor Arbiters and the Commission. — (a) The Labor Arbiters shall have the
original and exclusive jurisdiction to hear and decide within thirty (30) working days after
submission of the case by the parties for decision, the following cases involving all workers,
whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Those that workers may file involving wages, hours of work and other terms and conditions of
employment;

3. All money claims of workers, including those based on non-payment or underpayment of wages,
overtime compensation, separation pay and other benefits provided by law or appropriate
agreement, except claims for employees' compensation, social security, medicare and maternity
benefits;
4. Cases involving household services; and
5. Cases arising from any violation of Article 265 of this Code, including questions involving the
legality of strikes and lockouts.
(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by labor
Arbiters. 2
It must be stressed that not every controversy involving workers and their employers can be
resolved only by the labor arbiters. This will be so only if there is a "reasonable causal connection"
between the claim asserted and employee-employer relations to put the case under the provisions
of Article 217. Absent such a link, the complaint will be cognizable by the regular courts of justice in
the exercise of their civil and criminal jurisdiction.
In Medina v. Castro-Bartolome, 3 two employees filed in the Court of First Instance of Rizal a civil
complaint for damages against their employer for slanderous remarks made against them by the
company president. On the order dismissing the case because it came under the jurisdiction of the
labor arbiters, Justice Vicente Abad Santos said for the Court:
It is obvious from the complaint that the plaintiffs have not alleged any unfair labor practice. Theirs
is a simple action for damages for 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.
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:
It is the character of the principal relief sought that appears essential, in this connection. Where
such principal relief is to be granted under labor legislation or a collective bargaining agreement,
the case should fall within the jurisdiction of the Labor Arbiter and the NLRC, even though a claim
for damages might be asserted as an incident to such claim.
xxx xxx xxx
Where the claim to the principal relief sought is to be resolved not by reference to the Labor Code
or other labor relations statute or a collective bargaining agreement but by the general civil law,

the jurisdiction over the dispute belongs to the regular courts of justice and not to the Labor
Arbiter and the NLRC. In such situations, resolution of the dispute requires expertise, not in labor
management relations nor in wage structures and other terms and conditions of employment, but
rather in the application of the general civil law. Clearly, such claims fall outside the area of
competence or expertise ordinarily ascribed to Labor Arbiters and the NLRC and the rationale for
granting jurisdiction over such claims to these agencies disappears.
xxx xxx xxx
While paragraph 3 above refers to "all money claims of workers," it is not necessary to suppose
that the entire universe of money claims that might be asserted by workers against their employers
has been absorbed into the original and exclusive jurisdiction of Labor Arbiters.
xxx xxx xxx
For it cannot be presumed that money claims of workers which do not arise out of or in connection
with their employer-employee relationship, and which would therefore fall within the general
jurisdiction of the regular courts of justice, were intended by the legislative authority to be taken
away from the jurisdiction of the courts and lodged with Labor Arbiters on an exclusive basis. The
Court, therefore, believes and so holds that the 'money claims of workers" referred to in paragraph
3 of Article 217 embraces money claims which arise out of or in connection with the employeremployee relationship, or some aspect or incident of such relationship. Put a little differently, that
money claims of workers which now fall within the original and exclusive jurisdiction of Labor
Arbiters are those money claims which have some reasonable causal connection with the
employer-employee relationship (Ibid.).
The case now before the Court involves a complaint for damages for malicious prosecution which
was filed with the Regional Trial Court of Leyte by the employees of the defendant company. It
does not appear that there is a "reasonable causal connection" between the complaint and the
relations of the parties as employer and employees. The complaint did not arise from such
relations and in fact could have arisen independently of an employment relationship between the
parties. No such relationship or any unfair labor practice is asserted. What the employees are
alleging is that the petitioners acted with bad faith when they filed the criminal complaint which
the Municipal Trial Court said was intended "to harass the poor employees" and the dismissal of
which was affirmed by the Provincial Prosecutor "for lack of evidence to establish even a slightest
probability that all the respondents herein have committed the crime imputed against them." This
is a matter which the labor arbiter has no competence to resolve as the applicable law is not the
Labor Code but the Revised Penal Code.
"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.
G.R. No. 127639 December 3, 1999
SAN MIGUEL CORPORATION and BERNARDO NOEL in his capacity as Industrial Relations
Manager,petitioners,
vs.
ALFREDO ETCUBAN, BERNABE ETCUBAN, NORBERTO LABUCA, FELIPE ECHAVEZ, BERNARDINO
ENJAMBRE, ROGELIO ABELLANOSA, ROMULO CATALAN, PEDRO EBOT, ANATOLIO GERALDIZO,
JOSE ALFANTA, EDUARDO LOFRANCO, LECERIO PARBA, RAFAEL AGUILAR, RICARDO LACUAREN,
BENJAMIN ALESNA, ANTONIO BACUS, PRIMO SOTEROL, JESUS JADORMEO, MANUEL MANKIKIS,
APRONIANO ANG, RENATO VILLALON, SAMUEL OUANO, JOSE DELA, JESUS BASILGO, CATALINO
COLE, SR., ALFREDO GONZALES, RAMON FLORES, MARCOS VITO CRUZ, JACINTO DIVINAGRACIA,
ALAN ALINSUGAY and CLAUDIO AGAN, respondents.
KAPUNAN, J.:

Before the Court is a petition for review on certiorari of the Decision, dated 16 May 1996 of the
Court of Appeals in CA-G.R. CV No. 46554 and of its Resolution, dated November 1996 denying
petitioners' motion for reconsideration of said decision. The Court of Appeals' decision reversed
and set aside the resolution of the Regional Trial Court of Cebu, Branch 19, in Civil Case No. CEB15310, dismissing for lack of jurisdiction respondents' complaint for damages against petitioners
for terminating their employment by fraudulently inducing them to accept petitioners'
"retrenchment program."
The antecedents of this case are as follows:
In 1981, San Miguel Corporation (SMC) informed its Mandaue City Brewery employees that it was
suffering from heavy losses and financial distress which could eventually lead to its total closure. In
several meetings convened by SMC with its employee, it was explained to them that the distressed
state of SMC was caused by its poor sales performance which, in order to survive, called for a
cutback in production and a corresponding reduction in the work force. Because of this, SMC
offered its "Retrenchment to Prevent Loss Program" to its employees. The offering of the
retrenchment program was coupled with an unsolicited advise from SMC that it would be in the
best interest of the affected employees to avail of the said program since, by doing so, they would
be able to obtain their retrenchment benefits and privileges with ease. SMC admonished its
employees that their failure to avail of the retrenchment program might lead to difficulty in
following-up and obtaining their separation pay from the SMC's main office in Manila.
Convinced by the representations and importunings of SMC, respondents, who had been
employees of SMC since the 1960s, availed of the retrenchment program at various times in 1981,
1982 and 1983. After their inclusion in the retrenchment program, respondents were given their
termination letters and separation pay. In return, respondents executed "receipt and release"
documents in favor of SMC.
Sometime in May of 1986, respondents got hold of an SMC publication allegedly revealing that
SMC was never in financial distress during the time when they were being retrenched but was, in
fact, enjoying a growth in sales. Respondents also learned that, during their retrenchment, SMC
was engaged in hiring new employees. Thus, respondents concluded that SMC's financial distress
story and retrenchment program were merely schemes to rid itself of regular employees and, thus,
avoid the payment of their actual benefits.
On 17 October 1988, respondents filed a complaint before the Regional Arbitration Branch No. VII
of the National Labor Relations Commission (NLRC) for the declaration of nullity of the
retrenchment program. In their complaint, respondents alleged that they were former regular
employees of SMC who were deceived into severing their employment due to SMC's concocted
financial distress story and fraudulent retrenchment program. Respondents prayed for
reinstatement, backwages and damages. On 25 July 1989, the Labor Arbiter dismissed the
complaint on the ground of prescription, stating:
What is apparent from their allegations, however, is that complainants are contesting their
respective terminations pursuant to the Retrenchment Program effected by San Miguel
Corporation in 1981, 1982, and 1983. These then are claims for illegal dismissal which fall within
the ambit of Article 291 of the New Labor Code. It provides:
Art. 291. Money claims. — All money claims arising from employer-employee relations accruing
during the effectivity of this Code, shall be filed within three (3) years from the time the cause of
action accrued; otherwise they shall be forever barred. . . .
Under the aforequoted provision therefore, complainants' causes of action have already
prescribed.
Even if this Office were to apply the more liberal interpretation of the above provisions enunciated
by the Honorable Supreme Court in the case of Callanta vs. Carnation Phils., Inc., G.R. No. 70615,
Nov. 3, 1986, an interpretation that views illegal dismissal as an injury upon the rights of a person,
hence, under Article 1146 of the Civil Code prescribes in 4 years, those who were retrenched in
1983, at the very latest, had only until 1987 to institute a complaint against SMC.
The records will show that all the above captioned cases were filed in 1988.
Clearly, therefore, complainants' causes of action have already prescribed. 1

Respondents then appealed to the NLRC which, on 20 December 1990, dismissed the appeal and
affirmed the decision of the labor arbiter.
On 14 December 1993, respondents, who were thirty-one (31) in number, again filed a
complaint 2 against SMC, but this time before the Regional Trial Court of Cebu City, Branch 19.
Although their complaint was captioned as an action for damages, respondents sought the
declaration of nullity of their so-called collective "contract of termination" with SMC. Respondents
theorized that SMC's offer of retrenchment and their acceptance of the same resulted in the
consummation of a collective "contract of termination" between themselves and SMC.
Respondents asserted that since the cause of their "contract of termination" was non-existent, i.e.,
the claim of SMC that it was under financial distress, the said contract is null and void. In this
regard, respondents claimed that they were entitled to damages because of the deception
employed upon them by SMC which led to their separation from the company. They further
asseverated that their separation from employment resulted in the loss of earnings and other
benefits. Hence, they prayed that petitioners jointly and severally be ordered, among others, to
pay each of them the sum of P650,000.00 as actual and compensatory damages, P100,000.00 as
moral damages, P50,000.00 as exemplary damages, and 25% of whatever may be awarded to them
as attorney's fees.
Instead of filing an answer, SMC filed a motion to dismiss on the bases of lack of jurisdiction, res
judicata, payment, prescription and failure to state a cause of action. On 21 June 1994, the RTC
issued a resolution granting SMC's motion to dismiss on the grounds of lack of jurisdiction and
prescription. The pertinent portion of the resolution reads:
Although plaintiffs, among others, pray for the declaration of nullity of the contract of termination,
their main cause is for damages, actual, compensatory and moral damages in the "aggregate
amount of P650,000.00 each and P1,200,000.00 each" for plaintiffs Bernabe Etcuban and Jose Dela.
The alleged acts leading to their signing of the contract of termination are acts constituting labor
disputes. It is a case for damages resulting from illegal termination. Under Article 217 of the Labor
Code, such cases fall within the exclusive original jurisdiction of the Labor Arbiter and the National
Labor Relations Commission. In fact, in 1988, plaintiffs instituted the same case for
"implementation of Art. 217, par. 5, now (sic) Labor Code and Declaration of Nullity of
"Retrenchment" Program, and Damages" (see annex "A" to Motion to Dismiss) with the National
Labor Relations Commission. Their cases were dismissed, not because of lack of jurisdiction, but
because their cause of action already prescribed, the cases having been filed after the three-year
prescriptive period. Plaintiffs have already submitted to the jurisdiction of the NLRC when they
filed their cases with that agency. And they prayed for the declaration of nullity of the
retrenchment program of defendant corporation. It was only after the dismissal of those cases that
they instituted this present suit.
xxx xxx xxx
Moreover, the contract of termination which plaintiffs were allegedly induced to sign is not void
from the beginning. At most, such contract is voidable, plaintiffs' consent thereto being allegedly
vitiated by fraud and deceit.
Thus plaintiffs allege that "the brainwashing conducting (ted) on the affected employees through
briefings and pulong-pulongs relative to the actual economic condition of defendant corporation
finally led plaintiffs to believe that indeed said defendant was incurring losses and has opted to
reduce its production to arrest an immediate collapse of its operations. Thus, the corresponding
need to cut down on its work force;" (par. 11, complaint);" This distressed state of affairs of the
defendant corporation inculcated into their (sic) minds of defendants and the worry of nonrecovery of their benefits in the event defendant corporation closes down, induced plaintiffs to
accept the "offer of retrenchment". Thereupon, they were paid their so-called "separation pay".
Hence, the contract of termination evidenced by individual termination letters and benefits paid to
each plaintiff was consummated." (par. 12). But that "records, however, revealed that from 1973
up to 1983, inclusive, defendant corporation never suffered any business reverses or losses in its
operation."; (par. 13, complaint).

When the consent of one of the contracting parties is vitiated by fraud or deceit, the resulting
contract is only voidable or annulable, not void or inexistent. The action to annul the same should
be filed within four (4) years from discovery of the fraud or deceit. According to plaintiffs'
complaint, they "acquired knowledge of the actual business condition of defendant corporation
only in May 1986 when one of them got hold of a copy of the company's publication. That was the
time they discovered that indeed, defendants deceived them . . . . (par. 14, complaint.) From May
1986 to January 14, 1993, more than six (6) years have already elapsed. Clearly, the action, has
already prescribed.
The rest of the grounds need not be discussed.
WHEREFORE, for want of jurisdiction, and on the further ground of prescription, the above-entitled
case is dismissed.
SO ORDERED. 3
Respondents seasonably appealed to the Court of Appeals (CA). In its Decision dated 16 May 1996,
the CA reversed and set aside the lower court's order of dismissal and remanded the case to the
RTC for further proceedings. The pertinent portion of the decision reads:
A scrutiny of the allegations of the present complaint reveals that plaintiffs' cause of action is not
actually based on an employer-employee relationship between the plaintiffs and the defendants. It
primarily involves a civil dispute arising from the claim of plaintiffs that the cause for the contract
of termination of their services is inexistent rendering said contract as null and void from the
beginning. . . .
xxx xxx xxx
Guided thereby, we find that recourse by plaintiffs-appellants to the civil law on contracts by
raising the issue [of] whether or not the contract of termination of services entered into by
plaintiffs with defendants is void from the beginning due to inexistent cause of action under Article
1409 of the Civil Code, places the case within the jurisdiction of the civil courts.
As refined by the Supreme Court, where the 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, such claim falls outside the area
of competence of expertise ordinarily ascribed to Labor Arbiters and the NLRC. Thus, the trial court
erred in finding that it has no jurisdiction over the case.
Secondly, the trial court erred in ruling that the complaint of plaintiffs-appellants has prescribed.
Article 1410 of the Civil Code, in relation to Article 1409 as herein before quoted, specifically
provides that the action for the declaration of the inexistence of a contract on ground (3) above
does not prescribe.
Thirdly, one of the requisites for the application of the principle of res judicata is that there must
be a judgment on the merits in the earlier case involving the same parties and the same issues.
Plaintiffs-appellants' complaint was dismissed by the NLRC on the ground that their cause of action
had prescribed; no trial has been held on the first complaint. Thus, the dismissal of the first
complaint is not a judgment on the merits and therefore not applicable to the present case.
xxx xxx xxx
WHEREFORE, the order of dismissal is reversed and set aside. Let the original records of Civil Case
No. CEB-15310, be remanded to the Regional Trial Court (Branch 19), Cebu City for further
proceedings. Costs against defendants-appellees.
SO ORDERED. 4
SMC filed a motion for reconsideration but was denied in the CA's Resolution dated 14 November
1996 5. Hence, this petition.
In its petition, SMC contends that the CA erred:
I
IN HOLDING THAT THE REGIONAL TRIAL COURT OF CEBU, BRANCH 19, HAS JURISDICTION OVER
THE INSTANT CASE AND THE CAUSE OF ACTION OF THE RESPONDENTS ARE NOT ACTUALLY BASED
ON AN EMPLOYER-EMPLOYEE RELATIONSHIP WHEN THE COMPLAINT SHOWS THAT THE
RESPONDENTS ARE CLAIMING TO HAVE BEEN UNJUSTLY SEPARATED FROM THEIR REGULAR
EMPLOYMENTS (sic) BY THE PETITIONERS AND ARE DEMANDING TO BE PAID ACTUAL AND

COMPENSATORY DAMAGES CONSISTING OF "THEIR EXPECTED INCOME BY WAY OF SALARIES AND
OTHER FRINGE BENEFITS DUE THEM UNDER THE LAW FROM THE TIME OF THEIR SEPARATION AND
UNTIL THEIR RETIREMENT DUE TO AGE OR LENGTH OF SERVICE . . . SOCIAL SECURITY SYSTEM
BENEFITS . . . RETIREMENT BENEFITS.
II
IN RULING THAT THE COMPLAINT OF THE RESPONDENTS HAVE NOT YET PRESCRIBED WHEN THE
RESPONDENTS HAVE CLAIMED IN THEIR COMPLAINT THAT THEY HAVE BEEN ALLEGEDLY
BRAINWASHED BY THE PETITIONERS AND THEIR COMPAINT (sic) WAS FILED ONLY AFTER MORE
THAN SIX (6) YEARS HAVE LAPSED FROM THE TIME THAT THE RESPONDENTS CLAIMED TO HAVE
"DISCOVERED THAT INDEED, DEFENDANTS (Petitioners) DECEIVED THEM INTO BELIEVING THAT
THE DEFENDANT CORPORATION WAS INCURRING LOSSES IN ITS OPERATION HENCE, THE
NECESSITY TO TRIM DOWN ITS WORK FORCE TO INDUCE THEM TO ACCEPT THE "OFFER OF
RETRENCHEMENT (sic)."
III
IN RULING THAT "THE DISMISSAL OF THE FIRST COMPLAINT IS NOT A JUDGMENT ON THE MERITS
AND THEREFORE NOT APPLICABLE TO THE PRESENT CASE" WHEN IT IS THE SAID DIVISION'S OWN
FINDING THAT: "THE COMPLAINT FILED BY HEREIN PLAINTIFFS-APPELLANTS (Respondents) WITH
THE REGIONAL ARBITRATION BRANCH PRAYED FOR THE DECLARATION OF THE TERMINATION
SCHEME ALLEGEDLY DECEPTIVELY FORCED UPON THEM TO BE NULL AND VOID WITH THE SAME
PRAYER THAT THEY BE REINSTATED TO THEIR REGULAR EMPLOYMENT WITHOUT ANY LOSS OF ANY
RIGHTS (sic) AND BENEFITS (sic) AS WELL AS PAYMENT OF THEIR BACK WAGES AND DAMAGES." 6
We find the petition impressed with merit.
The demarcation line between the jurisdiction of regular courts and labor courts over cases
involving workers and their employers has always been the subject of dispute. We have recognized
that not all claims involving such groups of litigants can be resolved solely by our labor
courts. 7 However, we have also admonished that the present trend is to refer worker-employer
controversies to labor courts, unless unmistakably provided by the law to be otherwise. 8Because
of this trend, jurisprudence has developed the "reasonable causal connection rule." Under this
rule, if there is a reasonable causal connection between the claim asserted and the employeremployee relations, then the case is within the jurisdiction of our labor courts. 9 In the absence of
such nexus, it is the regular courts that have jurisdiction. 10
The jurisdiction of labor courts is provided under Article 217 of the Labor Code, to wit:
Art. 217. Jurisdiction of Labor Arbiters and the Commission. — (a) Except as otherwise provided
under this Code the Labor Arbiter 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 employeremployee relations;
5. Cases arising from any violation of Article 264 of this Code including questions involving the
legality of strikes and lockouts; and
6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all
other claims, arising from employer-employee relations, including those of persons in domestic or
household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of
whether accompanied with a claim for reinstatement.
(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. 11
With regard to claims for damages under paragraph 4 of the above article, this Court has observed
that:
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. 12
In the present case, while respondents insist that their action is for the declaration of nullity of
their "contract of termination," what is inescapable is the fact that it is, in reality, an action for
damages emanating from employer-employee relations. First, their claim for damages is grounded
on their having been deceived into severing their employment due to SMC's concocted financial
distress and fraudulent retrenchment program — a clear case of illegal dismissal. Second, a
comparison of respondents' complaint for the declaration of nullity of the retrenchment program
before the labor arbiter and the complaint for the declaration of nullity of their "contract of
termination" before the RTC reveals that the allegations and prayer of the former are almost
identical with those of the latter except that the prayer for reinstatement was no longer included
and the claim for backwages and other benefits was replaced with a claim for actual damages.
These are telltale signs that respondents' claim for damages is intertwined with their having been
separated from their employment without just cause and, consequently, has a reasonable causal
connection with their employer-employee relations with SMC. Accordingly, it cannot be denied
that respondents' claim falls under the jurisdiction of the labor arbiter as provided in paragraph 4
of Article 217.
Respondents' assertion that their action is for the declaration of nullity of their "contract of
termination" is merely an ingenious way of presenting their actual action, which is a claim for
damages grounded on their having been illegal terminated. However, it would seem that
respondents committed a Freudian slip when they captioned their claim against SMC as an action
for damages. 13 Even the term used for designating the contract, i.e. "contract of termination," was
formulated in a shrewd manner so as to avoid a semblance of employer-employee relations. This
observation is bolstered by the fact that if respondents' designation for the contract were to be
made complete and reflective of its nature, its proper designation would be a "contract of
termination of employment."
The Court is aware that the Civil Code provisions on contracts and damages may be used as bases
for addressing the claim of respondents. However, the fact remains that the present action
primarily involves an employer-employee relationship. The damages incurred by respondents as a
result of the alleged fraudulent retrenchment program and the allegedly defective "contract of
termination" are merely the civil aspect of the injury brought about by their illegal dismissal. 14 The
civil ramifications of their actual claim cannot alter the reality that it is primordially a labor matter
and, as such, is cognizable by labor courts. In Associated Citizens Bank vs. Japson, 15 we held:
For the unlawful termination of employment, this Court in Primero v. Intermediate Appellate
Court,supra, ruled that the Labor Arbiter had the exclusive and original jurisdiction over claims for
moral and other forms of damages, so that the employee in the proceedings before the Labor
Arbiter should prosecute his claims not only for reliefs specified under the Labor Code but also for
damages under the Civil Code. This is because an illegally dismissed employee has only a single
cause of action although the act of dismissal may be a violation not only the Labor Code but also of
the Civil Code. For a single cause of action, the dismissed employee cannot institute a separate
action before the Labor Arbiter for backwages and reinstatement and another action before the
regular court for the recovery of moral and other forms of damages because splitting a single cause
of action is procedurally unsound and obnoxious to the orderly administration of justice. (Primero
v. Intermediate Appellate Court, supra, citing Gonzales v. Province of Iloilo, 38 SCRA 209; Cyphil
Employees Association-Natu v. Pharmaceutical Industries, 77 SCRA 135; Calderon v. Court of
Appeals, 100 SCRA 459, etc.) 16

Even assuming arguendo that the RTC has jurisdiction, it is obvious from respondents' own
pleadings that their action for the declaration of nullity of the "contract of termination" will not
prosper. Respondents allege that they were deceived by SMC into believing that it was under
financial distress which, thus, led them into concluding the "contract of termination" with the
latter. 17 Respondents then posit that since the cause of the contract, SMC's alleged financial
distress, was inexistent, the contract is null and void. The argument is flawed.
The fact that SMC was never in financial distress does not, in any way, affect the cause of their
"contract of termination." Rather, the fraudulent representations of SMC only affected the consent
of respondents in entering into the said contract. 18 If the consent of a contracting party is vitiated
by fraud, the contract is not void but, merely, voidable. 19 In Abando vs. Lozada, 20 we ruled:
As correctly pointed out by the appellate court, the strategem (sic), the deceit, the
misrepresentations employed by Cuevas and Pucan are facts constitutive of fraud which is defined
in Article 1338 of the Civil Code as that (sic) insidious words or machinations of one of the
contracting parties, by which the other is induced to enter into a contract which, without them, he
would not have agreed to. When fraud is employed to obtain the consent of the other party to
enter into a contract, the resulting contract is merely a voidable contract, that is, a valid and
subsisting contract until annulled or set aside by a competent court. . . . 21
An action to annul a voidable contract based on fraud should be brought within four (4) years from
the discovery of the same. 22 In the present case, respondents discovered SMC's fraud in May 1986.
However, the action to question the validity of the contract was only brought on 14 December
1993, or more than seven (7) years after the discovery of the fraud. Clearly, respondents' action
has already prescribed.
The issue of jurisdiction and prescription having been resolved, it is no longer necessary to discuss
the issue onres judicata raised in this petition.
WHEREFORE, premises considered, the Decision of the Court of Appeals dated 16 May 1996 and its
Resolution dated 14 November 1996 are hereby REVERSED and SET ASIDE and the Resolution
dated 21 June 1994 of the Regional Trial Court of Cebu, Branch 19, in CEB-15310, REINSTATED.
SO ORDERED.
G.R. No. 128024 May 9, 2000
BEBIANO M. BAÑEZ, petitioner,
vs.
HON. DOWNEY C. VALDEVILLA and ORO MARKETING, INC., respondents.
GONZAGA-REYES, J.:
The orders of respondent judge 1 dated June 20, 1996 and October 16, 1996, taking jurisdiction
over an action for damages filed by an employer against its dismissed employee, are assailed in this
petition for certiorari under Rule 65 of the Rules of Court for having been issued in grave abuse of
discretion.
Petitioner was the sales operations manager of private respondent in its branch in Iligan City. In
1993, private respondent "indefinitely suspended" petitioner and the latter filed a complaint for
illegal dismissal with the National Labor Relations Commission ("NLRC") in Iligan City. In a decision
dated July 7, 1994, Labor Arbiter Nicodemus G. Palangan found petitioner to have been illegally
dismissed and ordered the payment of separation pay in lieu of reinstatement, and of backwages
and attorney's fees. The decision was appealed to the NLRC, which dismissed the same for having
been filed out of time. 2 Elevated by petition for certiorari before this Court, the case was dismissed
on technical grounds3; however, the Court also pointed out that even if all the procedural
requirements for the filing of the petition were met, it would still be dismissed for failure to show
grave abuse of discretion on the part of the NLRC.
On November 13, 1995, private respondent filed a complaint for damages before the Regional Trial
Court ("RTC") of Misamis Oriental, docketed as Civil Case No. 95-554, which prayed for the
payment of the following:
a. P709,217.97 plus 12% interest as loss of profit and/or unearned income of three years;

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

found to the contrary — that no business losses may be attributed to petitioner as in fact. 1367 and restored Article 217 of the Labor Code almost to its original form. an alleged unfair labor practice committed by the union. and presented evidence in support thereof. and should be entered as a counterclaim in the illegal dismissal case. There is no mistaking the fact that in the case before us. namely. including claims for damages. 127 SCRA 419: Certainly. within thirty (30) calendar days after the submission of the case by the parties for decision without extension. however. claimed for were based on tort 14. Second. even in the absence of stenographic notes. respondent court's taking jurisdiction over the instant case would bring about precisely the harm that the lawmakers sought to avoid in amending the Labor Code to restore jurisdiction over claims for damages of this nature to the NLRC. and back to labor tribunals. 18 Thus. it may help to refer to that period from 1979 to 1980 when jurisdiction over employment-predicated actions for damages vacillated from labor tribunals to regular courts. 1367 amended said Article 217 to the effect that "Regional Directors shall not indorse and Labor Arbiters shall not entertain claims for moral or other forms of damages. 6715. It will be recalled that years prior to R. or breach of contract. 1980. Jurisdiction of Labor Arbiters and the Commission. having been otherwise preoccupied by his unauthorized installment sale scheme. exemplary and other forms of damages arising from the employeremployee relations. moral. 875 (the "Industrial Peace Act". 1980. even after the enactment of the Labor Code. In the first place. and more importantly. Presidential Decree No. where the basis for the claim arises from or is necessarily connected with the fact of termination. jurisdiction over all money claims of workers. Having lost the right to appeal on grounds of untimeliness. to allow respondent court to proceed with the instant action for damages would be to open anew the factual issue of whether petitioner's installment sale scheme resulted in business losses and the dissipation of private respondent's property. the following cases involving all workers. . Thus. where the damages separately claimed by the employer were allegedly incurred as a consequence of strike or picketing of the union. however. splitting the cause of action and possible conflicting findings and conclusions by two tribunals on one and the same claim. it is obvious that private respondent's remedy is not in the filing of this separate action for damages. lasted only briefly since on May 1. 1367 and restored to the Labor Arbiter and the NLRC their jurisdiction to award all kinds of damages in cases arising from employer-employee relations. on May 1. xxx xxx xxx The above provisions are a result of the amendment by Section 9 of Republic Act ("R. Claims for actual. malicious prosecution 15. and that the trial procedure in the Court of First Instance would be a more effective means of determining such damages. No. which took effect on March 21.") No. now completely superseded by the Labor Code). Still on the prospect of re-opening factual issues already resolved by the labor court. 1691 nullified P. So. 17 Neither can we uphold the reasoning of respondent court that because the resolution of the issues presented by the complaint does not entail application of the Labor Code or other labor laws. clearly bestows upon the Labor Arbiter original and exclusive jurisdiction over claims for damages arising from employeremployee relations — in other words. or was necessarily intertwined with.D. jurisprudence was settled that where the plaintiff's cause of action for damages arose out of. it was by reason of petitioner's installment plan that the sales of the Iligan branch of private respondent (where petitioner was employed) reached its highest record level to the extent that petitioner was awarded the 1989 Field Sales Achievement Award in recognition of his exceptional sales performance. Clearly. Presidential Decree ("P. Respondent court clearly having no jurisdiction over private respondent's complaint for damages. and which put to rest the earlier confusion as to who between Labor Arbiters and regular courts had jurisdiction over claims for damages as between employers and employees. Even under Republic Act No. as amended. 1691 (which substantially reenacted Article 217 in its original form) nullified Presidential Decree No. This issue has been duly raised and ruled upon in the illegal dismissal case. Thus.") No.A. those amounting to lost profits and earnings due to petitioner's abandonment or neglect of his duties as sales manager. . 7 On May 1. 1979. the damages that may be incurred by either labor or management as a result of disputes or controversies arising from employer-employee relations. as distinguished from backwages and separation pay. . such complaint for damages is deeply rooted from the labor dispute between the parties. No. 1 this Court discussed: The lawmakers in divesting the Labor Arbiters and the NLRC of jurisdiction to award moral and other forms of damages in labor cases could have assumed that the Labor Arbiters' position-paper procedure of ascertaining the facts in dispute might not be an adequate tool for arriving at a just and accurate assessment of damages.D. which is prejudicial to the orderly administration of justice. private respondent's claim against petitioner for actual damages arose from a prior employer-employee relationship. Eisma. Evidently. . those equivalent to the value of private respondent's property and supplies which petitioner used in conducting his "business ". the issue of actual damages has been settled in the labor case. and the instant action for damages cannot take the place of such lost appeal. the jurisdiction is exclusively with the (now defunct) Court of Industrial Relations. the present Labor Code is even more committed to the view that on policy grounds. of course. and that the installment scheme was in fact with the knowledge of the management of the Iligan branch of private respondent. where private respondent brought up as a defense the same allegations now embodied in his complaint. but in properly perfecting an appeal from the Labor Arbiter's decision. P. but also damages governed by the Civil Code. whether agricultural or non-agricultural: xxx xxx xxx 4.A. was originally lodged with the Labor Arbiters and the NLRC by Article 217 of the Labor Code. private respondent would not have taken issue with petitioner's "doing business of his own" had the latter not been concurrently its employee. (Emphasis supplied). Article 217(a) of the Labor Code. as when the claimant seeks to recover a debt from a former employee 16 or seeks liquidated damages in enforcement of a prior employment contract. 6715. This is. . 6715. As held by this Court in National Federation of Labor vs. the jurisdiction of regular courts was upheld where the damages. 217. and equally so in the interest of greater promptness in the disposition of labor matters. the lawmaking authority had second thoughts about depriving the Labor Arbiters and the NLRC of the jurisdiction to award damages in labor cases because that setup would mean duplicity of suits. however. . The Labor Arbiter.A. Presently. ." 8This limitation in jurisdiction. de Guzman. which is now final and executory. 10 To allow otherwise would be "to sanction split jurisdiction. the Labor Arbiter has jurisdiction to award not only the reliefs provided by labor laws. and the assumption of jurisdiction of regular courts over the same is a nullity. 1989. the damages alleged in the complaint below are: first. to distinguish from cases of actions for damages where the employer-employee relationship is merely incidental and the cause of action proceeds from a different source of obligation.Art. a court is spared the often onerous task of determining what essentially is a factual matter. and as amended by R. the jurisdiction of Labor Arbiters and the NLRC in Article 217 is comprehensive enough to include claims for all forms of damages "arising from the employer-employee relations" Whereas this Court in a number of occasions had applied the jurisdictional provisions of Article 217 to claims for damages filed by employees. and should be dismissed by ordinary courts for lack of jurisdiction. — (a) Except as otherwise provided under this Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide. and second. In Ebon vs. we will no longer pass upon petitioner's other assignments of error. 9 we hold that by the designating clause "arising from the employer-employee relations" Article 217 should apply with equal force to the claim of an employer for actual damages against its dismissed employee. 12 In other words." 11 Thus.D. 113 SCRA 52. the dispute is intrinsically civil. the decision in the labor case stands as a final judgment on the merits.

00 for the inconvenience and work/program disruptions suffered by the Bank. 152121 July 29.636. and forced the Bank to hire the services of a third party to perform the job he was hired to do. reimburse the Bank for the various expenses incurred on his account as a result of his resignation (with legal interest). (f) booked Eviota’s participation in a Singapore conference on Y2K project scheduled on March 10 and 11. and may be served with summons and other court processes at 8 Maple Street. The Bank made sure that Eviota was fully aware of all the terms and conditions of his possible job with the Bank. Confident of Eviota’s professed commitment to the Bank. A copy of a receipt for the above expenses is hereto attached as Annex "C" (See also. The Bank informed Eviota that in addition to the Honda CR-V’s purchase price of P848. such as the salary schedule of all Corporate and Institutional Banking officers and photocopies of schedules of benefits provided expatriates being employed by the Bank. representing costs incurred in connection with the purchase of the Honda CR-V. 1998. and STANDARD CHARTERED BANK.807. Regional Trial Court of Makati. 8.00 An itemized schedule of the above expenses incurred by the Bank is hereto attached as Annex "B. with principal offices at the 5th Floor.2 Sometime on January 26. 6756 Ayala Avenue..000. In particular. No. Cottonwoods. In addition. where he was scheduled to participate in a Y2K project on March 10 and 11." 5. PEWED7P101101. (b) purchased a 1998 Honda CR-V (Motor No.00 g.500. After leading the Bank to believe that he had come to stay. Aside from causing no small degree of chaos within the Bank by reason of his sudden resignation. thus raising the latter’s expectations. G.200.000. 1 Honda CR-V 800. A copy of the Employment Contract between Eviota and the Bank is hereto attached as Annex "A. It is a foreign banking institution authorized to do business in the Philippines. Annex "B").53) and Fund Transfer Price (P18. Eviota energetically presented to senior management his projects for the year. COURT OF APPEALS. 1998 is hereto attached as Annex "D. 1998. 1998.. Among others. PADRD 1830WV00108) for Eviota’s use. of the Decision1 of the Court of Appeals in CA-G.539. 9. the Bank promptly proceeded to carry out the terms of the Employment Contract as well as to facilitate his integration into the workforce. 2003 EDUARDO G.881. incidental costs in the form of Processing Fees (P1. 1998. the Bank realizes that it was simply used by Eviota as a mere leverage for his selfish efforts at negotiating better terms of employment with his previous employer. Defendant Eduardo Eviota ("Eviota") is a former employee of the Bank. Worse. 1998 (the "Employment Contract"). Makati City. and (g) introduced Eviota to the local and regional staff and officers of the Bank via personal introductions and electronic mail. 1 Officer’s Chair 31. For the services of this third party. vs. which did not comply with the 30-day prior notice rule under the law and under the Employment Contract.995. DECISION CALLEJO. SP No. Eviota made off with a computer diskette and other papers and documents containing confidential information on employee compensation and other Bank matters.232.881. 1998.00 f. On March 16. 6. and the processing of merit promotion recommendations). Taken up during these negotiations were not only his compensation and benefit package.00. 1998. Eviota has resorted to falsehoods derogatory to the reputation of the Bank. 1998.38.000. as follows: a. inclusive of . the Bank allowed Eviota access to certain sensitive and confidential information and documents concerning the Bank’s operations. (d) arranged the takeout of Eviota’s loans with Eviota’s former employer. (c) purchased a desktop IBM computer for Eviota’s use.815.012. Branch 136. FPD/MCAR/98-155684 (P1. J. A copy of the Bank’s demand letter dated March 16. 1998. 95-554 before Branch 39 of the Regional Trial Court of Misamis Oriental is hereby DISMISSED.: Before us is a petition for review on certiorari under Rule 45 of the Revised Rules of Court. he has been maliciously purveying the canard that he had hurriedly left the Bank because it had failed to provide him support.R. Antipolo. Eviota instructed the Bank’s HR Administrator to book him a flight for Singapore. Respondents.646. His resignation. 4. bringing the total cost of the Honda CR-V to P868.000. the Bank had to pay a total of P208.00 b. Metro Manila. Presiding Judge of Branch 136. On February 25. the latter made the aforementioned airline booking for him.00 e. the respondent bank filed a complaint against the petitioner with the RTC of Makati City. aborted meetings previously scheduled among Bank officers. Eviota executed a contract of employment under which the petitioner was employed by the respondent bank as Compensation and Benefits Manager.00 TOTAL P1. Eviota began negotiating with the Bank on his possible employment with the latter. was so unexpected that it disrupted plans already in the pipeline (e. Acting on the Employment Contract and on Eviota’s uninhibited display of interest in assuming his position. there is evidence to show that in his attempts to justify his hasty departure from the Bank and conceal the real reason for his move. SO ORDERED..00 c.WHEREFORE. and the complaint in Civil Case No. The same day. The respondent bank alleged inter alia in its complaint that: 1. However. VP (M21). SR.g. Bankmer Bldg. With the benefit of hindsight.00).00 (of which Eviota initially shouldered P48. THE HON. Eviota indicated his conformity with the Bank’s Offer of Employment by signing a written copy of such offer dated January 22. thus damaging the Bank’s reputation and business standing in the highly competitive banking community. 2-Drawer Lateral File Cabinet 13.000. (e) released Eviota’s signing bonus in the net amount of P300. 1 Hanging Shelf 2. Staff Loan Processing Title Verification 375. No pronouncement as to costs.84) were incurred. On January 26. and pay damages in the amount of at least P500." 12. the petitioner abruptly resigned from the respondent bank barely a month after his employment and rejoined his former employer. the Bank made a written demand on Eviota to return the aforementioned computer diskette and other confidential documents and papers. JOSE BAUTISTA. Eviota suddenly resigned his employment with immediate effect to re-join his previous employer. Office Reconfiguration 29.272.38. At one Human Resources ("HR") Committee meeting held on March 3. EVIOTA. Eviota made arrangements with his previous employer to reimburse the Bank for the expenses incurred in connection with the Bank’s purchase of the Honda CR-V for his use. On June 19.00 i. The various expenses incurred by the Bank in carrying out the above acts are itemized below.00 Cost of Appraisal – Housing Loan 3. the respondent Standard Chartered Bank and petitioner Eduardo G. His untruthful remarks have falsely depicted the Bank as a contract violator and an undesirable employer. 10. 11.00 d. 3. but also the nature and demands of his prospective position. Signing Bonus P 300.000.200. On December 22. 1 Guest Chair 2. In partial compliance with said demand. THE HON. 60141 denying the petition for certiorari filed by the petitioner praying the nullification of the Order of the Regional Trial Court of Makati. and undermining its ability to recruit and retain the best personnel in the labor market. Eviota assumed his position as Compensation and Benefits Manager with the Bank and began to discharge his duties. Petitioner.00). the Bank: (a) renovated and refurbished the room which was to serve as Eviota’s office." 7. 2. IBM Desktop Computer 89. the development of a salary/matrix grid and salary structure. the Bank received two manager’s checks in the aggregate amount of P868. Chassis No. 1998.000. 1997. the Petition is GRANTED.R. On April 29.00 h.50.

as amended. 386. an employee may terminate without just cause the employer-employee relationship by serving written notice on the employer at least one (1) month in advance. Hence. 5.000.00. Annex "C").000.00. Jurisdiction of Labor Arbiters and the Commission.12. even in the absence of stenographic notes. and not on tortious acts.7 The petition is barren of merit. 1989 reads: ART. Section 13 of the Employment Contract specifically provides that: "Your [i. the amount of P360. 6 and the cost of the third-party services mentioned in par. and to deter other parties from committing similar acts in the future. the principal cause of action being the alleged omission of petitioner in giving notice to the respondent Bank employer of termination of their relationship. Costs of the suit. but the court issued an order denying the same. Termination disputes.562.) 15. Under Article 285 (a) of Presidential Decree No. the same are recoverable under the applicable provision of the Civil Code. the amount of P2. the CA promulgated a decision dismissing the petition.00. 13. On November 29. The petitioner filed a motion to dismiss the complaint on the ground that the action for damages of the respondent bank was within the exclusive jurisdiction of the Labor Arbiter under paragraph 4. the said claims are actually predicated on the petitioner’s acts and omissions which are separately. amounting to P360. The respondent bank opposed the motion. which has jurisdiction of the subject matter of the complaint in Civil Case No. 3. (See. holding that the trial court and not the Labor Arbiter had exclusive jurisdiction over the action of the respondent bank.000. Act No. The petitioner filed a petition for certiorari with the Court of Appeals for the nullification of the orders of the trial court.5 The respondent bank appended to its complaint a copy of the petitioner’s employment contract. As actual damages. and 6. 4.00 18. ratiocinating that the primary relief prayed for by the respondent bank was grounded on the tortious manner by which the petitioner terminated his employment with the latter. Eviota is liable to the Bank for damages in the amount of at least P100. 2. 5. grounded on the tortious manner by which the defendant terminated his employment with the company. Eviota had induced the Bank to believe that he was committed to fulfilling his obligations under the Employment Contract. the petitioner filed his petition with this Court contending that: Suffice to state immediately that on the basis of the allegations in the complaint.12. 217. the amount of P200. Claims for actual. in order to protect its interests. plaintiff is entitled to attorney’s fees of at least P200. Eviota never complied with the Bank’s demand that he reimburse the latter for the other expenses incurred on his account. judgment be rendered in its favor as follows: WHEREFORE. 3. defendant should be held liable for exemplary damages of at least P1. the Bank is entitled to actual damages of P360. 442.000. Eviota’s actions have compelled plaintiff to obtain the services of undersigned counsel for a fee.562. As attorney’s fees. 2001. As exemplary damages.1. 2. These derogatory statements have injured the Bank’s business standing in the banking community. The petitioner averred that the respondent bank’s claim for damages arose out of or were in connection with his employeremployee relationship with the respondent bank or some aspect or incident of such relationship. Other just and equitable reliefs are likewise prayed for. the respondent bank claimed damages in its complaint against the petitioner based on his employment contract. exemplary and other forms of damages arising from the employeremployee relations.1. representing expenses referred to in items c to i of par.000. since the primary relief prayed for by the plaintiff is for damages. the Bank incurred expenses in carrying out its part of the contract (see Annexes "B" and "C").562. Second Cause of Action 15.000. it is the Labor Arbiter. By his actions and representations. Hence. Eviota’s false and derogatory statements that the Bank had failed to deliver what it had purportedly promised have besmirched the Bank’s reputation and depicted it as a contract violator and one which does not treat its employees properly.000. 17.000.00. 8. and as such is governed by the New Civil Code: The Court holds that here. damages in the amount of at least P100. the manner in and circumstances under which he exercised the same are clearly abusive and contrary to the rules governing human relations. Although its claims for damages incidentally involved an employer-employee relationship.6 The petitioner filed a motion for reconsideration of the said order. it is respectfully prayed that judgment be rendered ordering the defendant to pay the plaintiff: 1. The petitioner further asserted that contrary to the ruling of the court.4 The respondent bank prayed. moral. If accompanied with a claim for reinstatement.00.00. Annex "B").—(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. whereas the claims for other actual/moral/exemplary damages are well within the competence of the Labor Arbiter. the trial court issued an order denying the petitioner’s motion to dismiss.000. 4." p. . alleging that the court a quo committed grave abuse of its discretion amounting to excess or lack of jurisdiction in issuing the said orders. For violating the 30-day notice requirement under the Labor Code and order (sic) the Employment Contract.00. 1999. less the P48. Previously. Article 217 of the Labor Code of the Philippines. Less reimbursements received from Eviota. 98-1397.000. Unfair labor practice cases. by way of its causes of action against the petitioner. 6715 which took effect on March 21.3 The respondent bank alleged. Third Cause of Action 16.00 he had advanced for the Honda CR-V’s purchase price. those cases that workers may file involving wages. claiming that its action for damages was within the exclusive jurisdiction of the trial court.. the amount of P1.000. Eviota’s] employment may be terminated by either party giving notice of at least one month. as amended (the Labor Code). As moral damages. Hence. In addition.000. Eviota had returned his P300. hours of work and other terms and conditions of employment. whether agricultural or non-agricultural: 1. Article 217 of the Labor Code of the Philippines. As a result. Eviota’s actions constitute a clear violation of Articles 19. that after due proceedings.e. not the Regional Trial Court.processing fees and other incidental costs. as amended (the "Civil Code"). the following: First Cause of Action 14. 20 and 21 of Republic Act No. specifically and distinctly governed by the New Civil Code. On November 15.000. rates of pay. the following cases involving all workers. With his motion for reconsideration of the decision having been denied by the CA.000. plaintiff is entitled to moral damages of at least P2." (Annex "A. It held that the latter’s claims for damages were grounded on the petitioner’s sudden and unceremonious severance of his employment with the respondent bank barely a month after assuming office. 14.00 signing bonus. the present controversy is removed from the jurisdiction of the Labor Arbiter and brings in within the purview of the regular courts.12 (see. and have undermined the Bank’s ability to recruit and retain the best personnel. Assuming arguendo that Eviota had the right to terminate his employment with the Bank for no reason. By way of example or correction for the public good. as amended by Rep. Eviota’s failure to comply with the above requirement threw a monkey wrench into the Bank’s operations – Eviota’s sudden resignation aborted meetings previously scheduled among Bank officers and disrupted plans for a salary/merit review program and development of a salary structure and merit grid already in the pipeline.

