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complaint for theft against them but this was later withdrawn and substituted with a criminal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:

xxx xxx xxx The above provisions are a result of the amendment by Section 9 of Republic Act ("R. 875 (the "Industrial Peace Act". and that the trial procedure in the Court of First Instance would be a more effective means of determining such damages. now completely superseded by the Labor Code). and as amended by R. 1367 and restored Article 217 of the Labor Code almost to its original form.A.") No. the dispute is intrinsically civil. Thus. jurisprudence was settled that where the plaintiff's cause of action for damages arose out of. No. Even under Republic Act No. 1367 amended said Article 217 to the effect that "Regional Directors shall not indorse and Labor Arbiters shall not entertain claims for moral or other forms of damages. and the instant action for damages cannot take the place of such lost appeal. having been otherwise preoccupied by his unauthorized installment sale scheme. which is prejudicial to the orderly administration of justice. the jurisdiction of regular courts was upheld where the damages. where private respondent brought up as a defense the same allegations now embodied in his complaint. which took effect on March 21. This issue has been duly raised and ruled upon in the illegal dismissal case. where the basis for the claim arises from or is necessarily connected with the fact of termination. 1691 nullified P.D. 1980. moral. 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. There is no mistaking the fact that in the case before us.") No. de Guzman. but in properly perfecting an appeal from the Labor Arbiter's decision. Presidential Decree ("P. private respondent's claim against petitioner for actual damages arose from a prior employer-employee relationship. those equivalent to the value of private respondent's property and supplies which petitioner used in conducting his "business ". malicious prosecution 15. . 10 To allow otherwise would be "to sanction split jurisdiction. 113 SCRA 52. even after the enactment of the Labor Code. In the first place. Article 217(a) of the Labor Code. — (a) Except as otherwise provided under this Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide. 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. Clearly." 8This limitation in jurisdiction. or was necessarily intertwined with. 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. the issue of actual damages has been settled in the labor case. This is.A. whether agricultural or non-agricultural: xxx xxx xxx 4. however. and second. In Ebon vs. 6715. the jurisdiction of Labor Arbiters and the NLRC in Article 217 is comprehensive enough to include claims for all forms of damages "arising from the employer-employee relations" Whereas this Court in a number of occasions had applied the jurisdictional provisions of Article 217 to claims for damages filed by employees. . of course. which is now final and executory. the damages that may be incurred by either labor or management as a result of disputes or controversies arising from employer-employee relations. 1989. jurisdiction over all money claims of workers. 217. clearly bestows upon the Labor Arbiter original and exclusive jurisdiction over claims for damages arising from employeremployee relations — in other words. a court is spared the often onerous task of determining what essentially is a factual matter. and the assumption of jurisdiction of regular courts over the same is a nullity. splitting the cause of action and possible conflicting findings and conclusions by two tribunals on one and the same claim. 1979. and more importantly. 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. . As held by this Court in National Federation of Labor vs. Respondent court clearly having no jurisdiction over private respondent's complaint for damages. and presented evidence in support thereof. Claims for actual. 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. The Labor Arbiter. such complaint for damages is deeply rooted from the labor dispute between the parties. 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. 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. 6715. on May 1. 1980. within thirty (30) calendar days after the submission of the case by the parties for decision without extension. found to the contrary — that no business losses may be attributed to petitioner as in fact. exemplary and other forms of damages arising from the employeremployee relations. even in the absence of stenographic notes. So. private respondent would not have taken issue with petitioner's "doing business of his own" had the latter not been concurrently its employee. but also damages governed by the Civil Code. Thus. claimed for were based on tort 14.A. an alleged unfair labor practice committed by the union. Still on the prospect of re-opening factual issues already resolved by the labor court. No. 18 Thus. those amounting to lost profits and earnings due to petitioner's abandonment or neglect of his duties as sales manager. or breach of contract. 6715. 7 On May 1. 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. Having lost the right to appeal on grounds of untimeliness. It will be recalled that years prior to R. . (Emphasis supplied). 1691 (which substantially reenacted Article 217 in its original form) nullified Presidential Decree No. 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. and that the installment scheme was in fact with the knowledge of the management of the Iligan branch of private respondent. as amended. and back to labor tribunals. was originally lodged with the Labor Arbiters and the NLRC by Article 217 of the Labor Code. where the damages separately claimed by the employer were allegedly incurred as a consequence of strike or picketing of the union. and should be entered as a counterclaim in the illegal dismissal case. 12 In other words. the damages alleged in the complaint below are: first. 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. the following cases involving all workers. we will no longer pass upon petitioner's other assignments of error. Presently. 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. however. the present Labor Code is even more committed to the view that on policy grounds. and equally so in the interest of greater promptness in the disposition of labor matters. 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. as distinguished from backwages and separation pay. however. Evidently. . P. Jurisdiction of Labor Arbiters and the Commission. the jurisdiction is exclusively with the (now defunct) Court of Industrial Relations. Presidential Decree No. and should be dismissed by ordinary courts for lack of jurisdiction.D. Eisma. the Labor Arbiter has jurisdiction to award not only the reliefs provided by labor laws." 11 Thus. namely.D.Art. . 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. . Second. the decision in the labor case stands as a final judgment on the merits. including claims for damages. 127 SCRA 419: Certainly.