121948 October 8. Inc. The fact that the private respondent was the erstwhile employer of the petitioner under an existing employment contract before the latter abandoned his employment is merely incidental. the Petition is DENIED. the petitioner had already been replaced by the private respondent before the action was filed against the petitioner. Sisinita Vilar. Paño.9 In Georg Grotjahn GMBH & Co. We further stated that while seemingly the cause of action arose from employeremployee relations.10 we held that the jurisdiction of the Labor Arbiter under Article 217 of the Labor Code. v. SO ORDERED. Department of Labor and Employment (DOLE). thus: Petitioner does not ask for any relief under the Labor Code of the Philippines. within two years from January 30. On its second cause of action. Thus. and attorney's fees.: On January 3.11 the complaint of the employer against the employee for damages for wanton justice and refusal without just cause to report for duty.. for illegal dismissal. the petitioner took off with the private respondent’s computer diskette. v.13 we held that a complaint of an employee for damages against the employer for slanderous remarks made against him was within the exclusive jurisdiction of the regular courts of justice because the cause of action of the plaintiff was for damages for tortious acts allegedly committed by the employer. HAROLD CATIPAY.1âwphi1The primary relief sought is for liquidated damages for breach of a contractual obligation. The petitioner volte face when. petitioner. SANDOVAL-GUTIERREZ. In Singapore Airlines Ltd. Villarama. 57). The fact that there was between the parties an employer-employee relationship does not negate the jurisdiction of the trial court. Moreover. as amended. the same position he held while in the employ of petitioner. private respondents. the date of private respondent’s resignation from petitioner’s employ. and/or employed. We reversed the order of the trial court and held. A money claim by a worker against the employer or vice-versa is within the exclusive jurisdiction of the labor arbiter only if there is a "reasonable causal connection" between the claim asserted and employee-employer relation. the complaint will be cognizable by the regular courts of justice. petitioner PHCCI filed a motion to dismiss the complaint on the ground that there is no employer-employee relationship between them as private respondents are all members and co- . Fourth Division.14 we held that: Stated differently. The private respondent was left in a lurch. Castro-Bartolome. IMELDA TAMAYO. We stated that the action was for breach of a contractual obligation. to be cognizable by the Labor Arbiter. SISINITA VILLAR. depicting the private respondent as unworthy of trust. 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. intrinsically a civil dispute.. as amended. to the prejudice of the private respondent. the said causes of action are intrinsically civil. must have a reasonable causal connection with any of the claims provided for in that article. Cebu City. respondents. Paño.12 The claims were the natural consequences flowing from a breach of an obligation. 1992. G. the petitioner made false and derogatory statements that the private respondent reneged on its obligations under their contract of employment. forcing the private respondent to hire a replacement. with any business firm. Such averments removed the controversy from the coverage of the Labor Code of the Philippines and brought it within the purview of the Civil Law. In Singapore Airlines Limited v. (PHCCI). overtime compensation or separation pay. Imelda Tamayo and Harold Catipay. The items claimed are the natural consequences flowing from breach of an obligation. 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. filed a complaint against the Perpetual Help Credit Cooperative. Not every controversy or money claim by an employee against the employer or vice-versa is within the exclusive jurisdiction of the labor arbiter. thus. moral damages. we held that jurisdiction over the controversy belongs to the civil courts. without the requisite thirty-day notice under the contract and the Labor Code of the Philippines. vs. which is intrinsically a civil dispute. IN LIGHT OF ALL THE FOREGOING."16 The petitioner alleged in its complaint with the trial court that: Petitioner claimed that private respondent became an employee of Angel Sound Philippines Corporation. with the Arbitration Branch. There is no causal relationship between the causes of action of the private respondent’s causes of action against the petitioner and their employer-employee relationship. other labor laws or their collective bargaining agreements. In Dai-Chi Electronics Manufacturing Corporation v. p. Anent its third cause of action. It is evident that the causes of action of the private respondent against the petitioner do not involve the provisions of the Labor Code of the Philippines and other labor laws but the New Civil Code. petitioner seeks protection under the civil laws and claims no benefits under the Labor Code. More so when we consider that the stipulation refers to the post-employment relations of the parties. In fact. as well as which court has jurisdiction over the same. EMPLOYEE shall not in any manner be connected. we ruled that jurisdiction over the action belongs to the civil court: On appeal to this court. intrinsically civil in nature. entity or undertaking engaged in a business similar to or in competition with that of the EMPLOYER. the petitioner simply walked away from his employment with the private respondent sans any written notice.Case law has it that the nature of an action and the subject matter thereof. premium pay on holidays and rest days.17 The trial court dismissed the case for lack of jurisdiction over the subject matter because the cause of action for damages arose out of the parties’ employer-employee relationship. Jurisprudence has evolved the rule that claims for damages under paragraph 4 of Article 217. Isnani.R. Dumaguete City. Jr. No.8 Actions between employees and employer where the employer-employee relationship is merely incidental and the cause of action precedes from a different source of obligation is within the exclusive jurisdiction of the regular court. a corporation engaged in the same line of business as that of petitioner. its banking operations and the conduct of its business. wage differential. such as payment of wages. J. he abandoned his office and rejoined his former employer. separation pay. Only if there is such a connection with the other claims can the claim for damages be considered as arising from employer-employee relations. Absent such a link. 2001 PERPETUAL HELP CREDIT COOPERATIVE. The Decision of the Court of Appeals dismissing the petition of the petitioner is AFFIRMED. Benedicto Faburada. In Medina v. The other items demanded are not labor benefits demanded by workers generally taken cognizance of in labor disputes. Petitioner further alleged that private respondent is holding the position of Head of the Material Management Control Department.18 In this case. Forthwith. be a consultant and/or be an informative body directly or indirectly. are determined by the material allegations of the complaint and the reliefs prayed for in relation to the law involved. INC. the private respondent’s first cause of action for damages is anchored on the petitioner’s employment of deceit and of making the private respondent believe that he would fulfill his obligation under the employment contract with assiduousness and earnestness. and its corporate plans and program in jeopardy and disarray.15 the petitioner sued its employee Adonis Limjuco for breach of contract which reads: That for a period of two (2) years after termination of service from EMPLOYER. papers and documents containing confidential information on employee compensation and other bank matters. petitioner. and jurisdiction over the controversy belongs to the regular courts. Such cause of action is within the realm of Civil Law. thus. BENEDICTO FABURADA. and for having maliciously and with bad faith violated the terms and conditions of their agreement for a course of conversion training at the expense of the employer. is limited to disputes arising from an employer-employee relationship which can only be resolved by reference to the Labor Code of the Philippines. 1990. and the NATIONAL LABOR RELATIONS COMMISSION.

Worked with the Cooperative since October 19. and assist the other clerks in their duties. holding that the case is impressed with employer-employee relationship and that the law on cooperatives is subservient to the Labor Code. for one and a half (1 1/2) years. On September 3.00 from July to December 1989. they cannot sue petitioner. compute interests on savings deposits. Duties: Among others.4 Undeniably. 1988 up to December 29. 1988. Work schedule: — Monday to Friday — 8:00 to 11:30 a. whether such service is continuous or broken. were paid regular wages and made to accomplish daily time records just like any other regular employee.00 — from June to December 1988. the same being supported by substantial evidence. Monthly salary: P500. perform various forms for mimeographing..m. Bookkeeping. hired private respondents to work for it. Sisinita Vilar — Clerk. judgment is hereby rendered declaring complainants illegally dismissed. Petitioner PHCCI contends that private respondents are its members and are working for it as volunteers. to 5:30 p. Monthly salary: P1. 1989. the Labor Arbiter rendered a decision. The computation of the foregoing awards is hereto attached and forms an integral part of this decision.8:00 to 11:30 a. Hence. Prepare summary of salary advances.050. were assigned specific duties. P1. Worked with the Cooperative since March 3 to December 29. One's regularity of employment is not determined by the number of hours one works but by the nature and by the length of time one has . junior depositors and special accounts. reconcile bank statements to the daily summary of disbursements. On the same date.A. and one Sunday each month — for at least three (3) hours. prepare cash vouchers. this leads us to the issue of whether or not private respondents are regular employees. except Harold D. 1989.m.00 — from December 1. fill up members logbook of regular depositors. dividends. journal vouchers. mortuary and patronage funds. 1989 to December 31.m. (2) the power to dismiss. otherwise known as the Cooperative Development Authority Law which took effect on March 26. All of them were given a memorandum of termination on January 2. 1993. mortuary.. Tamayo. check petty cash vouchers. But unfortunately. Duties: Among others. dividends and patronage funds. Worked with the Cooperative since December 1. pick up balances for the computation of interests on savings deposit. The issue for our resolution is whether or not respondent judge committed grave abuse of discretion in ruling that there is an employer-employee relationship between the parties and that private respondents were illegally dismissed. 1987 up to December 29. 6939. requires conciliation or mediation within the cooperative before a resort to judicial proceeding. separation pay for one month for every year of service since reinstatement is evidently not feasible anymore.350. 1989. worked with petitioner for more than one (1) year: Benedicto Faburada.000.m. 1990. Sisinita Vilar.150. Catipay — Clerk.m and 1:00 to 4:00 p.owners of the cooperative. 1989. On November 23. P1.m. premises considered.m.00 . reconcile passbooks and ledgers of members in the market.3 The employees who are deemed regular are: (a) those who have been engaged to perform activities which are usually necessary or desirable in the usual trade or business of the employer. maintain the masterlist of the cooperative members.00 — from January 1.m. 1989. Necessarily. its Manager..00 from July to December 1989. prepare checks and cash vouchers for regular and emergency loans. That an employer-employee exists between the parties is shown by the averments of private respondents in their respective affidavits. Petitioner PHCCI. and (3) casual employees or those who are neither regular nor project employees.Work schedule: Regular working hours.2 The above elements are present here. does not mean that he is not a regular employee. Catipay.for at least three (3) hours. and P1. accounting and collecting duties. Edilberto Lantaca.. for two (2) years and two (2) months. 1990. Tamayo — Clerk. the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season. 1989. and P1. with respect to the activity in which they are employed. 1987 to December 31. from 1:00 p. he being a part-time employee.1 the NLRC affirmed the Labor Arbiter's decision. effective December 29. for two (2) years. and 1:00 to 4:00 p.m and 2:00 to 5:30 p.m. Any competent and relevant evidence may show the relationship.000. Not being regular employees. to pay complainants 13th month pay. and perform such other duties as may be assigned from time to time.from January to June 1989. Monthly salary: P900. No particular form of proof is required to prove the existence of an employer-employee relationship. carefully considered by respondent NLRC in affirming the Labor Arbiter's decision.00 — from January to December 1988. petitioner filed a supplemental motion to dismiss alleging that Article 121 of R. and (4) the power to control the worker's conduct. and for at least three (3) hours during Sundays. disburse checks during regular and emergency loans. effect mortuary deductions and dividends on fixed deposits. that quantum of evidence required in quasi judicial proceedings. every Saturday — 8:00 to 11:30 a.500. We are not prepared to disregard the findings of both the Labor Arbiter and respondent NLRC. the Labor Arbiter denied petitioner's motion to dismiss." On appeal. Worked with the Cooperative since June 1. P1. Work schedule: Tuesdays and Thursdays. schedule loans. However. like this one. post daily collections from the two (2) collectors in the market. Saturday — 8:00 to 11:30 a. and every Saturday from 8:00 to 11:30 a. daily summary of disbursements to respective classifications. Jr. private respondents have not exhausted the remedies provided in the cooperative by-laws. Furthermore. the dispositive portion of which reads: WHEREFORE. and Imelda C. thus respondent is directed to pay Complainants backwages computed from the time they were illegally dismissed up to the actual reinstatement but subject to the three year backwages rule.m. 1989 to June 30. and (b) those casual employees who have rendered at least one (1 ) year of service.00 — from March to June 1989. take charge of loan releases every Monday morning. — Enter data into the computer. 1987 up to December 29. In determining the existence of an employer-employee relationship.Duties: Among others. P250. They worked under the supervision of the cooperative manager. Duties: Among others. That Benedicto Faburada worked only on a part-time basis. such as. this petition by the PHCCI. private respondents were rendering services necessary to the day-to-day operations of petitioner PHCCI. and perform such other bookkeeping and accounting duties as may be assigned to her from time to time. (3) the payment of wages by whatever means.00 .m. 1990. This fact alone qualified them as regular employees. take charge of the preparation of new passbooks and ledgers for new applicants. with the latter assuming primacy in the overall consideration. post the monthly balance of fixed and savings deposits in preparation for the computation of interests. and 1:00 to 4:00 p. Harold D. They worked regularly on regular working hours.00 — from October to November 1987. the following elements are considered: (1 ) the selection and engagement of the worker or the power to hire. thus: Benedicto Faburada —Regular part-time Computer programmer/ operator. and for one Sunday each month . and perform such other bookkeeping and accounting duties as may be assigned her from time to time. Monthly salary: P60. through Mr. assist in the posting and preparation of deposit slips. complainant Benedicto Faburada shall only be awarded what are due him in proportion to the nine and a half months that he had served the respondent.00 — from July 1. All other claims are hereby dismissed for lack of merit. P500. No. P950 — from January to June 1989. receive deposits from members. wage differentials and Ten Percent (10%) attorney's fees from the aggregate monetary award. All of them. they were dismissed.000.from July to December 1989. Imelda C.00 for December 1987. 1989. and 2:00 to 5:30 p. (2) project employees or those whose employment has been fixed for a specific project or undertaking. and P1. Article 280 of the Labor Code provides for three kinds of employees: (1) regular employees or those who have been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer. Work schedule: Monday to Friday .

1âwphi1. 1990 terminating their services effective December 29. JOEL WALES. MR.D. directors. OSCAR L. 1968. As aptly stated by the Solicitor General in his comment. G. DONATO. TESSIE BALACY. The valid causes are categorized into two groups: the just causes under Articles 282 of the Labor Code and the authorized causes under Articles 283 and 284 of the same Code. the effectivity date of R. rendered on 23 January 1996. HON. Settlement of Disputes. 6939 (Cooperative Development Authority Law) which reads: SEC. The records show that petitioner Pastor Dionisio V. payment of their separation pay in lieu of reinstatement is in order. with observance of due process. 124382 August 16. 703 (1989) is misplaced. private respondents are entitled to security of tenure. with modification in the sense that the backwages due private respondents shall be paid in full. RUFO GASAPO. in NLRC Case No. P. — Upon request of either or both parties. rest day and termination of employment. the Authority shall mediate and conciliate disputes within a cooperative or between cooperatives: Provided. and committee members. (3) retrenchment to prevent losses. 6938 (Cooperative Code of the Philippines) provides the procedure how cooperative disputes are to be resolved. Under Art. Article 121 of Republic Act No. officers and directors of the cooperative involved in disputes within a cooperative or between cooperatives. GAYARES. on the other hand. 8 Mediation and Conciliation. the petition is hereby DENIED.5 Petitioner's contention that private respondents are mere volunteer workers.2 He began his work with the SDA on 15 July 1963 as a literature evangelist. 121. the matter shall be settled in a court of competent jurisdiction.A.been in that particular job." Complementing this Article is Section8 of R. Obviously. be settled amicably in accordance with the conciliation or mediation mechanisms embodied in the by-laws of the cooperative. 217 of the Labor Code. 6939 or the Cooperative Development Authority Law. 1989. and intra-cooperative disputes shall. DAVID RODRIGO. PASTORS REUBEN MORALDE. he was elevated to the position of Pastor in the West Visayan Mission covering the island of Panay. Thus. As illegally dismissed employees. petitioner failed to comply with the twin requisites of a valid notice. They were dismissed because petitioner considered them to be mere voluntary workers. Central Philippine Union Mission Corporation of Seventh Day Adventists. KAPUNAN. There is no evidence that private respondents are members of petitioner PHCCI and even if they are. analogous cases. being its members. inclusive of allowances. overtime pay. petitioner worked his way up the ladder and got promoted several times.nêt Private Respondent Central Philippine Union Mission Corporation of the Seventh-Day Adventists (hereinafter referred to as the "SDA") is a religious corporation duly organized and existing under Philippine law and is represented in this case by the other private respondents. Austria worked with the SDA for twenty eight (28) years from 1963 to 1991. Finally. AUSTRIA. petitioner was promoted as District Pastor of the Negros Mission of the SDA and was assigned at . (4) commission of a crime or an offense against the person of the employer or his immediate family member or representative. — Disputes among members. 1989. No. a certificate of non-resolution shall be issued by the Commission prior to the filing of appropriate action before the proper courts. GIDEON BUHAT. MR. to inform them of the decision of the employer that they are being dismissed.A. From then on. 175 (strengthening the Cooperative Movement) 8 and its implementing rules and regulations under LOI 23. In January. ISACHAR GARSULA. ELISEO DOBLE. respondents. officers. Petitioner contends that the labor arbiter has no jurisdiction to take cognizance of the complaint of private respondents considering that they failed to submit their dispute to the grievance machinery as required by P. ELY SACAY. It was in the form of a Memorandum signed by the Manager of the Cooperative dated January 2. vs. ELEUTERIO LOBITANA.D. Likewise. was a Pastor of the SDA until 31 October 1991. 7 In this case. Clearly. entitled "Pastor Dionisio V. Petitioner missed the point As regular employees or workers. The authorized causes are: (1) the installation of labor-saving devices. Ministry of Labor and Employment (173 SCRA 697. and the provinces of Romblon and Guimaras.A. The issue in this case is whether or not the employees-members of a cooperative can organize themselves for purposes of collective bargaining. Procedural due process requires that the employer serve the employees to be dismissed two (2) written notices before the termination of their employment is effected: (a) the first. 175 does not provide for a grievance machinery where a dispute or claim may first be submitted.. Its invocation of San Jose City Electric Cooperative vs. not whether or not the members can be employees. In July. That if no mediation or conciliation succeeds within three (3) months from request thereof. their services may be terminated only for a valid cause. these disputes are within the original and exclusive jurisdiction of the Labor Arbiter. The decision of respondent NLRC is AFFIRMED. and in applicable laws. V-0120-93. only one notice was served upon private respondents by petitioner. MRS. MR. private respondents are therefore entitled to reinstatement without loss of seniority rights and other privileges and to full backwages. Should such a conciliation/mediation proceeding fail. (2) redundancy. LORETO MAYPA. and. petitioner. CEBU CITY. and MR.9 Since they were dismissed after March 21. not regular employees. and as such work at its pleasure. Petitioner held the same position up to 1988. Article 284 provides that an employer would be authorized to terminate the services of an employee found to be suffering from any disease if the employee's continued employment is prohibited by law or is prejudicial to his health or to the health of his fellow employees6 Private respondents were dismissed not for any of the above causes. plus other benefits or their monetary equivalent computed from the time their compensation was withheld from them up to the time of their actual reinstatement. without deducting from their backwages the earnings derived by them elsewhere during the period of their illegal dismissal. ZOSIMO KARA-AN. unless the closing is for the purpose of circumventing the provisions of law. 1972. Austria vs. EUFRONIO IBESATE.R. 1999 PASTOR DIONISIO V.: Subject of the instant petition for certiorari under Rule 65 of the Rules of Court is the Resolution 1 of public respondent National Labor Relations Commission (the "NLRC").11 If reinstatement is no longer feasible. selling literature of the SDA over the island of Negros." which dismissed the case for illegal dismissal filed by the petitioner against private respondents for lack of jurisdiction. WILLIAM U. We hold that private respondents have been illegally dismissed. LOI 23 refers to instructions to the Secretary of Public Works and Communications to implement immediately the recommendation of the Postmaster General for the dismissal of some employees of the Bureau of Post. in 1989. PORFIRIO BALACY. officers of the SDA. Petitioner. The just causes are: (1) serious misconduct or willful disobedience of lawful orders in connection with the employee's work. The above provisions apply to members. thus: ART. 6715 10 they are granted full backwages. when his services were terminated. et al. the Cooperative Development Authority did not issue a Certificate of Non-Resolution pursuant to Section 8 of R. the dispute is about payment of wages. petitioner became the Assistant Publishing Director in the West Visayan Mission of the SDA. CENTRAL PHILIPPINE UNION MISSION CORPORATION OF THE SEVENTH-DAY ADVENTISTS. ALOLOR. J. NATIONAL LABOR RELATIONS COMMISSION (Fourth Division). ELDER HECTOR V. (3) fraud or willful breach of trust. must necessarily fail. as when the relationship between petitioner and private respondents has become strained. and (4) closing or cessation of operations of the establishment or undertaking. as far as practicable.12 WHEREFORE.13 SO ORDERED. this LOI has no relevance to the instant case. computed from the time they were illegally dismissed up to the time of the finality of this Decision. to apprise them of the particular acts or omissions for which their dismissal is sought and (b) the second. (2) gross or habitual neglect of duties. No. meaning. Petitioner thus vehemently insists that their dismissal is not against the law.

Service Incentive Leave Pay — P 3. appealed the decision of the Labor Arbiter to the National Labor Labor Relations Commission. gross and habitual neglect of duties. since it was heavy. the two exchanged heated arguments. the Decision appealed from is hereby VACATED and a new one ENTERED dismissing this case for want of merit. Sensing that the result of the investigation might be one-sided. in view of all the foregoing. 13th month pay — P 21. Labor Arbiter Cesar D. he immediately proceeded to the office of Pastor Buhat on the date abovementioned and asked the latter to convene the Executive Committee. and to remit the same to the Negros Mission. dated 26 August 1994. in his district which amounted to P15. On various occasions from August up to October. Eufronio Ibesate who authorized his wife to collect the tithes and offerings since he was very sick to do the collecting at that time. the treasurer of the Negros Mission asking him to admit accountability and responsibility for the church tithes and offerings collected by his wife. the OSG filed a manifestation and motion in lieu of comment16 setting forth its stand that it cannot sustain the resolution of the NLRC.00 E. reversed itself once again. To be discussed in the meeting were the non-remittance of church collection and the events that transpired on 16 October 1991.Sagay.85 D. On 17 October 1991. Danny Diamada. the OSG submits that the termination of petitioner from his employment may be questioned before the NLRC as the same is secular in nature.m. as such. After the filing of the petition. from October 21 and 22. through its officers. petitioner tried to persuade Pastor Buhat to convene the Executive Committee for the purpose of settling the dispute between him and the private respondent. 1994 is VACATED and the decision of the Labor Arbiter dated February 15. and 3) Whether or not such termination is valid. Exemplary Damages — P 25.770.14 In view of the reversal of the original decision of the NLRC. Eufronio Ibesate. without loss of seniority and other rights and backwages in the amount of ONE HUNDRED FIFTEEN THOUSAND EIGHT HUNDRED THIRTY PESOS (P115. is as follows: WHEREFORE. SO ORDERED. petitioner overheard Pastor Buhat saying. The dispositive portion of the resolution reads: WHEREFORE. Thelma Austria. private respondents Pastors Yonilo Leopoldo and Claudio Montaño were around and they pacified both Pastor Buhat and petitioner. are hereby ordered to immediately reinstate complainant Pastor Dionisio Austria to his former position as Pastor of Brgy. Sideño rendered a decision in favor of petitioner.000. Interestingly. petitioner received several communications3 from Mr. requesting that certain members of the fact-finding committee be excluded in the investigation and resolution of the case. the fact-finding committee conducted an investigation of petitioner.4 petitioner reasoned out that he should not be made accountable for the unremitted collections since it was private respondents Pastor Gideon Buhat and Mr. for the first time on appeal. In its manifestation. scattered the books in his office. Pastor David Rodrigo. Negros Occidental. this case is hereby DISMISSED for lack of jurisdiction. accordingly. Allowance — P 4. SO ORDERED.. The dispute between Pastor Rodrigo and petitioner arose from an incident in which petitioner assisted his friend. the recourse to this Court by petitioner. The issues to be resolved in this petition are: 1) Whether or not the Labor Arbiter/NLRC has jurisdiction to try and decide the complaint filed by petitioner against the SDA.00 F. Thereafter. Taculing. Pastor Buhat denied the request of petitioner since some committee members were out of town and there was no quorum. PREMISES CONSIDERED. Mrs. serious misconduct. . dismissed the complaint of petitioner. Respondent CPUMCSDA is further ordered to pay complainant the following: A. Attorney's Fee — P 22.9 Out of the six (6) members requested to inhibit themselves from the investigation and decision-making. the president of the Negros Mission. the NLRC vacated the findings of the Labor Arbiter.060. petitioner went to the office of Pastor Buhat.461. Our decision dated August 26. During said call. The NLRC.00 B. petitioner received a letter 8 inviting him and his wife to attend the Executive Committee meeting at the Negros Mission Conference Room on 21 October 1991. the SDA filed a motion for reconsideration of the above resolution. only two (2) were actually excluded.078. respondents CENTRAL PHILIPPINE UNION MISSION CORPORATION OF THE SEVENTH-DAY ADVENTISTS (CPUMCSDA) and its officers.15 Hence. and tried to overturn the latter's table. 7 Fortunately. at around 7:30 a. and threw the phone. In his written explanation dated 11 October 1991. petitioner returned to the office of Pastor Buhat. not ecclesiastical. He held the position of district pastor until his services were terminated on 31 October 1991. involves the separation of church and state. the Court ordered the Office of the Solicitor General (the "OSG") to file its comment on behalf of public respondent NLRC. After the submission of memoranda of all the parties. 1991. the latter harbored ill-feelings against petitioner. petitioner was transferred to Bacolod City. 1993 is REINSTATED. Reacting against the adverse decision of the SDA. Petitioner then left the office of Pastor Buhat. A fact-finding committee was created to investigate petitioner.830. the dispositive portion of which reads thus: WHEREFORE. with twelve (12) churches under his jurisdiction. Thereafter. In a decision. on 29 October 1991. Thereafter.13 Petitioner filed a motion for reconsideration of the above-named decision. sustained the argument posed by private respondents and. When news reached petitioner that Pastor Rodrigo was about to file a complaint against him with the Negros Mission. Cebu City. respondents herein. willful breach of trust. Fourth Division. Notable in the motion for reconsideration filed by private respondents is their invocation. to collect from Pastor Rodrigo the unpaid balance for the repair of the latter's motor vehicle which he failed to pay to Diamada.27 SO ORDERED. that the Labor Arbiter has no jurisdiction over the complaint filed by petitioner due to the constitutional provision on the separation of church and state since the case allegedly involved an ecclesiastical affair to which the State cannot interfere. For two (2) days. Bacolod City. SO ORDERED." 6 Irked by such remark. subject of the present petition.12 The SDA. On 15 February 1993. without ruling on the merits of the case. Subsequently. and commission of an offense against the person of employer's duly authorized representative.10. Progreso and Banago. premises considered. president of the SDA and chairman of the fact-finding committee. namely: Pastor Buhat and Pastor Rodrigo. Balintawak and Toboso.83 C. the case was submitted for decision. In January.000. While on his way out. "Pastor daw inisog na ina iya (Pador you are talking tough). On 18 July 1995. before the Labor Arbiter for illegal dismissal against the SDA and its officers and prayed for reinstatement with backwages and benefits. petitioner received a letter of dismissal10 citing misappropriation of denominational funds. as grounds for the termination of his services. petitioner banged the attaché case of Pastor Buhat on the table. though unsuccessfully.012.5 Due to the assistance of petitioner in collecting Pastor Rodrigo's debt. 1991. The dispositive portion of the NLRC resolution dated 23 January 1996. petitioner immediately wrote Pastor Rueben Moralde. Moral Damages — P 50. the instant motion for reconsideration is hereby granted. Accordingly.00) without deductions and qualificatioons. and. 2) Whether or not the termination of the services of petitioner is an ecclesiastical affair. at nine in the morning. moral and exemplary damages and other labor law benefits. The decretal portion of the NLRC decision states: WHEREFORE. the NLRC issued a Resolution reversing its original decision. petitioner filed a complaint11 on 14 November 1991. on 16 October 1991.

since they are related. in instances when the findings of the NLRC differ from those of the labor arbiter. it is to be considered a purely ecclesiastical affair to which the State has no right to interfere. in its coverage. 32 This decision. At the outset. the SDA cannot hide behind the mantle of protection of the doctrine of separation of church and state to avoid its responsibilities as an employer under the Labor Code. must come only after the employee is given a reasonable period from receipt of the first notice within which to answer the charge and ample opportunity to be heard and defend himself with the assistance of a representative. Rule 1. as correctly pointed out by petitioner. 25 Thus. Rule XXIII. SDA even registered petitioner with the Social Security System (SSS) as its employee. it is palpable that the reason for petitioner's dismissal from the service is not religious in nature."17 The idea advocated by this principle is to delineate the boundaries between the two institutions and thus avoid encroachments by one against the other because of a misunderstanding of the limits of their respective exclusive jurisdictions. the matter of terminating an employee. petitioner was not ex-communicated or expelled from the membership of the SDA but was terminated from employment. SDA admitted in a certification 23 issued by its officer. Mr. (b) the dismissal must be for a valid cause as provided in Article 282 of the Labor Code. As aptly stated by the OSG. serious misconduct. which may be considered as the proper charge. are all based on Article 282 of the Labor Code which enumerates the just causes for termination of employment. willful breach of trust. it was merely exercising its management prerogative to fire an employee which it believes to be unfit for the job. 28 Thus. i. Book VI on the Termination of Employment and Retirement. the Church is likewise barred from meddling in purely secular matters. private respondents are estopped from raising the issue of lack of jurisdiction for the first time on appeal. 26 When the findings of NLRC do not agree with those of the Labor Arbiter. namely: misappropriation of denominational funds.33 This is in consonance with the express provision of the law on the protection to labor and the broader dictates of procedural due process. that petitioner has been its employee for twenty-eight (28) years. however. coupled with his failure to object to the jurisdiction of the court or quasi-judicial body where the action is pending. whether operated for profit or not. The rationale of the principle of the separation of church and state is summed up in the familiar saying. medical. or the adoption and enforcement within a religious association of needful laws and regulations for the government of the membership. Ibesate. In this case. Since the matter at bar allegedly involves the discipline of a religious minister. and the power of excluding from such associations those deemed unworthy of membership. Simply stated. what is involved here is the relationship of the church as an employer and the minister as an employee. As such. 1.34 Non-compliance therewith is fatal because these requirements are conditions sine quanon before dismissal may be validly effected. administration of sacraments and other activities with attached religious significance. such as the SDA. private respondents must not merely rely on the weaknesses of petitioner's evidence but must stand on the merits of their own defense. however. Aside from these.24 With this clear mandate. ordinations of religious ministers. the same must be measured against the requisites for a valid dismissal. As a matter of fact. is different from the ecclesiastical act of expelling a member from the religious congregation. A review of such findings is justified. The first notice. and giving to said employee reasonable opportunity within which to explain his side. Under the Labor Code. to wit: (a) a written notice served on the employee specifying the ground or grounds for termination. The principle of separation of church and state finds no application in this case. if he so desires. the grounds invoked for petitioner's dismissal. Indeed. be illegal. This is in consonance with the mandate of the Constitution to afford full protection to labor. he must be given an opportunity to be heard and to defend himself. categorically includes religious institutions in the coverage of the law. grounds have been established to justify his termination. to wit: Sec. worship and governance of the congregation.The first two issues shall be resolved jointly. Private respondents contend that by virtue of the doctrine of separation of church and state. gross and habitual neglect of duties and commission of an offense against the person of his employer's duly authorized representative. namely: (a) the employee must be afforded due process. the provision which governs the dismissal of employees. serves to apprise the employee of the particular acts or omissions for which his dismissal is sought. As pointed out by the OSG in its memorandum. 30 Before the services of an employee can be validly terminated. To be concrete. An ecclesiastical affair is "one that concerns doctrine. has the right to take cognizance of the case and to determine whether the SDA. which is purely secular in nature. The issue being the legality of petitioner's dismissal. particularly. Finally. this Court must of necessity review the records to determine which findings should be preferred as more comfortable to the evidentiary facts. Coupled with this is the act of the SDA in furnishing NLRC with a copy of petitioner's letter of termination. as in this case. It is already too late in the day for private respondents to question the jurisdiction of the NLRC and the Labor Arbiter since the SDA had fully participated in the trials and hearings of the case from start to finish. Section 1."19 While the state is prohibited from interfering in purely ecclesiastical affairs.. through the Labor Arbiter and the NLRC. the termination would. religious doctrines. "Strong fences make good-neighbors. the Labor Arbiter and the NLRC have no jurisdiction to entertain the complaint filed by petitioner.35 . in cases of regular employment with the exception of the Government and its political subdivisions including government-owned or controlled corporations. or form of worship of the church. 20 The case at bar does not concern an ecclesiastical or purely religious affair as to bar the State from taking cognizance of the same. whether for profit or not. creed. findings of fact of administrative bodies like the NLRC are binding upon this Court. From all of these it is clear that when the SDA terminated the services of petitioner. rightfully exercised its management prerogative to dismiss an employee. Coverage." Obviously. 29 Without the concurrence of this twin requirements. the cited article does not make any exception in favor of a religious corporation. is tantamount to an invocation of that jurisdiction and a willingness to abide by the resolution of the case and will bar said party from later on impugning the court or body's jurisdiction.e. While the matter at hand relates to the church and its religious minister it does not ipso facto give the case a religious significance. Article 277 (b) of the Labor Code and Section 2. the State. charitable and religious institutions and organizations. (b) a written notice of termination served on the employee indicating that upon due consideration of all the circumstances. this again is an eloquent admission by private respondents that NLRC has jurisdiction over the case. examples of this so-called ecclesiastical affairs to which the State cannot meddle are proceedings for excommunication. 21 Based on this definition. including educational. In termination cases. the worker's records of petitioner have been submitted by private respondents as part of their exhibits. is comprehensive enough to include religious corporations. The jurisdictional question now settled. Article 278 of the Labor Code on post-employment states that "the provisions of this Title shall apply to all establishments or undertakings. The Court has already ruled that the active participation of a party against whom the action war brought. Book V of the Rules Implementing the Labor Code further require the employer to furnish the employee with two (2) written notices. in the eyes of the law. It is purely secular and has no relation whatsoever with the practice of faith. the active participation of private respondents in the proceedings before the Labor Arbiter and the NLRC mooted the question on jurisdiction. as employer. 27 We turn now to the crux of the matter. and. we note that as a general rule. The contention of private respondents deserves scant consideration.22 By this alone. the settled rule is that the burden of proving that the termination was for a valid or authorized cause rests on the employer. we shall now proceed to determine whether the dismissal of petitioner was valid. and. an ecclesiastical affair involves the relationship between the church and its members and relate to matters of faith. The case at bar does not even remotely concern any of the abovecited examples. 31 The second notice on the other hand seeks to inform the employee of the employer's decision to dismiss him. 18 The demarcation line calls on the entities to "render therefore unto Ceasar the things that are Ceasar's and unto God the things that are God's. This is made more evident by the fact that the Rules Implementing the Labor Code. — This Rule shall apply to all establishments and undertakings. worship or doctrines of the church.

there is no basis for the allegation that petitioner's act constituted serious misconduct or that the same was an offense against the person of the employer's duly authorized representative.42 Though private respondents were able to establish that petitioner collected and received tithes and donations several times.078. but. collections and offerings amounting to P15.36 dated 17 October 1991. The alleged grounds for the dismissal of petitioner from the service were only revealed to him when the actual letter of dismissal was finally issued. rendered on 23 January 1996.44 Based on this standard. we believe that the minor infraction committed by petitioner does not merit the ultimate penalty of dismissal. For this reason. G. private respondents complied with the second requirement. Ibesate. petitioner cannot be made accountable for the alleged infraction committed by his wife. In fact. petitioner was surprised to find out that the alleged meeting turned out to be an investigation. Aside from merely citing the said ground. Indeed. A perusal of the said letter reveals that it never categorically stated the particular acts or omissions on which petitioner's impending termination was grounded. willful breach of trust. In fact.39 It should be genuine and not simulated. Naomi Geniebla. First of all. the notice of termination. without justifiable excuse. The final ground alleged by private respondents in terminating petitioner. heedlessly or inadvertently. officers of the SDA. private respondents failed to prove culpability on the part of petitioner.43 For misconduct to be considered serious it must be of such grave and aggravated character and not merely trivial or unimportant. serious misconduct and commission of an offense against the person of the employer's duly authorized representative pertain to the 16 October 1991 incident wherein petitioner allegedly committed an act of violence in the office of Pastor Gideon Buhat. The Decision of the Labor Arbiter. though petitioner committed damage to property.40 This ground has never been intended to afford an occasion for abuse. Hence. Suffice it to say that all private respondents had were allegations but not proof. Private respondents allege that they have lost their confidence in petitioner for his failure. Misconduct has been defined as improper or wrong conduct. he labored hard for the SDA. This argument deserves little consideration.10 which were collected by his wife. From the tenor of the letter. The letter merely mentioned that petitioner and his wife were invited to a meeting wherein what would be discussed were the alleged unremitted church tithes and the events that transpired on 16 October 1991. as proven by convincing and substantial evidence consisting of the testimonies of the witnesses for private respondents who are church treasurers. as admitted by their own witness. show that Pastor Austria was able to remit all his collections to the treasurer of the Negros Mission. it was Mrs. collections. they still have separate and distinct personalities. to remit the tithes and offerings amounting to P15. despite demands. cannot be considered as grave enough to be considered as serious misconduct. whatever missteps may have been committed by the worker ought not be visited with a consequence so severe such as dismissal from employment. Having been illegally dismissed. revealed how petitioner travelled to different churches to attend to the faithful under his care. is NULLIFIED and SET ASIDE. gross and habitual neglect of duties. and commission of an offense against the person of employer's duly authorized representative. After all. Thelma Austria who actually collected the tithes and donations from them. 2009 . petitioner remitted the amounts which he collected to the Negros Mission for which corresponding receipts were issued to him. In view of the foregoing. we find the same unmeritorious and. Breach of trust and misappropriation of denominational funds refer to the alleged failure of petitioner to remit to the treasurer of the Negros Mission tithes. A careful study of the voluminous records of the case reveals that there is simply no basis for the alleged loss of confidence and breach of trust. as such. otherwise the employee would eternally remain at the mercy of the employer. In fact. With regard to the first notice. it nevertheless urges a moderation of the sanctions that may be applied to him in light of the many disadvantages that weigh heavily on him like an albatross on his neck. cannot be construed as the written charge required by law. the evidence on record shows otherwise. which private respondents failed to demonstrate. the Negros Mission Church Auditor and a witness for private respondents.37 dated 29 October 1991. serious misconduct. the cited actuation of petitioner does not justify the ultimate penalty of dismissal from employment. On the other hand. The Court does not find any cogent reason. which notified petitioner and his wife to attend the meeting on 21 October 1991. therefore. In a vain attempt to support their claim of breach of trust. the alleged offense committed upon the person of the employer's representatives was never really established or proven by private respondents. It is the transgression of some established and definite rule of action. We cannot sustain the validity of dismissal based on the ground of breach of trust. and donations for the church. petitioner is entitled to reinstatement to his former position without loss of seniority right 48 and the payment of full backwages without any deduction corresponding to the period from his illegal dismissal up to actual reinstatement. private respondents enumerated the following as grounds for the dismissal of petitioner. the Labor Arbiter found it difficult to see the basis for the alleged loss of confidence and breach of trust. knowingly and purposely. Thus. Settled is the rule that under Article 282 (c) of the Labor Code. In fact.1âwphi1. throwing the telephone and scattering the books in the office of Pastor Buhat. Private respondents' evidence. a dereliction of duty. Hence. does not require an exhaustive discussion. in the churches under his jurisdiction. caprices or suspicion. The final ground invoked by private respondents is gross and habitual neglect of duties allegedly committed by petitioner. 160236 October 16. After all. Thelma Austria. and implies wrongful intent and not mere error in judgment. Petitioner's rise from the ranks disclose that he was actually a hard-worker. the allegations of private respondents that petitioner breached their trust have no leg to stand on. whims. in the absence of conspiracy and collusion. For this reason. they were notable to establish that petitioner failed to remit the same to the Negros Mission. between petitioner and his wife. thoughtlessly. a forbidden act.078. it cannot be presumed that petitioner was actually on the verge of dismissal. and.47 which consisted of petitioner's Worker's Reports. No. although improper. this does not cure the initial defect of lack of the proper written charge required by law. as distinguished from an act done carelessly.46 WHEREFORE. do not warrant petitioner's dismissal from the service.38 It must rest on substantial grounds and not on the employer's arbitrariness. willful in character. which were collected in his district. he did not physically assault Pastor Buhat or any other pastor present during the incident of 16 October 1991. and that he pocketed the amount and used it for his personal purpose. In the letter of termination. we sustain the finding of the Labor Arbiter that petitioner was terminated from service without just or lawful cause. the letter.10. the letter never even mentioned that petitioner would be subject to investigation. The testimony of these church treasurers were corroborated and confirmed by Ms.Private respondent failed to substantially comply with the above requirements. While admittedly. because of its subjective nature.46 For the foregoing reasons.41 The stenographic notes on the testimony of Naomi Geniebla.R. While the Constitution does condone wrongdoing by the employee. Mrs. private respondents try to pin on petitioner the alleged non-remittance of the tithes collected by his wife. it cannot be said that petitioner was given enough opportunity to properly prepare for his defense. he was rewarded with a dismissal from the service for a non-existent cause. to digress from the findings of the Labor Arbiter which is fully supported by the evidence on record. Geniebla and Mr. namely: misappropriation of denominational funds. is REINSTATED and hereby AFFIRMED. The records show that there were only six (6) instances when petitioner personally collected and received from the church treasurers the tithes. who failed to remit the same to the treasurer of the Negros Mission. With respect to the grounds of serious misconduct and commission of an offense against the person of the employer's duly authorized representative. The challenged Resolution of public respondent National Labor Relations Commission.nêt SO ORDERED. we believe that the act of petitioner in banging the attaché case on the table. in return. gross and habitual neglect of duties. As such. dated 15 February 1993. the breach of trust must be willful.45 Where a penalty less punitive would suffice. as correctly observed by the Labor Arbiter. Thus. the petition for certiorari is GRANTED. A breach is willful if it is done intentionally.

PHILIPPINE CURRENCY.19 GHI contended that the levied properties were the subject of a Deed of Real Estate and Chattel Mortgage.4 MMC was incorporated by the Development Bank of the Philippines (DBP) and the Philippine National Bank (PNB) on October 19. the former bought ninety percent (90%) of MMC’s shares and financial claims. The Facts The petitioner.R. and "PESOS TWO HUNDRED FORTY EIGHT MILLION. with office at Bacolod City following the auction sale conducted pursuant to the provisions of Act 3135. which were similarly worded except for their amounts. Negros Occidental. a copy of which certificate of sale is hereto attached as Annex "A" and made an integral part hereof. Quisumbing.. read as follows: PROMISSORY NOTE AMOUNT . 1984 issued by the Ex-Officio Provincial Sheriff of Negros Occidental. Tomas Writ. Brion and NAMAWU. 2001. and took full control of the management and operation of MMC. 2001. INC.25 Resolving. GHI filed with the Regional Trial Court (RTC) of Kabankalan City. Interest shall accrue on the amount of this Note at a rate per annum equal to the interest of 90-day Treasury Bills prevailing on the Friday preceding the maturity date of every calendar quarter.22 The trial court issued ex parte a TRO effective for 72 hours. with payment of full backwages and benefits. 13 On May 11. Ana. APROSTA and ALBERTO MUNOZ.R. its successors and/or assigns: 1.15 affirmed the propriety of the issuance of the Brion Writ. vs. Respondents. As collateral security. SHERIFFS RICHARD H. Negros Occidental. SEVEN HUNDRED THIRTY FOUR THOUSAND AND EIGHTY (Php248.18 On October 14.00) ["PESOS ONE HUNDRED EIGHTY SIX MILLION FIVE HUNDRED FIFTY THOUSAND FIFE HUNDRED AND SIXTY (Php186. Rolando V. 2002. with office at Bacolod City following the auction conducted pursuant to the provisions of Act 1508.16 On motion of NAMAWU. Later. and directed the execution of a new collective bargaining agreement (CBA) incorporating the terms and conditions of the previous CBA providing for an annual increase in the workers’ daily wage. 1984. Punta. more particularly listed and described in the Sheriff’s Certificate of Sale dated September 7. then DOLE Secretary Patricia A. 1996 20executed by MMC in favor of GHI to secure the aforesaid P550M promissory notes. Inc. as evidenced by the Certificate of Sale dated December 4.715.734. and levied on the properties of MMC located at its compound in Sipalay. 1996 and October 7.560. Metro Manila.00)" in the second note. the members of the union. now also an Associate Justice of this Court. 2002 Omnibus Order. which became final and executory on January 26.23 On October 17. National Mines and Allied Workers Union Local 103 (NAMAWU).] MAKATI. Special Civil Action (SCA) No. Region VI. MMC started its commercial operations in August 1985. later assumed jurisdiction over the dispute and ruled in favor of NAMAWU. 2283 Pasong Tamo Extension. entitled Maricalum Mining Corporation v. October 2.14Much later. Bacolod City. 1992 For Value Received.. Petitioner.715. 2001. now Associate Justice of this Court.. Negros Occidental.550. Nos. Sta. 157696-97.R.. and several armed men implemented the Sto. Arturo D. Nos. Manila.: Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the October 14. 1992.21 and that the mortgaged properties were already extrajudicially foreclosed in July 2001 and sold to GHI as the highest bidder on December 3. 1992. a copy of which Certificate of Sale is hereto attached as Annex "B" and made an integral part hereof.00 [Php186. METRO MANILA. MARICALUM MINING CORPORATION (MMC) with postal address at 4th Floor.7 These financial claims were converted into three Promissory Notes 8 issued by MMC in favor of GHI totaling P500M and secured by mortgages over MMC’s properties. we sustained the validity of the Quisumbing Order. 2002.00 in the third note. 133519 and 138996─filed with this Court. a copy of which Catalogue is hereby made an integral part hereof by way of reference. NAMAWU’s separate motions for the reconsideration of the injunction order and for the dismissal of the case. Philippines. and ordered the DOLE sheriffs to proceed to the MMC premises for the execution of the same. MMC hereby establishes and constitutes in favor of "G" HOLDINGS.00)" in the third note].080. 2002. 26 the dispositive portion of which reads: .550. In his July 30. 1984 issued by the Ex-Officio Provincial Sheriff of Negros Occidental. the trial court ordered the issuance of a Writ of Injunction (issued on October 18. "G" Holdings. Manila Memorial Park Bldg. Sto. SEVEN HUNDRED FIFTEEN THOUSAND AND THREE HUNDRED SIXTY (Php114. 1996. on motion of NAMAWU. 75322. 11 Then Labor Secretary. A chattel mortgage over assets and personal properties more particularly listed and described in the Sheriff’s Certificate of Sale dated September 7. and Php248. and set the hearing on the application for a writ of injunction. MARICALUM MINING CORPORATION (Maker) x x x x9 Upon the signing of the Purchase and Sale Agreement and upon the full satisfaction of the stipulated down payment. GHI immediately took physical possession of the mine site and its facilities. in G. was the exclusive bargaining agent of the rank and file employees of Maricalum Mining Corporation (MMC). 1996 was illegal and that MMC committed unfair labor practice. Mortgages over assets listed in APT Specific Catalogue GC-031 for MMC. 3. among others. that this deed was registered on February 24.00 in the second note. subject to GHI’s posting of a P5M bond. J.360. DBP and PNB transferred it to the National Government for disposition or privatization because it had become a non-performing asset. the respondent acting sheriffs. Ramirez. INC. Manalo Street. 2000. Brion. The notes. NATIONAL MINES AND ALLIED WORKERS UNION Local 103 (NAMAWU). INC. 2000. in 2006. F. dated September 5. 2002) 24 enjoining the DOLE sheriffs from further enforcing the Sto. DEPARTMENT OF LABOR AND EMPLOYMENT. on or before October 2. a labor dispute (refusal to bargain collectively and unfair labor practice) arose between MMC and NAMAWU. the RTC issued its December 4. on account of their foreclosure of Marinduque Mining and Industrial Corporation’s assets. pursuant to a Purchase and Sale Agreement6 executed between GHI and Asset Privatization Trust (APT). hereby promises to pay "G" HOLDINGS. 1997 Order in OS-AJ-10-96-014 (Quisumbing Order). is a domestic corporation primarily engaged in the business of owning and holding shares of stock of different companies. Tomas ordered the issuance of the July 18.17 On October 11. directed the issuance of a partial writ of execution (Brion Writ). A mortgage over certain parcels of land. DECISION NACHURA. Secretary Quisumbing declared that the lay-off (of workers) implemented on May 7. with the latter eventually filing with the National Conciliation and Mediation Board of Bacolod City a notice of strike. Private respondent. He then ordered the reinstatement of the laid-off workers. PHILIPPINES. 2. Tomas Writ).560.5 On October 2.734. the amount of PESOS ONE HUNDRED FOURTEEN MILLION. Leonardo A. 1127 for Contempt with Prayer for the Issuance of a Temporary Restraining Order (TRO) and Writ of Preliminary Injunction and to Nullify the Sheriff’s Levy on Properties. Makati. SP No. Ramirez. 2002 Alias Writ of Execution and Break-Open Order (Sto.Php114. then Acting Department of Labor and Employment (DOLE) Secretary. 2003 Decision1 of the Court of Appeals (CA) in CA-G. 2002. (GHI)."G" HOLDINGS.3 an entity operating a copper mine and mill complex at Sipalay. all acting Sheriffs. as well as assets presently in use by MMC but which are not listed or included in paragraphs 1 and 2 above and shall include all assets that may hereinafter be acquired by MMC. Bacolod District Office. at its office at Phimco Compound.360. Tomas Writ and from conducting any public sale of the levied-on properties.12 In two separate cases─G. this Court. The Brion Writ was not fully satisfied because MMC’s resident manager resisted its enforcement. 2 It was registered with the Securities and Exchange Commission on August 3. Rolando V. or on August 23. 10 Almost four years thereafter.080.

2002 and the December 4. VI WHETHER OR NOT. fictitious and fraudulent.29 The CA further ruled that the subsequent foreclosure of the mortgage was irregular. It noted that the foreclosure proceedings were initiated in July 2001. to its labor claims. we find it timely to reiterate that: "courts have also taken judicial notice of previous cases to determine whether or not the case pending is a moot one or whether or not a previous ruling is applicable to the case under consideration. VIII WHETHER OR NOT GHI CAN BE PREVENTED THROUGH THE ISSUANCE OF A RESTRAINING ORDER OR INJUNCTION FROM TAKING POSSESSION OR BE DISPOSSESSED OF ASSETS PURCHASED BY IT FROM APT. in view of the foregoing considerations. Accordingly. the same shall be dealt with accordingly. more importantly. These company notes. that it was executed two weeks after the labor dispute arose in 1996.000. NOS. effected precisely to prevent the satisfaction of the judgment against MMC. ASSUMING ARGUENDO THAT THE VALIDITY OF THE SAID REAL AND CHATTEL MORTGAGE MAY BE COLLATERALLY ATTACKED. the Deed was registered on February 4. the core issue is whether.27 Aggrieved. we acknowledge our Decision in Republic of the Philippines.34 in which we upheld the right of herein private respondent. The stipulations were subsequently formalized in a separate document denominated Deed of Real Estate and Chattel Mortgage on September 5. 2002 approving petitioner’s Injunction Bond in the amount of P5. 1996.200. The October 17. it is essential to take judicial cognizance of cases intimately linked to the present controversy which had earlier been elevated to and decided by this Court. the appellate court rendered a Decision setting aside the RTC issuances and directing the immediate execution of the Sto. raising the following issues: I WHETHER OR NOT GHI IS A PARTY TO THE LABOR DISPUTE BETWEEN NAMAWU AND MMC. Inc. is strictly warned not to resort again to disrespectful and contemptuous language in his pleadings. NAMAWU filed with the CA a petition for certiorari under Rule 65. respondent sheriffs are ordered to return the levied firearms and handguns to the petitioner provided the latter puts [up] a bond in the amount of P332. 2000. V WHETHER OR NOT THE VALIDITY OF THE DEED OF REAL AND CHATTEL MORTGAGE OVER THE SUBJECT PROPERTIES BETWEEN MMC AND GHI MAY BE COLLATERALLY ATTACKED. entitled to the delivery of the company notes accompanying the said purchase. Each of these notes uniformly contains stipulations "establishing and constituting in favor of GHI" mortgages over MMC’s real and personal properties. Brion and NAMAWU. in favor of any person. THE SAID MORTGAGE IS SHAM. 18 and December 4.28 After due proceedings. To repeat. 2002 is likewise DENIED. "G" Holdings. FICTITIOUS AND FRAUDULENT. the RTC properly issued the writ of injunction to prevent the enforcement of the Sto. II WHETHER OR NOT. The CA also found that the certificates of title to MMC’s real properties did not contain any annotation of a mortgage lien. Arturo D. without any legal ground or reason. 2002 for the reconsideration of the Order of this Court directing the issuance of Writ of Injunction prayed for by petitioner and the Order dated October 18. Thus. The resolution of this principal issue. Whether the mortgage of the MMC’s properties to GHI was a sham. Respondent’s lawyer.000. the Asset Privatization Trust v. 31 The dispositive portion of the appellate court’s decision reads: WHEREFORE. VII WHETHER OR NOT GHI IS A DISTINCT AND SEPARATE CORPORATE ENTITY FROM MMC. 2002 orders of the RTC.33 Stripped of non-essentials. SO ORDERED. ASSUMING ARGUENDO THAT THE PERTINENT DECISION OR ORDER IN THE SAID LABOR DISPUTE BETWEEN MMC AND NAMAWU MAY BE ENFORCED AGAINST GHI. the petition is GRANTED. but surprisingly. Atty. Hon. GHI did not intervene in the long drawn-out labor proceedings to protect its right as a mortgagee of virtually all the properties of MMC. given the factual circumstances obtaining. immediately after the Court affirmed with finality the Quisumbing Order. 1996 Deed of Real Estate and Chattel Mortgage yielded the conclusion that the deed was sham. Judicial Notice. and the DOLE Sheriff is directed to immediately enforce the Writ of Execution issued by the Department of Labor and Employment in the case "In re: Labor Dispute in Maricalum Mining Corporation" docketed as OS-AJ-10-96-01 (NCMB-RB6-08-96).00.WHEREFORE. 2000. firm or entity. were part of the documents executed in 1992 in the privatization sale of MMC by the Asset Privatization Trust (APT) to GHI. and thus.00 is hereby DENIED. these decisions respectively confirm the right of NAMAWU to its labor claims 37 and affirm the right of GHI to its financial and mortgage claims over the real and personal properties of MMC. Thereafter. Negros Occidental are hereby ANNULLED and SET ASIDE for having been issued in excess or without authority. as will be explained below. Respondent’s Motion to Dismiss as embodied in its Opposition to Extension of Temporary Restraining Order and Issuance of Writ of Preliminary Injunction with Motion to Dismiss and Suspend Period to File Answer dated October 15. Jose Lapak. Tomas Writ. In fact. ARLES CORRECTLY ISSUED A WRIT OF INJUNCTION AGAINST THE UNLAWFUL EXECUTIOIN ON GHI’S PROPERTIES."30 Further. GHI elevated the case to this Court via the instant petition for review on certiorari. assailing the October 17. NAMAWU. Pursuant thereto. the basis for the extrajudicial foreclosure was not the failure of MMC to pay the mortgage debt. III WHETHER OR NOT GHI IS THE ABSOLUTE OWNER OF THE PROPERTIES UNLAWFULLY GARNISHED BY RESPONDENTS SHERIFFS. however. that the circumstances surrounding the execution of the September 5. The assailed CA decision apparently failed to consider the impact of these two decisions on the case at bar. on October 14. and. 2003. will necessitate a ruling on the following key and interrelated questions: 1. among others.R. and. Upon the same principle of judicial notice.36 We find both decisions critically relevant to the instant dispute. suspiciously. IV WHETHER OR NOT THE HONORABLE HENRY D. Our Ruling Before we delve into an extended discussion of the foregoing issues. Branch 61 of Kabankalan City.35 in which GHI was recognized as the rightful purchaser of the shares of stocks of MMC.. respondent NAMAWU Local 103’s Motion for Reconsideration dated October 23. Whether it was proper for the CA to pierce the veil of corporate fiction between MMC and GHI. The Writ of Preliminary Injunction issued by the said court is lifted. it was registered only on February 24. Petitioner’s Urgent Motion for the return of the levied firearms is GRANTED. consisting of three (3) Promissory Notes. but its failure "to satisfy any money judgment against it rendered by a court or tribunal of competent jurisdiction. Whether there was an effective levy by the DOLE upon the MMC’s real and personal properties. 2002 Order of the RTC. they should have guided the courts below in the disposition of the controversy at their respective levels. shortly after the issuance of the Brion Writ." 38 However. the CA pierced the veil of corporate fiction of the two corporations. otherwise. the main inquiry addressed by the CA decision was whether GHI could be treated as a third party or a . and 3. the CA correctly assessed that the authority of the lower court to issue the challenged writ of injunction depends on the validity of the third party’s (GHI’s) claim of ownership over the property subject of the writ of execution issued by the labor department. Judicial notice must be taken by this Court of its Decision in Maricalum Mining Corporation v.32 The Issues Dissatisfied. 2. Tomas Writ. premises considered. The CA ruled. 157696-97. through its trustee. THERE IS ALREADY A FINAL DEETERMINATION BY THE SUPREME COURT OF THE RIGHTS OF THE PARTIES IN SAID LABOR DISPUTE CONSIDERING THE PENDENCY OF G.

and "G" Holdings culminated in the execution of a purchase and sale agreement on October 2. fictitious or fraudulent."41 The "company notes" mentioned therein were actually the very same three (3) Promissory Notes amounting toP550M. eventually. executed the agreement. not with the trial court which rendered the judgment appealed from. These cases may be so closely interwoven. The participation of the Government. with office at Bacolod City following the auction conducted pursuant to the provision of Act 1508. as follows: The series of negotiations between the petitioner Republic of the Philippines. through the APT as its trustee. Having recognized these crucial Court rulings. During the pre-trial. Espina. No other judicial remedy was resorted to until July 2. This conclusion surfaces when we consider the genesis of Civil Case No. Contrary to the rules of procedure. as to invoke a rule of judicial notice. filed a petition for annulment of judgment with the CA. issued by MMC in favor of GHI. Apparently. a specific deed of mortgage in a separate document may have been deemed necessary for registration purposes. To repeat. as narrated in Republic.280. they were agreed upon long before the seeds of the labor dispute germinated. as explicitly provided in the Promissory Notes. this . these notes uniformly contained stipulations "establishing and constituting" mortgages over MMC’s real and personal properties. x x x x43 With the RTC decision having become final owing to the failure of the Republic to perfect an appeal.161. This presumption would cover all related transactional acts and documents needed to consummate the privatization sale. "G" Holdings. SO ORDERED. Ramirez. It ruled in favor of "G" Holdings and held: "In line with the foregoing. as well as its company notes. this Court has recognized this Purchase and Sale Agreement in Republic. 1992. 95-76132.. a copy of which certificate of sale is hereto attached as Annex "A" and made an integral part hereof. 95-76132 became final in mid-1996. courts have also taken judicial notice of proceedings in other cases that are closely connected to the matter in controversy. the notes (and the stipulations therein) enjoy the benefit of the same presumption of regularity accorded to government actions. the three (3) Promissory Notes. The mortgage was not a sham.000 with the balance divided into four tranches payable in installment over a period of ten years. all the more does it become imperative to take judicial notice of the two cases aforesaid. Inc. 1984 issued by the Ex-Officio Provincial Sheriff of Negros Occidental. It is obvious. Unable to settle the issue. as mentioned above. the Republic undertook to sell and deliver 90% of the entire issued and outstanding shares of MMC. v. Rolando V. 1992. It may be remembered that APT acquired the MMC from the PNB and the DBP.. Inc. a copy of which Catalogue is hereby made an integral part hereof by way of reference. Indeed. 95-76132 and subsequent incidents thereto. within a period of thirty (30) days from receipt of this Decision. Even as the parties had already validly constituted the mortgages in 1992. 1984 issued by the Ex-Officio Provincial Sheriff of Negros Occidental. the mortgages cannot be characterized as sham.122. 1996. etc. but instead reinforces. the respective counsels of the parties manifested that the issue involved in the case was one of law and submitted the case for decision. 5. a copy of which Certificate of Sale is hereto attached as Annex "B" and made an integral part hereof. The complaint was docketed as Civil Case No." The Solicitor General filed a notice of appeal on behalf of the Republic on June 28. Accordingly. the notice of appeal was filed with the Court of Appeals (CA). 1996. Plaintiff shall pay the balance simultaneously with the delivery of the Deed of Transfer and actual delivery of the shares and notes.and after "G" Holdings Inc. through APT.702. acknowledged the existence of the Purchase and Sale Agreement between the APT and the GHI. etc. executed on October 2. we now proceed to resolve the questions identified above. the appellate court dismissed the petition. in compliance with its mandate to privatize government assets. v. as provided in the notes. a disagreement on the matter of when installment payments should commence arose between the parties. Rolando V. Branch 49. however. It also provided for a down payment of P98. A mortgage over certain parcels of land. and our review of the instant case cannot stray from the findings and conclusions therein. to "G" Holdings in consideration of the purchase price of P673. as they provide the necessary perspective to determine whether GHI is such a party with a valid ownership claim over the properties subject of the writ of execution. computed pursuant to the prepayment provisions of the Agreement. giving rise to the presumption of regularity in its execution. the trial court rendered its decision. already existing in 1992. whose properties were beyond the reach of the Writ of Execution dated December 18. inclusive of the Promissory Notes. then the transaction is imbued with an aura of official authority. While it is true that the Deed of Real Estate and Chattel Mortgage was executed only on September 5. 1996. Ramirez. Section 10 of the Rules of Court. 1992. The Republic claimed that it should be on the seventh month from the signing of the agreement while "G" Holdings insisted that it should begin seven months after the fulfillment of the closing conditions. more particularly listed and described in the Sheriff’s Certificate of Sale dated September 7. that the Government. Inc. then. situating the facts in proper perspective. This appears to be the most plausible explanation for the execution of the Deed of Real Estate and Chattel Mortgage only in September 1996. and recounts the facts attendant to that transaction. Inc. as well as assets presently in use by MMC but which are not listed or included in paragraphs 1 and 2 above and shall include all assets that may hereinafter be acquired by MMC. As already adverted to above. It claimed that the decision should be annulled on the ground of abuse of discretion amounting to lack of jurisdiction on the part of the trial court. viz: Subsequently. Republic etc.40 we held that "in some instances. After all. Then. were a "fictitious" arrangement intended to defraud NAMAWU. in order to enforce the trial court’s decision of June 11.86.42 It is difficult to conceive that these mortgages.. Given the Government consent thereto. 3. against the Republic to compel it to close the sale in accordance with the purchase and sale agreement. the manifest intention of the parties to "establish and constitute" the mortgages on MMC’s real and personal properties. 2.stranger to the labor dispute. Because the Government had actively negotiated and. The execution of this Deed in 1996 does not detract from. "G" Holdings. it is beyond cavil that this formal document of mortgage was merely a derivative of the original mortgage stipulations contained in the Promissory Notes of October 2. at its present value of P241. x x x Finding that the grounds necessary for the annulment of judgment were inexistent. 2001. "G" Holdings filed a complaint for specific performance and damages with the Regional Trial Court of Manila. Under the agreement." The two cases that we have taken judicial notice of are of such character. in this transaction is significant. through the APT. consented to the "establishment and constitution" of the mortgages on the assets of MMC in favor of GHI. 1999 when the Republic.. accordingly orders that the Asset Privatization Trust execute the corresponding Document of Transfer of the subject shares and financial notes and cause the actual delivery of subject shares and notes to "G" Holdings. v. A chattel mortgage over assets and personal properties more particularly listed and described in the Sheriff’s Certificate of Sale dated September 7. this Court having been convinced that the Purchase and Sale Agreement is indeed subject to the final closing conditions prescribed by Stipulation No. APT sold the aforesaid MMC shares and notes to GHI. Obviously. 1996..02 and conformably to Rule 39. "G" Holdings. In Juaban v. through APT. with office at Bacolod City following the auction sale conducted pursuant to the provisions of Act 3135. the move to execute a formal document denominated as the Deed of Real Estate and Chattel Mortgage came about after the decision of the RTC of Manila in Civil Case No. Mortgages over assets listed in APT Specific catalogue GC-031 for MMC.704. it may have become necessary to execute the Deed of Real Estate and Chattel Mortgage on September 5. 1996. or so clearly interdependent. and clothed with the presumption of regularity.39 In this light. "established and constituted" in favor of GHI the following mortgages: 1. On June 11. almost four (4) years before NAMAWU filed its notice of strike. shall have paid in full the entire balance.

this case involves an involuntary transfer (foreclosure of mortgage) arising from a loan obligation that well-existed long before the commencement of the labor claims of the private respondent. It bears reiterating that as early as November 4. the failure of the mortgagor to record in its financial statements its loan obligations is surely not an essential element for the validity of mortgage agreements. v. as far as the CA is concerned. when the donor did not reserve sufficient property to pay all debts contracted before the donation. 1992. and to declare that the mortgage deed was void for being simulated and fictitious.12 to ADB only for the purpose of defrauding Solidbank of the sum ofP52."48 Furthermore. 1997. Furthermore. The fact that MMC’s obligation to GHI is not reflected in the former’s financial statements─a circumstance made capital of by NAMAWU in order to cast doubt on the validity of the mortgage deed─is of no moment. voluntary transfer in the form of a sale executed by the judgment debtor in favor of a dubious third-party.12 to ADB in satisfaction of Marcopper’s remaining debt as of March 20. all the assets of MMC had already been transferred to GHI. the CA considered it highly suspect that the Deed of Real Estate and Chattel Mortgage was registered only on February 4. 1996. owing to the motion to dismiss filed by NAMAWU. the latter being a preferred creditor. after the NLRC decision became final and executory on April 29. and need not have been obtained by the party seeking rescission. the CA found that the mortgage deed itself was executed without any consideration. showing the clear intent of the parties to impose a lien upon MMC’s properties. while the date of the foreclosure signified that it was "effected precisely to prevent the satisfaction of the judgment awards. Tanongon v. 1997 and the "Deed of Assignment" on December 8. is the fact that the mortgages were foreclosed on July 31. it follows that Solidbank’s right as judgment creditor over the subject properties must give way to that of the former. a reputable international financial organization.50 We do not agree. in favor of petitioner an "Assignment Agreement" and a "Deed of Assignment. herein petitioner. while the participation of APT in this case clothes the transaction in 1992 with such a presumption that has not been successfully rebutted. It is basic that mortgaged properties answer primarily for the mortgaged credit. as discussed above.450. First. Sheriff Bajar51 pertinent and instructive: Article 1387 of the Civil Code of the Philippines provides: "Art. In Tanongon. no trial was held. Patent from the "Assignment Agreement" is the fact that petitioner assumed the payment of US$18." Obviously. there was no intention on the part of petitioner to defeat Solidbank’s claim.453. was remitted in favor of the Bank of Nova Scotia. In addition to these presumptions.52 . "G" Holdings. The "Assignment Agreement" and the "Deed of Assignment" were executed for valuable considerations. The decision or attachment need not refer to the property alienated.06. No presumption of regularity inheres in the deed of sale in Tanongon. On the other hand. 1997 of the Partial Judgment in Civil Case No. Samson44 is not "on all fours" with the instant case.791."46 Equally suspicious. We find this Court’s ruling in MR Holdings. the third-party claimant. in the absence of satisfactory evidence to the contrary. ADB and Marcopper executed. Second. Inc. pay ADB the amount of US$18.453. Three other circumstances have been put forward by the CA to support its conclusion that the mortgage contract is a sham.explanation is more logical and more sensible than the strained conjecture that the mortgage was executed on September 5. Those contracts cannot be viewed in isolation. Solidbank cannot deny this fact considering that a substantial portion of the said payment. The execution of the "Assignment Agreement" on March 20. Placer Dome had already bound itself under a "Support and Standby Credit Agreement" to provide Marcopper with cash flow support for the payment to ADB of its obligations. To say otherwise. well ahead of the union’s notice of strike on August 23. its major stockholder.45 In this case. the conduct of a fullblown trial led to the finding─duly supported by evidence─that the voluntary sale of the assets of the judgment debtor was madein bad faith. Here. "three years after its execution. Inc. etc. At issue in Tanongon was a third-party claim arising from a Deed of Absolute Sale executed between Olizon and Tanongon on July 29. 1992 in the Promissory Notes.the claimant did not exercise his option to file a separate action in court. however. 2000.970. after the DOLE had already issued a Partial Writ of Execution on May 9. etc. "G" Holdings. Contrary to the CA decision. will connive with Marcopper to feign or simulate a contract in 1992 just to defraud Solidbank for its claim four years thereafter. By itself.453. and the CA failed to consider the factual findings made by this Court in Republic. 1387. As such. Besides. the design to defraud creditors may be proved in any other manner recognized by law and of evidence.756. which obliged APT to deliver the MMC shares and financial notes to GHI. and almost one month after the Supreme Court rendered its decision in the labor dispute. Solidbank cannot assert a better right than ADB.49 These circumstances provided the CA with sufficient justification to apply Article 1387 of the Civil Code on presumed fraudulent transactions. it is highly inconceivable that ADB. as yet. 1992. If we may add. in Tanongon. v. This presumption of fraud is not conclusive and may be rebutted by satisfactory and convincing evidence.450.47 To the appellate court. It is undeniable that the Deed of Real Estate and Chattel Mortgage was formally documented two weeks after NAMAWU filed its notice of strike against MMC on August 23. it does not provide a sufficient basis to invalidate this public document. All that is necessary is to establish affirmatively that the conveyance is made in good faith and for a sufficient and valuable consideration. the assignment contracts were connected with transactions that happened long before the rendition in 1997 of the Partial Judgment in Civil Case No. 1996 only for the purpose of defrauding NAMAWU. would furnish MMC a convenient excuse to absolve itself of its mortgage obligations by adopting the simple strategy of not including the obligations in its financial statements. The facts of the case so far show that the assignment contracts were executed in good faith. 1992. Finally. because at the time of its execution." This article presumes the existence of fraud made by a debtor.. what is involved is a loan with mortgage agreement executed on October 2.12. 2001. 1997. Thus. It would ignore our ruling in Republic. When Marcopper ceased operations on account of disastrous mine tailings spill into the Boac River and ADB pressed for payment of the loan. It is said that the test as to whether or not a conveyance is fraudulent is ― does it prejudice the rights of creditors? We cannot see how Solidbank’s right was prejudiced by the assignment contracts considering that substantially all of Marcopper’s properties were already covered by the registered "Deed of Real Estate and Chattel Mortgage" executed by Marcopper in favor of ADB as early as November 11. the mere filing of a notice of strike by NAMAWU did not. Thereupon. Considering that petitioner assumed Marcopper’s debt to ADB. thus allowing the NLRC Sheriff to levy on execution and to determine the rights of third-party claimants. not for the judgment credit of the mortgagor’s unsecured creditor. resulting in the inability of the judgment creditor to satisfy the judgment. and to invalidate the mortgage deed on this pretext. Ltd. Alienations by onerous title are also presumed fraudulent when made by persons against whom some judgment has been rendered in any instance or some writ of attachment has been issued.89. 1996.886. First.450. And it is equally incredible for petitioner to be paying the huge sum of US$18. v. In the case at bar. in the sum of US$13. an alienation of a property will be held fraudulent if it is made after a judgment has been rendered against the debtor making the alienation. Placer Dome agreed to have its subsidiary. the mortgages had already been "established and constituted" as early as October 2. 9680083 by the Manila RTC. However. While the execution of these assignment contracts almost coincided with the rendition on May 7.1997 is not the alphaof this case. 2001. There are material differences between the two cases. 1997. this fact alone cannot give rise to an adverse inference for two reasons. vest in NAMAWU any definitive right that could be prejudiced by the execution of the mortgage deed. a separate action was filed in the regular courts by GHI. the questioned transaction in Tanongon was a plain. respectively. 96-80083 by the Manila RTC. nor will it independently affect the right of the mortgagee to foreclose. All contracts by virtue of which the debtor alienates property by gratuitous title are presumed to have been entered into in fraud of creditors. the timing of the registration of the mortgage deed was too coincidental.

9576132. This is all the more true in the present case. we must reject the conclusion of the CA that the Deed of Real Estate and Chattel Mortgage executed in 1996 was a simulated transaction. as amended by P. with full knowledge that such circumstances existed. 2001 against MMC. entrenched in our jurisdiction is the doctrine that registration in a public registry creates constructive notice to the whole world. judgment. This happened four and a half years after July 31. shall take effect as a conveyance or bind the land. it should be presumed that he did so. Further. there is nothing in Act No. 2001 was "effected [only] to prevent satisfaction of the judgment award. To paraphrase MR Holdings. The well-settled principle is that the rights of a mortgage creditor over the mortgaged properties are superior to those of a subsequent attaching creditor. because. as it was only then that this Court resolved the issue. the date when GHI foreclosed on the mortgaged properties. But no deed. charge or otherwise deal with the same in accordance with existing laws. stood to suffer a loss if it did not avail itself of the remedy of foreclosure. Conveyance and other dealings by registered owner. docketed as G. 2002.D. mortgages. leases or other voluntary instrument as are sufficient in law. The well-settled rule is that a mortgage lien is inseparable from the property mortgaged. No. we note the narration of subsequent facts contained in the Comment of the Office of the Solicitor General. that NAMAWU filed a notice of strike to protest non-payment of its rightful labor claims. instrument or entry affecting registered land. Yet." We also observe the error in the CA’s finding that the 1996 Deed of Real Estate and Chattel Mortgage was not supported by any consideration since at the time the deed was executed. Neither will the circumstance of GHI’s foreclosure of MMC’s properties on July 31. Given this reality. Rule 39. It was also about this time. support the conclusion of the CA that GHI’s act of foreclosing on MMC’s properties was "effected to prevent satisfaction of the judgment award. a motion for reconsideration was filed by MMC. or by its delayed registration. was registered in the office of the register of deeds of Manila. In Cabral v. be constructive notice to all persons from the time of such registering. and in all cases under this Decree. since he should not have expected that with the purchase. lien. 2006 would have been the earliest date for the unimpeded enforcement of the Partial Writ of Execution.53 But. filed or entered in the Office of the Register of Deeds for the province or city where the land to which it relates lies. but shall operate only as a contract between the parties and as evidence of authority to the Registry of Deeds to make registration. Section 22 of the old Rules of Court (now Rule 39. he knew. 2001. mortgage. we can draw parallel conclusions."58 It should be remembered that the Purchase and Sale Agreement between GHI and APT involved large amounts (P550M) and even spawned a subsequent court action (Civil Case No. No. 1996 was simply the formal documentation of what had already been agreed in the seminal transaction (the Purchase and Sale Agreement) between APT and GHI. or after the DOLE had already issued a Partial Writ of Execution on May 9. by reason of its late registration." It has long been settled by this Court that "The right of those who so acquire said properties should not and can not be superior to that of the creditor who has in his favor an instrument of mortgage executed with the formalities of the law. 1529. or at least. he would acquire a better right than that which the vendor then had. These properties simply served as mortgaged collateral for the 1992 Promissory Notes. Section 25 of the Revised Rules). Exhibit 2. Therein. 496. mortgage. as amended by Section 52 of P. Thus. He may use such forms. 157696. 1529. constituted in 1992. as already mentioned. 157696 was decided by this Court only on February 9. 57 While it is true that GHI’s foreclosure of MMC’s mortgaged properties may have had the "effect to prevent satisfaction of the judgment award against the specific mortgaged property that first answers for a mortgage obligation ahead of any subsequent creditors.D. that the denial of the motion was appealed to the CA. deeds. The APT was even ordered by the court to deliver the shares and financial notes of MMC in exchange for the payments that GHI had made. It was a reasonable option open to a mortgagee which. the second mortgagee has at most only the right to redeem. lease. Likewise. in 1996.59 The Purchase and Sale Agreement and the Promissory Notes themselves are the best evidence that there was ample consideration for the mortgage. except a will purporting to convey or effect registered land. attachment. and NAMAWU could only have hoped for. 2001. lease. Section 16 of the Revised Rules of Court. 2001. judgment. This chronology of subsequent events shows that February 9. which states with regard to the effect of levy on execution as to third persons that "The levy on execution shall create a lien in favor of . when substantially all of the properties of MMC were already mortgaged to GHI as early as October 2. order. that said automobile was subject to a mortgage lien.—Every conveyance. The importance of registration and its binding effect is stated in Section 51 of the Property Registration Decree or Presidential Decree (P. order.R. mortgage. or speculated about. antedated the Partial Writ of Execution by nearly ten (10) years. if registered." that same foreclosure does not necessarily translate to having been "effected to prevent satisfaction of the judgment award" against MMC. Section 51 of Act No.D. registration is the operative act which gives validity to the transfer or creates a lien upon the land. RTC of Manila). it eventually became the subject of a review petition before this Court. Constructive notice upon registration." The mere lapse of time from the execution of the mortgage document to the moment of its registration does not affect the rights of a mortgagee. Thus. very much willing to respect the lien existing thereon." GHI’s mortgage rights. the purchaser acquires no more than the right of redemption from the first mortgagee." In another case between two mortgagees.60 this Court declared that: Defendants-appellants purchase of the mortgaged chattels at the public sheriff's sale and the delivery of the chattels to them with a certificate of sale did not give them a superior right to the chattels as against plaintiffs-mortgagees. lease or other voluntary instrument. 1933.54 which reads: SECTION 51. the outcome of that labor dispute was yet unascertainable at that time. and without the least indication of fraud. No. filing or entering. it is presumed that he knew. and that G. by the mere fact that the instrument of mortgage. 1992. On the issue of whether there had been an effective levy upon the properties of GHI. lien. lease. therefore. 1992. 55 Under the Torrens system. the registration shall be made in the Office of the Register of Deeds for the province or the city where the land lies. 496. it is alleged that after the Partial Writ of Execution was issued on May 9. provides: SECTION 52. No. not being a party to the labor dispute between NAMAWU and MMC. GHI’s resort to foreclosure was a legitimate enforcement of a right to liquidate a bona fide debt. instrument or entry affecting registered land shall. And it cannot be denied that this original agreement was supported by an adequate consideration. But. the Court of Appeals had no basis to conclude that this Deed of Real Estate and Chattel Mortgage. It should not be viewed in isolation. apart from the original agreement of October 2. that imposes a period within which to register annotations of "conveyance. The execution of the subsequent Deed of Real Estate and Chattel Mortgage on September 5. nowhere in the Agreement or in the RTC decision is there any mention of real and personal properties of MMC being included in the sale to GHI in 1992. it is not accurate to say that the foreclosure made on July 31. The act of registration shall be the operative act to convey or affect the land insofar as third persons are concerned." If registered. cited by appellants precisely provides that "the sale conveys to the purchaser all the right which the debtor had in such property on the day the execution or attachment was levied.From this ruling in MR Holdings. in good faith.R.—An owner of registered land may convey. that when the appeal was dismissed by the CA on January 24. it "shall be the operative act to convey or affect the land insofar as third persons are concerned. and even when the second mortgagee goes through the formality of an extrajudicial foreclosure. a favorable ruling. we held that "As between the first and second mortgagees. then it "shall operate only as a contract between the parties and as evidence of authority to the Registry of Deeds to make registration.56 Thus. 2006. when the plaintiff purchased the automobile in question on August 22. attachment. "all the real and personal property of MMC had already been transferred in the hands of G Holdings." If liens were not so registered.) No. we cannot see how NAMAWU’s right was prejudiced by the Deed of Real Estate and Chattel Mortgage. 1529. mortgage. In purchasing it. Evangelista. was a simulated or fictitious contract." The superiority of the mortgagee's lien over that of a subsequent judgment creditor is now expressly provided in Rule 39.

we cannot ascribe to the Government. This is particularly true when the fiction is used to defeat public convenience. generally. or business conduit for the sole benefit of GHI. 2002. For this reason. for they had already been conveyed to the consortium of banks by mortgage (defined as a "conditional sale"). The sheriff could not have attached the properties themselves. and even made subject of court litigation (Civil Case No. confuse legitimate legal or judicial issues. Under a factual background largely resembling this case at bar. since even the courts were already judicially aware of its existence since 1992. then their separate personalities must be recognized. either NAMAWU had no properties of MMC to attach because the same had been previously foreclosed by GHI as mortgagee thereof. Accordingly. the courts have not hesitated to pierce the corporate veil (Francisco vs. This separate and distinct personality is. upon coming into existence. (hereinafter LGV). be made to answer for acts or liabilities of the said corporation. the latter’s rights are subject to the notice of the foreclosure on the subject properties by a prior mortgagee’s right. defend crime. in the said Republic. etc. Inc. under the writ of attachment obtained by the petitioner. 2000. we now ask: Was the CA correct in piercing the veil of corporate identity of GHI and MMC? In our disquisition above. Thus. justify wrong. the notion of corporate entity will be pierced or disregarded with reference to the particular transaction involved. In the case at bar. Given this jurisprudential principle and the factual circumstances obtaining in this case. the Court denied piercing the veil of corporate fiction to favor a judgment creditor who sued the parent corporation of the debtor. Thus.. or by virtue of the DOLE’s levy to enforce NAMAWU’s claims. In this regard. when there was already a judgment rendered or a writ of attachment issued. resulting in a merger of the personalities of the creditor (GHI) and the debtor (MMC) in one person. such that the debt of one to the other is thereby extinguished. Inc. subject to liens or encumbrances then existing."68 On the issue of piercing the veil of corporate fiction. We find that Article 1387 finds less application to an involuntary alienation such as the foreclosure of mortgage made before any final judgment of a court. Certainly. cannot be depicted as a contrived transaction. with the registration of the mortgage. was actually a levy on the interest only of the judgment debtor CMI on those properties. so his levy must be understood to have attached only the mortgagor's remaining interest in the mortgaged property — the right to redeem it from the mortgage. 95-76132. because the foregoing circumstances belie such an inference. or business conduit for the sole benefit of the stockholders or of another corporate entity. protect fraud. In all these cases. a subsidiary of defendant that was formed to develop the Top O’ the World resort community overlooking Lake George. we cannot impute to this Court’s findings on the case any badge of fraud. such as when the same is used for fraudulent or wrongful ends. In fact. This is likewise true where the corporate entity is being used as an alter ego. and not 200165 What is undisputed though is that the mortgage of GHI was registered on February 4. we have shown that the CA’s finding that there was a "simulated mortgage" between GHI and MMC to justify a wrong or protect a fraud has struggled vainly to find a foothold when confronted with the ruling of this Court in Republic v. perpetrate deception or otherwise circumvent the law. This can only mean that GHI and MMC have separate corporate personalities. xxxx The sheriff's levy on CMI's properties." Even in the matter of possession. Neither was MMC used merely as an alter ego. GHI’s mortgage right had already been registered by then. Mejia. it is not the alienation by onerous title contemplated in Article 1387 of the Civil Code wherein fraud is presumed. Prior registration of a lien creates a preference.62 xxxx There appears in the record a factual contradiction relating to whether the foreclosure by GHI on July 13. who has levied an attachment on the judgment debtor's (CMI) real properties which had been mortgaged to a consortium of banks and were subsequently sold to a third party. We also cannot agree that the presumption of fraud in Article 1387 of the Civil Code relative to property conveyances. The negotiations between the GHI and the Government--through APT. at that moment in time. we reject the CA’s conclusion that it was right to pierce the veil of corporate fiction. and vice versa. viz: In this action. 2001. this Court adjudged that GHI was entitled to its rightful claims─ not just to the shares of MMC itself. such as respondent herein. and the foreclosure is resorted to in order to liquidate a bona fide debt. dating back to 1992-culminating in the Purchase and Sale Agreement. The notion of separate personality is clearly being utilized by the two corporations to perpetuate the violation of a positive legal duty arising from a final judgment to the prejudice of the petitioner’s right. we consider the CA interpretation unwarranted. Since the factual antecedents of this case do not warrant a finding that the mortgage and loan agreements between MMC and GHI were simulated. Top Rate. But the debt embodied in the 1992 Financial Notes has been established. By this attribute. it may not be used or invoked for ends subversive to the policy and purpose behind its creation or which could not have been intended by law to which it owes its being. alleging fraudulent corporate asset-shifting effected after a prior final judgment. or just to the financial notes that already contained the mortgage clauses over MMCs disputed assets. The right of redemption was the only leviable or attachable property right of the mortgagor in the mortgaged real properties. adjunct.the judgment creditor over the right. by piercing the corporate veil or . we find American jurisprudence persuasive. "G" Holdings. However. the Deed of Real Estate and Chattel Mortgage was entered into between MMC and G Holdings for the purpose of evading the satisfaction of the legitimate claims of the petitioner against MMC. and the mortgagor has mere rights of redemption. Since the properties were already mortgaged to the consortium of banks. title and interest of the judgment debtor in such property at the time of the levy. the only interest remaining in the mortgagor CMI was its right to redeem said properties from the mortgage. to justify piercing the former’s veil of corporate fiction so that the latter could be held liable to claims of third-party judgment creditors. NAMAWU claims that the levy on two trucks was effected on June 22. however. In a decision by the Supreme Court of New York71 bearing upon similar facts. 66 well ahead of any levy by NAMAWU. and the foreclosure is not fraudulent because the mortgage deed has been previously executed in accordance with formalities of law. plaintiffs seek to recover the balance due under judgments they obtained against Lake George Ventures Inc. not for the judgment credit of the mortgagor’s unsecured creditor. Its registration of the mortgage was not intended to defraud NAMAWU of its judgment claims. 200163over some of the contested properties came ahead of the levy thereon. adjunct. as the act of registration is the operative act that conveys and affects the land. when the legal fiction of the separate corporate personality is abused. is invested by law with a personality separate and distinct from those persons composing it as well as from any other legal entity to which it may be related. the interlocking of directors and officers in two different corporations is not a conclusive indication that the corporations are one and the same for purposes of applying the doctrine of piercing the veil of corporate fiction. the only interest remaining in the mortgagor was its right to redeem said properties from the mortgage. like the petitioner. 61 Similar rules apply to cases of mortgaged real properties that are registered. mortgagees over chattel have superior. The right of redemption was the only leviable or attachable property right of CMI in the mortgaged real properties. Since the properties were already mortgaged to GHI. To pierce the veil of corporate fiction would require that their personalities as creditor and debtor be conjoined. preferential and paramount rights thereto. 362 SCRA 738). We have held that — The main issue in this case is the nature of the lien of a judgment creditor. or the reverse. but also to the delivery of those instruments. merely a fiction created by law for convenience and to promote the ends of justice.67 even against subsequent judgment creditors. a stockholder may not. RTC Manila)."69 Settled jurisprudence70 has it that – "(A) corporation. like NAMAWU. 64 which GHI disputes as a misstatement because the levy was attempted on July 18. authorizes piercing the veil of corporate identity in this case. and "it is basic that mortgaged properties answer primarily for the mortgaged credit. The CA found that: "Ordinarily. "G" Holdings. or the APT in particular. v. Furthermore. We thus hold that when the alienation is involuntary.. any undue motive to participate in a transaction designed to perpetrate fraud.