Eviota made off with a computer diskette and other papers and documents containing confidential information on employee compensation and other Bank matters. Confident of Eviota’s professed commitment to the Bank.00 g. the Bank received two manager’s checks in the aggregate amount of P868.000.00.00).00 d.272. the Bank had to pay a total of P208. 6. and forced the Bank to hire the services of a third party to perform the job he was hired to do.000. Eviota indicated his conformity with the Bank’s Offer of Employment by signing a written copy of such offer dated January 22. as follows: a.00 e. Chassis No. PEWED7P101101. of the Decision1 of the Court of Appeals in CA-G. Presiding Judge of Branch 136.00 i. the Bank made a written demand on Eviota to return the aforementioned computer diskette and other confidential documents and papers.50. With the benefit of hindsight. No pronouncement as to costs. 4. 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. 1998. On April 29.R..: Before us is a petition for review on certiorari under Rule 45 of the Revised Rules of Court. Eviota instructed the Bank’s HR Administrator to book him a flight for Singapore. Defendant Eduardo Eviota ("Eviota") is a former employee of the Bank. 1 Officer’s Chair 31. 2-Drawer Lateral File Cabinet 13. A copy of the Bank’s demand letter dated March 16. Eviota assumed his position as Compensation and Benefits Manager with the Bank and began to discharge his duties. thus raising the latter’s expectations. Worse. 1998. vs. 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. 1 Hanging Shelf 2.000.232." 12. No. EVIOTA. Eviota suddenly resigned his employment with immediate effect to re-join his previous employer. In partial compliance with said demand. (d) arranged the takeout of Eviota’s loans with Eviota’s former employer. THE HON. 6756 Ayala Avenue. On January 26. A copy of a receipt for the above expenses is hereto attached as Annex "C" (See also. His untruthful remarks have falsely depicted the Bank as a contract violator and an undesirable employer. His resignation. On March 16. SO ORDERED. Petitioner. (b) purchased a 1998 Honda CR-V (Motor No.38. aborted meetings previously scheduled among Bank officers. 1998.00 Cost of Appraisal – Housing Loan 3.995. The Bank made sure that Eviota was fully aware of all the terms and conditions of his possible job with the Bank. the respondent Standard Chartered Bank and petitioner Eduardo G. thus damaging the Bank’s reputation and business standing in the highly competitive banking community. and the complaint in Civil Case No. The Bank informed Eviota that in addition to the Honda CR-V’s purchase price of P848. Branch 136. Eviota energetically presented to senior management his projects for the year. Staff Loan Processing Title Verification 375. 1997. For the services of this third party. the development of a salary/matrix grid and salary structure. 1998.00 An itemized schedule of the above expenses incurred by the Bank is hereto attached as Annex "B. (f) booked Eviota’s participation in a Singapore conference on Y2K project scheduled on March 10 and 11.38. In particular.R. 8. On June 19. the latter made the aforementioned airline booking for him. inclusive of . 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. The same day. Aside from causing no small degree of chaos within the Bank by reason of his sudden resignation. JOSE BAUTISTA. representing costs incurred in connection with the purchase of the Honda CR-V. Among others. DECISION CALLEJO. (e) released Eviota’s signing bonus in the net amount of P300. reimburse the Bank for the various expenses incurred on his account as a result of his resignation (with legal interest). 1 Guest Chair 2. 60141 denying the petition for certiorari filed by the petitioner praying the nullification of the Order of the Regional Trial Court of Makati.53) and Fund Transfer Price (P18. Respondents.815. 1998. and may be served with summons and other court processes at 8 Maple Street. 1998. THE HON.00 for the inconvenience and work/program disruptions suffered by the Bank. J. 2. 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. was so unexpected that it disrupted plans already in the pipeline (e.2 Sometime on January 26. IBM Desktop Computer 89. In addition. and STANDARD CHARTERED BANK. the petitioner abruptly resigned from the respondent bank barely a month after his employment and rejoined his former employer. Annex "B"). At one Human Resources ("HR") Committee meeting held on March 3.200. Antipolo.000. Acting on the Employment Contract and on Eviota’s uninhibited display of interest in assuming his position. and undermining its ability to recruit and retain the best personnel in the labor market. 