New York State Dept. see.50. the loan was modified by splitting the loan into a $1.9 term note on which defendant was primary obligor and a $4. Fundamentally. as a rule.2d 135. We are equally unpersuaded by plaintiffs' continued reliance upon defendant's December 1991 unilateral conversion of its intercompany loans with LGV from debt to equity. Matter of Morris v. 141.2d 891. of the mortgages earlier constituted in the Promissory Notes dated October 2.070.. xxxx Time and again. later. But these Promissory Notes with mortgage were executed by GHI with APT in the name of MMC. not only of finances but of policy and business practice in respect to the transaction attacked so that the corporate entity as to this transaction had at the time no separate mind.Y. Defendant bid in the property at the foreclosure sale and thereafter obtained a deficiency judgment in the amount of $3.2d 1157). paid the $1. v.2d 234) and the matter proceeded to a nonjury trial. in a full privatization process. 92 N. 82 N. a derivative. 623 N. 3. not mere majority or complete control. Corp. supra) set forth a "roadmap" for the proof required at trial and mandated a verdict in favor of plaintiffs upon their production of evidence that supported the decision's "listed facts". Neither can we conclude that the constitution of the loan nearly four (4) years prior to NAMAWU’s notice of strike could have been the proximate cause of the injury of NAMAWU for having been deprived of MMC’s corporate assets. Chemical Bank thereafter loaned an additional $3. to perpetuate the violation of a statutory or other positive legal duty. a party seeking to pierce the corporate veil must show complete domination and control of the subsidiary by the parent and also that such domination was used to commit a fraud or wrong against the plaintiff that resulted in the plaintiff's injury ( 252 A. In fact. National Mines and Allied Workers’ Union v. To the contrary. 703 N. will or existence of its own. Defendant's principal.1 million project note on which LGV was the obligor and defendant was a guarantor. defendant brought an action to foreclose its mortgage.50. Supreme Court thereafter rendered judgment in favor of defendant upon its findings that.2d 609. 603 N. no temporary or permanent injunction or restraining order in any case involving or growing out of a labor dispute shall be issued by any court--where the writ of execution issued by a labor tribunal is sought to be enforced upon the property of a stranger to the labor dispute.246. Ultimately.2d 234. Clear and convincing evidence is needed to pierce the veil of corporate fiction. but complete domination. of Taxation & Fin. As properly concluded by Supreme Court. Initial project funding was provided through a $2. 254 of the New Labor Code (herein earlier quoted) which prohibits injunctions or restraining orders in any case involving or growing out of a 'labor . our decision was predicated upon the existence of such evidence. a writ of preliminary injunction to prevent enforcement of a writ of execution issued by a labor tribunal on the basis of a third-party’s claim of ownership over the properties levied upon. 1992. Plaintiffs appealed. to wit: 1.2d 807. Not only must there be a showing that there was majority or complete control. by LGV's divestiture of the water company stock or the sports complex property. or by defendant's transfer to LGV of a third party's uncollectible note. fraud or malfeasance" (TNS Holdings v. National Labor Relations Commission. 675 N. by itself.Y. In Concept Builders.000 reduction in the deficiency judgment.D.5 million balance on the term note and took an assignment of the first mortgage on the project's realty. supra. After LGV failed to make payments on the indebtedness over the course of the succeeding two years. Ultimately. On the propriety of injunction to prevent execution by the NLRC on the properties of third-party claimants It is settled that a Regional Trial Court can validly issue a Temporary Restraining Order (TRO) and. in exchange for a $950.S. defendant was forced to make monthly installments of principal and interest on LGV's behalf. xxxx In reaching that conclusion. The mortgage deed transaction attacked as a basis for piercing the corporate veil was a transaction that was an offshoot. that wielded it. We previously upheld Supreme Court's denial of defendant's motion for summary judgment dismissing the complaint (252 A.2d 609. since said action neither involves nor grows out of a labor dispute insofar as the third party is concerned. at the time of the foreclosure sale. a sufficient ground for disregarding a separate corporate personality. will or existence of its own. and the two loans were consolidated into a first mortgage loan of $6 million.Y.5 million to LGV. the U. 77 Instructively. we specifically reject a number of plaintiffs' assertions.73 we laid down the test in determining the applicability of the doctrine of piercing the veil of corporate fiction. liens against its property exceeded the value of its assets by several million dollars.E. 339. accomplished solely for tax purposes.S. absent which we would have granted summary judgment in favor of defendant. even upon a mere prima facie showing of ownership of such claimant--a separate action for injunctive relief against such levy may be maintained in court.2d 335. both causes of action pleaded in the amended complaint must fail. we have reiterated that mere ownership by a single stockholder or by another corporation of all or nearly all of the capital stock of a corporation is not. which constituted nothing more than a "bookkeeping transaction" and had no apparent effect on LGV's obligations to defendant or defendant's right to foreclose on its mortgage. and. or dishonest and. The aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of.2d 749).. a separate entity that had been organized to construct and operate the water supply and delivery system for the project.Y. but complete domination.D. Supreme Court of New York held— Based on the foregoing. including the entirely erroneous claims that our determination on the prior appeal (252 A. initially held 90% of the stock and all of the stock was ultimately transferred to defendant.S. It appears that if there was any control or domination exercised over MMC. not only of finances but of policy and business practice in respect to the transaction attacked. and for some period of time had been. In 1989.Y. although defendant dominated LGV. defendant purchased the project note from Chemical Bank for $3. MKI Sec.74 It is basic that a corporation has a personality separate and distinct from that composing it as well as from that of any other legal entity to which it may be related.S.246. the mere interlocking of directors and officers does not warrant piercing the separate corporate personalities of MMC and GHI. Such control must have been used by the defendant to commit fraud or wrong. it did not use that domination to commit a fraud or wrong on plaintiffs. defendant obtained a judgment of foreclosure and sale in the amount of $6.2d 234. The loan proceeds were utilized to purchase the real property upon which the project was to be established.2d 609. unable to meet its obligations and.S.75 In this case. Francesco Galesi. we are at a loss as to how plaintiffs perceive themselves to have been inequitably affected by defendant's foreclosure action against LGV. 675 N.E.D. it was APT.72 This doctrine is good law under Philippine jurisdiction. so that the corporate entity as to this transaction had at the time no separate mind. Following the foreclosure sale. LGV transferred to defendant all of the shares of Top of the World Water Company. even if plaintiffs' analysis were utilized to eliminate the entire $3 million deficiency judgment. unjust act in contravention of plaintiffs legal rights. It is undisputed that LGV was. and accepting that defendant exercised complete domination and control over LGV. Inc. the fact remains that subordinate mortgages totaling nearly an additional $2 million have priority over plaintiffs' judgments. "[e]vidence of domination alone does not suffice without an additional showing that it led to inequity.Y. 610.1 million.1avvphi1 The trial evidence showed that LGV was incorporated in November 1985.S. Notably. again guaranteed by defendant. absent a finding of any inequitable consequence to plaintiffs. 2.Y. not GHI.upon the theory that LGV's transfer of certain assets constituted fraudulent transfers under the Debtor and Creditor Law.070. Control. 680 N. Vera78 Petitioners' reliance on the provision of Art. 675 N.5 million loan from Chemical Bank. even including the water company and sports complex at the values plaintiffs would assign to them.76 While. Due to LGV's lack of success in marketing the project's townhouses and in order to protect itself from the exercise of Chemical Bank's enforcement remedies. secured by defendant's guarantee of repayment of the loan and completion of the project.

" Likewise. petitioner is situated squarely as such third-party claimant. since the third-party claimant is not one of the parties to the action. At this stage. Notably. CEFERINO ROMERO. 2749 is whether the NLRC's decision and writ of execution. This has no application to the case at bar. v. JAIME ACEVEDO. therefore. To deny the victim of the wrongful levy. because its issuance was amply supported by factual and legal bases. ANANIAS HERMOCILLA. ERNESTO LITADA. vs. FELOMENO BALLON. A final word The Court notes that the case filed with the lower court involves a principal action for injunction to prohibit execution over properties belonging to a third party not impleaded in the legal dispute between NAMAWU and MMC. SEVERINO ROSETE. the Petition is GRANTED. The Omnibus Order dated December 4. RTC Branch 61. Inc. ANDREW DE LA ISLA BAYANI PILAR. of the fact that the labor claims of NAMAWU. WALLY LEONES. for brevity). 2749 does not put in issue either the fact or validity of the proceeding in theNLRC case nor the decision therein rendered. it thereby admitted that the mortgage was not void. impute grave abuse of discretion on the National Labor Relations Commission (NLRC) 1 for issuing two resolutions. acknowledged by this Court in Maricalum. however.83 or even the resort to receivership. the presumption of regularity of transaction must be considered and said document must be looked [upon] as valid.81 We. under the pretext that no court of general jurisdiction can interfere with the writ of execution issued in a labor dispute. for the third and final time. etc. we see that NAMAWU always had. above mentioned. Certainly. Simply because a writ of execution was issued by the NLRC does not authorize the sheriff implementing the same to levy on anybody's property. NONILON DAWAL. only for the purpose of resolving again the matter of whether GHI owns the properties that were the subject of the latter’s foreclosure. that the petitioner has a clear and unmistakable right over the levied properties. 2001 are the basis of its conclusion. Civil Case No. Thus. Unless said mortgage contract is annulled or declared null and void. VICENTE CHAVEZ. "G" Holdings. strictly speaking. Brion and NAMAWU. Rule 39 of the Rules of Court. SO ORDERED.79 A separate civil action for recovery of ownership of the property would not constitute interference with the powers or processes of the labor tribunal which rendered the judgment to execute upon the levied properties. v. We have observed.80 Upon the findings and conclusions we have reached above. CARLITO CHOSAS. which were validly foreclosed by GHI. an independent action is needed to rescind the contract of mortgage. etc. No costs. or to consider. Official proceedings relative to the foreclosure of the subject properties constituted a prima facie showing of ownership of such claimant to support the issuance of injunctive reliefs. that the lower court and the CA failed to take judicial notice of. cannot be considered as interference. shall be permitted to be satisfied against properties of private respondents. BONIFACIO URBANO. ULDARICO GARCIA. The registration of the mortgage document operated as notice to all on the matter of the mortgagee’s prior claims. What is sought to be tried in Civil Case No. because the mortgage has been previously recognized to exist. appeal from the order denying his claim. which reconsidered a resolution it rendered on April 15. and the rights of NAMAWU to its labor claims. Possession and Control over said mortgaged properties on July 19. dated April 7. still awaits final execution. G. ANICETO ARBAN. ERNESTO BANAY. The Decision of the Court of Appeals dated October 14.dispute' is not well-taken. all former employees of private respondent Philtread (Firestone) Tire and Rubber Corporation (Philtread. As correctly held by the lower court: The subject incidents for TRO and/or Writ of Injunction were summarily heard and in resolving the same. To sustain petitioners' theory will inevitably lead to disastrous consequences and lend judicial imprimatur to deprivation of property without due process of law.R. 1992. we find no more need to remand the case to the lower court. Such a recourse is allowed under the provisions of Section 17. nor even this Court. RICARDO CUEVAS. The property levied upon being that of a stranger is not subject to levy. RENAN HALILI. the recourse such as that availed of by the herein private respondents. this case is not ended by this decision. and November 18. since the lower court is still to try the case filed with it and decide it on the merits. The questioned restraining order of the lower court.: Petitioners. hold that such an independent action cannot now be maintained. that could not have been the intendment of the law creating the NLRC.. RICARDO ESCUETA. 2001 and the fact that a Sheriff’s Certificate of Sale was issued on December 3. EDILBERTO VIRAY ANGELES BARON. and not of the judgment debtor named in the NLRC decision and writ of execution. We are not unmindful. ample supplemental remedies found in Rule 39 of the Rules of Court in order to protect its rights against MMC. does not constitute interference with the powers or processes of the labor department. GERONIMO ESPLANA. The existence of the subject Deed of Real Estate and Chattel Mortgage. but merely rescissible under Article 1381(3) of the Civil Code. a separate action for recovery. and RICARDO B. MANOLITO CUSTODIO. the fact that petitioner initiated a foreclosure of said properties before the Clerk of Court and Ex-Officio Sheriff. and Maricalum Mining Corporation v. the Office of the Solicitor General also aptly observed that when the respondent maintained that the Deed of Real Estate and Chattel mortgage was entered into in fraud of creditors. therefore. in issuing the questioned orders.. NATIONAL LABOR RELATIONS COMMISSION and PHILTREAD (FIRESTONE) TIRE AND RUBBER CORPORATION. WHEREFORE. They allege that its resolution . petitioners. the Court believes. For well-settled is the rule that the power of a court to execute its judgment extends only over properties unquestionably belonging to the judgment debtor. neither the lower court nor the CA. ROMERO. our Decisions in Republic. respondents. The private respondents are not parties to the said NLRC case. 2003 is SET ASIDE. PABLO ALULOD. Branch 61 of Kabankalan City. however. did not commit grave abuse of discretion. ORLANDO MENDOZA. in Republic. in which we respectively recognized the entitlement of GHI to the shares and the company notes of MMC (under the Purchase and Sale Agreement). VALERIANO MAUBAN. will be sanctioning a greater evil than that sought to be avoided by the Labor Code provision in question. Kabankalan City on July 13.82 the examination of the obligors of judgment obligors. 2749 is one which neither "involves" nor "grows out" of a labor dispute. So also is the consequential issue of the separate and distinct personalities of GHI and MMC. or a complaint for damages against the bond filed by the judgment creditor in favor of the sheriff. What 'involves' or 'grows out' of a labor dispute is the NLRC case between petitioners and the judgment debtor. SILVA. "G" Holdings. J. much less the writ of execution issued thereunder. MARIO CREDO BERNABE GERONIMO. From our discussion above. Philippine Iron Mines. HERNANI ABOROT. and. Negros Occidental is AFFIRMED. upon a claim and prima facie showing of ownership by the petitioner. ERNESTO BARENG. he cannot. Inc. 1997 ALBERTO S. the matter of whether the mortgage and foreclosure of the assets that are the subject of said foreclosure is ended herein. 110226 June 19. Having resolved these principal issues with certainty. as well as the order granting preliminary injunction. 1993. VENTURA. can depart from our findings in those two cases because of the doctrine of stare decisis. Civil Case No. PASTOR VELUZ. It does not seek to enjoin the execution of the decision against the properties of the judgment debtor. STEVE VELECINA. 2002 of the Regional Trial Court. with a valid consideration.. the fact that said Ex-Officio Sheriff and the Clerk of Court issue a Notice of Foreclosure. 2001. These include the examination of the judgment obligor when judgment is unsatisfied. theoretically. No. RODOLFO JUAN. and may still have. VICENTE SANTOS. 1992. we now rule that the trial court. but he should file a separate reivindicatory action against the execution creditor or the purchaser of the property after the sale at public auction. As success fades from NAMAWU’s efforts to execute on the properties of MMC. RODOLFO MARIANO.841avvphi1 While. however.

1989. the case at bar presents no peculiar circumstances warranting a departure therefrom. petitioners deemed it highly irregular and capricious for the NLRC to still allow reconsideration of its April 15. promulgated one of its challenged resolutions dismissing the complaint of petitioners. 4 In dismissing the complaint. as an administrative and quasi-judicial body. resolution or decision. Rule VII of the New Rules of Procedure of the National Labor Relations Commission. not being privy to the CBA executed between the union and Philtread. subject only to existing vacancies and a finding of good physical condition. Although there are exceptions to said rule. matters involving bargaining agreements were already within the exclusive jurisdiction of the voluntary arbitrator. said rule. Jurisdiction. petitioners fault the NLRC for issuing the assailed resolutions even when the resolution sought to be reconsidered had already attained finality upon Philtread's failure to timely move for its reconsideration. In short. They posit that since the bailiff's return indicated May 5. Upon discovery of this development. volunteered for. incapable of attaining finality. Gutierrez and Leogardo. it affirmed its earlier resolution dated November 18. or after the filing of the complaint on December 5. in accordance with Section 4. is a mandatory requirement to forestall the finality of such order.of April 15. 1992 resolution. as set forth in Article 262 of the Labor Code. Even the request of the incumbent union for Philtread to stop hiring new personnel until petitioners were first hired failed to elicit any favorable response. 1989. This resolution was received by Atty. an ex parte manifestation explaining that he was returning the copy of the resolution rendered on April 15. 1992. Daniel C. Labor Arbiter Edgardo M. namely: (1) that the NLRC lacked jurisdiction. damages and attorney's fees against Philtread. Philtread opted not to interpose an appeal despite the Labor Arbiter's failure to rule squarely on the question of jurisdiction. and (2) that petitioners had no locus standi. 5 The statutory bases for this is found in Article 223 of the Labor Code 6 and Section 14. Thus. The record unfolds the following facts: Sometime in 1985. Gutierrez and Leogardo on May 5. however. 1988. then Philtread only had ten (10) calendar days or until May 15. Being one for unfair labor practice. on December 5. as well as those former employees similarly situated for available positions provided they meet the necessary current qualifications. however. petitioners filed their respective applications for employment with Philtread. 1992 became final and executory when Philtread failed to seasonably file a motion for reconsideration within the ten-day reglementary period required by Article 223 of the Labor Code. 1992. On August 31. however. 1983. Philtread claims. These are jurisdictional and mandatory requirements which must be strictly complied with. Both parties submitted their respective position papers. challenging Philtread's motion to dismiss. petitioners moved for its execution. acting on a motion for reconsideration filed by Atty. 1992. Subsequent demands for re-employment made by petitioners were ignored. 1992. its actuation was not only whimsical and capricious but also a demonstration of its utter disregard for its very own rules. expanded its operations and hired new personnel. the NLRC issued a resolution reversing the decision of the Labor Arbiter. Philtread's counsel of record. resolution or decision of the NLRC. is only relevant if the tribunal or body which takes cognizance of a . petitioners argued that the subsequent amendment cannot retroactively divest the Labor Arbiter of the jurisdiction already acquired in accordance with Articles 217 and 248 of the Labor Code. It ruled that while petitioners had standing to sue. Dismayed by the NLRC's sudden change of position. there being no employer-employee relationship between it and petitioners and that the basic issue involved was the interpretation of a contract. 1992 resolution by the law firm of Borreta. is not bound by the rigid application of technical rules of procedure in the conduct of its proceedings. since the primary issue was the implementation and interpretation of the CBA. Philtread maintains that the ten-day reglementary period could not have started running and. 7 In the case at bar. Petitioners duly appealed the decision of the Labor Arbiter to the NLRC. Petitioners further stressed that the resolution of April 15. In another resolution issued on April 7. 1992. While we agree with the dictum that a void judgment cannot attain finality. Madriaga rendered a decision dismissing the complaint but directing Philtread to give petitioners priority in hiring. then rank-and-file employees and members of Philtread Workers Union (PWU). according to him. 9 It was thus incumbent upon the NLRC to have dismissed outright Philtread's late motion for reconsideration. had already become final and executory since Philtread's counsel of record did not file any motion for reconsideration within the period of ten (10) days from receipt of the resolution on May 5. Gutierrez and Leogardo had already been dissolved. 6715 took effect only on March 21. which. this petition. therefore. he dwelt solely on the question whether the petitioners were entitled to priority in re-employment on the basis of the CBA. it is uncontroverted that Philtread's counsel filed a motion for reconsideration of the April 15. Article III of the 1986 and 1983 CBAs. Borreta of the law firm of Borreta. Article III of the Collective Bargaining Agreement concluded on July 5. was not convinced by petitioners' assertions. 1992. pursuant to Article 217 (a) (1) of the Labor Code. 8 or 31 days after receipt of said resolution. Subsequently. Gutierrez and that no seasonable motion for reconsideration was ever filed by Philtread. and availed of. as shown by the bailiff's return. their decisions thereon were null and void and. 1992. The NLRC. This being the case. did not tackle the jurisdictional issue posed by Philtread in its position paper. petitioners immediately moved for reconsideration. was erroneously served on him by the process server of the NLRC. 1992. the complaint should have been filed with the voluntary arbitrator. this Court has been emphatic in ruling that the seasonable filing of a motion for reconsideration within the l0-day reglementary period following the receipt by a party of any order. Philtread. as mandated by the provisions of Section 4. the CBA. the Labor Arbiter. 1992. On its part. They added that the amendment of Article 261 introduced by Republic Act No. On November 18. The Court is aware of Philtread's obvious attempt to skirt the requirement for seasonable filing of a motion for reconsideration by persuading us that both the Labor Arbiter and the NLRC have no jurisdiction over petitioners' complaint. therefore. petitioners lodged a complaint 3 with the National Capital Region Arbitration Branch of the NLRC for unfair labor practice (ULP). Since Philtread indisputably failed to file any such motion within said period. Philtread moved for the dismissal of the complaint based on two grounds. as the date of receipt of the April 15. Certiorari. however. He alleged that in the several conciliation conferences held. it is settled doctrine that the NLRC. To be sure. the retrenchment program instituted by Philtread with the understanding that they would have priority in re-employment in the event that the company recovers from its financial crisis. apparently having recovered from its financial reverses. petitioners concluded that the NLRC had jurisdiction over the case. 1992 resolution only on June 5. the filing of a motion for reconsideration and filing it ON TIME are not mere technicalities of procedure. Petitioners. Borreta filed with the NLRC on May 20. therefore. The argument is not tenable. Gutierrez. 10 However. its motion could not be considered late. 1988. Time and again. 1992 resolution of the NLRC had been properly served at the address of the law firm of Atty. Atty. stressed that the complaint was one for unfair labor practice precipitated by the unjust and unreasonable refusal of Philtread to reemploy them. regardless of age qualifications and other pre-employment conditions. Instead. pursuant to Article 261 of the Labor Code. within which to file a motion for reconsideration. merely agreed to consider them for future vacancies. petitioners. which however. 1993. As stated at the outset. The petition is impressed with merit. which was cognizable by the regular courts. Abraham B. 2 In November 1986. On April 15. ruling that even before the amendatory law took effect. it was Atty. lies. Hence. Being of the impression that the April 15. 1992. It directed Philtread to re-employ petitioners and other employees similarly situated. Gutierrez who exclusively handled the case on behalf of Philtread and informed the Labor Arbiter and petitioners that the law firm of Borreta. They pointed out that the NLRC's reliance on Article 261 of the Labor Code was patently erroneous because it was the amended provision which was being cited by the NLRC. 1992. lies instead with the voluntary arbitrator so that when the Labor Arbiter and the NLRC took cognizance of the case. By doing exactly the opposite. the NLRC.

Under the above provisions then prevailing.particular subject matter indeed lacks jurisdiction over the same. Cases arising from any violation of Article 264 of this Code. — (a) Except as otherwise provided under this Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide. which in this case is the re-employment clause." the jurisdiction of which pertains to the Grievance Machinery or thereafter. That termination disputes shall be governed by Article 278 of this Code. including questions involving the legality of strikes and lockouts. 2. 1989. we observe that there is a confusion in the minds of both Philtread and the NLRC with respect to the proper jurisdiction of the voluntary arbitrator. it is not the voluntary arbitrator who can take cognizance of the complaint. exemplary and other forms of damages arising from the employeremployee relations. including those based on non-payment or underpayment of wages. however. 3. 248. Medicare and maternity benefits. the employer and the bargaining representative shall meet to adjust the grievance. 12 or the so-called "Herrera-Veloso Amendments. defined the jurisdiction of the voluntary arbitrator. The Court. 2. damages and attorney's fees on December 5. 1988. 3. To their mind. including the respective jurisdictions of the Labor Arbiter. however. As a result. Republic Act 6715. If accompanied with a claim for reinstatement. — It shall be unlawful for an employer to commit any of the following unfair labor practice: xxx xxx xxx (i) To violate a collective bargaining agreement. the following cases involving all workers. the following cases involving all workers. conciliation or arbitration as provided elsewhere in this Code. the governing provision of the Labor Code with respect to the jurisdiction of the Labor Arbiter and the NLRC was Article 217 which states: Art. Cases arising from any violation of Article 265 of this Code. — Whenever a grievance arises from the interpretation or implementation of a collective agreement. (Emphasis supplied) Since the contending parties in the instant case are not the union and Philtread. 5. does not write finis to the discussion. 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." took effect. overtime compensation. notwithstanding Philtread's claim that the real issue is the interpretation of the CBA provision on re-employment. Unfair labor practices of employers. Where there is no collective agreement and in cases where the grievance procedure as provided herein does not apply. 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. Claims for actual." 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. Articles 261 and 262. Cases involving household services. At the time. 261. viz. one cannot immediately jump to the conclusion that jurisdiction is with the voluntary arbitrator. Jurisdiction of Labor Arbiters and the Commission. involving an amount exceeding five thousand pesos (P5. only disputes involving the union and the company shall be referred to the grievance machinery or voluntary arbitrators. to a voluntary arbitrator or panel of voluntary arbitrators. It need not be mentioned that the parties to a CBA are the union and the company. . Hence. as amended. 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. the rule adverted to is misapplied for it is actually the Labor Arbiter and the NLRC which possess jurisdiction over petitioners' complaint and NOT the voluntary arbitrator. and 5. We note that at the time petitioners filed their complaint for unfair labor practice. Respondents' posture is too simplistic and finds no support in law or in jurisprudence.000. within thirty (30) calendar days after the submission of the case by the parties for decision without extension. rates of pay. 262. including disciplinary actions imposed on members of the bargaining unit. all other claims. In this case. and 6. There is an equally important need to inquire further if the disputants involved are the union and the employer. 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. (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. those cases that workers may file involving wages. otherwise. grievances shall be subject to negotiation. hours of work and other terms and conditions of employment. it shall automatically be referred to voluntary arbitrators (or panel of voluntary arbitrators) designated in advance by the parties. Social Security. moral. Those that workers may file involving wages. separation pay and other benefits provided by law or appropriate agreement. social security. except claims for employees' compensation. 217. then pursuant to the Sanyodoctrine.00) regardless of whether accompanied with a claim for reinstatement. All money claims of workers. Art. A more important question arises: If the voluntary arbitrator could not have assumed jurisdiction over the case.: Art. arising from employer-employee relations. Canizares. on the other hand. To this effect was the ruling of the Court in Sanyo Philippines Workers Union-PSSLU v. Thus: Art. — All grievances referred to in the immediately preceding Article which are not settled through the grievance procedure provided in the collective agreement shall be referred to voluntary arbitration prescribed in said agreement: Provided. 217. one can understand why petitioners lodged their complaint for ULP with the Labor Arbiter. the present jurisdiction of the Labor Arbiter and the NLRC is as follows: Art. 11 where we clarified the jurisdiction of the voluntary arbitrator in this manner: In the instant case. Jurisdiction of Labor Arbiters and the Commission. the NLRC and the voluntary arbitrator. unless the parties agree to submit them to voluntary arbitration. Philtread's refusal to re-employ them was tantamount to a violation of the re-employment clause in the 1983 CBA which was also substantially reproduced in the 1986 CBA. amending several provisions of the Labor Code. even in the absence of stenographic notes. then the same necessarily falls within the competence of the voluntary arbitrator pursuant to Article 261 of the Labor Code. the voluntary arbitrator cannot assume jurisdiction. Except claims for Employees Compensation. Voluntary arbitration. whether agricultural or non-agricultural: 1. including those of persons in domestic or household service. In this regard. Unfair labor practice cases. 4. Unfair labor practice cases. Grievance machinery. Termination disputes. On March 21. including questions involving the legality of strikes and lockouts. any violation of the CBA was unqualifiedly treated as ULP of the employer falling within the competence of the Labor Arbiter to hear and decide. as erroneously contended by Philtread. did the Labor Arbiter and the NLRC validly acquire jurisdiction when both of them entertained the complaint? A brief review of relevant statutory provisions is in order. 4. hours of work and other terms and conditions of employment. When the issue concerns an interpretation or implementation of the CBA. whether agricultural or non-agricultural: 1. (b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters. They appear to share the view that once the question involved is an interpretation or implementation of CBA provisions. 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. medicare and maternity benefits. however.

for a ULP case to be cognizable by the Labor Arbiter. The Decision of this case. shall also hear and decide all other labor disputes including unfair labor practices and bargaining deadlocks. the Labor Arbiter had clear jurisdiction over the same. (Emphasis supplied) Art. the divestment affected pending litigations. including money claims. on November 9. Briad Agro Development Corp. It is further stated that "gross violations of Collective Bargaining Agreement shall mean flagrant and/or malicious refusal to comply with the economic provisions of such agreement. No. No. however. the prevailing laws were Presidential Decree No.14 where we refused to give retroactive application to Executive Order No. Thus. 111. 797 which created the Philippine Overseas Employment Administration (POEA). It also affected this particular case. except those which are gross in character. as well as the economic provision violated. Dela Cerna cited by the petitioner is not applicable to the case at bar. 1989. while it would make out a case for ULP. regional directors have jurisdiction). inBriad Agro Development Corporation v.O. 1982. Under said law." At the time of the filing of the complaint. upon agreement of the parties. With the amendments introduced by RA 6715. We fail to perceive in the language of E. — The Voluntary Arbitrator or panel of Voluntary Arbitrators. In Garcia v. 6715 a retroactive application because as curative statutes. when this new law divested Regional Directors of the power to hear money claims." Hence. In ruling against the retroactive application of the law.A. in view of the promulgation of Republic Act (R. . in Calderon v. (Note that under par 6. as amended. 1004). at the time private respondent filed his complaint against the petitioner. like its predecessors. POEA was vested with "original and exclusive jurisdiction over all cases. to our mind. In Briad. . . except those which are gross in character. vs. Court of Appeals. . National Labor Relations Commission. we categorically held that amendments relative to the jurisdiction of labor arbiters (under Presidential Decree No. amended Article 217 of the Labor Code to widen the worker's access to the government for redress of grievances by giving the Regional Directors and Labor Arbiters . has retroactive application. the Court. Thus. it is even doubtful if the CBA provision on re-employment fits into the accepted notion of an economic provision of the CBA. and L.O. According violations of a Collective Bargaining Agreement. However. Laws should only be applied prospectively unless the legislative intent to give them retroactive effect is expressly declared or is necessarily implied from the language used. Inc. shall no longer be treated as unfair labor practice and shall be resolved as as grievances under the Collective Bargaining Agreement. do not constitute gross violation of the CBA for purposes of lodging jurisdiction with the Labor Arbiter and the NLRC. In this case.M. Executive Order No. may the Briad doctrine be applied to the instant case and cause its dismissal for want of jurisdiction of the Labor Arbiter and the NLRC? Upon a careful and meticulous study of Briad. involving employer-employee relations arising out of or by virtue of any law or contract involving Filipino workers for overseas employment. . On March 31. 261. 797. — 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. There is. like Civil Case No. finally. The Court dismissed the petition in its Decision dated June 29. in a Resolution. Jurisdiction over other labor disputes.S. Dela Cerna. It ruled that the enactment of E. while that of the voluntary arbitrator is defined in this wise: Art. 262. (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. Furthermore.O. however. 1367 [is] curative and retrospective in nature. 1989. acknowledged the retrospective characteristics of Executive Order No. . challenged the jurisdiction of the Regional Director of the Department of Labor and Employment over cases involving workers' money claims. As in the instant case. gross violations of Collective Bargaining Agreement shall mean flagrant and/or malicious refusal to comply with the economic provisions of such agreement. reconsidered and set aside its June 29 Decision and referred the case to the Labor Arbiter for proper proceedings. The case of Briad Agro Development Corp. namely: (1) gross violation of the CBA. since Article 217 of the Labor Code. a significant change: The unqualified jurisdiction conferred upon the Labor Arbiter prior to the amendment by RA 6715 has been narrowed down so that "violations of a Collective Bargaining Agreement. amending Article 217 of the Labor Code. As such. the law in force at the time of the filing of the complaint. under present law. the allegations in the complaint should show prima facie the concurrence of two things. cured the Regional Director's lack of jurisdiction by giving the Labor Arbiter and the Regional Director concurrent jurisdiction over all cases involving money claims. the Court already made its pronouncement that RA 6715 is in the nature of a curative statute. 9657 (See 82 C. vested in the Labor Arbiters exclusive jurisdiction over such cases. AND (2) the violation pertains to the economic provisions of the CBA. and the NLRC to exercise its appellate jurisdiction.000. No. the Court holds that the rationale behind it does not apply to the present case. 111 and R.O. sufficient details supporting the conclusion of bad faith and unjust refusal to re-employ petitioners must be indicated. No. Thus. Thus. 1367. The Court's appreciation of petitioners' cause of action is that." 15 which jurisdiction was originally conferred upon the Labor Arbiter. the Court explained its position as follows: The rule is that jurisdiction over the subject matter is determined by the law in force at the time of the commencement of the action. 111. they fall under the exceptions to the rule on prospectivity of laws. where the claim does not exceed P5.) 6715 which divested the Regional Directors of the power to hear money claims.00. 797 did not divest the Labor Arbiter's authority to hear and decide the case filed by private respondent prior to its effectivity. it can be gleaned that the Labor Arbiter still retains jurisdiction over ULP cases.O. Camus Engineering Corp. Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators.J. We adopt instead the more recent case of Erectors. In several instances prior to the instant case. Herein lies the problem. 6715. 13 we held: Republic Act No. E. shall no longer be treated as unfair labor practice but as grievances under the Collective Bargaining Agreement. No. Although evidentiary matters are not required (and even discouraged) to be alleged in complaint.A. Martinez. For purposes of this article.(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters. the same falls short of the special requirements necessary to make it cognizable by the Labor Arbiter and the NLRC. E. the Court applied the exception rather than the general rule. With the Briad ruling in place. Garcia has since been uniformly applied in subsequent cases.O. the implication is that the qualified jurisdiction of the Labor Arbiter and the NLRC should have been applied when the ULP complaint was still pending. divesting the labor arbiter of jurisdiction) partake of the nature of curative statutes. The lack of jurisdiction was cured by the issuance of the amendatory decree which is in the nature of a curative statute with retrospective application to a pending proceeding. 111 and Article 217. 797 an intention to give it retroactive effect. It bears emphasis that the Court accorded E. without which the complaint would be dismissible. 111. the Labor Arbiter's assumption of jurisdiction therein was likewise questioned in view of the subsequent enactment of E. given the foregoing considerations. still. reiterated that PD No. we declared that it can be applied retroactively to pending cases. 1691 and Presidential Decree No. 1391 which vested the Regional Offices of the Ministry of Labor and the Labor Arbiters with "original and exclusive jurisdiction over all cases involving employer-employee relations including money claims arising out of any law or contracts involving Filipino workers for overseas employment. Unsubstantiated conclusions of bad faith and unjustified refusal to re-employ petitioners. v. thus: It now appears that at the time this case was decided the lower court had jurisdiction over Velasco's complaint although at the time it was filed said court was not clothed with such jurisdiction. This means that petitioners should have been required to show in their complaint the gross nature of the CBA violation.

Actually. 18 To our mind. 1990. 6715. filed by Atty. Like in Erectors. while its resolution dated April 15. as what in fact happened here. does not seek reinstatement. must be applied retroactively. The Court view it as merely a matter of change in policy of the lawmakers.00. and Leogardo were really dissolved. the respondent company had strong reason to believe that the complainant was guilty of the offense charged against her. or he should have withdrawn the appearance of the firm and entered his own appearance. (National Sugar Refineries Corporation vs. as amended by then Executive Order No. Similarly. are SET ASIDE. all ULP cases were exclusively within the jurisdiction of the Labor Arbiter. 111 and R. if the law firm of Borreta. WHEREFORE. This amendment. is not impressed. Respondent denied any employer-employee relationship between them.000.informing her that she was being dismissed due to loss of trust and confidence based on alleged mismanagement and misappropriation of funds. transpired at around that date. is REINSTATED for immediate execution.2 On appeal. G. 1992. the conclusion that it was curative in nature and.A. however. this Office is inclined to rule in favor of the respondent. instruments or acts of public authorities which would otherwise be void for want of conformity with certain existing legal requirements. vs. SO ORDERED. and sought the dismissal of the complaint. notwithstanding the fact that a different law is involved. and its new address at that. alleging that she was initially employed by Equitable PCI-Bank (respondent) in 1990 as Italian Remittance Marketing Consultant to the Frankfurt Representative Office. until September 1999.A. this case should be dismissed for want of jurisdiction. Ermita. when she received a letter from Remegio David -. she was promoted to Manager position. 17 This. respondent's position paper). it follows that the law that govern their relationship is the law of the place where the employment was executed and her place of work or assignment. why then did he use the firm's name. created a situation where the jurisdiction of the Regional Directors and the Labor Arbiters overlapped.) xxx In this case. The same thing cannot be said of the case at bar. E. Borreta. No. . the Labor Arbiter rendered its Decision dismissing the case for want of jurisdiction and/or lack of merit. Gutierrez and Leogardo had been dissolved. As for Atty. Gutierrez and Atty. are lame excuses to cast doubt on the propriety of service to Atty. these excuses cannot camouflage the clever ploy of Philtread's counsel to earn a last chance to move for reconsideration. in case the dissolution took place midstream. By failing to exercise either option. 6715 are therefore curative statutes. Assuming for the sake of argument that this Office has jurisdiction over this case. must be the rationale that prompted the amendment. it was incumbent upon him not to have used the firm's name in the first place.Europe -. however. and (3) the aggregate money claim of the employee or househelper does not exceed P5. still. she held a position of trust. a further elucidation on the matter would be an exercise in futility. 6715 was passed and delineated the jurisdiction of the Labor Arbiters and Regional Directors. Hence. 157376 October 2. As can be gleaned from the foregoing. On this premise. It is well-settled doctrine that the basic premise for dismissal on the ground of loss of confidence is that the employee concerned holds a position of trust and confidence. There is here no overlapping of jurisdiction to speak of because matters involving interpretation and implementation of CBA provisions.O. the National Labor Relations Commission (NLRC) affirmed the Labor Arbiter's Decision and dismissed petitioner's appeal for lack of merit. 6715 further amended Article 217 by delineating their respective jurisdictions. R. Borreta were once partners in their law firm.: Corazon Sim (petitioner) filed a case for illegal dismissal with the Labor Arbiter. Hence. Atty. Gutierrez. Borreta take fifteen days to file his Manifestation and inform the NLRC of the "improper" service of the resolution to him? Why did he not object immediately to the service by the bailiff? Considering that Atty. Gutierrez and Leogardo" whose address could be found at the "3rd Floor. the instant petition is hereby GRANTED.concurrent jurisdiction over cases involving money claims. What RA 6715 merely did was to re-apportion the jurisdiction over ULP cases by conferring exclusive jurisdiction over such ULP cases that do not involve gross violation of a CBA's economic provision upon the voluntary arbitrator. the preliminary conferences adverted to by Atty. therefore. Atty. 1988. In other words. A curative statute is enacted to cure defects in a prior law or to validate legal proceedings. have always been determined by the Voluntary Arbitrator even prior to RA 6715. created a scenario where the Labor Arbiters and the Regional Directors of the Department of Labor and Employment (DOLE) had overlapping jurisdiction over money claims. 797. indicating therein that the counsel for respondent (Philtread) was "Borreta. (2) the claimant. his receipt of the adverse resolution should have alerted him of the adverse consequences which might follow if the same were not acted upon promptly. Gutierrez. 1993. European Head of PCIBank. J.R. Eventually. the Court deemed it a rectification of such defect. Complainant. Manila. Gutierrez who exclusively represented Philtread and that the law firm of Borreta. the Italian law allegedly provides severance pay which was applied and extended to herein complainant (Annex "P". Gutierrez cannot now blame the NLRC for serving its resolution at the address of the firm still on record. As a remedy. The assailed resolutions of the NLRC dated November 18.1 According to the Labor Arbiter: It should be stressed at this juncture that the labor relations system in the Philippines has no extraterritorial jurisdiction. as well as interpretation and enforcement of company personnel policies. Borreta to have at least advised his former partner of the receipt of the resolution. No. as General Manager is an employee whom the respondent company reposed its trust and confidence. 2007 CORAZON C. On September 3. Gutierrez. 111. no longer being employed. It is limited to the relationship between labor and capital within the Philippines. as well as the factual circumstances to which they were made to apply. SIM.O. 1988. Borreta. respondents*. 286 SCRA 478. this is not the first time that the Court refused to apply RA 6715 retroactively. Guerrero Streets. DECISION AUSTRIA-MARTINEZ. The law at bar. why did Atty.A. E. Since complainant was hired and assigned in a foreign land. Commodore Condominium Arquiza corner M.the Senior Officer. Finally. We do not find any reason why the Court should not apply the above ruling to the case at bar. petitioners. 2001. indeed." If. is surprised to discover that the record bears a Notice of Change of Address dated March 12. 16 Our previous decisions on whether to give it retroactive application or not depended to a great extent on what amended provisions were under consideration. the instant case presents no defect in the law requiring a remedy insofar as the jurisdiction of the Labor Arbiter and the Voluntary Arbitrator is concerned. where Atty. We do not see anything in the act of reapportioning jurisdiction curative of any defect in the law as it stood prior to the enactment of RA 6715. or househelper under the Code. Under R. NATIONAL LABOR RELATIONS COMMISSION and EQUITABLE PCI-BANK. it behooves Atty. we uphold the jurisdiction of the Labor Arbiter which attached to this case at the time of its filing on December 5. the Regional Director has exclusive original jurisdiction over cases involving money claims provided: (1) the claim is presented by an employer or person employed in domestic or household service. . All other cases within the exclusive and original jurisdiction of the Labor Arbiter. This situation was viewed as a defect in the law so that when RA No. instead of the inherent defect in the law. NLRC. This Court. is not a curative statute. Gutierrez supposedly declared that he was exclusively representing Philtread. In Briad. Article 217 of the Labor Code. although by a Philippine Corporation. the contention that it was Atty. and April 7. in the aforementioned notice to the NLRC? Moreover. it bears emphasizing. As a lawyer. but looks incredulously at such superficial moves. Gutierrez declared during the Labor Arbiter's proceedings that he was exclusively representing Philtread. especially since the 1987 Constitution adheres to the preferential use of voluntary modes of dispute settlement. Presumably. the underlying reason for applying RA 6715 retroactively was the fact that prior to its amendment.3 . It must be noted that the complaint of petitioners was filed on December 5. No. hence. . The Court. 1992. and Managing Director of PCIB.

A company's resort to acts of self-defense would be more easily justified. indeed.6 The pivotal question that needs to be resolved is whether or not a prior motion for reconsideration is indispensable for the filing of a petition for certiorari under Rule 65 of the Rules of Court with the CA.00 lire from the bank's account.8 This is to give the lower court the opportunity to correct itself. Respondent is a managerial employee. the present recourse under Rule 45 of the Rules of Court. exemplary and other forms of damages arising from the employeremployee relations. Court of Appeals: It must be emphasized that a writ of certiorari is a prerogative writ. Medicare and maternity benefits. including questions involving the legality of strikes and lockouts.000. never demandable as a matter of right. which was denied by respondent. In fact.5 Petitioner filed a motion for reconsideration but it was nonetheless denied by the CA per Resolution dated February 26. 5. unless it is shown that grave abuse of discretion or lack or excess of jurisdiction has been committed by said quasi-judicial bodies. she gives up some of the rigid guaranties available to ordinary workers. exceptions to the foregoing rule. compelling. The issues raised in this case are mixed questions of fact and law. If accompanied with a claim for reinstatement. moral. But it is not for petitioner to determine whether it is so. It was only in her motion for reconsideration of the CA's resolution of dismissal and in the petition filed in this case that petitioner justified her non-filing of a motion for reconsideration. – (a) Except as otherwise provided under this Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide. to wit: (a) where the order is a patent nullity. 14 The mere existence of a basis for believing that a managerial employee has breached the trust of the employer would suffice for his/her dismissal. and. (d) where. Hence. as such. even in the absence of stenographic notes. 4. the CA was not in error when it dismissed the petition. Petitioner alleges that: I. the Court notes that the petition filed before the CA failed to allege any reason why a motion for reconsideration was dispensed with by petitioner. The rule is that the Court is bound by the findings of facts of the Labor Arbiter or the NLRC.11 (Emphasis supplied) Petitioner also contends that the issue at bench is purely a question of law. 7 A "plain" and "adequate remedy" is a motion for reconsideration of the assailed order or resolution. viz. To dispense with the requirement of filing a motion for reconsideration. the radio program was already off the air. 10 Petitioner. In a Resolution dated October 29. 3. The Court of Appeals departed from the accepted and usual concepts of remedial law when it ruled that the petitioner should have first filed a Motion for Reconsideration with the National Labor Relations Commission. rates of pay. a motion for reconsideration would be useless. 217. involving an amount of exceeding five thousand pesos (P5. or any plain. Respondent. whether agricultural or non-agricultural: 1. those cases that workers may file involving wage. the filing of which is an indispensable condition to the filing of a special civil action for certiorari. Unfair labor practice cases. with regard to the issue on jurisdiction. Infractions which if committed by others would be overlooked or condoned or penalties mitigated may be visited with more severe disciplinary action. as affirmed by the NLRC. relief from an order of arrest is urgent and the granting of such relief by the trial court is improbable. 2003. and 6. Cases arising from any violation of Article 264 of this Code.13 The Court will not deviate from said doctrine without any clear showing that the findings of the Labor Arbiter. Thus. however. Termination disputes. The legality of petitioner's dismissal hinges on the question of whether there was an employer-employee relationship. never issued except in the exercise of judicial discretion. all other claims. which was affirmed by the NLRC. arising from employer-employee relations. and (i) where the issue raised is one purely of law or public interest is involved. Social Security. As stressed in Cervantes v. including those of persons in domestic or household service. These are mixed questions of fact and law and. Except claims for Employees Compensation. (h) where the proceeding was ex parte or in which the petitioner had no opportunity to object. however. It was wrong for the Labor Arbiter to rule that "labor relations system in the Philippines has no extra-territorial jurisdiction. countered that at the time she withdrew said amount. There is a question of fact when doubt or difference arises as to the truth or falsehood of the alleged facts. and adequate remedy in the ordinary course of law. Under Rule 65. which petitioner failed to do. 12 Petitioner. Thus.000.000. II. 2.9 There are. an exception to the rule. Consequently. 2002. Hence. if in the affirmative. . and valid reason for doing so. the following cases involving all workers. or are the same as those raised and passed upon in the lower court. the CA4 dismissed the petition due to petitioner's nonfiling of a motion for reconsideration with the NLRC. The National Labor Relations Commission decided a question of jurisdiction heretofore not yet determined by the Court and decided the same in a manner not in accord with law when it ruled that it had no jurisdiction over a labor dispute between a Philippine corporation and its employee which it assigned to work for a foreign land. More so since petitioner failed to show any error on the part of the Labor Arbiter and the NLRC in ruling that she was dismissed for cause. do not fall within the exception from the filing of a motion for reconsideration. in a criminal case.15 [w]hen an employee accepts a promotion to a managerial position or to an office requiring full trust and confidence. the remedy of filing a special civil action for certiorari is available only when there is no appeal. petitioner must show a concrete. (f) where. aside from questioning the ruling of the NLRC sustaining the Labor Arbiter's view that it does not have any jurisdiction over the case. Petitioner does not deny having withdrawn the amount of P3. Claims for actual. Jurisdiction of Labor Arbiters and the Commission.Petitioner may not arrogate to himself the determination of whether a motion for reconsideration is necessary or not. he who seeks a writ of certiorari must apply for it only in the manner and strictly in accordance with the provisions of the law and the Rules. of course. (e) where petitioner was deprived of due process and there is extreme urgency for relief. Petitioner argues that filing a motion for reconsideration with the NLRC would be merely an exercise in futility and useless. under the circumstances. hours of work and other terms and conditions of employment. What petitioner submits is that she used said amount for the Radio Pilipinas sa Roma radio program of the company. failed to qualify her case as among the few exceptions. as where the court a quo has no jurisdiction. speedy. the Court of Appeals correctly dismissed the petition.: ART. are bereft of sufficient substantiation. whether petitioner. loss of trust and confidence is a valid ground for her dismissal. also questions the NLRC's ruling affirming the Labor Arbiter's conclusion that she was validly dismissed by respondent. (b) where the questions raised in the certiorari proceedings have been duly raised and passed upon by the lower court. A reading of the petition filed with the CA shows otherwise. committed a breach of trust and confidence justifying her dismissal. (c) where there is an urgent necessity for the resolution of the question and any further delay would prejudice the interests of the Government or of the petitioner or the subject matter of the action is perishable. hence.16 The Court notes. within thirty (30) calendar days after the submission of the case by the parties for decision without extension."17 Article 217 of the Labor Code provides for the jurisdiction of the Labor Arbiter and the National Labor Relations Commission.Without filing a motion for reconsideration with the NLRC. however.00) regardless of whether accompanied with a claim for reinstatement. a palpable error in the Labor Arbiter's disposition of the case. petitioner went to the Court of Appeals (CA) via a petition for certiorari under Rule 65 of the Rules of Court. and there is a question of law where the doubt or difference arises as to what the law is on a certain state of facts. (g) where the proceedings in the lower court are a nullity for lack of due process.

. Meanwhile [in 1993]. et al. acting through its Board of Trustees and represented by Alejandro L. 1987 Constitution]. 1990.R. premises considered and in view of the foregoing. — Notwithstanding any provision of law to the contrary. security of tenure. 00-787. On October 1. Demands to pay the respective obligations were made upon petitioners. The appellate court reversed and set aside the Decision3 of Branch 139 of the Regional Trial Court of Makati City (RTC) in Civil Case No. Custodio. No. National Labor Relations Commission. among whom are petitioners Editha Broqueza and Fe Gerong. HSBCLSRP filed Civil Case No. ordering the latter: 1. moral. Costs against petitioner. 3. The appellate court granted the petition filed by Fe Gerong (Gerong) and Spouses Bienvenido and Editha Broqueza (spouses Broqueza) and dismissed the consolidated complaints filed by Hongkong and Shanghai Banking Corporation. Inc. 52911 against Gerong. and just and humane conditions of work [Article 3 of the Labor Code of the Philippines. the petition is DENIED. G. Thus.18 provides: SECTION 10. ensure equal work opportunities regardless of sex. 1993. public policy and good customs shall not be rendered ineffective by laws or judgments promulgated. Ltd.6 HSBCL-SRP.) No. the claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual. among whom are overseas Filipino workers. The legality or illegality of such termination is now pending before this appellate Court in CA G. Article II and Section 3. the Court finds no compelling reason to relax the rule on the filing of a motion for reconsideration prior to the filing of a petition for certiorari. or the Migrant Workers and Overseas Filipinos Act of 1995.00 at six percent interest per annum from the time of demand and in Civil Case No. plaintiff below). SO ORDERED. 8042. she again applied and was granted an appliance loan in the amount of Php24. This pronouncement is in keeping with the basic public policy of the State to afford protection to labor. race or creed. collective bargaining. SO ORDERED. 56797. and regulate the relations between workers and employers. Thus.) Petitioner.00 on June 2. Money Claims. 2. The MeTC ruled that the nature of HSBCL-SRP’s demands for payment is civil and has no connection to the ongoing labor dispute. while the spouses Broqueza’s case was docketed as Civil Case No. to pay the amount of Php116. since the CA did not commit any error in dismissing the petition before it for failure to file a prior motion for reconsideration with the NLRC. To pay the amount of Php20. 62685. The employees then filed an illegal dismissal case before the National Labor Relations Commission (NLRC) against HSBC. Cost of suit. all Filipino workers enjoy the protective mantle of Philippine labor and social legislation.9 . This ruling is likewise rendered imperative by Article 17 of the Civil Code which states that laws "which have for their object public order. 52400 against the spouses Broqueza on 31 July 1996. As unsecured and pure obligations. WHEREFORE. the Court pronounced: x x x Whether employed locally or overseas.740. and considering that the Labor Arbiter and the NLRC's factual findings as regards the validity of petitioner's dismissal are accorded great weight and respect and even finality when the same are supported by substantial evidence. a labor dispute arose between HSBC and its employees. The Regional Trial Court’s Ruling The RTC initially denied the joint appeal because of the belated filing of Gerong and the spouses Broqueza’s memorandum. DECISION CARPIO. Respondents. 178610 November 17. See also Section 18. Also. moral.R.8 Gerong and the spouses Broqueza filed a joint appeal of the MeTC’s decision before the RTC. Under these provisions. The HSBCL-SRP is a retirement plan established by HSBC through its Board of Trustees for the benefit of the employees. within ninety (90) calendar days after the filing of the complaint. 52911.000.: G." 21 (Emphasis supplied) In any event. STAFF RETIREMENT PLAN.20 In Philippine National Bank v. the MeTC promulgated its Decision7 in favor of HSBCL-SRP. 8042 19 provides that the Labor Arbiters of the NLRC shall have the original and exclusive jurisdiction to hear and decide all claims arising out of employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual. 1991. Both suits were civil actions for recovery and collection of sums of money. On 19 September 1996. The Facts The appellate court narrated the facts as follows: Petitioners Gerong and [Editha] Broqueza (defendants below) are employees of Hongkong and Shanghai Banking Corporation (HSBC).R. filed Civil Case No. Section 62 of the Omnibus Rules and Regulations Implementing R.000. For the State assures the basic rights of all workers to self-organization. et al.R.780. 52400. petitioner [Editha] Broqueza obtained a car loan in the amount of Php175. to pay the amount of Php25. Employees Union. The Metropolitan Trial Court’s Ruling On 28 December 1999. the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide. petitioners were not able to pay the monthly amortizations of their respective loans. exemplary and other forms of damages. No. 00-787 dated 11 December 2000.344. Ltd. it is clear that labor arbiters have original and exclusive jurisdiction over claims arising from employer-employee relations. Moreover. Article XIII. as well as its Order 4 dated 5 September 2000. On the other hand. the Court finds that the plaintiff was able to prove by a preponderance of evidence the existence and immediate demandability of the defendants’ loan obligations as judgment is hereby rendered in favor of the plaintiff and against the defendants in both cases. 00-786. J. CV No. On December 12. petitioner Gerong applied and was granted an emergency loan in the amount of Php35. SP No. The RTC later reconsidered the order of denial and resolved the issues in the interest of justice.00 each as reasonable attorney’s fees. Gerong and Editha Broqueza’s termination from employment resulted in the loss of continued benefits under their retirement plans. 52400 for Recovery of a Sum of Money. the loans are immediately demandable. the loans secured by their future retirement benefits to which they are no longer entitled are reduced to unsecured and pure civil obligations. Gerong’s case was docketed Civil Case No. Majority of HSBC’s employees were terminated. They are also members of respondent Hongkong Shanghai Banking Corporation. In Civil Case No. vs. LTD. The dispositive portion of the MeTC’s decision reads: WHEREFORE. Staff Retirement Plan (HSBCL-SRP.00. vs. 2010 HONGKONG AND SHANGHAI BANKING CORP. Retirement Trust Fund.00. contract stipulations to the contrary notwithstanding. On 11 December 2000. 178610 is a petition for review1 assailing the Decision2 promulgated on 30 March 2006 by the Court of Appeals (CA) in CA-G.A.12 at six percent per annum from the time of the filing of these cases. the RTC affirmed the MeTC’s decision in toto. No. but they failed to pay.A. These loans are paid through automatic salary deduction. or by determination or conventions agreed upon in a foreign country. entitledHongkong Shanghai Banking Corp. subject to the rules and procedures of the NLRC. Because of their dismissal. Staff Retirement Plan (HSBCL-SRP) for recovery of sum of money. Cabansag. Section 10 of Republic Act (R. promote full employment. The RTC’s decision affirmed the Decision5 dated 28 December 1999 of Branch 61 of the Metropolitan Trial Court (MeTC) of Makati City in Civil Case No. respondent HSBCL-SRP considered the accounts of petitioners delinquent. until the amount is fully paid. exemplary and other forms of damages. including termination disputes involving all workers.000.(b) The commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters. SPOUSES BIENVENIDO AND EDITHA BROQUEZA.

R.R. Gerong and the spouses Broqueza then filed a Petition for Review under Rule 42 before the CA. 62685 promulgated on 30 March 2006 is REVERSED and SET ASIDE. In case of judicial execution. CABALQUINTO. Editha Broqueza authorized HSBCL-SRP to make deductions from her payroll until her loans are fully paid. SO ORDERED. MA. 00-787. respondent and FASAP entered into a Collective Bargaining Agreement3 incorporating the terms and conditions of their agreement for the years 2000 to 2005. we apply the first paragraph of Article 1179 of the Civil Code: Art. no cause of action accrued in favor of HSBCL-SRP. No. (Emphasis supplied. the CA rendered its Decision 10 which reversed the 11 December 2000 Decision of the RTC. I/WE _____ jointly and severally promise to pay to THE HSBC RETIREMENT PLAN (hereinafter called the "PLAN") at its office in the Municipality of Makati. payable monthly. 52400 against the spouses Bienvenido and Editha Broqueza. I/WE agree that the PLAN may. The Court of Appeals has decided a question of substance in a way not in accord with law and applicable decisions of this Honorable Court. MARIANNE V. the fulfillment of which are demandable at once. or upon a past event unknown to the parties. defaulted in her monthly loan payment due to her dismissal. the spouses Broqueza have already incurred in default in paying the monthly installments." 17 WHEREFORE. Respondent. We agree with the rulings of the MeTC and the RTC.11 HSBCL-SRP filed a motion for reconsideration which the CA denied for lack of merit in its Resolution12promulgated on 19 June 2007. Editha Broqueza. 2009 PATRICIA HALAGUEÑA. As a consequence. The CA ruled that the HSBCL-SRP’s complaints for recovery of sum of money against Gerong and the spouses Broqueza are premature as the loan obligations have not yet matured. VICTA. and II.R. Neither did HSBCL-SRP agree that if Editha Broqueza ceases to be an employee of HSBC."16A definite amount is paid to HSBCL-SRP on a specific date. CRESENCIO. They are members of the Flight Attendants and Stewards Association of the Philippines (FASAP). vs. Once Editha Broqueza defaulted in her monthly payment. As such it should be enforced through a separate civil action in the regular courts and not before the Labor Arbiter. The Ruling of the Court of Appeals On 30 March 2006. which HSBC collected through payroll check-off. granted the motion. the assailed Decision of the RTC is REVERSED and SET ASIDE.The RTC ruled that Gerong and Editha Broqueza’s termination from employment disqualified them from availing of benefits under their retirement plans. 1179. 86813. and in such a case our liability shall remain joint and several. NOEMI R. DECISION PERALTA. ANGELITA L. the absence of a period within which to pay the loan allows HSBCL-SRP to demand immediate payment. the payroll deduction is merely a convenient mode of payment and not the sole source of payment for the loans. MA. Article 1179 of the Civil Code applies. 2001. VILLARETE. M. For the Cabin Attendants hired before 22 November 1996: xxxx 3. The spouses Broqueza’s obligation to pay HSBCL-SRP is a pure obligation. x x x. Finally. The loan obligations are considered pure obligations. Costs against respondents. increase the interest rate stipulated in this note at any time depending on prevailing conditions.1avvphi1 In case collection is made by or through an attorney. I/WE hereby jointly and severally waive our rights under the provisions of Rule 39. In their Answer. on or before until fully paid the sum of PESOS ___ (P___) Philippine Currency without discount. as well as the decision of Branch 61 of the Metropolitan Trial Court of Makati City in Civil Case No. The dispositive portion of the appellate court’s Decision reads as follows: WHEREFORE. The Promissory Notes uniformly provide: PROMISSORY NOTE P_____ Makati. is demandable at once. her obligation to pay the loans will be suspended. CYNTHIA A. J. KATINDIG. ____ 19__ FOR VALUE RECEIVED. PHILIPPINE AIRLINES INCORPORATED. Petitioners. and other flight attendants of PHILIPPINE AIRLINES. On 6 August 2007. TERESITA P. she "religiously paid the loan amortizations. flight stewards and pursers of respondent. No. Section 144. I/WE jointly and severally agree to pay ten percent (10%) of the amount due on this note (but in no case less than P200. HSBCL-SRP never agreed that the loans will be paid only through salary deductions. upon written notice.: Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to annul and set aside the Decision1 and the Resolution2 of the Court of Appeals (CA) in CA-G. a labor organization certified as the sole and exclusive certified as the sole and exclusive bargaining representative of the flight attendants. provides that: A. The RTC is correct in ruling that since the Promissory Notes do not contain a period. A new one is hereby rendered DISMISSING the consolidated complaints for recovery of sum of money. Issues HSBCL-SRP enumerated the following grounds to support its Petition: I. HSBCL-SRP has a legal right to demand immediate settlement of the unpaid balance because of Gerong and Editha Broqueza’s continued default in payment and their failure to provide new security for their loans. however. The Court of Appeals has departed from the accepted and usual course of judicial proceedings in reversing the decision of the Regional Trial Court and the Metropolitan Trial Court. ROSE ANNA G. The decision of Branch 139 of the Regional Trial Court of Makati City in Civil Case No. TUGAS. SP No. BERNADETTE A. The Decision of the Court of Appeals in CA-G. this Court treated the manifestation as a motion to withdraw the petition against Gerong. 172013 October 2. Moreover. In a Resolution 13 of this Court dated 10 September 2007. STEHMEIER.00) as and for attorney’s fees in addition to expenses and costs of suit. HSBCL-SRP made a demand to enforce a pure obligation. SP. The fact that HSBCL-SRP was content with the prior monthly check-off from Editha Broqueza’s salary is of no moment. LORNA B. PULIDO. Despite the spouses Broqueza’s protestations. and considered the case against Gerong closed and terminated. Moreover. Part A of the PAL-FASAP CBA. SO ORDERED. Every obligation whose performance does not depend upon a future or uncertain event. the spouses Broqueza admitted that prior to Editha Broqueza’s dismissal from HSBC in December 1993. 1996. are AFFIRMED.15 In ruling for HSBCL-SRP. Section 12 of the Rules of Court. Compulsory Retirement . Petitioners were employed as female flight attendants of respondent Philippine Airlines (PAL) on different dates prior to November 22. HSBCL-SRP has the right to demand immediate payment. G.M. the enforcement of a loan agreement involves "debtor-creditor relations founded on contract and does not in any way concern employee relations.) We affirm the findings of the MeTC and the RTC that there is no date of payment indicated in the Promissory Notes. with interest from date hereof at the rate of Six per cent (6%) per annum. there is no longer any security for the loans. HSBCL-SRP filed a manifestation withdrawing the petition against Gerong because she already settled her obligations. HSBCL-SRP can immediately demand payment of the loans at anytime because the obligation to pay has no period. MARY CHRISTINE A. On July 11. 14 The Court’s Ruling The petition is meritorious. Metro Manila. SANTIAGO. hereinafter referred to as PAL-FASAP CBA. I/WE hereby expressly consent to any extensions or renewals hereof for a portion or whole of the principal without notice to the other(s). we GRANT the petition. Thus.

1987 of the Constitution and. This demand was reiterated in a letter 5 by petitioners' counsel addressed to respondent demanding the removal of gender discrimination provisions in the coming re-negotiations of the PAL-FASAP CBA. even criminal. The pertinent portion of the petition recites: CAUSE OF ACTION 24. the RTC issued an Order 8 upholding its jurisdiction over the present case. and demanded for an equal treatment with their male counterparts. 04-886. For being patently unconstitutional and unlawful. required the parties to submit their respective memoranda. as the controversy partakes of a labor dispute. this case seeks a declaration of the nullity of the questioned provision of the CBA. The RTC set a hearing on petitioners' application for a TRO and. it has the power to decide issues of constitutionality or legality of the provisions of Section 144. tribunal. and the CEDAW. 2003. at the soonest possible time. the thrust of the Petition is Sec. in violation of the Constitution. Branch 147. 26. 2004. The petition is meritorious. within the specific context of this case. 2004. Section 114. filed a Petition for Certiorari and Prohibition with Prayer for a Temporary Restraining Order and Writ of Preliminary Injunction 12 with the Court of Appeals (CA) praying that the order of the RTC. The dispute concerns the terms and conditions of petitioners' employment in PAL. 27. discrimination against women continues. against respondent for the invalidity of Section 144. Petitioners have the statutory right to equal work and employment opportunities with men under Article 3. Part A of the PAL-FASAP CBA null and void. 2004. orders and processes it has so far issued therein are ANNULED and SET ASIDE. Part A of the PAL-FASAP CBA. the petitioners pray that judgment be rendered on the merits declaring Section 144.4 petitioners and several female cabin crews manifested that the aforementioned CBA provision on compulsory retirement is discriminatory. There is no reasonable. basis for Philippine Airlines to distinguish. docketed as Civil Case No. for an employer to discriminate against women employees with respect to terms and conditions of employment solely on account of their sex under Article 135 of the Labor Code as amended by Republic Act No. Robert D. It further prayed that the (1) petitioners' application for the issuance of a writ of preliminary injunction be denied. On July 29. Petitioner filed a motion for reconsideration. person or body exercising judicial or quasi-judicial functions. Part A of the PAL-FASAP CBA. which denied its objection to its jurisdiction. Jurisdiction of the court is determined on the basis of the material allegations of the complaint and the character of the relief prayed for irrespective of whether plaintiff is entitled to such relief. Aggrieved. 04-886. On September 27. On August 9. 144. the Labor Code. Part A of the PAL-FASAP 20002005 CBA must be declared invalid and stricken down to the extent that it discriminates against petitioner. on the other hand. respondent alleged that petitioners' prayer before this Court to resolve their petition for declaratory relief on the merits is procedurally improper and baseless. 2005. . the respondent court is by us declared to have NO JURISDICTION OVER THE CASE BELOW and. the labor arbiter or the National Labor Relations Commission (NLRC) has no jurisdiction over the case and. 33. On July 12. The respondent filed an omnibus motion 10 seeking reconsideration of the order overruling its objection to the jurisdiction of the RTC the lifting of the TRO. President of FASAP submitted their 2004-2005 CBA proposals6 and manifested their willingness to commence the collective bargaining negotiations between the management and the association. Petitioners submit that the RTC has jurisdiction in all civil actions in which the subject of the litigation is incapable of pecuniary estimation and in all cases not within the exclusive jurisdiction of any court. compulsory retirement shall be fifty-five (55) for females and sixty (60) for males. This discrimination against Petitioners is likewise against the Convention on the Elimination of All Forms of Discrimination Against Women (hereafter. Part A of the PAL-FASAP 2000-20005 CBA on compulsory retirement from service is invidiously discriminatory against and manifestly prejudicial to Petitioners because. the allegations in the petition for declaratory relief plainly show that petitioners' cause of action is the annulment of Section 144. 2004. This case is not directed specifically against respondent arising from any act of the latter. Regular courts have no power to set and fix the terms and conditions of employment.13 which was denied by the CA in its Resolution dated March 7. thus. 2004. The RTC reasoned that: In the instant case. granting the respondent's petition. Hence. within the specific context of this case. and ruled that: WHEREFORE. the RTC issued an Order 11 directing the issuance of a writ of preliminary injunction enjoining the respondent or any of its agents and representatives from further implementing Sec. Finally. alleges that the labor tribunals have jurisdiction over the present case. The allegations in the Petition do not make out a labor dispute arising from employer-employee relationship as none is shown to exist. they are compelled to retire at a lower age (fifty-five (55) relative to their male counterparts (sixty (60). Part A of the PAL-FASAP CBA. It is unlawful. including our courts. but also because it highlights the fact that twenty-three years after the Philippine Senate ratified the CEDAW. thereafter. Presidential Decree No. much less lawful. The RTC has the power to adjudicate all controversies except those expressly witheld from the plenary powers of the court. This case is a matter of public interest not only because of Philippine Airlines' violation of the Constitution and existing laws. 6725 or the Act Strengthening Prohibition on Discrimination Against Women. 28. all the proceedings. consequently. be annuled and set aside for having been issued without and/or with grave abuse of discretion amounting to lack of jurisdiction. respondent. The Labor Code and. with the male cabin attendants of Philippine Airlines. The Government and its agents. "CEDAW"). but must also implement measures towards its elimination. 14 In the case at bar. dated August 31. 37. on October 8. Petitioners have the constitutional right to fundamental equality with men under Section 14. nor does it involve a claim against the respondent. Part A of the PAL-FASAP CBA pending the resolution of the case. Respondent court is ordered to DISMISS its Civil Case No. The RTC has no jurisdiction over the subject matter of petitioners' petition for declaratory relief because the Voluntary Arbitrator or panel of Voluntary Arbitrators have original and exclusive jurisdiction to hear and decide all unresolved grievances arising from the interpretation or implementation of the CBA.Subject to the grooming standards provisions of this Agreement. Article II. a multilateral convention that the Philippines ratified in 1981. 2004. 2006. specifically their retirement age. the instant petition assigning the following error: THE COURT OF APPEALS' CONCLUSION THAT THE SUBJECT MATTER IS A LABOR DISPUTE OR GRIEVANCE IS CONTRARY TO LAW AND JURISPRUDENCE. The RTC issued a TRO on August 10. Accordingly. 29. petitioners filed a Special Civil Action for Declaratory Relief with Prayer for the Issuance of Temporary Restraining Order and Writ of Preliminary Injunction 7 with the Regional Trial Court (RTC) of Makati City. not only must condemn all forms of discrimination against women. Rather. SO ORDERED. Part A of the PAL-FASAP CBA.9 enjoining the respondent for implementing Section 144. with the allegations in the Petition constituting the bases for such relief sought. 144 of the subject CBA which is allegedly discriminatory as it discriminates against female flight attendants. x x x. differentiate or classify cabin attendants on the basis of sex and thereby arbitrarily set a lower compulsory retirement age of 55 for Petitioners for the sole reason that they are women. As the issue involved is constitutional in character. The CA rendered a Decision. Section 114. Respondent. In a letter dated July 22. 31. 442. Anduiza. with the male cabin attendants of Philippine Airlines. and (2) the petition be dismissed or the proceedings in this case be suspended. The main issue in this case is whether the RTC has jurisdiction over the petitioners' action challenging the legality or constitutionality of the provisions on the compulsory retirement age contained in the CBA between respondent PAL and FASAP. which is within the Court's competence.

. several employees questioned its validity via a petition for certiorari directly to the Supreme Court. which includes the provision to suspend the PAL-PALEA CBA for 10 years. Espiritu. NLRC. it does not necessarily follow that a resolution of controversy that would bring about a change in the terms and conditions of employment is a labor dispute. In Gonzales v. Accordingly. ruling that there is available to petitioners a plain. the same is beyond the jurisdiction of labor tribunals. involve questions of fact especially with regard to the determination of the circumstances of the execution of the contracts. Part A of the PAL-FASAP 2000-2005 CBA INVALID. the petitioners' primary relief in Civil Case No. the creeping take-over by the administrative agencies of the judicial power vested in the courts would render the judiciary virtually impotent in the discharge of the duties assigned to it by the Constitution. v. as it is like vesting power to someone who cannot wield it. but is called upon to determine whether CBA is consistent with the laws. it cannot be said that the "dispute" is between the union and petitioner company because both have previously agreed upon the provision on . x x x .e. an action which properly falls under the jurisdiction of the regional trial courts. both the union and the company are united or have come to an agreement regarding the dismissal of private respondents. this Court denied the petition for certiorari. it requires the application of the Constitution. or their collective bargaining agreement. a court of general jurisdiction.e. In the instant case. Petitioners submit that the suspension was inordinately long. Rather. To be sure. In Saura v. The Court said: Whether the case involves void or voidable contracts is still a judicial question. as the same involves the exercise of judicial power. but rather in the application of the general civil law. such referral to the grievance machinery and thereafter to voluntary arbitration would be inappropriate to the petitioners. the dispute is not a mining conflict. petitioners' proper remedy is an ordinary civil action for annulment of contract. 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. after trial on the merits: (I) declare Section 114. cognizable by labor tribunals. its object was actually the nullification of the PAL-PALEA agreement. law on contracts and the Convention on the Elimination of All Forms of Discrimination Against Women. Actions between employees and employer where the employer-employee relationship is merely incidental and the cause of action precedes from a different source of obligation is within the exclusive jurisdiction of the regular court.. Part A of the PAL-FASAP CBA. PRAYER WHEREFORE. other labor statutes. the Constitution and CEDAW. NULL and VOID to the extent that it discriminates against Petitioners. because the union and the management have unanimously agreed to the terms of the CBA and their interest is unified. Otherwise. v.. it is clear that the issue raised is whether Section 144. the trial court is not asked to set and fix the terms and conditions of employment. In such situations.. Inc.20 this Court affirmed the jurisdiction of courts over questions on constitutionality of contracts. nullification of the alleged discriminatory provision in the CBA. on the other hand. Applying the same rationale to the case at bar. Their exercise of jurisdiction is futile.22 after Philippine Airlines (PAL) and PAL Employees Association (PALEA) entered into an agreement. But the resolution of the validity or voidness of the contracts remains a legal or judicial question as it requires the exercise of judicial function. Clearly. In Georg Grotjahn GMBH & Co. resolution of the dispute requires expertise. in effect. By agreeing to a 10-year suspension. it should not deprive the courts of justice of their power to decide ordinary cases in accordance with the general laws that do not require any particular expertise or training to interpret and apply. speedy.. The grievance machinery with members designated by the union and the company cannot be expected to be impartial against the dismissed employees. it is most respectfully prayed that the Honorable Court: c. consistent with the constitutional and statutory guarantee of equality between men and women. It is essentially judicial. i. The jurisdiction of labor arbiters and the NLRC under Article 217 of the Labor Code is limited to disputes arising from an employer-employee relationship which can only be resolved by reference to the Labor Code. labor statutes. to insure a more knowledgeable solution of the problems submitted to them. The subject of litigation is incapable of pecuniary estimation. No grievance between them exists which could be brought to a grievance machinery. 15 Being an ordinary civil action. in some instances. This would also relieve the regular courts of a substantial number of cases that would otherwise swell their already clogged dockets. as amended. Jr. only disputes involving the union and the company shall be referred to the grievance machinery or voluntary arbitrators. pursuant to Section 19 (1) of Batas Pambansa Blg. But as expedient as this policy may be. Saura. which allegedly discriminates against them for being female flight attendants.21 this Court emphasized the primacy of the regular court's judicial power enshrined in the Constitution that is true that the trend is towards vesting administrative bodies like the SEC with the power to adjudicate matters coming under their particular specialization. Thus.17 this Court held that not every dispute between an employer and employee involves matters that only labor arbiters and the NLRC can resolve in the exercise of their adjudicatory or quasi-judicial powers. 04-886 is the annulment of Section 144. It requires the ascertainment of what laws are applicable to the dispute. and adequate remedy in the ordinary course of law. In that case. is but a necessary and unavoidable consequence of the principal relief sought.19 If We divest the regular courts of jurisdiction over the case. Not every controversy or money claim by an employee against the employer or vice-versa is within the exclusive jurisdiction of the labor arbiter.38. The said issue cannot be resolved solely by applying the Labor Code. exclusively cognizable by the RTC. i. should Section 144 of the CBA be held invalid. 129. Here.16 and the power to apply and interpret the constitution and CEDAW is within the jurisdiction of trial courts. Due process demands that the dismissed workers’ grievances be ventilated before an impartial body. the interpretation and application of those laws. like their male counterparts. The Court said that while the petition was denominated as one for certiorari and prohibition. Part A of the PAL-FASAP CBA is unlawful and unconstitutional. It may. They said that the suspension was unconstitutional and contrary to public policy. and the rendering of a judgment based thereon. The dispute has to be settled before an impartial body. Thus. abdicated the workers' constitutional right to bargain for another CBA at the mandated time. where the principal relief sought is to be resolved not by reference to the Labor Code or other labor relations statute or a collective bargaining agreement but by the general civil law. Petitioners should be adjudged and declared entitled. Along that line. 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. In Pantranco North Express. Isnani. Climax Mining Ltd. PALEA. the employer-employee relationship between the parties is merely incidental and the cause of action ultimately arose from different sources of obligation. The change in the terms and conditions of employment. way beyond the maximum statutory life of 5 years for a CBA provided for in Article 253-A of the Labor Code. The complaint was not merely for the determination of rights under the mining contracts since the very validity of those contracts is put in issue. to work until they are sixty (60) years old. As such. the jurisdiction over the dispute belongs to the regular courts of justice and not to the labor arbiter and the NLRC. not in labor management relations nor in wage structures and other terms and conditions of employment. They have no jurisdiction and competence to decide constitutional issues relative to the questioned compulsory retirement age. Although the CBA provides for a procedure for the adjustment of grievances.23 this Court held that: x x x Hence. in Rivera v. It is unfair to preclude petitioners from invoking the trial court's jurisdiction merely because it may eventually result into a change of the terms and conditions of employment. 18 Here. Clearly. x x x x From the petitioners' allegations and relief prayed for in its petition. then which tribunal or forum shall determine the constitutionality or legality of the assailed CBA provision? This Court holds that the grievance machinery and voluntary arbitrators do not have the power to determine and settle the issues at hand.

Without FASAP's active participation on behalf of its female flight attendants. because the manner of implementing the same is clear in itself. there was no showing that FASAP. SLIMMERS WORLD INTERNATIONAL. Slimmers World preventively suspended Okol. 28 Finally. Okol received a memorandum that her suspension had been extended from 2 September until 1 October 1999 pending the outcome of the investigation on the Precor equipment importation. FASAP. No. are deemed written into the contract. public order or public policy.1avvphi1 WHEREFORE. good customs. these are imbued with public interest and therefore are subject to the police power of the state. petitioners sought relief before this Court through the instant petition for review under Rule 45. the dispute in the case at bar is not between FASAP and respondent PAL. SP No. is the art of or process of discovering and ascertaining the meaning of a statute. The rule is settled that pure questions of fact may not be the proper subject of an appeal by certiorari under Rule 45 of the Revised Rules of Court.. A full-blown trial is necessary. of our Civil Code is that the contracting parties may establish such stipulations as they may deem convenient. which set aside the Resolutions dated 29 May 2001 and 21 December 2001 of the National Labor Relations Commission (NLRC). 160146 December 11. This would require the presentation and reception of evidence by the parties in order for the trial court to ascertain the facts of the case and whether said provision violates the Constitution. Behavior Modifications. The law relating to labor and employment is clearly such an area and parties are not at liberty to insulate themselves and their relationships from the impact of labor laws and regulations by simply contracting with each other. INC. In the same vein. a remand of this case to the RTC for the proper determination of the merits of the petition for declaratory relief is just and proper. When the CA annuled and set aside the RTC's order. particularly those employed before November 22. This Court is not persuaded. who have both previously agreed upon the provision on the compulsory retirement of female flight attendants as embodied in the CBA. Okol filed her written explanation. Part A of PAL-FASAP CBA when several of its female flight attendants reached the compulsory retirement age of 55. Although it is a rule that a contract freely entered between the parties should be respected. SP. However. the relations between capital and labor are not merely contractual."compulsory retirement" as embodied in the CBA.x x x 26 The supremacy of the law over contracts is explained by the fact that labor contracts are not ordinary contracts." Thus. x x x. DECISION CARPIO.24 The provision regarding the compulsory retirement of flight attendants is not ambiguous and does not require interpretation. J. The shipment of the equipment was placed under the names of Okol and two customs brokers for a value less than US$500. dated August 31. the issue in the petition for certiorari brought before the CA by the respondent was the alleged exercise of grave abuse of discretion of the RTC in taking cognizance of the case for declaratory relief. which jurisdiction to hear the same is properly lodged with the the RTC. SO ORDERED. in a letter dated July 12. counter-balancing the principle of autonomy of contracting parties is the equally general rule that provisions of applicable law. an absolute principle. The Facts Respondent Slimmers World International operating under the name Behavior Modifications. Put a little differently. Interpretation. addressed to PAL. A CBA. (Slimmers World) employed petitioner Leslie Okol (Okol) as a management trainee on 15 June 1992. 1996. 2005 and March 7. Petitioner. FASAP's attempt to change the questioned provision was shallow and superficial. the governing principle is that parties may not contract away applicable provisions of law especially peremptory provisions dealing with matters heavily impressed with public interest.25 this Court held that: The principle of party autonomy in contracts is not. The suspension arose from the seizure by the Bureau of Customs of seven Precor elliptical machines and seven Precor treadmills belonging to or consigned to Slimmers World. morals.R. Okol filed a complaint3 with the Arbitration branch of the NLRC against Slimmers World. settle or negotiate with PAL for the removal of the difference in compulsory age retirement between its female and male flight attendants. the equipment were seized. Ople. applying the principle in the aforementioned case cited. petitioners pray for the declaration of the alleged discriminatory provision in the CBA against its female flight attendants. Neither is there any question regarding the implementation of the subject CBA provision. the petition is PARTLY GRANTED. "provided they are not contrary to law. said rule is not absolute. Inc. referral to the grievance machinery and voluntary arbitration would not serve the interest of the petitioners. because it exerted no further efforts to pursue its proposal. The only controversy lies in its intrinsic validity. Slimmers World terminated Okol’s employment. In Pakistan International Airlines Corporation v. She rose up the ranks to become Head Office Manager and then Director and Vice President from 1996 until her dismissal on 22 September 1999. contract. as their representative. 2004. the utilization of the grievance machinery or voluntary arbitration would be pointless. Branch 147 is DIRECTED to continue the proceedings in Civil Case No. or public policy. They are so impressed with public interest that labor contracts must yield to the common good. . it was only private respondent on his own who questioned the compulsory retirement.29 The question as to whether said Section 114. On 19 September 1999. This mode of appeal is generally limited only to questions of law which must be distinctly set forth in the petition. The Decision and Resolution of the Court of Appeals. Thus. Therefore. a referral of the case to the grievance machinery and to the voluntary arbitrator under the CBA would be futile because respondent already implemented Section 114. The dispute is between respondent PAL and several female flight attendants who questioned the provision on compulsory retirement of female flight attendants. and Moy (collectively called respondents) for illegal suspension. such provisions may very well be voided. No. The Regional Trial Court of Makati City. as defined in Black's Law Dictionary. and RONALD JOSEPH MOY. 69893.R. The Supreme Court is not a trier of facts.: The Case Before the Court is a petition for review on certiorari1 assailing the Decision2 dated 18 October 2002 and Resolution dated 22 September 2003 of the Court of Appeals in CA-G. since a contract is the law between the parties. submitted its association's bargaining proposal for the remaining period of 2004-2005 of the PAL-FASAP CBA. 2006. Slimmers World found Okol’s explanation to be unsatisfactory. will. however. or other written document. The rule in Article 1306.27 It should not be taken to mean that retirement provisions agreed upon in the CBA are absolutely beyond the ambit of judicial review and nullification. in CA-G. For being undervalued. respectively. to say the least. illegal dismissal. Further. 86813 are REVERSED and SET ASIDE. public morals. Also. prior to Okol’s dismissal. is not merely contractual in nature but impressed with public interest. Okol received another memorandum from Slimmers World requiring her to explain why no disciplinary action should be taken against her in connection with the equipment seized by the Bureau of Customs. Besides. On 17 September 1999. On 28 July 1999. vs. However. Inc. If the retirement provisions in the CBA run contrary to law. A perusal of the petition before Us.R. Moreover. as a labor contract. 2009 LESLIE OKOL. BEHAVIOR MODIFICATIONS.Respondents. Through a letter dated 22 September 1999 signed by its president Ronald Joseph Moy (Moy). especially provisions relating to matters affected with public policy. 04-886 with deliberate dispatch. Part A of the PAL-FASAP CBA. On 2 September 1999. The trial court in this case is not asked to interpret Section 144. which includes the renegotiation of the subject Section 144. statutes and treaties. endeavored to adjust. G. Part A of the PAL-FASAP CBA is discriminatory or not is a question of fact. When petitioners in their individual capacities questioned the legality of the compulsory retirement in the CBA before the trial court.

the Vice-President shall be elected by the Board of Directors from [its] own members. In the motion. the dispute was an intra-corporate controversy falling outside the jurisdiction of the Arbitration branch. Section 25 of the Corporation Code enumerates corporate officers as the president. On the other hand.5 dated 20 March 2000. and (3) petitioner was dismissed from employment not through a board resolution but by virtue of a letter from Moy. 1999 to November 28. the work that she performed conforms to that of an employee rather than a corporate officer. However. Okol filed an appeal with the NLRC. The question of remuneration involving a stockholder and officer. The GIS and minutes of the meeting of the board of directors indicated that petitioner was a member of the board of directors. In a Resolution6 dated 29 May 2001. The issue revolves mainly on whether petitioner was an employee or a corporate officer of Slimmers World. Petitioner enumerated the instances that she was under the power and control of Moy. Respondents assert that petitioner was not only an officer but also a stockholder and director. on the other hand.17 we have held that a corporate officer’s dismissal is always a corporate act. NLRC.00 computed from July 28. 69893. respondents filed a Motion to Dismiss4 the case with a reservation of their right to file a Position Paper at the proper time. In Tabang v. Also. The Issue The issue is whether or not the NLRC has jurisdiction over the illegal dismissal case filed by petitioner. Thus.10 The appellate court added that the NLRC had acted without jurisdiction in giving due course to the complaint and deprived respondents of their right to due process in deciding the case on the merits. It is the "four-fold" test.R.00 as indemnity pay plus attorney’s fee equivalent to ten (10%) of the total monetary award. secretary. Qualifications and Election – The general management of the corporation shall be vested in a board of five directors who shall be stockholders and who shall be elected annually by the stockholders and who shall serve until the election and qualification of their successors. the NLRC denied the motion for lack of merit. or an intra-corporate controversy which arises between a stockholder and a corporation. and the further sum of P1. the jurisdiction to hear and decide the case is vested with the labor arbiter and the NLRC. Slimmers World’s president: (1) petitioner received salary evidenced by pay slips. a fraction of at least six months considered one whole year.000. Okol filed a Motion for Reconsideration which was denied in a Resolution 11 dated 22 September 2003. Since it involved a corporate officer. (2) the payment of wages.7 Respondents filed a Motion for Reconsideration with the NLRC. Respondents. which facts provide further basis that petitioner’s separation from Slimmers World does not come under the NLRC’s jurisdiction. with prayer for reinstatement and payment of backwages. which must be applied. in their motion to dismiss filed before the labor arbiter. SO ORDERED. Even the alleged absence of any resolution of the Board of Directors approving petitioner’s termination does not constitute proof that petitioner was not an officer. falls within the jurisdiction of the regular courts pursuant to Republic Act No. the factors cited by petitioner that she was a mere employee do not prove that she was not an officer of Slimmers World.000. xxx Article III Officers xxx 4. the instant petition.250. the respondents. should reinstatement be not feasible separation pay equivalent to one month pay per year of service is awarded. reinstatement and back wages imputed by petitioner against respondents fall squarely within the ambit of intra-corporate disputes. However. the Order appealed from is SET ASIDE and REVERSED. (3) the power to dismiss. Minutes14 of the meeting of the Board of Directors dated 14 April 1997 and Secretary’s Certificate. the appellate court set aside the NLRC’s Resolution dated 29 May 2001 and affirmed the labor arbiter’s Order dated 20 March 2000. holding one subscribed share of the capital stock. The relevant portions of the Amended By-Laws of Slimmers World which enumerate the power of the board of directors as well as the officers of the corporation state: Article II The Board of Directors 1. xxx Clearly. Petitioner asserts that even as vice-president. an "employee" usually occupies no office and generally is employed not by action of the directors or stockholders but by the managing officer of the corporation who also determines the compensation to be paid to such employee. Hence. petitioner was a director and officer of Slimmers World. All other claims are dismissed for lack of factual or legal basis. Respondents contended that the relief prayed for was confined only to the question of jurisdiction. The Vice-President shall be vested with all the powers and authority and is required to perform all the duties of the President during the absence of the latter for any cause.12 we held that an "office" is created by the charter of the corporation and the officer is elected by the directors or stockholders. Mere title or designation in a corporation will not. SP No. In a Resolution8 dated 21 December 2001.unpaid commissions. The Ruling of the Court of Appeals In a Decision9 dated 18 October 2002./Slimmers World International to reinstate complainant Leslie F. In a number of cases. The Vice-President will perform such duties as the Board of Directors may impose upon him from time to time. the NLRC reversed and set aside the labor arbiter’s order. questioned the jurisdiction of the NLRC in taking cognizance of petitioner’s complaint. maintain that petitioner was a corporate officer at the time of her dismissal from Slimmers World as supported by the General Information Sheet and Director’s Affidavit attesting that petitioner was an officer. The charges of illegal suspension. respondents attached the General Information Sheet 13 (GIS) dated 14 April 1998. The dispositive portion of the resolution states: WHEREFORE. determine the existence of an employer-employee relationship. Okol to her former position with full back wages which to date stood in the amount of P10. Respondents then filed an appeal with the Court of Appeals. namely (1) the power to hire. 8799. On 22 February 2000. (2) Moy deducted Medicare and SSS benefits from petitioner’s salary. In an Order. having shown that an employer-employee relationship exists. In the present case. The Court’s Ruling The petition lacks merit. the labor arbiter granted the motion to dismiss. from the documents submitted by respondents. Petitioner insists that the Court of Appeals erred in ruling that she was a corporate officer and that the case is an intra-corporate dispute falling within the jurisdiction of the regular courts.15 and the Amended By-Laws16 dated 1 August 1994 of Slimmers World as submitted to the SEC to show that petitioner was a corporate officer whose rights do not fall within the NLRC’s jurisdiction. The Court of Appeals ruled that the case. illegal dismissal. and an elected corporate officer. the NLRC not only decided the case on the merits but did so in the absence of position papers from both parties. not a mere employee. and (4) the power to control. docketed as CA-G. by itself. is not a simple labor problem but a matter that comes within the area of . Vice-President – Like the Chairman of the Board and the President. being an intra-corporate dispute. The labor arbiter ruled that Okol was the vice-president of Slimmers World at the time of her dismissal. A new one is hereby ENTERED ordering respondent Behavior Modification. damages and attorney’s fees.000. unpaid commissions. 2000 until fully reinstated. treasurer and such other officers as may be provided for in the by-laws. Inc. Respondents asserted that the NLRC had no jurisdiction over the subject matter of the complaint.

National Capital Region. and in his Confirmation of Appointment as Computer Specialist. Upon arrival in Riyadh. WHEREFORE." The faxed letter also stated that if Gran agrees to the terms and conditions of employment contained in it. Gran instituted a complaint. OAB informed EDI that. 1994 letter. 1999 Resolution4 rendered by the National Labor Relations Commission (NLRC) (Third Division) in POEA ADJ (L) 94-06-2194. the Labor Arbiter decided that Gran was validly dismissed from his work due to insubordination. 1999 Decision 3 and September 30.500. 8 After accepting OAB's offer of employment. while his Philippine Overseas Employment Agency (POEA) Information Sheet indicated USD 600. 145587 October 26. disobedience. 1994. is an intra-corporate dispute subject to the jurisdiction of the regular courts. SP No. and the absence of pre-qualification requirements cannot be attributed to Gran but to EDI. it selected Gran for the position of "Computer Specialist. and deployed by ESI to work for OAB. vs. which dealt directly with OAB.00 as unpaid salaries.00 for a period of two years.2. Dissatisfied. This Decision is without prejudice to petitioner Leslie Okol’s taking recourse to and seeking relief through the appropriate remedy in the proper forum. No. Gran's monthly salary was USD 600. Insubordination or disobedience to Top Management Order and/or instructions (non-submittal of daily activity reports despite several instructions). Section 5 of Republic Act No. (EDI). After his arrival in the Philippines. it shall have original and exclusive jurisdiction to hear and decide cases involving: xxx c) Controversies in the election or appointments of directors. 902-A is hereby transferred to the Courts of general jurisdiction or the appropriate Regional Trial Court.R.00.. SO ORDERED. SP No. (5) and that Gran was paid a monthly salary of USD 850. one of which was a monthly salary of SR (Saudi Riyal) 2.00 representing his final pay. The Ruling of the NLRC The NLRC held that EDI's seemingly harmless transfer of Gran's contract to ESI is actually "reprocessing. The alleged non-compliance with contractual stipulations relating to Gran's salary and contract duration.00. ruled that there was neither underpayment nor illegal dismissal. which was equivalent to USD 600. 2000 Decision2 of the Court of Appeals (CA) in CA-G. we DENY the petition. Kingdom of Saudi Arabia. (2) that he was not qualified for the job as computer specialist due to his insufficient knowledge in programming and lack of knowledge in ACAD system. 1998 with the NLRC. The Labor Arbiter reasoned that there was no underpayment of salaries since according to the POEA-Overseas Contract Worker (OCW) Information Sheet. if any. On July 11. petitioner. 8799. trustees. However.00 monthly as food allowance.150. F-5751-93. (1) that Gran did not submit a single activity report of his daily activity as dictated by company policy. the appellate court correctly ruled that it is not the NLRC but the regular courts which have jurisdiction over the present case.18 Prior to its amendment. from the applicants' curricula vitae submitted to it for evaluation. 902-A19 (PD 902-A) provided that intra-corporate disputes fall within the jurisdiction of the Securities and Exchange Commission (SEC): Sec. 56120 which affirmed the January 15. In addition. INC.2. Gran received from OAB the total amount of SR 2. However. respondents. the charge of insubordination was not . EDI may arrange for Gran's immediate dispatch. and Western Guaranty Corporation with the NLRC. to whom Gran's case was assigned. 2007 EDI-STAFFBUILDERS INTERNATIONAL. through the assistance of the EDI office in Riyadh." which is a prohibited transaction under Article 34 (b) of the Labor Code. and on the same day. he executed a Declaration 13 releasing OAB from any financial obligation or otherwise. to justify that Gran had no claim for unpaid salaries or wages against OAB. and USD 350. Country Bankers Insurance Corporation. namely.948. J. dated October 3. Gran questioned the discrepancy in his monthly salary—his employment contract stated USD 850. his employment was terminated through OAB's July 9. 1993. (OAB) jointly and severally to pay Eleazar S. The Ruling of the Labor Arbiter In his February 10. G.00). which took effect on 8 August 2000. Section 5(c) of Presidential Decree No." 7 In a facsimile transmission dated November 29. Private respondent Gran was an OFW recruited by EDI. 2. his monthly basic salary was fixed at SR 2.12 3. xxx It is a settled rule that jurisdiction over the subject matter is conferred by law. 20 The determination of the rights of a director and corporate officer dismissed from his employment as well as the corresponding liability of a corporation. towards him. Arbiter Caday also cited the Declaration executed by Gran. Caday. it appears from the records that Gran failed to furnish EDI with a copy of his Appeal Memorandum. it was found that Gran did not commit any act that constituted a legal ground for dismissal. The Commission’s jurisdiction over all cases enumerated under Section 5 of Presidential Decree No. (3) that Gran refused to follow management's instruction for him to gain more knowledge of the job to prove his worth as computer specialist. Gran filed an Appeal15 on April 6.. EDIStaffbuilders International.00 a month.00 only. 69893. on July 21.00. JR.: The Case This Petition for Review on Certiorari1 seeks to set aside the October 18. This scheme constituted misrepresentation through the conspiracy between EDI and ESI in misleading Gran and even POEA of the actual terms and conditions of the OFW's employment. officers or managers of such corporations. 1993 letter for curricula vitae of qualified applicants for the position of "Computer Specialist. against ESI/EDI.R. Inc. DECISION VELASCO.14 Labor Arbiter Manuel R. 5. Kingdom of Saudi Arabia on February 7. OAB. on February 10.6 It appears that OAB asked EDI through its October 3.250. 1993.R.00.11 on the following grounds: 1. transferred to regional trial courts the SEC’s jurisdiction over all cases listed in Section 5 of PD 902-A: 5. Thus. and his failure to submit daily activity reports. 1998 Decision. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations. in Riyadh. We AFFIRM the 18 October 2002 Decision and 22 September 2003 Resolution of the Court of Appeals in CA-G. and Omar Ahmed Ali Bin Bechr Est. Non-compliance to contract requirements by the recruitment agency primarily on your salary and contract duration. GRAN.10 After Gran had been working for about five months for OAB. 1994. OAB agreed to pay Gran USD 850. In addition. With regard to the issue of illegal dismissal. Gran was then deployed to Riyadh. Gran signed an employment contract 9 that granted him a monthly salary of USD 850. partnerships and other forms of associations registered with it as expressly granted under existing laws and decrees. partnerships or associations. Quezon City.00. 1994. Accordingly. Third Division.5 ESI is another recruitment agency which collaborated with EDI to process the documentation and deployment of private respondent to Saudi Arabia. Thus.] vide OAB letter ref. 1998. The Facts Petitioner EDI is a corporation engaged in recruitment and placement of Overseas Filipino Workers (OFWs). the Labor Arbiter found that Gran failed to refute EDI's allegations. Non-compliance to pre-qualification requirements by the recruitment agency[. Arbiter Caday dismissed Gran's complaint for lack of merit. (4) that Gran's employment contract had never been substituted. Subsection 5.corporate affairs and management and is a corporate controversy in contemplation of the Corporation Code. NATIONAL LABOR RELATIONS COMMISSION and ELEAZAR S. which was docketed as POEA ADJ (L) 94-06-2194 for underpayment of wages/salaries and illegal dismissal. Gran (Gran) the amount of USD 16.00 (USD 600. ordering Expertise Search International (ESI).

and Omar Ahmed Ali Bin Bechr Est. Thus. it was ruled that failure of appellant to furnish a copy of the appeal to the adverse party is not fatal to the appeal. IV. the CA held that the Declaration signed by Gran did not bar him from demanding benefits to which he was entitled. WHETHER THE FAILURE OF GRAN TO FURNISH A COPY OF HIS APPEAL MEMORANDUM TO PETITIONER EDI WOULD CONSTITUTE A JURISDICTIONAL DEFECT AND A DEPRIVATION OF PETITIONER EDI'S RIGHT TO DUE PROCESS AS WOULD JUSTIFY THE DISMISSAL OF GRAN'S APPEAL." the appellate court found that EDI failed to show that the submission of the "Daily Activity Report" was a part of Gran's duty or the company's policy. Hence. WHETHER GRAN IS ENTITLED TO BACKWAGES FOR THE UNEXPIRED PORTION OF HIS CONTRACT. Magpayo Customs Brokerage Corp. an excusable neglect. As a result of these findings. and hence. an excusable neglect. the appellate court denied the petition to set aside the NLRC Decision. The NLRC then ordered Gran to present proof of service. 1999 with the NLRC and petitioner receiving a copy of this motion on the same date. Also.00. The appellate court ratiocinated that EDI had the burden of proving Gran's incompetence. the doctrine that evolved from these cases is that failure to furnish the adverse party with a copy of the appeal is treated only as a formal lapse. SO ORDERED. Magpayo. in such a situation. the appeal should not be dismissed. Petitioner claimed in its petition that the NLRC committed grave abuse of discretion in giving due course to the appeal despite Gran's failure to perfect the appeal. National Labor Relations Commission. otherwise. EDI Staffbuilders Int'l. Magpayo ruling was reiterated in Carnation Philippines Employees Labor Union-FFW v.29 Thus. this instant petition is before the Court. he should have just been suspended or reprimanded. in J. While Gran's failure to furnish EDI with a copy of the Appeal Memorandum is excusable. and that there was "no cogent reason or patent or palpable error that warrant any disturbance thereof. considered. the duty that is imposed on the NLRC. 1999. Inc. Rules of Court. the abject failure of the NLRC to order Gran to furnish EDI with the Appeal Memorandum constitutes grave abuse of discretion.27 Pagdonsalan v. on October 18. The court found that Gran was terminated on the same day he received the termination letter. an excusable neglect and not a jurisdictional defect which would justify the dismissal of his appeal. other than the termination letter. EDI filed a Petition for Certiorari before the CA.. II. and Gran was not even afforded the required notice and investigation on his alleged offenses. the order of dismissal of an appeal to the NLRC based on the ground that "there is no showing whatsoever that a copy of the appeal was served by the appellant on the appellee"25was annulled. The Ruling of the Court of Appeals The CA subsequently ruled on the procedural and substantive issues of EDI's petition. The Court ratiocinated as follows: The failure to give a copy of the appeal to the adverse party was a mere formal lapse. NLRC. Inc. Accordingly. however.26 (Emphasis supplied. National Labor Relations Commission. WHETHER THE PRIETO VS. We act on the petitions and simply require the petitioners to comply with the rule. however. WHETHER PETITIONER EDI HAS ESTABLISHED BY WAY OF SUBSTANTIAL EVIDENCE THAT GRAN'S TERMINATION WAS JUSTIFIABLE BY REASON OF INCOMPETENCE. III. given that OAB did not abide by the twin notice requirement. no evidence was presented to show how and why Gran was considered to be incompetent. ratiocinating that the issues and arguments raised in the motion "had already been amply discussed. not a jurisdictional defect. AS APPLIED BY THE COURT OF APPEALS. but not dismissed. The CA also held that Gran was not afforded due process.24 this Court set aside the order of the NLRC which dismissed an appeal on the sole ground that the appellant did not furnish the appellee a memorandum of appeal contrary to the requirements of Article 223 of the New Labor Code and Section 9. Respondents Expertise Search International. The records reveal that the NLRC discovered that Gran failed to furnish EDI a copy of the Appeal Memorandum. First Issue: NLRC's Duty is to Require Respondent to Provide Petitioner a Copy of the Appeal Petitioner EDI claims that Gran's failure to furnish it a copy of the Appeal Memorandum constitutes a jurisdictional defect and a deprivation of due process that would warrant a rejection of the appeal. This position is devoid of merit. a Motion for Reconsideration of the NLRC Decision after receiving a copy of the Decision on August 16. Inc.00) representing his salaries for the unexpired portion of his contract. petitioner filed an Opposition19 to Gran's motion arguing that the Writ of Execution cannot issue because it was not notified of the appellate proceedings before the NLRC and was not given a copy of the memorandum of appeal nor any opportunity to participate in the appeal. As enunciated in J. it should not be given due course either." Unconvinced of the NLRC's reasoning." 22 The court also held that petitioner EDI failed to prove that private respondent was terminated for a valid cause and in accordance with due process.18 To prevent the execution. 1999. he would not have been hired and deployed abroad. on August 26. NLRC. petitioner filed. (OAB) are hereby ordered jointly and severally liable to pay the complainant Eleazar Gran the Philippine peso equivalent at the time of actual payment of SIXTEEN THOUSAND ONE HUNDRED FIFTY US DOLLARS (US$16.D. The court held that since the law requires the recruitment agencies to subject OFWs to trade tests before deployment.28 and in Sunrise Manning Agency. v. In Estrada v. The court also held that even if Gran was guilty of insubordination.. and that Gran's Declaration releasing OAB from any monetary obligation had no force and effect.20 The NLRC then issued a Resolution21 denying petitioner's Motion for Reconsideration.D. 2000. NLRC RULING. the NLRC reversed the Labor Arbiter's Decision and rendered a new one.) The J.150. is to require the appellant to comply with the rule that the opposing party should be provided with a copy of the appeal memorandum. As for the charge of insubordination and disobedience due to Gran's failure to submit a "Daily Activity Report. Rule XIII of its Implementing Rules and Regulations. Seeing that the NLRC did not act on Gran's motion after EDI had filed its Opposition.substantiated. WHETHER PETITIONER HAS ESTABLISHED BY WAY OF SUBSTANTIAL EVIDENCE THAT GRAN'S TERMINATION WAS JUSTIFIABLE BY REASON OF INSUBORDINATION AND DISOBEDIENCE. the assailed decision is SET ASIDE. without having been apprised of the bases of his dismissal or afforded an opportunity to explain his side. in such a case. COROLLARY HERETO. and as such is frowned upon as contrary to public policy especially where the monetary consideration given in the Declaration was very much less than what he was legally entitled to—his backwages amounting to USD 16. Gran must have been competent and qualified. the dispositive portion of which reads: WHEREFORE. In compliance with the . On the procedural issue. v. The Issues Petitioner raises the following issues for our consideration: I. In a catena of cases.D.23 The Court's Ruling The petition lacks merit except with respect to Gran's failure to furnish EDI with his Appeal Memorandum filed with the NLRC. The appellate court found that the Declaration was in the form of a quitclaim. V. Time and again We have acted on petitions to review decisions of the Court of Appeals even in the absence of proof of service of a copy thereof to the Court of Appeals as required by Section 1 of Rule 45. WHETHER GRAN WAS AFFORDED DUE PROCESS PRIOR TO TERMINATION.150.16 Gran then filed a Motion for Execution of Judgment 17 on March 29. the appellate court held that "Gran's failure to furnish a copy of his appeal memorandum [to EDI was] a mere formal lapse. NLRC. Finally. and ruled upon" in the Decision. IS APPLICABLE IN THE INSTANT CASE.

1995 letter44 from OAB addressed to EDI and ESI. Magpayo and the other cases. terms and conditions as they may deem convenient. and the foreign employer/principal are governed by the employment contract. Any decision taken by the employer shall be without prejudice to the right of the workers to contest the validity or legality of his dismissal by filing a complaint with the regional branch of the National Labor Relations Commission. Proof of service.35 Unfortunately for petitioner. The NLRC should not have proceeded with the adjudication of the case.—The return is prima facie proof of the facts indicated therein. specific causes for termination. it has been held that in termination disputes or illegal dismissal cases. from Andrea E. 40 Taking into account the character of the charges and the penalty meted to an employee. and convincing evidence to prove that the dismissal is valid and legal.43 addressed to Gran. the local recruiter/agent. the International Law doctrine ofpresumed-identity approach or processual presumption comes into play. provides for proofs of service: Section 13. instead of annulling the dispositions of the NLRC and remanding the case for further proceedings we will resolve the petition based on the records before us to avoid a protracted litigation. EDI submitted two letters as evidence." 45 Petitioner . and failure to do so would necessarily mean that the dismissal was not justified and therefore illegal. Sec.D. service shall take effect after such time. proof shall be made by such affidavit and registry receipt issued by the mailing office. 1994 termination letter. This claim has no merit. but it should have required Gran to properly furnish the opposing parties with copies of his Appeal Memorandum as prescribed in J. the employer has the burden of proving that the dismissal is for just and valid causes. they will be discussed jointly. Petitioner claims that Gran was incompetent for the Computer Specialist position because he had "insufficient knowledge in programming and zero knowledge of [the] ACAD system. The rights of the employers to procedural due process cannot be cavalierly disregarded for they too have rights assured under the Constitution. This mailing list. 1998. He is presumed to know only domestic or forum law. only to receive a copy of Gran's Motion for Execution of Judgment which also informed them that Gran had obtained a favorable NLRC Decision. and disobedience In cases involving OFWs. the employer shall furnish the worker whose employment is sought to be terminated a written notice containing a statement of the causes for termination and shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires in accordance with company rules and regulations promulgated pursuant to guidelines set by the Department of Labor and Employment. 5 of the NLRC Rules of Procedure (1990) provides for the proof and completeness of service in proceedings before the NLRC: Section 5. The glaring failure of NLRC to ensure that Gran should have furnished petitioner EDI a copy of the Appeal Memorandum before rendering judgment reversing the dismissal of Gran's complaint constitutes an evasion of the pertinent NLRC Rules and established jurisprudence. thus. afterwards. it has been established by Philippine law and jurisprudence that the employer should prove that the dismissal of employees or personnel is legal and just.31 of Ermita.36 Where a foreign law is not pleaded or. Being the law intended by the parties (lex loci intentiones) to apply to the contract. it is only deemed complete when the addressee or his agent received the mail or after five (5) days from the date of first notice of the postmaster. This is not level playing field and absolutely unfair and discriminatory against the employer and the job recruiters. or in lieu thereof the unclaimed letter together with the certified or sworn copy of the notice given by the postmaster to the addressee (emphasis supplied). He should have submitted an affidavit proving that he mailed the Appeal Memorandum together with the registry receipt issued by the post office. Second and Third Issues: Whether Gran's dismissal is justifiable by reason of incompetence. Gran should have immediately filed the registry return card. (Emphasis supplied. but if the addressee fails to claim his mail from the post office within five (5) days from the date of first notice of the postmaster. public order. termination procedures.The burden of proving that the termination was for a valid or authorized cause shall rest on the employer.32 Proof and completeness of service. If the service is by ordinary mail. The registry return card shall be filed immediately upon its receipt by the sender. petitioner claims that private respondent Gran was validly dismissed for just cause. clauses. or the affidavit of the party serving. However. Sec. the parties may establish such stipulations. provided they are not contrary to law.30 The post office's list shows that private respondent Gran sent two pieces of mail on the same date: one addressed to a certain Dan O. it did not prove the pertinent Saudi laws on the matter. the employment contract signed by Gran specifically states that Saudi Labor Laws will govern matters not provided for in the contract (e.37 Thus. we apply Philippine labor laws in determining the issues presented before us. x x x In many cases. If service is made by registered mail. and hence. nor is it conclusive proof that EDI received its copy of the Appeal Memorandum. or public policy. Rule 13 of the Rules of Court. Makati. and ESI experienced when they thought that the dismissal of Gran's complaint became final. The first is the July 9.—Proof of personal service shall consist of a written admission of the party served or the official return of the server. Garcia (or Gran). Section 33 of Article 277 of the Labor Code38 states that: ART.41 This is consistent with the principle of security of tenure as guaranteed by the Constitution and reinforced by Article 277 (b) of the Labor Code of the Philippines. should be respected.g. 13. To prove its allegations. accurate.order. the rights and obligations among and between the OFW. it is obvious that the list submitted by Gran is not conclusive proof that he had served a copy of his appeal memorandum to EDI. good customs. after seeing that Gran failed to attach the proof of service. if the service is done through registered mail. EDI. Saudi Labor Laws should govern all matters relating to the termination of the employment of Gran.Service by registered mail is complete upon receipt by the addressee or his agent. and the other appears to be addressed to Neil B. Nicolaou. the NLRC should not have simply accepted the post office's list of mail and parcels sent. is not proved. The second is an unsigned April 11. is not a conclusive proof that EDI indeed received a copy of the Appeal Memorandum. due to incompetence and insubordination or disobedience. containing a full statement of the date. Gran submitted a copy of Camp Crame Post Office's list of mail/parcels sent on April 7.). place and manner of service. However.33 The second and third issues have a common matter—whether there was just cause for Gran's dismissal—hence. Managing Director of OAB. the presumption is that foreign law is the same as ours. Worse. de Guzman of Legaspi Village. this failure deprived EDI of procedural due process guaranteed by the Constitution which can serve as basis for the nullification of proceedings in the appeal before the NLRC. 277. The foreign law is treated as a question of fact to be properly pleaded and proved as the judge or labor arbiter cannot take judicial notice of a foreign law. One can only surmise the shock and dismay that OAB. consistent. Manila—both of whom are not connected with petitioner.34 In the present case. In illegal dismissal cases. as this constitutes grave abuse of discretion. In formulating the contract. the NLRC Rules do not state what would constitute proper proof of service. which outlined the reasons why OAB had terminated Gran's employment. proof thereof shall consist of an affidavit of the person mailing of facts showing compliance with section 7 of this Rule. A contract freely entered into is considered law between the parties. Petitioner EDI claims that it had proven that Gran was legally dismissed due to incompetence and insubordination or disobedience. In international law. however. even if pleaded. morals. 42 In the instant case. the employer is bound to adduce clear. MISCELLANEOUS PROVISIONS39 (b) Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal except for a just and authorized cause and without prejudice to the requirement of notice under Article 283 of this Code. etc.) Hence. the party who wants to have a foreign law applied to a dispute or case has the burden of proving the foreign law. Hence. insubordination. Based on the foregoing provision.

49 as used by the CA in its Decision. a notice of the decision to dismiss. and expose bogus qualifications. jointly and solidarily. he was not qualified for the job for which he was hired. lawful. when the termination of employment is without just.57 an employer is liable to pay nominal damages as indemnity for violating the employee's right to statutory due process. indeed. 51 EDI also claims that the requirements of due process. 1994 termination letter was effective on the same day. in cases arising before the effectivity of R. This shows that OAB had already condemned Gran to dismissal. Pursuant to the doctrine laid down in Agabon. It is supposed to reveal applicants with false educational backgrounds. The purpose of the required trade test is to weed out incompetent applicants from the pool of available workers. In addition. there was no intention to provide Gran with due process. Obviously. Petitioner's imputation of incompetence on private respondent due to his "insufficient knowledge in programming and zero knowledge of the ACAD system" based only on the above mentioned letters. Gran was notified and his employment arbitrarily terminated on the same day. In Agabon v. the petitioners were subjected to trade tests required by law to be conducted by the recruiting agency to insure employment of only technically qualified workers for the foreign principal.59 On the other hand. in order to justify willful disobedience.60 . the Prieto ruling is not applicable because in the case at hand. the employees must be given two (2) notices before their employment could be terminated: (1) a first notice to apprise the employees of their fault. he was denied the opportunity to respond to said notice. 8042 58 (Migrant Workers and Overseas Filipinos Act) on August 25. We disagree. the employees should be given a hearing or opportunity to defend themselves personally or by counsel of their choice. characterized by a wrongful and perverse attitude.00 as indemnity. In any case. OAB. Gran's job description. In between the first and second notice. In the case at bar. made known to the employee. NLRC. Since EDI deployed Gran to Riyadh.53 cited by the CA in its Decision. v. it failed to furnish Gran the written notice apprising him of the charges against him.also claims that Gran was justifiably dismissed due to insubordination or disobedience because he continually failed to submit the required "Daily Activity Reports. No. and (2) if the dismissal is based on authorized causes under Articles 283 and 284. (1) if the dismissal is based on a just cause under Article 282. In Micro Sales Operation Network v. the employer must give the employee and the Department of Labor and Employment written notices 30 days prior to the effectivity of his separation. 47 EDI failed to discharge the burden of proving Gran's insubordination or willful disobedience. Therefore. or any other document that would show that the "Daily Activity Reports" were required for submission by the employees. and (2) a second notice to communicate to the employees that their employment is being terminated. OAB's manner of dismissing Gran fell short of the two notice requirement. the following twin elements must concur: (1) the employee's assailed conduct must have been willful. since he was allowed to work and improve his capabilities for five months prior to his termination. in the absence of proof of Saudi laws. No.54 this Court held that: Procedurally.A." 46However. Incompetence may be shown by weighing it against a standard. using the ruling in the said case. and EDI. is not applicable to the present case. insubordination. EDI should have provided a copy of the company policy. as prescribed by the Labor Code. were properly observed in the present case. valid or authorized cause as defined by law or contract. In addition. other than the abovementioned letters. it was still EDI's responsibility to subject Gran to a trade test. Before the Labor Arbiter. Petitioner also raised the issue that Prieto v. and (2) the order violated must have been reasonable. through the same letter. According to petitioner. While it furnished Gran the written notice informing him of his dismissal. However. This position is untenable. and for unjustified grounds. Thus. Inc. NLRC. Gran was not afforded due process. more particularly by a Computer Specialist. ruled that Gran must have passed the test. Jr. or criterion. it can be presumed that Gran had passed the required trade test and that Gran is qualified for the job. 1995. that when the contract is for a fixed term and the employees are dismissed without just cause. or willful disobedience. Fourth Issue: Gran was not Afforded Due Process As discussed earlier. NLRC. Clearly. Under the twin notice requirement.56 Consequently.48 Thus. we must determine whether the order violated by the employee is reasonable. the July 9. the employer must give the employee two written notices and a hearing or opportunity to be heard if requested by the employee before terminating the employment: a notice specifying the grounds for which dismissal is sought a hearing or an opportunity to be heard and after hearing or opportunity to be heard. and its failure to do so only weakened its position but should not in any way prejudice Gran. for cases arising after the effectivity of R. The burden devolves not only upon the foreign-based employer but also on the employment or recruitment agency for the latter is not only an agent of the former.A. even before Gran was furnished the termination letter. the issue is rendered moot and academic because Gran's incompetency is unproved. plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term whichever is less. Philippine Labor laws and regulations shall govern the relationship between Gran and EDI. no other evidence was presented to show how and why Gran was considered incompetent. As indicated by the second requirement provided for in Micro Sales Operation Network. NLRC. they are entitled to the payment of their salaries corresponding to the unexpired portion of their contract. that is. benchmark. Petitioner EDI claims that private respondent Gran was afforded due process. we held that: For willful disobedience to be a valid cause for dismissal. or disobedient. without any other evidence. the elements that must concur for the charge of insubordination or willful disobedience to prosper were not present.000. are liable to Gran in the amount of PhP 30. v. ESI. EDI failed to establish any such bases to show how petitioner found Gran incompetent.52 and Malaya Shipping Services. The CA is correct in applying Prieto. Gran misrepresented himself in his curriculum vitae as a Computer Specialist. petitioner failed to prove that Gran was justifiably dismissed due to incompetence. EDI was at fault when it deployed Gran who was allegedly "incompetent" for the job." 50 The CA. petitioner failed to show that the order of the company which was violated—the submission of "Daily Activity Reports"—was part of Gran's duties as a Computer Specialist. cannot be given credence. as enunciated in Santos. Fifth and Last Issue: Gran is Entitled to Backwages We reiterate the rule that with regard to employees hired for a fixed period of employment.55 A careful examination of the records revealed that. our laws and rules on the requisites of due process relating to termination of employment shall apply. and pertains to the duties which he had been engaged to discharge. NLRC. insubordinate. he would not have been hired. lawful. thus. Moreover. but is also solidarily liable with the foreign principal for any claims or liabilities arising from the dismissal of the worker. this Court ruled that "[i]t is presumed that before their deployment. Since OAB was in breach of the due process requirements under the Labor Code and its regulations. An allegation of incompetence should have a factual foundation. In Prieto. Petitioner EDI had clearly failed to overcome the burden of proving that Gran was validly dismissed. Even if there was no objective trade test done by EDI. 8042. OAB did not schedule a hearing or conference with Gran to defend himself and adduce evidence in support of his defenses. they should have adduced additional evidence to convincingly show that Gran's employment was validly and legally terminated. made known to the employee and must pertain to the duties which he had been engaged to discharge. Even though EDI and/or ESI were merely the local employment or recruitment agencies and not the foreign employer. Summing up. the worker shall be entitled to the full reimbursement of his placement fee with interest of twelve percent (12%) per annum. It should also be pointed out that OAB failed to give Gran the chance to be heard and to defend himself with the assistance of a representative in accordance with Article 277 of the Labor Code. otherwise.

duress. or in the dialect known to the employees—that by signing the waiver or quitclaim. and e. (Emphasis supplied. On July 21. he is therefore entitled to backwages corresponding to the unexpired portion of his contract. I STATE FURTHER THAT OAB EST. If the agreement was voluntarily entered into and represents a reasonable settlement. SIGNED.948. The relevant portions of the Declaration are as follows: I. The court may however step in when such amount is unconscionably low or unreasonable although the employee voluntarily agreed to it. It is only where there is clear proof that the waiver was wangled from an unsuspecting or gullible person. that the law will step in to annul the questionable transaction.948. and had fully understood the contents of the document and that their consent was freely given without any threat. or undue influence exerted on their person. before the effectivity of R.65 c. A statement that the employer has clearly explained to the employee in English. 1996. 4. 1994.00). 1994. intimidation. and quitclaims: Not all waivers and quitclaims are invalid as against public policy. said agreements should contain the following: 1. Saudi Arabia and started to work on February 7. The October 18. the petition is DENIED. 2.63 (Emphasis supplied. No.A. The Court finds the waiver and quitclaim null and void for the following reasons: 1. misrepresentation.64 the parameters for valid compromise agreements. A quitclaim will understandably be lower than the sum total of the amounts and benefits that can possibly be awarded to employees or to be earned for the remainder of the contract period since it is a compromise where the employees will have to forfeit a certain portion of the amounts they are claiming in exchange for the early payment of a compromise amount. The court a quo is correct in its finding that the Declaration is a contract of adhesion which should be construed against the employer. It is advisable that the stipulations be made in English and Tagalog or in the dialect known to the employee. On July 9. ELEAZAR GRAN Courts must undertake a meticulous and rigorous review of quitclaims or waivers. citing Periquet v.00. Gran was instructed to depart Saudi Arabia and required to pay his plane ticket. with full understanding of what he was doing. Filipino. or the terms of settlement are unconscionable on its face.190. HAS NO OBLIGATION TOWARDS ME IN WHATEVER FORM. 62 hence. the employer is being unjust to the employee as there is no meaningful choice on the part of the employee while the terms are unreasonably favorable to the employer. which was equivalent to USD 16. NLRC. In addition. Gran received a copy of his letter of termination. 3. Since he was illegally dismissed on July 9.00)—although possibly less than the estimated Gran's salaries for the remaining duration of his contract and other benefits as employee of OAB. in regard not only to the words and terms used. 66 Thus. On July 10. and the consideration for the quitclaim is credible and reasonable. OAB.In the present case. There should be two (2) witnesses to the execution of the quitclaim who must also sign the quitclaim.67 This compromise settlement becomes final and binding under Article 227 of the Labor Code which provides that: [A]ny compromise settlement voluntarily agreed upon with the assistance of the Bureau of Labor Relations or the regional office of the DOLE. On July 12.00 for the payment of his ticket.00 is actually the payment for Gran's salary for the services he rendered to OAB as Computer Specialist. the employment contract provides that the employment contract shall be valid for a period of two (2) years from the date the employee starts to work with the employer. releases and other waivers of benefits granted by laws or contracts in favor of workers should be strictly scrutinized to protect the weak and the disadvantaged. which the employees are giving up in consideration of the fixed compromise amount. Gran filed the Complaint before the NLRC.00 which is the amount Gran is legally entitled to get from petitioner EDI as backwages.00 (SAUDI RIYALS TWO THOUSAND NINE HUNDRED FORTY EIGHT ONLY) REPRESENTING COMPLETE PAYMENT (COMPENSATION) FOR THE SERVICES I RENDERED TO OAB ESTABLISHMENT.61 Gran arrived in Riyadh. his employment contract is until February 7. in the amount of SR 2. waivers. The salary paid to Gran upon his termination. The benefits of the employees if possible with the corresponding amounts. 1994. the transaction must be recognized as a valid and binding undertaking. he signed the Declaration. Saudi Arabia. 1994.00 even if it was against his will—since he was told on July 10. The waivers should be carefully examined.00 (USD 850. the NLRC or a labor attaché in a foreign country. 1994. the Bureau of Labor Relations. In order to prevent disputes on the validity and enforceability of quitclaims and waivers of employees under Philippine laws.R. violence. 3. Gran departed from Riyadh. but also the factual circumstances under which they have been executed. the payment of SR 2. 1999 Resolution of the NLRC . b. 2. the Declaration purporting to be a quitclaim and waiver is unenforceable under Philippine laws in the absence of proof of the applicable law of Saudi Arabia. The Declaration reveals that the payment of SR 2. Panganiban in Land and Housing Development Corporation v. 1994. But where it is shown that the person making the waiver did so voluntarily.) Is the waiver and quitclaim labeled a Declaration valid? It is not.948. As correctly pointed out by the court a quo.190. the foreign laws shall apply. 2. An adhesion contract is contrary to public policy as it leaves the weaker party—the employee—in a "take-it-or-leave-it" situation. shall be final and binding upon the parties and the NLRC or any court "shall not assume jurisdiction over issues involved therein except in case of noncompliance thereof or if there is prima facieevidence that the settlement was obtained through fraud. If the Declaration is a quitclaim. Consider the following chronology of events: a.00 is even lower than his monthly salary of SR 3. the amount is unreasonably small compared to the future wages of Gran. I HEREBY DECLARE THAT OAB EST. 56120 of the Court of Appeals affirming the January 15. it is binding on the parties and may not later be disowned simply because of a change of mind. 1994. Esquillo: Quitclaims. A statement that the employees signed and executed the document voluntarily. more particularly those executed by employees. ELEAZAR GRAN (COMPUTER SPECIALIST) AFTER RECEIVING MY FINAL SETTLEMENT ON THIS DATE THE AMOUNT OF: S.948. Petitioner EDI questions the legality of the award of backwages and mainly relies on the Declaration which is claimed to have been freely and voluntarily executed by Gran. 1994 to leave Riyadh on July 12. 1999 Decision and September 30. It is made clear that the foregoing rules on quitclaim or waiver shall apply only to labor contracts of OFWs in the absence of proof of the laws of the foreign country agreed upon to govern said contracts. SP No.R. Otherwise. He could have entertained some apprehensions as to the status of his stay or safety in Saudi Arabia if he would not sign the quitclaim. Certainly. then the consideration should be much much more than the monthly salary of SR 3. and 4. I ATTEST TO THE TRUTHFULNESS OF THIS STATEMENT BY AFFIXING MY SIGNATURE VOLUNTARILY.) This Court had also outlined in Land and Housing Development Corporation. 2000 Decision in CA-G.948. A fixed amount as full and final compromise settlement. is unreasonably low. 1994. 8042. they are forfeiting or relinquishing their right to receive the benefits which are due them under the law.150. HAS NO FINANCIAL OBLIGATION IN MY FAVOUR AFTER RECEIVING THE ABOVE MENTIONED AMOUNT IN CASH. d. Such official shall assist the parties regarding the execution of the quitclaim and waiver. The document should be subscribed and sworn to under oath preferably before any administering official of the Department of Labor and Employment or its regional office. He had no other choice but to sign the Declaration as he needed the amount of SR 2.150. The foregoing events readily reveal that Gran was "forced" to sign the Declaration and constrained to receive the amount of SR 2. it is also very much less than the USD 16. In the case of the Declaration.00 (USD 850. This requirement was clearly articulated by Chief Justice Artemio V. On July 11. or coercion. The factual circumstances surrounding the execution of the Declaration would show that Gran did not voluntarily and freely execute the document. WHEREFORE.948.

AMALIA G. Indeed. respondent filed with the National Labor Relations Commission (NLRC) a complaint2 for illegal dismissal against petitioner ATCI as the local recruitment agency.g. J. as long as they are not contrary to law.200.Otherwise. can be held jointly and solidarily liable. 2004. petitioners failed to discharge. 2002. Sec. Unfortunately for petitioner. finding that petitioners neither showed that there was just cause to warrant respondent’s dismissal nor that she failed to qualify as a regular employee. the immunity extended to them. On appeal of petitioners ATCI and Ikdal. Petitioner ATCI.R. He is presumed to know only domestic or forum law. Amalia Ikdal (Ikdal). The Court’s ruling in EDI-Staffbuilders Int’l. held that respondent was illegally dismissed and accordingly ordered petitioners to pay her US$3. for the position of medical technologist under a two-year contract.is AFFIRMED with the MODIFICATION that petitioner EDI-Staffbuilders International. shouldering her own air fare. 2007. practices. customs and practices of the host country. they appealed to the Court of Appeals. Further. the Ministry of Public Health of Kuwait (the Ministry). 2001. with a monthly salary of US$1. as such. the same was not substantiated. In international law. the Labor Arbiter. that the party invoking the application of a foreign law has the burden of proving the law. (emphasis supplied) The imposition of joint and solidary liability is in line with the policy of the state to protect and alleviate the plight of the working class. representing her salary for the three months unexpired portion of her contract. 2 of the POEA Rules and Regulations) accord respect to the "customs. the appellate court noted that under the law. 2010 ATCI OVERSEAS CORPORATION. shall pay the amount of PhP 30. Under the MOA. as agent. public order or public policy.9 Verily. as the foreign principal. petitioners posit that assuming arguendo that Philippine labor laws are applicable. directors and partners of a recruitment agency may themselves be jointly and solidarily liable with the recruitment agency for money claims and damages awarded to overseas workers. On July 27. or that such foreign principal’s liability must first be established before it. Petitioners further contended that Ikdal should not be liable as an officer of petitioner ATCI. in this case.000. 8042 precisely affords the OFWs with a recourse and assures them of immediate and sufficient payment of what is due them. Respondent. v. termination procedures. represented by petitioner. Skippers United Pacific v. to allow petitioners to simply invoke the immunity from suit of its foreign principal or to wait for the judicial determination of the foreign principal’s liability before petitioner can be held liable renders the law on joint and solidary liability inutile. 10 of Republic Act No. 2001. In providing for the joint and solidary liability of private recruitment agencies with their foreign principals. MA.). a private employment agency shall assume all responsibilities for the implementation of the contract of employment of an overseas worker." Finally. IKDAL and MINISTRY OF PUBLIC HEALTHKUWAITPetitioners. [T]he obligations covenanted in the recruitment agreement entered into by and between the local agent and its foreign principal are not coterminous with the term of such agreement so that if either or both of the parties decide to end the agreement. including the laws which they wish to govern their respective obligations. Petitioners’ motion for reconsideration having been denied by the appellate court by Resolution7 of June 27. SO ORDERED.1 all newly-hired employees undergo a probationary period of one (1) year and are covered by Kuwait’s Civil Service Board Employment Contract No. petitioners argue that even the Philippine Overseas Employment Act (POEA) Rules relative to master employment contracts (Part III. vs. As to Ikdal’s liability. contending that their principal. 8042. It is hornbook principle. They thus conclude that it was patent error for the labor tribunals and the appellate court to apply the Labor Code provisions governing probationary employment in deciding the present case. under the doctrine of processual presumption which. Petitioners maintain that they should not be held liable because respondent’s employment contract specifically stipulates that her employment shall be governed by the Civil Service Law and Regulations of Kuwait. a contract freely entered into is considered the law between the parties who can establish stipulations.. 2000 but was terminated from employment on February 11. the party who wants to have a foreign law applied to a dispute or case has the burden of proving the foreign law. the appellate court held that under Sec. the "Migrant and Overseas Filipinos’ Act of 1995. 2007. as in fact it did not sign any document agreeing to be held jointly and solidarily liable. In brushing aside petitioners’ contention that they only acted as agent of the Ministry and that they cannot be held jointly and solidarily liable with it. company policies and labor laws and legislation of the host country. 2001.00. denominated as a Memorandum of Agreement (MOA). etc. and that respondent was validly dismissed for her failure to meet the performance rating within the one-year period as required under Kuwait’s Civil Service Laws. Respondent was deployed on February 17. she not having allegedly passed the probationary period. more so since the Ministry’s liability had not been judicially determined as jurisdiction was not acquired over it. and the Ministry. 2004. Maguad8 explains: . The foreign law is treated as a question of fact to be properly pleaded and proved as the judge or labor arbiter cannot take judicial notice of a foreign law. the present petition for review on certiorari was filed. it can be sued jointly and severally with the foreign principal for any violation of the recruitment agreement or contract of employment. JOSEFA ECHIN. Republic Act No. NLRC10 illuminates: In the present case. specific causes for termination. good customs. thus. morals. Petitioners’ motion for reconsideration having been denied by Resolution5 of April 22. 2. By Decision6 of March 30. . G. The petition fails. which she voluntarily entered into. No costs. No. terms and conditions as they may deem convenient. cannot evade responsibility for the money claims of Overseas Filipino workers (OFWs) which it deploys abroad by the mere expediency of claiming that its foreign principal is a government agency clothed with immunity from suit. the Ministry. 178551 October 11. this will render nugatory the very purpose for which the law governing the employment of workers for foreign jobs abroad was enacted. DECISION CARPIO MORALES. By Decision3 of November 29.600. petitioner ATCI cannot likewise be held liable. it did not prove the pertinent Saudi laws on the matter. that the terms of her engagement shall be governed by prevailing Kuwaiti Civil Service Laws and Regulations as in fact POEA Rules accord respect to such rules. however. but the same extends up to and until the expiration of the employment contracts of the employees recruited and employed pursuant to the said recruitment agreement. As to petitioners’ contentions that Philippine labor laws on probationary employment are not applicable since it was expressly provided in respondent’s employment contract. As the Ministry denied respondent’s request for reconsideration.: Josefina Echin (respondent) was hired by petitioner ATCI Overseas Corporation in behalf of its principal-co-petitioner. hence." corporate officers. the employment contract signed by Gran specifically states that Saudi Labor Laws will govern matters not provided for in the contract (e. given that the foreign principal is a government agency which is immune from suit. the International Law doctrine of presumed-identity approach or processual presumption comes into . Inc. the appellate court affirmed the NLRC Resolution. the NLRC affirmed the Labor Arbiter’s decision by Resolution4 of January 26. she returned to the Philippines on March 17. the responsibilities of such parties towards the contracted employees under the agreement do not at all end. clauses. Being the law intended by the parties (lex loci intentiones) to apply to the contract. being a foreign government agency. as a private recruitment agency. is immune from suit and. Saudi Labor Laws should govern all matters relating to the termination of the employment of Gran.00 to respondent Gran as nominal damages for non-compliance with statutory due process. .00.

respondent suspended petitioner for one month effective July 1. VII. the certificate may be made by a secretary of the embassy or legation. and that on June 17. 2003. 2003 with a request of explanation in your part of your habitual tardiness. (emphasis and underscoring supplied) The Philippines does not take judicial notice of foreign laws. and April 1. even if pleaded. the petition is DENIED. hence. that on June 24. the party invoking it must present a copy thereof and comply with Sections 24 and 25 of Rule 132 of the Revised Rules of Court which reads: SEC. 2003. G. Thus the subject certifications read: xxxx This is to certify that the herein attached translation/s from Arabic to English/Tagalog and or vice versa was/were presented to this Office for review and certification and the same was/were found to be in order. J. Another situation that may arise after this memorandum will be a ground for your suspension. what petitioners submitted were mere certifications attesting only to the correctness of the translations of the MOA and the termination letter which does not prove at all that Kuwaiti civil service laws differ from Philippine laws and that under such Kuwaiti laws. citing his tardiness on February 18. 2003 Memorandum via registered mail suspending him for one month effective July 1. Mustapha Alawi. under the seal of such court. a translated copy11 (Arabic to English) of the termination letter to respondent stating that she did not pass the probation terms. but that petitioner refused to receive it and in fact answered back and walked out on his immediate supervisor.play. and a translated copy of the certificate of termination. as provided by law. and accompanied. And he failed to submit an explanation behind his habitual tardiness. he informed respondent of his need for a letter of introduction to Metro Ayala since his Metro Ayala Identification Card (I. vice consul. shall be answerable for all money claims or damages that may be awarded to the workers. drawing him to file on July 2. prompting the latter to send him a Memorandum on June 18. whether taken singly or as a whole. the presumption is that foreign law is the same as ours. if the record is not kept in the Philippines. they must not only be alleged.R. it sent petitioner a Violation Memorandum5 warning him for habitual tardiness. Upon the other hand. one of these is to attend [the] company meeting scheduled every Tuesday of the week. Cebu City. and respondent’s letter 13 of reconsideration to the Ministry. there has been no improvement of your habitual tardiness since our first memorandum .12 both of which documents were certified by Mr. Money Claims. 1997 Romero Montederamos (petitioner) as a stockman at its outlet at the Metro Ayala Department Store. shall themselves be jointly and solidarily liable with the corporation or partnership for the aforesaid claims and damages.: Respondent Tri-Union International Corp. assumes no responsibility as to the contents of the document/s. DECISION CARPIO MORALES. do not sufficiently prove that respondent was validly terminated as a probationary employee under Kuwaiti civil service laws. 2003. which provides that the employee is subject to a probationary period of one (1) year and that the host country’s Civil Service Laws and Regulations apply. The attestation must be under the official seal of the attesting officer. which Memorandum required him to submit a written explanation therefor. 25. This Office. 2003. drawing respondent to send him a June 27. petitioners submitted the following: MOA between respondent and the Ministry. (emphasis supplied) SEC. that on June 26. This provision shall be incorporated in the contract for overseas employment and shall be a condition precedent for its approval. and June 3. or if he be the clerk of a court having a seal. 24. consul general. exemplary and other forms of damages.—Notwithstanding any provision of law to the contrary. 2003. hired on July 18. 2003. he repaired to respondent’s office but was told that his supervisor was absent and that the latter’s assistant could not give the letter of introduction by herself. as required under the Rules. 2003. March 4. it sent petitioner a second Violation Memorandum 6 for habitual tardiness. TRI-UNION INTERNATIONAL CORPORATION. in substance. 8042 on money claims. 3 and that as his wait for a letter of introduction did not come by June 30. or by his deputy. service incentive leave. 2003. These documents. which markets and distributes Company B products. — The record of public documents referred to in paragraph (a) of Section 19. 2003. However. The performance bond to be filed by the recruitment/placement agency. without specifying the grounds therefor. respondent asked him to sign a contract of employment covering five months2 but he refused. 2003. However. SO ORDERED. May 6. 2003. may be evidenced by an official publication thereof or by a copy attested by the officer having the legal custody of the record. the same is in order too following the express provision of R. knowing that he was already a regular employee. 2003. as represented by ATCI. that the copy is a correct copy of the original. If the office in which the record is kept is in a foreign country.D. (emphasis supplied)1avvphi1 Respecting Ikdal’s joint and solidary liability as a corporate officer. that he later learned that the assistant could and actually did sign letters of introduction for and in behalf of the supervisor. If the recruitment/placement agency is a juridical being. or a specific part thereof. 2003. Where a foreign law is not pleaded or. with a certificate that such officer has the custody. 2003. viz: SEC. the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide. viz: You are hereby warned to follow all rules and regulations of our company where you are employed. hence. they must be proven. Cebu Business Park. This certification is being issued upon request of the interested party for whatever legal purpose it may serve. citing his tardiness on April 22.A. if there be any. Head of the Department of Foreign Affairs-Office of Consular Affairs Inslamic Certification and Translation Unit. 176700 September 4. respondent was validly terminated. wherein she noted that in her first eight (8) months of employment. when admissible for any purpose.7 (Underscoring supplied) Again petitioner refused to receive the third Memorandum. or consular agent or by any officer in the foreign service of the Philippines stationed in the foreign country in which the record is kept. 2003 a Complaint1 for illegal dismissal and non-payment of overtime pay. the attestation must state.) was due to expire on June 30. the corporate officers and directors and partners as the case may be. By Memorandum of June 27. we apply Philippine labor laws in determining the issues presented before us. that he was told to return the following day but was unable to do so because he had to accomplish clearance requirements with Metro Ayala. 2009 ROMERO MONTEDERAMOS. however. you answered and walked out from the office before your superior told you to do so. To prove a foreign law. May 20. 2003 reading: You were given second memorandum last June 17. Petitioner. Respondent. he realized that respondent had no intention of giving him one and was terminating his employment. the claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual moral. This memo serves as your warning. is not proved. allowances and separation pay before the National Labor Relations Commission (NLRC) Regional Arbitration Branch No. 2003. 2003. 10. vs. No. To prove the Kuwaiti law. respondent claimed as follows: 4 On April 15. and authenticated by the seal of his office. By petitioner’s claim. March 18. (emphasis and underscoring supplied) WHEREFORE. his filing on July 2. Proof of official record. Instead of submitting a copy of the pertinent Kuwaiti labor laws duly authenticated and translated by Embassy officials thereat. 2003. Instead. — Whenever a copy of a document or record is attested for the purpose of the evidence. she was given a rating of "Excellent" albeit it changed due to changes in her shift of work schedule. as the case may be. you refuse[d] to sign the memorandum for the said violation. What attestation of copy must state. consul. The liability of the principal/employer and the recruitment/placement agency for any and all claims under this section shall be joint and several. within ninety (90) calendar days after the filing of the complaint. (respondent). 2003 of the Complaint against respondent. Thus. in August 2002.

Respondents.D. 2003 but he was given "a chance to report on August 9(sic). DENIED. and ended in his illegal dismissal when respondent denied his request for the issuance of a letter of introduction for the renewal of his Metro Ayala I. 2003 but we are giving you a chance to report on August 11. By Decision15 of July 27. you were given a second memo with a request of explanation on your part last June 17. It went on to hold that petitioner’s infractions resulting in his suspension ─ tardiness and refusal to attend company meetings because he was not allegedly paid remuneration ─ were of his own wrongdoings. Respondent’s Motion for Reconsideration 13 having been denied by Resolution14 of July 22. respondent claimed that it had paid petitioner overtime pay. petitioner’s filing on July 2. entitled to separation pay. 21 Constructive dismissal contemplates. it appealed via Certiorari to the Court of Appeals. leaving him with no option but to forego his continued employment. by its claim. the last day of the 30-day suspension of petitioner. by June 27. in itself." the NLRC granted him backwages and separation pay covering the period July 1. the Court finds well-taken the Labor Arbiter’s grant thereto. hence. allowance.23 Respecting petitioner’s claim for service incentive leave. 2003.. 2003 [sic]. which affirmed the Resolution2 dated 5 May 2006 of the National Labor Relations Commission (NLRC) in NLRC NCR CC No. in fact. 2005. you showed insubordination [on] your part by answering back your immediate superior.19This petitioner failed to discharge. Respondent’s inability to provide the letter-introduction for the renewal of petitioner’s Metro Ayala I. cannot be considered an act of discrimination or insensibility to warrant a finding of constructive dismissal. It bears noting that petitioner’s Metro Ayala I. failed to refute respondent’s claim that it sent him a Violation Memorandum.last April 15. in light of the foregoing discussions. there being no concrete proof that he had indeed rendered overtime service. His Motion for Reconsideration16 having been denied by Resolution17 of January 23. which claim he did not refute.9 (Emphasis and underscoring supplied) Petitioner never ever reported for work. petitioner’s failure to report for work after the expiration of the period of his suspension notwithstanding. Instead. . unreasonable or unlikely. respondent advised petitioner as follows: This is to remind you that your suspension ends this July 31. 2003 but you refuse[d] to sign. and REYES. Noting that "it is to the best interest of complainant that he should no longer be reinstated to his former position. 2003. Restaurants and Allied Industries-Manila Pavilion Hotel (NUWHRAIN) against Manila Pavilion Hotel (the Hotel). You disrespect our office personnel.000. 2003 that he was "supposed to report . In another vein. 2003 at 9 o’clock in the morning. He particularly highlights the fact that his one month suspension ended on July 31. however. amount to constructive dismissal. Finally. 2006. the same fails. subject to recomputation upon finality of the Decision. 2003. 2003. 2003 Memorandum. On July 31. precipitated. was yet to expire on June 30. but the Violation Memoranda were issued to petitioner much later starting April 2003. Petitioner’s claim for overtime pay was denied as it was unsubstantiated. As for petitioner’s claim for overtime pay. SP No. Labor Arbiter Ernesto F. . 2003 belied the charge of illegal dismissal. The same incident took place last June 26. 000307-05 NCMB NCR NS 09-199-05. This is the third time you did this. 179402 RESTAURANTS AND ALLIED INDUSTRIES— Present: MANILA PAVILLION HOTEL CHAPTER. G. NACHURA. first was last April 15. JJ. however.R. With these offenses. WHEREFORE. backwages and other money claims. or a demotion in rank or a diminution of pay. insensibility or disdain by an employer becomes unbearable to the employee.00. which was duly received by him on April 15. YNARES-SANTIAGO.versus Chairperson. He was. among other things. The appellate court held that respondent’s June 27. Bare allegations of constructive dismissal.: This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court. 2003 to 2004. J. reversed and set aside the Labor Arbiter’s decision and entered a new one declaring petitioner to have been illegally dismissed. the NLRC. The petition is bereft of merit. 2003 but later advising him to resume work 10 days later or on August 11. CORPORATION. That respondent advised petitioner on July 31. 2003. On appeal.D. 2003" as amounting to constructive dismissal. No.18 insisting that he was illegally/constructively dismissed and not merely suspended by respondent. finding that there was neither illegal dismissal nor abandonment. the appellate court held that respondent’s offer of reinstatement to petitioner runs counter to the charge of illegal dismissal. Respecting petitioner’s claim that his refusal to sign the 5-month contract precipitated his suspension. 2003. Carreon. assailing the Decision1dated 30 May 2007 rendered by the Court of Appeals in CA-G. Another situation that may arise after this memo will be a ground for your termination.R. 2008 x-------------------------------------------------x DECISION CHICO-NAZARIO. 2003 of his Complaint.Petitioner. and pay him service incentive leave pay in the amount of P3. it could have done so much earlier.20 requiring him to explain his habitual tardiness on the therein indicated dates but that he failed to comply therewith. NATIONAL UNION OF WORKERS IN HOTELS. 2003.22 Not any of these circumstances exists to call for a ruling that petitioner was constructively dismissed. the appellate court noted that the refusal occurred in August 2002 yet. 2003. [the following day]. the Court of Appeals reversed and set aside the NLRC decision and reinstated the Labor Arbiter’s decision. It clearly exists when an act of clear discrimination.12 by Decision dated February 21. petitioner filed the present Petition for Review on Certiorari. . and service incentive leave. cannot be given credence. 2003" but that he was given a chance to report on August 11. He. 2005. and ACESITE PHILIPPINES HOTEL CHICO-NAZARIO. the NLRC concluded. 2003. the petition is.D. you are suspended for one month effective July 1. the NLRC held that respondent failed to refute petitioner’s allegation that he was made to sign a 5-month contract but that he refused as he had attained regular status. You will resume work on August 1. I am hoping [for] your presence on the date mentioned above. quitting because continued employment is rendered impossible. For respondent’s claim of having settled it bears no documentation. offered to reinstate him during the mandatory conference and even after receiving the promulgation of the decision of Labor Arbiter. and a subsequent Memorandum via registered mail.8 (Emphasis and underscoring supplied) Hence. when uncorroborated by the evidence on record. You are supposed to report at the office this August 1. suspended effective July 1. 2003 does not. Thereby. Such refusal of petitioner. . This memo serves as your last warning. 96171. J. respondent just the same. Brushing aside petitioner’s alleged tardiness in 2003 in light of respondent’s failure to present the daily time records of petitioner who had been working for respondent since 1997. NATIONAL LABOR RELATIONS COMMISSION AUSTRIA-MARTINEZ. It thus held that if indeed respondent wanted to terminate the services of petitioner on the basis of such refusal. 2007.10 By Decision11 of November 10. Finally. the employee must first establish by substantial evidence the fact of dismissal from service. 2003 Memorandum to petitioner suspending him for one month ending July 31. 2003. SO ORDERED. Promulgated: September 30. ordered respondent to reinstate petitioner without backwages. While the employer bears the burden in illegal dismissal cases to prove that the termination was for valid or authorized cause. dismissing for lack of merit the complaint for unfair labor practice filed by petitioner National Union of Workers in Hotels. August 1.

respondent insisted that it did not commit unfair labor practice.000. Finally. the Industrial Relations Division of the DOLE allowed the registration of the Memorandum of Agreement executed between HIMPHLU and the Hotel.. It was accordingly certified as the exclusive bargaining agent for rank and file employees of the Hotel. the NLRC determined that the issuance of the Notices directing the 36 employees to explain why they should not be dismissed was in compliance with the Collective Bargaining Agreement provisions regarding the union security clause. which HIMPHLU won. the NLRC declared that the claim for moral and exemplary damages of NUWHRAIN lacked sufficient factual and legal bases. Both parties consented that the representation aspect and other non-economic provisions of the Collective Bargaining Agreement were to be effective for five years or until 30 June 2005. in violation of Section 2. Jr. which provided for a union security clause that reads: 12 Section 2. SP No. extending the effectivity of the existing Collective Bargaining Agreement for another two years. It was denied by the NLRC in another Resolution dated 30 June 2006.000. Article IV of the Collective Bargaining Agreement. made the statements attributed to them. The parties signed the Memorandum of Agreement on 20 May 2005 and the employees ratified it on 27 May 2005. It clarified that these Notices did not amount to the termination of the employees concerned but merely sought their explanation on why the union security clause should not be applied to them. purportedly expressing their preference for HIMPHLU during the reconciliatory conferences. Thirdly. the Court of Appeals promulgated its Decision 22 in C. Jr. The parties subsequently re-negotiated the economic provisions of the Collective Bargaining Agreement and extended the term of their effectivity for another two years or until 30 June 2005. Thus. Norma Azores. joined NUWHRAIN. NUWHRAIN was accorded by the Labor Relations Division of the Department of Labor and Employment (DOLE) the status of a legitimate labor organization. joining another union or non-payment of UNION dues shall be a ground for the UNION to demand the dismissal from the HOTEL of the employee concerned. extending the effectivity of the existing Collective Bargaining Agreement. docketed as C. Secondly. The NLRC concluded that these statements did not constitute unfair labor practice for they could not have coerced or influenced either of the contending unions. upholding the Resolution dated 5 May 2006 of the NLRC in NLRC NCR CC No. 9 After the lapse of the 60-day freedom period. HIMPHLU served the Hotel with a written demand dated 28 July 200510 for the dismissal of 36 employees following their expulsion from HIMPHLU for alleged acts of disloyalty and violation of its Constitution and by-laws. In the meantime. effective 1 July 2005 to 30 June 2007. the exclusive bargaining agent of the rank-and-file employees of the Hotel. SP No. but pending the disposition of the Petition for Certification Election filed by NUWHRAIN. however. and clarified that none of the 36 employees were dismissed by the Hotel.Petitioner NUWHRAIN is a legitimate labor organization composed of rank-and-file employees of the Hotel. The Notices and the statements made by the officers of the respondent and the Hotel were allegedly intended to intimidate and coerce the employees in the exercise of their right to self-organization.8 On 5 July 2007. The appellate court also gave credence to the denial by the officers of the respondent and the Hotel that they made statements favoring HIMPHLU over NUWHRAIN during the reconciliatory conferences.18 In a Resolution19 dated 5 May 2006. On 1 September 2005.R.15 The Secretary of Labor intervened and certified the case for compulsory arbitration with the NLRC. however. the Hotel issued Disciplinary Action Notices 13 (Notices) to the 36 employees identified in the written demand of HIMPHLU. implored NUWHRAIN’s members to withdraw their Petition for Certification Election and reaffirm their membership in HIMPHLU. both of whom did not agree in the suggested course of action or to any other manner of settling the dispute. NUWHRAIN proceeded to file a Notice of Strike before the National Conciliation and Mediation Board (NCMB) on 8 September 2005 on the ground of unfair labor practice under Article 248. was entered into with the view of responding to the employees’ economic needs. HIMPHLU. Even thereafter. 96171. G. while blaming NUWHRAIN for the labor problems of the Hotel. stating that the 36 employees. the NLRC pronounced that the Hotel was not guilty of unfair labor practice. 96171. the Hotel and HIMPHLU negotiated the extension of the provisions of the existing Collective Bargaining Agreement for two years.5 During the 60-day freedom period which preceded the expiration of the Collective Bargaining Agreement. failure to join the UNION within the period specified in the immediately preceding section or failure to maintain membership with the UNION in good standing either through resignation or expulsion from the UNION in accordance with the UNION’s Constitution and by-laws due to disloyalty. DISMISSAL PURSUANT TO UNION SECURITY CLAUSE. An Investigation Report11 was attached to the said written demand. NUWHRAIN filed a Motion for Reconsideration of the foregoing NLRC Resolution. The case was docketed as NLRC NCR CC No. the Certification Election for regular rank and file employees of the Hotel was held. the Resident Manager of the Hotel. NUWHRAIN exercised the right to challenge the majority status of the incumbent union. It declared that the Hotel had acted prudently when it issued the Notices to the 36 employees after HIMPHLU demanded their dismissal.0017 Respondent countered that it merely complied with its contractual obligations with HIMPHLU when it issued the assailed Notices. provided. G. starting on 1 May 2005 and ending on 30 June 2005. nor was it liable for moral and exemplary damages.3 while respondent Acesite Philippines Hotel Corporation is the owner and operator of said Hotel. During the reconciliatory conference held on 5 August 2005.14 However. who were members of HIMPHLU. be compelled to act on any such UNION demand if made within a period of sixty (60) days prior to the expiry date of this agreement.4 The factual antecedents of the instant Petition are as follows: The Hotel entered into a Collective Bargaining Agreement with HI-MANILA PAVILION HOTEL LABOR UNION (HIMPHLU). (Emphasis provided) On 1 August 2005. on 16 June 2006. Firstly. the NLRC interpreted the statements made by the officials of respondent and the Hotel during the reconciliatory conferences – encouraging the withdrawal of the Petition for Certification Election and the reaffirmation by the 36 employees of their membership in HIMPHLU – as proposed solutions to avoid the dismissal of the said employees. . and the economic provisions of the same were to be effective for three years or until 30 June 2003. paragraphs (a) and (b) of the Labor Code. Bernardo Corpus.00 and exemplary damages of P20. respondent’s Vice President. The Court of Appeals further noted that the unhampered organization and registration of NUWHRAIN negated its allegation that the Hotel required its employees not to join a labor organization as a condition for their employment.7 Thereafter. 000307-05 NCMB NCR NS 09-199-05.16 NUWHRAIN asserted that the Hotel committed unfair labor practice when it issued the Notices to the 36 employees who switched allegiance from HIMPHLU to NUWHRAIN. The HOTEL shall not.R. the Hotel had not acted improperly as it did not wrongfully terminate any of the 36 employees. Accordingly. It further denied that respondent’s Vice President Norma Azores and the Hotel’s Resident Manager Bernardo Corpus.21 On 30 May 2007. The demand shall be accompanied by the UNION’s investigation report and the HOTEL shall act accordingly subject to existing laws and jurisprudence on the matter. entitled IN RE: Labor Dispute at Manila Pavilion Hotel. The reconciliatory conferences facilitated by the Hotel were held on 5 August 2005 and 1 September 2005.A. NUWHRAIN claimed that it was entitled to moral damages in the amount of P50. NUWHRAIN filed a Petition forCertiorari before the Court of Appeals.6 On 21 June 2005. the NLRC adjudged that the execution of the Memorandum of Agreement between respondent and HIMPHLU. and not intended to interfere with or restrain the exercise of the right to self-organization of NUWHRAIN’s members. 000307-05 NCMB NCR NS 09-199-05.A.20 Thus. that the UNION shall hold the HOTEL free and harmless from any and all liabilities that may arise should the dismissed employee question in any manner the dismissal. stated her preference to deal with HIMPHLU. by filing a Petition for Certification Election on 28 June 2005. The Hotel called the contending unions and the employees concerned for a reconciliatory conference in an attempt to avoid the dismissal of the 36 employees. The Notices directed the 36 employees to submit a written explanation for their alleged acts of disloyalty and violation of the union security clause for which HIMPHLU sought their dismissal.

. the Hotel would have been subjected to a suit for its failure to comply with the terms of the Collective Bargaining Agreement. 30 In the case at bar. however. one of the proposals laid on the table to settle the dispute between the unions and preclude the dismissal of the 36 employees was for NUWHRAIN to withdraw its Petition for Certification Election and. even afforded the employees involved a chance to be heard. 246 SCRA 445 [1995]. 80 SCRA 434 [1977] and INSULAR LIFE ASSURANCE CO. the quantum of proof necessary is substantial evidence. respondent’s Vice President Norma Azores expressed her preference to deal with HIMPHLU. HIMPHLU alleged that it had found these members guilty of disloyalty and demanded their dismissal pursuant to the union security clause in the Collective Bargaining Agreement. Jr. "Union security" is a generic term which is applied to and comprehends "closed shop. workers are able to negotiate with management on an even playing field and with more persuasiveness than if they were to individually and separately bargain with the employer. Court of Industrial Relations.26 In Villar v. The cases cited by NUWHRAIN are not applicable to the present case given their diverse factual backgrounds. Still. or such amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion. except of those employees who are already members of another union at the time of the signing of the collective bargaining agreement x x x. and ASUNCION V.. The only act attributed to the respondent is its issuance of the Notices which. II THE COURT OF APPEALS ERRED IN RULING THAT RESPONDENT HOTEL IS NOT GUILTY OF UNFAIR LABOR PRACTICE CONTRARY TO ARTICLE 248 OF THE LABOR CODE AND THE SUPREME COURT’S RULING IN PROGRESSINVE DEVELOPMENT CORPORATION V. hours of work. SUCH A RULING CONTRADICTS EXISTING JURISPRUDENCE SUCH AS MASAGANA CONCRETE PRODUCTS INC. JRS BUSINESS CORPORATION V. they must suffer the consequences of their separation from the union under the security clause of the Collective Bargaining Agreement. and the Hotel’s Resident Manager Bernardo Corpus." "maintenance of membership" or any other form of agreement which imposes upon employees the obligation to acquire or retain union membership as a condition affecting employment. the only sensible option left to the Hotel. Had the Hotel totally ignored this demand. including the delayed reinstatement of striking employees and the offering of bribes. The self-serving statement signed by six of NUWHRAIN’s members have very little weight. and (2) the acts of discrimination. demanding the dismissal of 36 of its former members who joined NUWHRAIN. in return. V. upon its receipt of the demand of HIMPHLU for the dismissal of the 36 employees. Before the Court of Appeals. contrary to being an unfair labor practice. who switched allegiance to NUWHRAIN. By thus promoting unionism. wherein the officers of the respondent and the Hotel acted as mediators. 1999. implored NUWHRAINs’ members to withdraw their Petition for Certification Election and reaffirm their membership in HIMPHLU. absent any other independent evidence which indicates that . Ramos 29 clearly stated the general rule: the dismissal of an employee by the company pursuant to a labor union’s demand in accordance with a union security agreement does not constitute unfair labor practice.R.34 which NUWHRAIN failed to discharge in the present case. and (2) the officers of the respondent and the Hotel allegedly uttered statements during the reconciliatory conferences indicating their preference for HIMPHLU and their disapproval of NUWHRAIN. (e) To discriminate in regard to wages. Instead. None of these acts were attributed to the respondent in the present case. THE INSULAR LIFE ASSURANCE CO. 31 the Court declared the employer guilty of unfair labor practice for singling out its workers who refused to join the employer’s preferred union by not giving them work assignments and regular status. 362 SCRA 56 [2001]. and must accordingly be denied. LTC EMPLOYEES ASSOCIATION-NATU V. 248. the members of NUWHRAIN would owe their loyalty to their union. NLRC. In Progressive Development Corporation v. Jr. NUWHRAIN maintains that the respondent committed unfair labor practice when (1) the Hotel issued the Notices to the 36 employees. Unfair labor practices of employers. Greenfield v. in which NUWHRAIN makes the following assignment of errors: I THE COURT OF APPEALS GAVE MORE PROBATIVE VALUE TO RESPONDENT HOTEL’S GENERAL AND UNSWORN DENIAL VERSUS THAT OF PETITIONER’S SWORN TESTIMONY NARRATING RESPONDENT’S HOTEL’S VIOLATION OF PETITIONER’S RIGHT TO SELF ORGANIZATION. despite the insistence of HIMPHLU. 106916. Employees Association-NATU v.27 this Court held that employees have the right to disaffiliate from their union and form a new organization of their own. Ltd. a natural bias which somewhat puts into question their credibility as witnesses.. on the basis of the union security clause of the Collective Bargaining Agreement. for HIMPHLU to re-accept the employees without sanctions. in Malayang Samahan ng Manggagawa sa M. NUWHRAIN claimed that during the reconciliatory conferences. NLRC. 23 Hence. This Court. The fact that six members of the union signed a single statement. LTD. The burden of proof rests upon the party who asserts the affirmative of an issue. Inciong. SEPTEBMER 3. It is important to note that the Hotel did not take further steps to terminate the 36 employees. the sole bargaining agent for the rank and file employees of the Hotel. NLRC. respondent denied that such statements were made and that the officers of the respondent and the Hotel were merely misquoted.. the present Petition. The issuance by the respondent of the Notices requiring the 36 employees to submit their explanations to the charges against them was the reasonable and logical first step in a fair investigation.28 To avoid the clear possibility of liability for breaching the union security clause of the Collective Bargaining Agreement and to protect its own interests.32 for (1) the dismissal of some of its striking employees without even giving them an opportunity to explain their side. Insular Life Assurance Co. did make the statements being attributed to them. Nothing in this Code or in any other law shall prevent the parties from requiring membership in a recognized collective bargaining agent as a condition for employment. In the present case. 37 SCRA 244 [1971]. NUWHRAIN has the burden of proving its allegation that Norma Azores and Bernardo Corpus. Undoubtedly. In its letter. G.25 Article 248(e) of the Labor Code recognizes the effectivity of a union shop clause: Art. and wage increases to loyal employees after refusing to bargain with the union. there is even less possibility of sustaining a finding of guilt for unfair labor practice where respondent did not dismiss the 36 employees. and eventually dismissing said employees. as NUWHRAIN suggests it should have done. NUWHRAIN asserts that the sworn testimony signed by its six union members that the officers of the respondent and the Hotel did utter the offending statements deserve more credence than the unsworn denial of respondent. former members of HIMPHLU. (Emphasis supplied. bonuses. NO. while blaming NUWHRAIN for the Hotel’s labor problems. it arranged for reconciliatory conferences between the contending unions in order to avert the possibility of dismissing the 36 employees for violation of the union security clause of the Collective Bargaining Agreement. During the reconciliatory conferences..33 And in labor cases. even if made under oath. gives the impression that it was signed in a perfunctory manner and motivated by a sense of union solidarity. especially since the success of this case would also redound to their benefit. instead of each member presenting their sincere and individual narrations of events. CIR. was to conduct its own inquiry so as to make its own findings on whether there was sufficient ground to dismiss the said employees who defected from HIMPHLU. Ltd.NUWHRAIN’s Motion for Reconsideration of the aforementioned Decision of the Court of Appeals was denied by the same court in a Resolution dated 24 August 2007. This argument is specious.) The law allows stipulations for "union shop" and "closed shop" as a means of encouraging workers to join and support the union of their choice in the protection of their rights and interests vis-à-vis the employer.24 The instant Petition lacks merit. The employer was found guilty of unfair labor practice in Insular Life Assurance Co. and other terms and conditions of employment in order to encourage or discourage membership in any labor organization." "union shop. the Collective Bargaining Agreement includes a union security provision. An employer is not considered guilty of unfair labor practice if it merely complied in good faith with the request of the certified union for the dismissal of employees expelled from the union pursuant to the union security clause in the Collective Bargaining Agreement. The records clearly show that the Notices were issued after HIMPHLU served the Hotel with a letter dated 28 July 2005.

R. the respondent maintained a neutral stand in the dispute between HIMPHLU and NUWHRAIN.10 The NLRC ruled that the petitioner’s defense of abandonment has no legal basis since there was no clear intent on the respondent’s part to sever the employer-employee relationship. the respondent refused to return to work and insisted that he be paid his separation pay. 13th month pay. 2003. the CA affirmed the NLRC’s finding that the dismissal was illegal.36 Even the surrounding circumstances would contradict NUWHRAIN’s allegation that the respondent interfered with or coerced its employees in their choice of union membership. 2002. NATIONAL LABOR RELATIONS COMMISSION and PERFECTO BALOGO. On January 20. The CA concluded that the respondent complied with the petitioner’s directive to submit a written explanation when the former presented the medical certificate to explain his absences.9 The decision directed the company to pay the respondent separation pay. the respondent formally amended his complaint to include his claim of illegal dismissal. 2009 PENTAGON STEEL CORPORATION. THE FACTUAL ANTECEDENTS The petitioner. 2006. 2002. the petitioner filed a special civil action for certiorari11 with the CA. Thus. G. The petitioner sent another letter to the respondent on August 21. 2002. SO ORDERED.7 The Labor Arbiter Ruling On October 27. On October 22. The labor arbiter noted that the respondent’s allegation that he reported for work is not reliable for lack of corroborating evidence. 2006. 2005."8 In dismissing the respondent’s claim of illegal dismissal. 2006. The records are bereft of any instance that would show that respondent rode roughshod over its employees’ freedom to decide which union to join. NUWHRAIN admitted that before issuing its Notices. 2003. the NLRC held that the respondent was illegally dismissed. It seeks to set aside: (a) the Decision of the Court of Appeals (CA) dated June 28. 2002 and October 10 and 18. the NLRC found. the respondent failed to respond. 35 Considering the expertise of these agencies in matters pertaining to labor disputes. vs. for this reason.the officers of the respondent and the Hotel made such hostile and coercive utterances that tend to interfere or influence the employees’ exercise of the right to self-organization. still during the conciliation proceedings. the NLRC denied the petitioner’s motion for reconsideration. requiring an explanation for his absence. the labor arbiter rendered his decision dismissing the illegal dismissal charge. In all. the respondent filed a complaint with the Arbitration Branch of the NLRC for underpayment/nonpayment of salaries and wages. that the officers of the respondent and the Hotel did not make statements that would have constituted unfair labor practice. 2002 to August 21. informing him that he had been absent without official leave (AWOL) from August 7. The CA Ruling On May 6. holiday pay. the petitioner refused to take him back despite the medical certificate he submitted. the respondent again reported for work. but also finality. however. however. but modified the challenged decision by adding reinstatement and the payment of "full backwages. 4 denying the motion for reconsideration that the petitioner subsequently filed. service incentive leave. 96171 is hereby AFFIRMED. 20062 modifying the Decision of the National Labor Relations Commission (NLRC) dated January 31. separation pay. however. all pointing out his absences. but directed the petitioner "to pay the complainant his SIL and 13th month pay in the amount of Five Thousand One Hundred Sixty-Six Pesos and 66/100 (P5. 37 Neither did the respondent threaten the 36 employees who shifted their allegiance to NUWHRAIN with any form of reprisal. In a Decision dated June 28. and ECOLA. the respondent presented a medical certificate issued by the company physician. the labor arbiter found that no dismissal took place. DECISION Before this Court is the Petition for Review on Certiorari1 under Rule 45 of the Rules of Court filed by Pentagon Steel Corporation (the petitioner). the respondent presented the medical certificate covering his period of absence. 5 On September 13. 2002 without giving prior notice of his absence. 2002. alleging grave abuse of discretion on the part of the NLRC in ruling that illegal dismissal took place. No. 2002."12 The CA held that the respondent was constructively dismissed when the petitioner repeatedly refused to accept the respondent back to work despite the valid medical reason that justified his absence from work. to no avail. specifically questioning the ruling that no illegal dismissal took place. overtime pay. The petitioner. As a consequence. COURT OF APPEALS. Thus. 174141 June 26. according to the petitioner.66). 2002. On January 31. . When the respondent finally reported for work on August 17. he contracted flu associated with diarrhea and suffered loose bowel movement due to the infection. in addition to backwages. also by registered mail. In their Reply before the NLRC. did not allow him to resume work on the same date. backwages. Together with this conclusion. As a result. 2003. The respondent maintained that his illness had prevented him from reporting for work for ten (10) days. this kind of action is inconsistent with the respondent’s twenty-three (23) years of service and lack of derogatory record during these years. On March 31. Costs against petitioner NUWHRAIN. inclusive of allowances and other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. exhibiting a note from his doctor indicating that he was fit to work. and service incentive leave. wire and nails. 2002. Petitioner. employed respondent Perfecto Balogo (the respondent) since September 1. thus. the respondent again reported for work on August 21 and 23. the instant Petition is DENIED. The respondent alleged that on August 6. The NLRC Ruling The respondent appealed the labor arbiter’s decision to the NLRC on November 14. the NLRC Third Division vacated and set aside the decision of the labor arbiter. The petitioner refused the respondent’s demand for separation pay for lack of basis. On August 19. Findings of fact of the NLRC are given much weight and are considered conclusive by this Court. 2002. as the respondent in fact failed to respond to the petitioner’s memoranda. and the Court of Appeals affirmed. the NLRC also considered the strained relationship existing between the parties and. In the case at bar. 3 and (b) the Resolution of the CA dated August 15. the decision was confined to the directive to pay service incentive leave and 13th month pay. the petitioner considered him on AWOL from August 7. It is only when such findings are not substantially supported by the records that this Court will step in and make its independent evaluation of the facts. they were not dismissed for their affiliation with NUWHRAIN. the findings of administrative agencies of the Department of Labor are generally accorded not only respect. 2002. 2005. however. the petitioner sent him a letter by registered mail dated August 12.Respondents.R. Subsequently. The NLRC found it difficult to accept the petitioner’s allegation that the respondent absented himself for unknown reasons. 2002. a corporation engaged in the manufacture of G.I. 1979 in its wire drawing department. 13th month pay. respondent had not committed any act which would constitute unfair labor practice. IN VIEW OF THE FOREGOING. to submit himself to the company physician to determine whether he was fit to return to work in accordance with existing policies.166. awarded separation pay in lieu of reinstatement. The assailed Decision dated 30 May 2007 of the Court of Appeals in CA-G. SP No. the petitioner never carried the burden of proving the legality of a dismissal. written in Filipino. and in awarding the respondent separation pay and backwages. 2005. Other letters were sent to the respondent by registered mail. The petitioner alleged that the respondent absented himself from work on August 7. 2002. 6 During the conciliation proceedings on October 9. He was thus driven to file a complaint against the petitioner. The petitioner required him.

2) in declaring that respondent was illegally dismissed by the petitioner." citing jurisprudence that the doctrine should be strictly applied in order not to deprive an illegally dismissed employee of his right to reinstatement. since they are supported by substantial evidence.22 We agree with the CA that the petitioner failed to prove the charge of abandonment. if every offer to buy peace could be used as evidence against a person who presents it." This was the provision we cited in Nissan Motors Philippines. The employer bears the burden of showing a deliberate and unjustified refusal by the employee to resume his employment without any intention of returning. The refusal is indicative of the petitioner’s ill motive towards him. disagreed with the NLRC’s application of the doctrine of "strained relations. never bothered to reply in writing. a person is entitled to "buy his or her peace" without danger of being prejudiced in case his or her efforts fail. manifested through overt acts.23 In this case.24 In addition. using the lack of written explanation as a clever ruse to terminate Balogo’s employment. Petitioner moved for reconsideration of the decision. the petitioner claims that there was no illegal dismissal since the respondent abandoned his job. however.The CA also disregarded the petitioner’s charge of abandonment against the respondent. that his or her claim is groundless or even doubtful. or on the part of a plaintiff. we shall first resolve the propriety of the CA’s consideration of the proceedings that transpired during the mandatory preliminary conference of the case. however. the respondent. and 3) in ordering that respondent be reinstated to his former position with backwages. the jurisprudential rule is that abandonment is a matter of intention that cannot be lightly presumed from equivocal acts. Both tribunals found that after the respondent presented his medical certificate to the petitioner to explain his absence. he even went back to his doctor for a certification that he was already fit to return to work. but was amply supported by other evidence on record. The correct reason for the CA’s error in considering the actions and agreements during the conciliation proceedings before the labor arbiter is Article 233 of the Labor Code which states that "[i]nformation and statements made at conciliation proceedings shall be treated as privileged communication and shall not be used as evidence in the Commission. Conciliators and similar officials shall not testify in any court or body regarding any matters taken up at conciliation proceedings conducted by them. The petitioner points out that it wrote the respondent various memoranda requiring him to explain why he incurred absences without leave. the CA’s conclusion on illegal dismissal. our ruling regarding the statement made during conciliation has no effect at all on our final conclusion. since the law favors the settlement of controversies out of court. Secretary of Labor15 when we pointedly disallowed the award made by the public respondent Secretary. The CA also held that to deny the respondent the benefits due from his long service with the company would be very harsh since his long service would not be amply compensated by giving him only separation pay. since it is made with a view to avoid controversy and save the expense of litigation. THE COURT’S RULING We do not find the petition meritorious.21 To constitute abandonment. These findings of fact we duly accept as findings that we must not only respect. but the CA denied the motion for lack of merit in the Resolution dated August 15. Second. The respondent presented a medical certificate from his doctor attesting to the fact that he was sick with flu associated with diarrhea or loose bowel movement which prevented him from reporting for work for 10 days. Before going into the substantive merits of the controversy. We quote with approval the following discussion in the CA’s decision: In his case. The CA also ruled that the respondent’s filing of a complaint for illegal dismissal with a prayer for reinstatement manifested his desire to return to his job.18 A true offer of compromise does not.17 Second. The appellate court ruled that the petitioner failed to prove a clear and deliberate intent on the respondent’s part to discontinue working with no intention of returning. 16 Indeed. In the present case.14 We agree with the petitioner. the petitioner imputes grave abuse of discretion against the CA: 1) in basing its decision on the proceedings that transpired when the parties were negotiating for a compromise agreement during the preliminary conference of the case. the award was based on the information NCMB Administrator Olalia secured from the confidential position given him by the company during conciliation. The CA took note of the respondent’s eagerness to return to work when he obtained a note from his doctor about his fitness to return to work. since no prudent person would dare offer or entertain a compromise if his or her compromise position could be exploited as a confession of weakness. First. the respondent’s filing of the amended complaint for illegal dismissal on January 20. however. The CA. to sever the employer-employee relationship. hence. and in contemplation of mutual concessions. hypothetically. v. and (2) a clear intent. which we discuss below. hence. involve an admission on the part of a defendant that he or she is legally liable. thus negating the petitioner’s charge of abandonment. First. was not grounded solely on the parties’ statements during conciliation. many settlements would be prevented and unnecessary litigation would result. we see no reason to depart from the unanimous factual findings of the NLRC and the CA that the respondent’s actions after his absence from work for ten (10) days due to illness showed his willingness to return to work. and requiring him as well to report for work. Rule 130 of the Rules of Court. there was no clear intention on the respondent’s part to sever the employeremployee relationship. two elements must concur: (1) the failure to report for work or absence without valid or justifiable reason. The reasons behind the exclusion are two-fold. but consider as final. Balogo should be judged as having fully complied with the petitioner’s directive by his presenting of the medical certificate to justify or explain his absences because the medical certificate already constituted the required "written explanation. Inc. offers for compromise are irrelevant because they are not intended as admissions by the parties making them. Considering that "intention" is a mental state. any communication made toward that end will be regarded as privileged. the respondent had a valid reason for absenting himself from work. We thus concur with the CA’s view that the respondent submitted a valid reason for his absence and thereby substantially complied with the petitioner’s requirement of a written explanation. for it is . Respondent did not abandon his job The rule is that the burden of proof lies with the employer to show that the dismissal was for a just cause. Based on these other pieces of evidence. 2003 strongly speaks against the petitioner’s charge of abandonment. the respondent was illegally dismissed. 2006. we find that the CA did indeed consider the statements the parties made during conciliation. Statements and/or agreements made at conciliation proceedings are privileged and cannot be used as evidence The petitioner contends that the CA cannot use the parties’ actions and/or agreements during the negotiation for a compromise agreement as basis for the conclusion that the respondent was illegally dismissed because an offer of compromise is not admissible in evidence under Section 27. thus. but for a different reason.20 In the present case. Why the petitioner persistently refused to accept Balogo back despite his presentation of the medical certificate and the doctor’s note about his fitness to work was not credibly explained by the petitioner. The petitioner never effectively refuted the respondent’s reason for his absence.13 In this present petition.19 While we agree with the petitioner that the CA should not have considered the agreements and/or statements made by the parties during the conciliation proceedings. the petitioner must show that the respondent’s overt acts point unerringly to his intent not to work anymore. In evaluating a charge of abandonment. It is the distinguishing mark of an offer of compromise that it is made tentatively. in legal contemplation." Another written explanation from him would be superfluous and even redundant if the facts already appearing in the medical certificate would inevitably be stated again in that other written explanation. the CA erred by considering excluded materials in arriving at its conclusion.

R. Inc. For all these reasons. inclusive of allowances and other benefits or their monetary equivalent. SO ORDERED. computed from the time his compensation was withheld from him up to the time of his actual reinstatement. DUBRICO. 2006 in CA-G. The drug tests. were administered on about 122 employees by the Martell Medical Trade and Lab Services (Martell). As the NLRC correctly held. Under the given facts. VILLAFLOR. vs. Respondent is entitled to reinstatement not separation pay As the CA correctly ruled. conducted surprise random drug tests on its employees. barred him from resuming his work under the pretext that he had violated a company directive.: Via petition for review on certiorari.28 The respondent’s illegal dismissal carries the legal consequence defined under Article 279 of the Labor Code: the illegally dismissed employee is entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages. a drug testing laboratory. otherwise. A dismissal need not be expressed orally or in writing. We have consistently ruled that the doctrine of strained relations cannot be used recklessly or applied loosely to deprive an illegally dismissed employee of his means of livelihood and deny him reinstatement. this issue – factual in nature – was not the subject of evidence on the part of both the petitioner and the respondent. The circumstances in this case do not warrant an exception to the rule that reinstatement is the consequence of an illegal dismissal. 9165 (Comprehensive Dangerous Drugs Act of 2002). the degree of hostility attendant to a litigation is not. First. V-000366-2005 in favor of herein respondents. Respondent was constructively dismissed The above conclusion necessarily leads us to sustain the NLRC’s finding. in compliance with Republic Act No. Prior to his dismissal. Respondents are former employees of Plantation Bay located in Cebu. a Department of Health-accredited laboratory. premises considered. no basis in reason exists for the petitioner’s theory that the respondent abandoned his job. benefit and privileges – there may be constructive dismissal if an act of clear discrimination. Separation pay may take into account the respondent’s past years of service. does not merit the severance of the employee-employer relationship between the parties. We significantly note that payment of separation pay in lieu of respondent’s reinstatement will work injustice to the latter when considered with his long and devoted years in the petitioner’s service. 20064 Resolutions of the National Labor Relations Commission (NLRC) in Case No. by itself. after 23 years of service. 2009 PLANTATION BAY RESORT and SPA and EFREN BELARMINO. except only to the extent recognized by the law itself as expressed in jurisprudence. if any. speaks against any intent to sever the employer-employee relationship. we find it difficult to accept the petitioner’s allegation that the respondent absented himself for unjustifiable reasons with the intent to abandon his job. Again.25 The prayer for reinstatement. constitute constructive dismissal. When the employer continuously refuses to accept the employee back despite his having a valid reason for his absence from work. Inc. DECISION CARPIO MORALES. labor disputes almost always result in "strained relations.1avvphi1 The petitioner’s actions. or disdain by an employer becomes so unbearable on the part of the employee that it could foreclose any choice by him except to forego his continued employment. hence. The existence of strained relations between the parties was not clearly established. however. 31 In the present case. abandonment after the respondent’s long years of service and the consequent surrender of benefits earned from years of hard work are highly unlikely. There thus exists no competent evidence on which to base the conclusion that the relationship between the petitioner and the respondent has reached the point where their relationship is now best severed. of which Belarmino is the Manager.30 Indeed. thereafter. NGUJO and JULIUS D. 20063 and June 23. A dismissal effected through the fig leaf of an alleged violation of a company directive is no less than an actual illegal dismissal that jurisprudence has labeled as a constructive dismissal. he was issued a memorandum7 requiring him to appear in a mandatory . file a complaint for illegal dismissal. 2008 Resolution2dismissing their petition and affirming the March 24. Second. G. Petitioners. and. 29 The imposition of this legal consequence is a matter of law that allows no discretion on the part of the decision maker. the implementation of the doctrine of strained relationship must be supplemented by the rule that the existence of a strained relationship is for the employer to clearly establish and prove in the manner it is called upon to prove the existence of a just cause. We significantly note that by reporting for work repeatedly. the filing of the complaint for illegal dismissal is proof enough of the desire to return to work. we hereby DENY the petition. We take note. 89587. we find no evidentiary support for the conclusion that strained relations existed between the parties. illegal dismissal results because the employee is thus prevented from returning to work under the façade of a violation of a company directive. but will deprive the respondent of compensation for the future productive years that his security of tenure protects. consequently. Respondent Romel Dubrico (Dubrico) failed to take the drug test conducted on September 14. Since the application of this doctrine will result in the deprivation of employment despite the absence of just cause. Hyatt Taxi Services. occasioned by the respondent’s filing of an illegal dismissal case. said to have been carried out with the assistance of the Philippine National Police-Scene of Crime Operations (SOCO). 182216 December 4. under these circumstances. any separation pay paid at this point cannot equal the retirement pay due the respondent upon retirement. Drug). Respondents. ROMEL S. shall in a few years retire. The petitioner. SP No. the respondent’s service record was unblemished having had no record of infraction of company rules. (Phil.R. Consequently. GODFREY D.26 We additionally take note of the undisputed fact that the respondent had been in the petitioner’s employ for 23 years. for it can also be implied. that the respondent was dismissed without just cause. AFFIRM the Decision of the Court of Appeals dated June 28. sufficient proof of the existence of strained relations that would rule out the possibility of reinstatement. petitioners Plantation Bay Resort and Spa (Plantation Bay) and Efren Belarmino (Belarmino) challenge the Court of Appeals August 30. To our mind. we uphold the CA ruling that the respondent should be reinstated to his former position or to a substantially equivalent position without loss of seniority rights. The records disclose that respondent has been in the petitioner’s employ for 23 years and has no previous record of inefficiency or infraction of company rules prior to his illegal dismissal from service. J. compensation. the petitioner did not raise the defense of strained relationship with the respondent before the labor arbiter. we quote with approval the CA’s disquisition: That Balogo was dismissed in contravention of the letter and spirit of the Constitution and the Labor Code on the security of tenure guaranteed to him as employee is clear for us. This is a clear manifestation of the petitioner’s lack of respect and consideration for the respondent who had long served the company without blemish. WHEREFORE. On several dates in September 2004. That abandonment is negated finds support in a long line of cases where the immediate filing of a complaint for illegal dismissal was coupled with a prayer for reinstatement. as in this case. 2006 and its Resolution dated August 15. an unjustly dismissed employee can never be reinstated. To be sure. 2007 Decision1 and March 3.illogical for an employee to abandon his employment and. And confirmatory tests were conducted by the Philippine Drug Screening Laboratory. v.6 Plantation Bay. after Plantation Bay issued a series of memoranda and conducted seminars5relative to its drug-free workplace policy." and the phrase cannot be given an overarching interpretation. insensibility. given the result of the petitioner’s action and the attendant insensibility and disdain the employer exhibited." The respondent’s situation is no different from what Hyatt defined. No. 2004.32 We agree with the CA’s specific finding that the conflict. the respondent manifested his willingness to comply with the petitioner’s rules and regulations and his desire to continue working for the latter. that the respondent. the NLRC erred when it awarded separation pay instead of reinstatement. as affirmed by the CA. Catinoy27describes this type of company action when it ruled that "[c]onstructive dismissal does not always involve forthright dismissal or diminution in rank. but who had to absent himself because of illness. too.

farce or sham. by Decision of October 26." in compliance with Republic Act No. Ngujo and Villaflor and three others thereupon filed on November 18. Indeed. Issued on 09/29/04 at p. Dubrico was later tested and found positive for use of methamphetamine hydrochloride (shabu). they having been issued memoranda as to the mandatory investigation and given the chance to. and that he was at the appointed time and place for the pre-test meeting but that the duty manager was not around. reversed its October 26. hence. as they did refute the results of the drug tests by submitting results of recent drug tests. they maintain that in terminating the services of respondents. they should not be made liable therefor. 9165.171avvphil1 Records show the following timeline. the NLRC abandoned its earlier statement that it was the SOCO which conducted the drug tests. Plantation Bay validly terminated their employment. 2004. and that they were afforded due process. how can the presence of shabu be confirmed when the results of the initial screening were not yet out? Plantation Bay’s arguments that it should not be made liable thereof and that the doubt arising from the time of the conduct of the drug and confirmatory tests was the result of the big volume of printouts being handled by Martell do not thus lie. (Emphasis and underscoring supplied)1avvphi1 On the issue of due process. and the assailed Decision is AFFIRMED in toto. 2005. 2004. the employees submitted their explanations on the result of the tests. questioning the conduct of the drug tests without the presence of the DOLE Regional Director or his representative.12 The Labor Arbiter discredited the drug test results presented by the employees as the tests were taken more than 72 hours after the conduct of the random drug tests. the present petition. disposing as follows: WHEREFORE. the Appeal is DISMISSED. In compliance with separate memoranda9 issued by the management of Plantation Bay. and if the results turned out to be questionable or erroneous. 2006. also applicable in labor cases.m. On appeal. the results thereof being the bases in terminating the employees’ services. however. we now rule that respondents were not really into drugs. we have ruled that where there is no showing of a clear. The NLRC did not err in considering the issue of the veracity of the confirmatory tests even if the same was raised only in respondents’ Motion for Reconsideration of its Decision. the NLRC. the supposed confirmatory tests conducted on them were not based on their urine samples that were the subject of the drug tests.conference on September 20. It ratiocinated: Considering the indubitable documentary evidence on record notably submitted by respondents [petitioners herein] themselves. 2005. it. Respondents Dubrico. inter alia. At any rate.13 Its motion for reconsideration having been denied by Resolution of June 23. The Constitution no less directs the State to afford full protection to labor. 14 there are exceptions thereto among which are for reasons of public policy or interest. Technical rules of procedure are not strictly adhered to in labor cases. he left and failed to be tested. The importance of the confirmatory test is underscored in Plantation Bay’s own "Policy and Procedures. Godfrey Ngujo Urine sample received on 09/29/04 at 5:24 p. thereby casting doubts on the veracity of the confirmatory results.m.m. To achieve this goal.20 (Emphasis supplied) . hence. we agree with complainants that either or both drug tests and confirmatory tests conducted on them were fabricated. Plantation Bay dismissed them including herein respondents. they were guilty of serious misconduct. they relied on the results of the random drug tests undertaken by an accredited and licensed drug testing facility. Drug: Name Drug Test Confirmatory Test Romel Dubrico Urine sample received on 09/29/04 at 5:14 p. It added that respondents were not given the opportunity to examine the evidence and confront the witnesses against them through their counsel. The burden is on the employer to prove that the termination of employment was for a valid and legal cause. Issued on 09/29/04 at p. While it is a well-settled rule. this time declaring that it was Martell which actually administered them. the confirmatory test results were released earlier than those of the drug test. petitioners reiterating the same issues raised in the appellate court. the NLRC held that the results of the confirmatory drug tests cannot be given credence since they were conducted prior to the conduct by the employer of the drug tests. Issued on 09/29/04 at p. these could not have been gotten from their urine samples which were yet to undergo drug testing.m. For an employee's dismissal to be valid. (Underscoring supplied) As reflected in the above matrix. it being crucial in determining the validity of respondents’ dismissal from their employment. by giving the opposing party sufficient opportunity to meet and rebut the new or additional evidence15 introduced. the procedure for the random drug testing was not followed such that he was not informed about his selection. 2006 Resolution with modification by deleting the award of damages. affirmed the Decision of the Labor Arbiter. valid and legal cause for termination of employment. 2005 Decision and declared that respondents were illegally dismissed. 2004 their respective complaints10 for illegal dismissal. based on the reports on respondents’ respective drug tests18 administered by Martell and confirmatory tests19 undertaken by the Phil. Julius Villaflor Urine sample received on 09/29/04 at 5:32 p. the drug testing should always come ahead of the confirmatory testing. Before the scheduled conference or on September 19. For how could one "confirm" some thing which was yet to be established or discovered? Needless to say. hence. the veracity of the confirmatory tests was raised by respondents only when they filed a belated Motion for Reconsideration of the NLRC Decision. provided due process is observed. (a) the dismissal must be for a valid cause and (b) the employee must be afforded due process. The NLRC accordingly reversed the Decision of the Labor Arbiter. technical rules of procedure shall be liberally construed in favor of the working class in accordance with the demands of substantial justice. Additionally. new or additional evidence may be introduced on appeal before the NLRC. holding that in testing positive for the use of shabu. by Resolution of March 24. he averring that. as was the case here. Or that is the confirmatory tests were correct. the law considers the case a matter of illegal dismissal. 16 On the merits. Dubrico explained in writing8 his failure to undergo the drug test. Twenty other employees were found positive for use of shabu including herein respondents Godfrey Ngujo (Ngujo) and Julius Villaflor (Villaflor). In finding for respondents. hence. that issues not raised below cannot be raised for the first time on appeal. It was Plantation Bay’s responsibility to ensure that the tests would be properly administered. the petition just the same fails. Labor Arbiter Jose G. In the interest of substantial justice. On respondents’ motion for reconsideration. Gutierrez dismissed the employees’ complaints. We thus agree with complainants that if the drug tests against them were true. arguing that. Time and again. By Decision11 of April 18. The appellate court affirmed the NLRC March 24. the NLRC gravely abused its discretion when it reversed its findings based on such new issue. not the other way around. Such move is proper. Thus. Hence. requiring that a confirmatory test must be conducted if an employee is found positive for drugs in the Employee’s Prior Screening Test. inter alia. there is not only doubt that on the version of respondents but also their conduct is highly suspicious based on their own evidence. 2006.m. The petition is bereft of merit. SO ORDERED.m. and that both tests must arrive at the same positive result. which explanations were found unsatisfactory. Plantation Bay appealed to the Court of Appeals.

NOT GUILTY of illegally dismissing complainant from the service. Ramirez. Petitioner. February 27. while he was assigned at the Babag station. as he allegedly intended to return to Mindanao. through the Cashier of this Arbitration Branch.5 Further. Valcueba. 2006. As to the appellate court’s deletion of the award of damages.: This is a Petition for Review under Rule 45 of the Rules of Court assailing the (a) 13 July 2007 Resolution1 of the Court of Appeals which dismissed the Petition for Certiorari under Rule 65 filed by petitioner Hilario Ramirez for failure to properly verify his petition and to state material dates and (b) the 7 March 2008 Resolution2 of the same court denying petitioner’s Motion for reconsideration. nor did he file an application for a leave of absence when he failed to report for work that day. Lapu-lapu City. the same is in order. WHEREFORE. within ten (10) days from receipt hereof.538. temporarily assigned at Babag Station.4 Aggrieved. No documentary evidence purporting to clearly indicate that complainant was discharged was submitted for Our judicious consideration.287. as the records are bereft of any evidence that respondent sent complainant a letter which advised the latter to report for work.98 Philippine currency. No. there being no dismissal nor abandonment involved in this case. As rescue or emergency mechanic temporarily assigned at Babag Station.00 a day in 2003 and to P190. On 26 February 2006. There were three categories of mechanics at the workplace. and service incentive leaves with claims for moral and exemplary damages and attorney’s fees. G. We do not rule out a case of abandonment because the overt act of not answering an emergency call is not insufficient to constitute abandonment. is hereby ordered to pay complainant MARIO S. DECISION CHICO-NAZARIO. complainant would be guilty of abandonment and respondent of illegal dismissal. Josephine Torres. NLRC. he filed this case. Complainant must go back to work within ten (10) days from receipt of this judgment. where she pointed out that: The allegation of complainant that his refusal to work on pakiao basis prompted respondent Hilario Ramirez to dismiss him from the service is not substantiated by any piece of evidence. After hearing. Ramirez insisted that Valcueba was never terminated from his employment. He was not paid for holidays and rest days. RAMIREZ. which was increased to P165. First were the mechanics assigned to specific stations. complainant is ordered to report back for work within ten (10) days from receipt hereof. whichever comes first. Cebu City and MARIO S. 27 February 2006. the Commission found that the same does not comply with Section 6. vs. against Hilario Ramirez (Ramirez). Valcueba advanced no reason regarding his failure to answer an emergency call of duty.P30.00 b. 13th Month Pay - 15. He was not also paid the complete amount of his 13th month pay. Valcueba did not report to the Calawisan station. HON. Proof of compliance hereof. On the contrary. On 26 February 2006. Cebu City. which required him to fix Ramirez’s troubled taxi unit. informed Valcueba that he would not be allowed to return to work unless he agreed to work on pakyaw basis. VIEWED FROM THE FOREGOING.6 In the end. the petition is DENIED.00 in 2005. 4th Division. OWNER OF H. it appearing that there is no dismissal to speak of in this case. respondents are deemed to have been illegally dismissed. Lapu-lapu City when Ramirez ordered him to answer an emergency call. the NLRC issued a Resolution9 dated 29 September 2006. there being no clear showing that the termination of respondents’ services was actuated by bad faith. those who were classified as rescue/emergency mechanics. Consequently. Ramirez directed him to proceed to Calawisan. On the side of respondent Ramirez. SO ORDERED. also within ten (10) days from receipt of this decision.R.R. In fact. The mechanic assigned in the area was then absent at that time. judgment is hereby rendered declaring respondent HILARIO RAMIREZ. he alleged that it was complainant who abandoned his job. On 27 February 2006. which reads: Upon a careful perusal of the motion to reduce bond. on February 26. respondent HILARIO RAMIREZ. the Labor Arbiter decreed: WHEREFORE.R. TAXI. Complainant advanced no reason as to why he failed to answer an emergency call of duty nor did he file an application for a leave of absence when he failed to report for work that day. Second were the mechanics paid on pakyaw basis.In fine. Consequently. the Labor Arbiter rendered her decision. and respondent Hilario Ramirez must complainant (sic) back to work as soon as the latter would express his intention to report for work or within the same period of ten (10) days from receipt hereof. and eventually as mechanic. xxxx Respondent has not offered a meritorious ground for the reduction of the appeal bond and the amount ofP10. Rule VI of the NLRC Rules of Procedure. on the other hand.000. Nonetheless. owner of H. On the contrary. complainant did not report at Calawisan. Lapu-Lapu City when respondent Ramirez ordered him to answer an emergency call. Valcueba claimed that Ramirez hired him as mechanic on 28 May 1999. holiday pay. premium pay for holidays and rest days. must be submitted within the same period (sic). Other claims are DISMISSED for failure to substantiate. A fortiori.Respondents. he did not report for work anymore. Taxi. there is reason for Us to doubt complainant’s submission that he was dismissed from his employment grounded on disobedience to the lawful order of respondent. while respondent must accept complainant back to work. As emergency/rescue mechanic. 182626 December 4. presented a different version of the antecedents. then as helper of the mechanic.00. By 2002. HON. he was paid a daily wage of P140. as a unit had developed engine trouble and the mechanic assigned in that area was absent. The refusal of complainant to obey the lawful order of respondent Ramirez is bolstered by his failure to report for work the following day. Resolving the motion. asserting that Valcueba was first hired as construction worker. 2009 HILARIO S. He filed a Motion for Reconsideration and/or Memorandum of Appeal with Urgent Motion to Reduce Appeal Bond8 on the 9th day of the reglementary period or on 14 June 2006 before the National Labor Relations Commission (NLRC). J. The facts are: Respondent Mario Valcueba (Valcueba) filed a Complaint3 for illegal dismissal and nonpayment of wage differential. In addition. he insisted that complainant was never terminated from his employment. VALCUEBA the following: a. as petitioners failed to indubitably prove that respondents were guilty of drug use in contravention of its drug-free workplace policy amounting to serious misconduct. 13th month pay differential. it is best that the parties to this case should be restored to their previous employment relations. Valcueba belonged to the last category. The refusal of Valcueba to obey the lawful order of Ramirez was bolstered by his failure to report for work the following day. Wage Differential .98 Total Award - P45. Not even a declaration under oath by any affiant attesting to the credibility of complainant’s allegation is presented. as rescue or emergency mechanic. did not report at Calawisan. secretary of Ramirez. The mechanic assigned in the area was then absent at that time. and finally. VALCUEBA. 2006.7 Records show that Ramirez received the Labor Arbiter’s decision on 5 June 2006. which required him to fix the respondent’s troubled taxi unit.825. it was the latter who abandoned his job. he was assigned to various stations to perform emergency/rescue work. however.00 he posted is not a reasonable amount in relation to the monetary . COURT OF APPEALS.

The intention of the lawmakers to make the bond a mandatory requisite for the perfection of an appeal by the employer is clearly expressed in the provision that an appeal by the employer may be perfected "only upon the posting of a cash or surety bond. 2) verified by the appellant himself in accordance with Section 4. Rule 7 of the Rules of Court.17 Article 223 of the Labor Code provides for the procedure in case of appeal to the NLRC: Art. his motion to reduce appeal bond shall not be entertained and his appeal is dismissed for non-perfection due to lack of an appeal bond. If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter. If made purely on questions of law. as amended. as it was not equivalent to the monetary award of the Labor Arbiter. which the NLRC resolved in a Resolution dated 20 December 2006 in this wise: The mere filing of a motion to reduce bond without complying with the requisites of meritorious grounds and posting of a bond in a reasonable amount in relation to the monetary award does not stop the running of the period to perfect an appeal.11 The decision of the Labor Arbiter became final and executory on 19 February 2007 and was entered in the Book of Entries of Judgment on 4 May 2007."15 The issues are: I PUBLIC RESPONDENT COURT OF APPEALS ERRED IN NOT CONSIDERING THE SUBSTANTIAL COMPLIANCE OF THE FILED PETITION. Failing to do so.10 Ramirez filed a Motion for Reconsideration. In case of a judgment involving a monetary award. iii) a certificate of non-forum shopping. Ramirez’s Motion for Reconsideration was denied by the Court of Appeals in a resolution dated 7 March 2008. The mere filing of a motion to reduce bond without complying with the requisites in the preceding paragraphs shall not stop the running of the period to perfect an appeal. awards. Moreover. and only upon the posting of a bond in a reasonable amount in relation to the monetary award.16 The case presents no novel issue. it should be stressed that the right to appeal is not a natural right or a part of due process. At the outset.R. 3) in the form of a memorandum of appeal which shall state the grounds relied upon and the arguments in support thereof. the same was insufficient. 02614. or orders. We first resolve the propriety of dismissal by the NLRC.Decisions. If serious errors in the finding of facts are raised which would cause grave or irreparable damage or injury to the appellant. since the assailed Decision of the Labor Arbiter contains a monetary award in favor of complainant. respondent’s failure to abide with the requisites so mentioned has not perfected his appeal.98. The meaning and the intention of the legislature in enacting a statute must be determined from the language employed. the relief prayed for. . and d. The party who seeks to avail himself of the same must comply with the requirements of the rules. b. Consequently. for in three (3) legibly type written or printed copies. reaffirms the explicit jurisdictional principle in Article 223 even as it allows in justifiable cases the reduction of the appeal bond. they will receive the money judgment in their favor upon the dismissal of the employer's appeal. and where there is no ambiguity in the words used. Thus. xxxx No motion to reduce bond shall be entertained except on meritorious grounds. 18 The posting of a bond is indispensable to the perfection of an appeal in cases involving monetary awards from the decision of the labor arbiter. the filing of the bond is not only mandatory but also a jurisdictional requirement that must be complied with in order to confer jurisdiction upon the NLRC. The case was docketed as CA-G. . including graft and corruption. This requirement is intended to assure the workers that if they prevail in the case. II THE DISMISSAL RESOLUTION (ANNEX "A") HAS NOT RESOLVED THE LEGAL ISSUES RAISED IN CA-G. an appeal by the employer may be perfected only upon the posting of a bond. appeals involving monetary awards are perfected only upon compliance with the following mandatory requisites.825. and may be exercised only in the manner prescribed by and in accordance with the provisions of law. 223. c.14hence. Under the Rules. 21 Colby Construction and Management Corporation v. Verily. xxxx SECTION 6. SP No. The relevant provision states: SECTION 4. In a resolution dated 13 July 2007. premises considered. and (3) payment of the required cash or surety bond. although Ramirez posted an appeal bond. resolution or order. an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from. WHEREFORE. The NLRC then held: WHEREFORE. it is merely a statutory privilege. SP NO. ii) posting of a cash or surety bond as provided in Section 6 of this Rule. he merely said that the bond was excessive and baseless without amplifying why he considered it as such. and 5) accompanied by i) proof payment of the required appeal fee. Such appeal may be entertained only on any of the following grounds: a. exclusive of damages and attorney's fees. National Labor Relations Commission22 succinctly elucidates that an employer who files a motion to reduce the appeal bond is still required to post the full amount of cash or surety bond within the tenday reglementary period. . this petition where Ramirez prays that the "dismissal resolution issued by the Court of Appeals be set aside and in its stead to give due course to this petition by dismissing the unwarranted claims imposed by the NLRC for being highly speculative." The word "only" in Articles 223 of the Labor Code makes it unmistakably plain that the lawmakers intended the posting of a cash or surety bond by the employer to be the essential and exclusive means by which an employer's appeal may be perfected.R. respondent’s motion to reduce bond which missed to comply with such requisites does not deserve to be entertained nor to be given a preferred resolution. then there is no room for construction. he loses the right to appeal. namely: (1) payment of the appeal fees. (2) filing of the memorandum of appeal. and iv) proof of service upon the other parties. The word "may" refers to the perfection of an appeal as optional on the part of the defeated party. with no evidence to support of (sic). when Ramirez sought a reduction of the bond. (Emphasis supplied. the appeal of respondent is hereby DISMISSED for non-perfection due to want of an appeal bond. it behooves upon respondent to post the required bond. and with a statement of the date the appellant received the appealed decision.13 the Court of Appeals dismissed the Petition outright for failure of Ramirez to properly verify his petition and to state material dates. Non-compliance with the requirement renders the decision of the Labor Arbiter final and executory. which shall either be in the form of cash deposit or surety bond equivalent in amount to the monetary award. the same holds true only when such motion complies with the requirements stated above. order or award was secured through fraud or coercion. or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions. If the decision.20 In this case. Bond. Requisites for Perfection of Appeal. Consequently. 02614. — In case the decision of the Labor Arbiter or the Regional Director involves a monetary award.12 Ramirez went up to the Court of Appeals.award of P45. but not to the compulsory posting of an appeal bond. as amended. Appeal. awards. While the filing of a motion to reduce bond can be considered as a motion of preference in case of an appeal. if he desires to appeal. even pending resolution of his motion. It is intended to discourage employers from using an appeal to delay or evade their obligation to satisfy their employees’ just and lawful claims.19 Clearly.) Sections 4(a) and 6 of Rule VI of the New Rules of Procedure of the NLRC. premises considered. the motion for reconsideration of respondent is hereby DENIED for lack of merit.(a) The appeal shall be: 1) filed within the reglementary period provided in Section 1 of this Rule.

On the other hand. the full discretion to grant or deny Ramirez’s motion to reduce the amount of the appeal bond. No. the employer is still expected to post the cash or surety bond securing the full amount within the said 10-day period. namely. it is true that verification is merely a formal requirement intended to secure an assurance that matters that are alleged are true and correct.26 (Emphases supplied. Failure of petitioner to properly verify the petition in accordance with A. the court may simply order the correction of unverified pleadings or act on them and waive strict compliance with the rules. Guanzon. as a consequence of which the petition is treated as an unsigned pleading. For the same reasons above. There is a concession to the employer. Rule 7 in relation to Section 1. . Rule 46 of the Rules of Court. but lies within the sound discretion of the NLRC upon a showing of meritorious grounds. 00-2-10SC amending Section 4. which prescribes the appeal bond requirement. Nothing in the Labor Code or the NLRC Rules of Procedure authorizes the posting of a bond that is less than the monetary award in the judgment. for the same failed to elucidate why the amount of the bond was either unjustified or prohibitive. the filing of the motion to reduce bond shall not stop the running of the period to perfect an appeal. in excluding damages and attorney's fees from the computation of the appeal bond. The NLRC had. The qualification effectively requires that unless the NLRC grants the reduction of the cash bond within the ten (10)-day reglementary period. produces no legal effect. For the same reason. The Court of Appeals found that he committed the following fatal defects in his petition: 1. the correct relief would be to reduce the cash or surety bond already posted by the employer within the ten (10)-day period.Very recently. Rule VI of the NLRC’s New Rules of Procedure allows the Commission to reduce the amount of the bond. petitioner has not presented any persuasive reason for this Court to be liberal. there is that proviso in Rule VI. We have consistently enucleated that a mere claim of excessive bond without more does not suffice. Thus. as it had no basis upon which it could actually and completely determine Ramirez’s motion to reduce bond. therefore. we sustain the dismissal of its petition by the Court of Appeals on technical grounds. Court of Appeals. and the Court should give utmost regard to this intention. Again as in the NLRC. we next resolve the issue of whether or not the Court of Appeals correctly dismissed the petition of Ramirez. 31 However. All given. in Mcburnie v. The qualification effectively requires that unless the NLRC grants the reduction of the cash bond within the 10-day reglementary period. 25 it was held that "a substantial monetary award. but none obtains in this case. unless considerations of equity and substantial justice present cogent reasons to hold otherwise. the respondents therein filed their memorandum of appeal and motion to reduce bond on the 10th or last day of the reglementary period. The application of the Rules may be relaxed only when rigidity would result in a defeat of equity and substantial justice. In Calabash Garments. Given that Ramirez is involved in taxi business. particularly Rule 65 of the Rules of Court. even if it runs into millions. this Court invariably sustains the Court of Appeals’ dismissal of the petition on technical grounds under this provision. even pro hac vice.29 That settled. is a rule of jurisdiction and not of procedure. in Ong v. – x x x. Petitioner failed to indicate in the petition the material dates showing when notice of the resolution subject hereof was received and when the motion for reconsideration was filed in violation of Section 3. the employer is still expected to post the cash or surety bond securing the full amount within the said ten (10)-day period. We emphasized in that case that it behooves the Court to give utmost regard to the legislative and administrative intent to strictly require the employer to post a cash or surety bond securing the full amount of the monetary award within the 10-day reglementary period. and certainly none premised on the ground that its requirements are mere technicalities. which under Section 3. the Labor Code. In Moncielcoji Corporation v.M. National Labor Relations Commission. There is little leeway for condoning a liberal interpretation thereof. If the NLRC does eventually grant the motion for reduction after the reglementary period has elapsed. National Labor Relations Commission. and without proof that he is incapable of raising the amount of the bond. Thus. does not necessarily give the employer-appellant a `meritorious case’ and does not automatically warrant a reduction of the appeal bond. the exercise of the authority is not a matter of right on the part of the movant. But. or would deem such insufficient postage as sufficient to perfect the appeal. The clear intent of both statutory and procedural law is to require the employer to post a cash or surety bond securing the full amount of the monetary award within the ten (10)-day reglementary period. We have always stressed that Article 223. Article 223 indubitably requires that the appeal be perfected only upon the posting of the cash or surety bond which is equivalent to the monetary award in the judgment appealed from.27 While Section 6. this is subject to the conditions that (1) the motion to reduce the bond shall be based on meritorious grounds. Thus. Inc. the same was inadequate compared to the monetary award.23 By stating that the bond is excessive and baseless without more. Nothing in the Labor Code or the NLRC Rules of Procedure authorizes the posting of a bond that is less than the monetary award in the judgment. as it arises solely from grant of statute. Ramirez did not even come near to substantially complying with the requirements of Art. While the bond may be reduced upon motion by the employer. which states: SECTION 1. The Court found no basis for therein respondent’s contention that the awards of the Labor Arbiter were null and excessive. Although they posted an initial appeal bond. Rule 7 of the Rules of Court. such that strict adherence thereto is required. we allow a relaxation in the application of the rules to set right an arrant injustice. or deems such insufficient posting as sufficient to perfect the appeal.28 It is daylight-clear from the foregoing that while the bond may be reduced upon motion by the employer. we have repeatedly emphasized that the requirement for posting the surety bond is not merely procedural but jurisdictional and cannot be trifled with." It is clear from both the Labor Code and the NLRC Rules of Procedure that there is legislative and administrative intent to strictly apply the appeal bond requirement. The liberal interpretation and application of rules apply only to proper cases of demonstrable merit and under justifiable causes and circumstances. 30 On Ramirez’s failure to verify his petition. otherwise. 223 of the Labor Code and NLRC Rule of Procedure. Ramirez has not shown any justifiable ground to set aside technical rules for his failure to comply with the requirement regarding the verification of his petition. Rule 65 of the Rules of Court which now requires that a pleading must be verified by an affidavit that the affiant has read the pleading and the allegations therein are true and correct of his personal knowledge or based on authentic records. the NLRC justifiably denied the motion to reduce bond. he has not shown that he had difficulty raising the amount of the bond or was unable to raise the amount specified in the award of the Labor Arbiter. and (2) a reasonable amount in relation to the monetary award is posted by the appellant.24 this Court held that the NLRC did not act with grave abuse of discretion when it denied petitioner’s motion. Section [6] that the filing of such motion does not stay the reglementary period. Ramirez violated basic tenets of remedial law. Petition for certiorari. v.) While in certain instances. Not even the filing of a motion to reduce bond is deemed to stay the period for requiring an appeal. It must be emphasized that there is no inherent right to an appeal in a labor case. we also find no reversible error in the assailed resolution of the Court of Appeals dismissing Ramirez’s petition on the ground of failure to state material dates.32 the Court states the rationale – Rules of procedure are tools designed to promote efficiency and orderliness as well as to facilitate attainment of justice. because in filing a special civil action for certiorari without indicating the requisite material date therein. 2. we never intend to forge a weapon for erring litigants to violate the rules with impunity. The finding of the labor tribunal that Ramirez did not present sufficient justification for the reduction thereof cannot be said to have been done with grave abuse of discretion. Noncompliance with such legal requirements is fatal and has the effect of rendering the judgment final and executory.

Thus. Therefore. Contents and filing of petition. SO ORDERED.xxxx The petition shall be accompanied by a certified true copy of the judgment. and with backwages.84 c. failure to comply with any of the requirements shall be sufficient ground for the dismissal of the petition. In the case before us. Inc. and a sworn certification of non-forum shopping as provided in the third paragraph of Section 3. 1993 JARDINE DAVIES. second. Court of Appeals.100. in denying due course to and dismissing the petition for certiorari for its procedural defects. copies of all pleadings and documents relevant and pertinent thereto. the petition was dismissed for failure to comply with this Court's Circular No. 106915 August 31. It also reinstated Salutin. 36 Wherefore. NATIONAL LABOR RELATIONS COMMISSION. the petition shall further indicate the material dates showing when notice of the judgment or final order or resolution subject thereof was received. – x x x . Inc.) and Rule 46. which is ten percent (10%) of the total awarded amount. No. and SALVADOR SALUTIN.00 b. 34 Quite apparent from the foregoing is that the Court of Appeals did not err. Rule 46. J. The appellate court saw no compelling need meriting the relaxation of the rules. JDI filed its first petition for certiorari with this Court. Ramirez’s failure to verify and state material dates as required under the rules warranted the outright dismissal of his petition. & Hilado Law Office for petitioner. and it posted a supersedeas bond to answer for the monetary awards. 28-91 on forum-shopping.R.R. Hagad. NLRC dismissed JDI's appeal for lack of merit but modified the decision by eliminating the awards given for holiday pay. and attorney's fees.) Attorney's fees. docketed as G. 3. The resolution of 26 February 1992 became final and executory on 19 June 1992. At the time when the above narrated events were still unfolding. and to give advice on. the decretal portion of which reads: WHEREFORE. we find no sufficient justification to set aside the NLRC and Court of Appeals resolutions. on 15 July 1985. Section 1 (2nd par. No. 2 A motion for reconsideration was filed which was denied in NLRC's resolution of 13 January 1992. assailing the 17 October 1991 decision and the resolution of 13 January 1992 of respondent Commission. FOURTH DIVISION. The Court of Appeals was not in any position to determine when this period commenced to run and whether the motion for reconsideration itself was filed on time since the material dates were not stated. respondent Jardine Davies. without loss of seniority and other rights. began when respondent Salutin filed a complaint against petitioner JDI for illegal dismissal. JDI appealed the case to the National Labor Relations Commission (NLRC). 103720. premises considered. thirteenth (13th) month pay. SO ORDERED.) Holiday pay 13. On the other hand. with prayer for reinstatement and backwages or. and an entry of judgment was accordingly made on 20 August 1992. Such a petition is required to be filed not later than sixty (60) days from notice of the judgment. The controversy that spawned two (2) special Civil actions for certiorari (this instance included) with this Court. To merit liberality. The rationale for this strict provision of the Rules of Court is not difficult to appreciate. service incentive leave pay. concomitant to a liberal application of the rules of procedure should be an effort on the part of the party invoking liberality to at least explain its failure to comply with the rules. Esuerte for private respondent. Costs against petitioner. the decision of the Labor Arbiter is already final and executory and binding upon this Court. dated 08 August 1991. Romeo B. In our resolution. dated 26 February 1992. order or Resolution sought to be assailed. and third. 1avvphi1 As explicitly stated in the aforementioned Rule. when a motion for new trial or reconsideration. the pertinent provision under Rule 46 is explicit: Sec. Respondent Salvador Salutin ("Salutin") was employed by petitioner Jardine Davies. much less commit grave abuse of discretion. if any. in the alternative.) 13th month pay P 8. service incentive leave pay. In the instant case. vs.00 e.115. in violation of Rule 65. in amount of FIFTY SIX THOUSAND SEVEN HUNDRED PESOS (P56. ("JDI").: The instant petition for certiorari seeks the reversal of the resolution of respondent National Labor Relations Commission. First.700. the date when a motion for new trial or for reconsideration was filed. paragraph 3.). absent valid and compelling reasons for such procedural lapse. thus: The requirement of setting forth the three (3) dates in a petition for certiorari under Rule 65 is for the purpose of determining its timeliness. In Santos v.) Exemplary Damages 10. some material facts occured beginning with JDI's appeal to the NLRC on the 08 August 1991 decision of the . The Resolutions of the Court of Appeals dated 13 July 2007 and 7 March 2008 and the Resolutions of the NLRC dated 29 September 2006 and 20 December 2006 are AFFIRMED. x x x.33 the court explains that the requirement is for purpose of determining the timeliness of the petition.00 f. "on payroll only". of the Labor Code. that the petition for certiorari was filed forty-one (41) days from receipt of the denial of the motion for reconsideration is hardly relevant. In actions filed under Rule 65.000. Hilado. which declared private respondent Salvador Salutin as not having abandoned his work by his alleged failure to report for work during the pendency of the petitioner's appeal before the respondent Commission. Its subsequent motion for reconsideration was itself denied on 20 May 1992.60 d.. CEBU CITY. VITUG.35 The relaxation of procedural rules cannot be made without any valid reasons proffered for or underpinning it. moral and exemplary damages.000.) Service Incentive pay 1. effect of non-compliance with requirements. Respondent is further ordered to pay complaint the following: a. PREMISES CONSIDERED. dated 22 July 1992. 1 in compliance with the writ of execution issued by the Labor Arbiter pursuant to Article 223. without deduction and qualification. as a demonstrator/agronomist to provide services relating to. However. In a decision. Section 3 (2nd par. The complaint was decided by the Labor Arbiter in favor of respondent Salutin in a decision. petitioner.00). There are three material dates that must be stated in a petition for certiorari brought under Rule 65. the date when notice of the denial thereof was received. was filed and when notice of the denial thereof was received.respondents. moral and exemplary damages. xxxx The failure of the petitioner to comply with any of the foregoing requirements shall be sufficient ground for the dismissal of the petition./Jardine Agchem is hereby ordered to reinstate complaint to his former position.) Moral Damages 20. dated 17 October 1991. separation pay plus wage differential.557. the petition was bereft of any persuasive explanation as to why Ramirez failed to observe procedural rules properly. G. 3 On 14 February 1992. INC. The desired leniency cannot be accorded. holiday pay. In sum. the petition is Denied for lack of merit. the promotion and use of JDI's pesticides and other products. neither do we see any. order or resolution subject thereof. the petition filed with the Court of Appeals failed to indicate when the notice of the NLRC Resolution was received and when the Motion for Reconsideration was filed. the date when notice of the judgment or final order or resolution was received. We are not unmindful of exceptional cases where this Court has set aside procedural defects to correct a patent injustice. Ramirez must show reasonable cause justifying his non-compliance with the rules and must convince the court that the outright dismissal of the petition would defeat the administration of substantive justice. beginning 26 August 1991.

we second the wellconsidered view of NLRC. it may still wade through the records of a case if only to prevent any possible misgiving in its ultimate disposition. JDI." 6 Salutin. Salutin did report. at its request. assailing the 17 October 1991 decision of NLRC. as directed reported on the 24th of September 1991 at around 9:20 a. dated 17 October 1991. 4 Salutin opposed the motion. thus — The order of immediate reinstatement pending appeal. 12 Thus. during the period from 01 September to 31 December 1991. on his part. respondent Commission issued its assailed resolution stating. for "peptic ulcer". on 30 January 1992. When the motion for reconsideration was likewise denied. In this instance. WHEREFORE. in fact. among other things. The final determination of the rights and obligations respectively of the parties is the ultimate and final resolution of this Commission. denying the petition in G.R. manifest his desire to assume his work with the petitioner. the same fate of dismissal is still inevitable. for which he was paid P5. He submitted a medical certificate to support his claim. did seek medical consultation on 7 November 1991. dated 16 June 1992. dated 3 March 1993. as directed. Premises considered. this was the reason given by JDI in its ex parte motion. the petitioner should really now be barred from invoking anew that issue in this present (second) petition. and that any award for reinstatement to his former position. Inc. which this Court dismissed with finality. although perhaps belatedly made. JDI paraphrased the assigned issue in this wise: Is Salutin. dated 21 September 1991. that: As to the issue of whether the complaint-appellee Salvador Salutin is guilty of work abandonment. Petitioner raises this sole assignment of error.. he foregoes such a temporary relief and is not paid of his salary. Shortly after the reinstatement of Salutin "on payroll only". 11 A shift to a new focus took place when. however. that: Salutin be considered as having abandoned his work considering his continuous absence of more than three (3) weeks since he was required to report for work . The questioned resolutions of the National Labor Relations Commission are AFFIRMED. 15 Abandonment of position is a matter of intention expressed in clearly certain and unequivocal acts. in cases of illegal dismissal is an ancillary relief under R. from 01 September to 31 December 1991. claiming that he was forced to leave in haste because he was then suffering from a serious ailment. and on 11 December 1991. inter alia. JDI filed an "urgent motion for the issuance of writ of preliminary injunction and/or restraining order" to prevent the respondent Commission from enforcing its resolution of 22 July 1992 and 25 August 1992 insofar as it ordered the reinstatement of Salutin. more especially in the present case. stressed by the petitioner. . SO ORDERED. 13 Considering that this matter was thus already taken up by the petitioner in its first petition for certiorari.R. During the pendency of this petition. this is a new and factual matter which has to be determined and resolved in appropriate proceedings before the Arbitration Branch. In the subsequent pages of its petition. the respondent's prayer to declare or consider the complainant to have abandoned his job for his alleged failure to report back to work during the pendency of the appeal in this case is hereby denied for lack of merit. certain uncontroverted facts show just exactly the opposite. to set for hearing the aforestated "Manifestation and Motion. until he formally seeks for the enforcement of the decision is likewise denied. SO ORDERED. dated 16 June 1992. he. and the temporary restraining order issued by this Court is hereby LIFTED. to wit: THE RESPONDENT COMMISSION ACTED WITH GRAVE ABUSE OF DISCRETION IN DENYING PETITIONER'S CONTENTION/SUBMISSION THAT PRIVATE RESPONDENT SALUTIN SHOULD BE CONSIDERED AS HAVING ABANDONED HIS WORK WHEN HE FAILED TO REPORT FOR WORK PENDING THE PETITIONER-EMPLOYER'S APPEAL FROM THE ARBITER'S DECISION GRANTING REINSTATEMENT.Labor Arbiter. 8 On 22 July 1992. viz: WHEREFORE. without loss of seniority and other rights. When JDI filed its first petition for certiorari (in G. there must be a deliberate unjustified refusal of the employee to resume his employment. this Court resolved to issue a temporary restraining order. where the charge of abandonment is seriously controverted. JDI instituted on 18 September 1992 the present petition for certiorari. the sole basis of its prayer for a declaration that Salutin abandoned his work was his alleged unauthorized absences from the date he was notified to report for work. the petition is hereby DISMISSED. If the employee chooses not to report for work pending resolution of the case appeal. No. 103720) with this Court on 14 February 1992. . it must be accompanied by overt acts pointing to the fact that the employee simply does not want to work anymore. did not stain the picture at all.m. Respondent Salutin's interim employment. The complainant's motion for release of his salary since 24 September 1991. respondent Commission denied JDI's "Manifestation & Motion" stating. He did not stay long. however. Mere absence is not sufficient. at the Corazon Locsin Montelibano Memorial Regional Hospital. On 17 October 1991. did respondent Commission not gravely abuse its discretion when it did not take into consideration such other employment? Our answer is in the negative. Inc. 5 On 13 January 1992. 14 The petitioner's evidence to establish Salutin's supposed abandonment of work is the certification of employment issued by King's Enterprises at the request of herein petitioner to the effect that Salutin had indeed been employed by Monsato Philippines. 6715 granted to a dismissed employee to cushion him and his family against the impact of economic dislocation or abrupt loss of earnings. became final and executory on 19 June 1992.00 per month.. This refusal must be clearly shown. since after fifteen minutes or so.A. Hence. HENCE HE WAS RECEIVING SALARIES FROM BOTH. he left and was reported not to have thereafter returned for work. also filed a motion praying that JDI be ordered to release his withheld salary. Be that as it may. he did. JDI sent a letter. Although this Court is not a trier of facts. JDI filed a "Manisfestation and Motion" with the respondent Commission stating. The records show that at the time JDI filed its Manifestation and Motion. in the Arbiter's decision subject of this appeal be considered and held as waived or lost. not guilty of abandonment when his failure to report for work was because he was also working for another entity from 01 September 1991 to 31 December 1991? Correlatively. . the fact that he was gainfully employed elsewhere. Salutin. ALTHOUGH AT THAT TIME HE WAS ON REINSTATEMENT ON PAYROLL — THIS NOTWITHSTANDING PETITIONER'S SHOWING THAT SUCH FAILURE TO REPORT WAS BECAUSE RESPONDENT-EMPLOYEE WAS THEN WORKING ALSO WITH ANOTHER COMPANY.146. on 24 September 1991. as an added argument on the alleged abandonment of work by Salutin. 103720. to set for hearing the Manifestation and Motion of 17 October 1991. In its resolution. who was then on payroll reinstatement since 26 August 1991. it also raised. to Salutin directing him to report for work to their Bacolod Branch Manager. as Aggressive Crop Technician. Prescinding from its receipt of an information that Salutin was employed elsewhere. received a lettercertification issued by the Officer-in-Charge of King's Enterprises of Iloilo City that Salutin was employed by Monsato Philippines. NLRC denied the said ex parte motion in the now assailed resolution of 22 July 1992. No. This Court's resolution of 26 February 1992. 7 claiming that he had reported for work when he recovered from his ailment on 11 December 1991. JDI filed an ex parte motion. JDI forthwith stopped further payment of salary to Salutin. but that he could not stay long because he was ailing at that time. Here. Is this enough? What we have heretofore said is this — For abandonment to constitute a valid cause for termination of employment.

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