152121 July 29. Taken up during these negotiations were not only his compensation and benefit package. he has been maliciously purveying the canard that he had hurriedly left the Bank because it had failed to provide him support. Signing Bonus P 300. The respondent bank alleged inter alia in its complaint that: 1. incidental costs in the form of Processing Fees (P1.000. SP No. PADRD 1830WV00108) for Eviota’s use.WHEREFORE. Eviota has resorted to falsehoods derogatory to the reputation of the Bank. the Bank allowed Eviota access to certain sensitive and confidential information and documents concerning the Bank’s operations.636. A copy of the Employment Contract between Eviota and the Bank is hereto attached as Annex "A. and the processing of merit promotion recommendations). with principal offices at the 5th Floor. It is a foreign banking institution authorized to do business in the Philippines.00 b.881.646.. where he was scheduled to participate in a Y2K project on March 10 and 11. (c) purchased a desktop IBM computer for Eviota’s use. On February 25. Makati City. Bankmer Bldg..00 TOTAL P1. FPD/MCAR/98-155684 (P1. bringing the total cost of the Honda CR-V to P868.00 h. SR.807. After leading the Bank to believe that he had come to stay." 5. Eviota executed a contract of employment under which the petitioner was employed by the respondent bank as Compensation and Benefits Manager. On December 22. and (g) introduced Eviota to the local and regional staff and officers of the Bank via personal introductions and electronic mail. 1998. 1 Honda CR-V 800. and pay damages in the amount of at least P500.000.84) were incurred. which did not comply with the 30-day prior notice rule under the law and under the Employment Contract. COURT OF APPEALS. Eviota began negotiating with the Bank on his possible employment with the latter.200. Regional Trial Court of Makati. VP (M21). 10. 1998 (the "Employment Contract"). 9. However.00).000.00 f. 1998. 1998.00 (of which Eviota initially shouldered P48.500. 11. Office Reconfiguration 29. The various expenses incurred by the Bank in carrying out the above acts are itemized below. the Bank promptly proceeded to carry out the terms of the Employment Contract as well as to facilitate his integration into the workforce. 3. 95-554 before Branch 39 of the Regional Trial Court of Misamis Oriental is hereby DISMISSED. the Bank: (a) renovated and refurbished the room which was to serve as Eviota’s office.881.00 c. G. the Petition is GRANTED.g. 2003 EDUARDO G.539. but also the nature and demands of his prospective position.012. Metro Manila. Cottonwoods. 1998 is hereto attached as Annex "D." 7. the respondent bank filed a complaint against the petitioner with the RTC of Makati City.

as amended (the Labor Code).1.000. Unfair labor practice cases. even in the absence of stenographic notes. Less reimbursements received from Eviota. since the primary relief prayed for by the plaintiff is for damages. Jurisdiction of Labor Arbiters and the Commission. the trial court issued an order denying the petitioner’s motion to dismiss. These derogatory statements have injured the Bank’s business standing in the banking community. Hence. On November 15. The respondent bank opposed the motion. Although its claims for damages incidentally involved an employer-employee relationship. in order to protect its interests. Termination disputes.. Second Cause of Action 15. the Bank incurred expenses in carrying out its part of the contract (see Annexes "B" and "C"). Article 217 of the Labor Code of the Philippines. Eviota is liable to the Bank for damages in the amount of at least P100.00.000.00.00.12. as amended. 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 petitioner filed his petition with this Court contending that: Suffice to state immediately that on the basis of the allegations in the complaint. Eviota had induced the Bank to believe that he was committed to fulfilling his obligations under the Employment Contract. judgment be rendered in its favor as follows: WHEREFORE. grounded on the tortious manner by which the defendant terminated his employment with the company. the present controversy is removed from the jurisdiction of the Labor Arbiter and brings in within the purview of the regular courts. For violating the 30-day notice requirement under the Labor Code and order (sic) the Employment Contract. the amount of P200. Article 217 of the Labor Code of the Philippines.processing fees and other incidental costs. whereas the claims for other actual/moral/exemplary damages are well within the competence of the Labor Arbiter. 2001. In addition. by way of its causes of action against the petitioner. 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. 3. as amended by Rep. plaintiff is entitled to moral damages of at least P2. Third Cause of Action 16.00. Under Article 285 (a) of Presidential Decree No.6 The petitioner filed a motion for reconsideration of the said order.000. Hence. and not on tortious acts. (See. 17. 6715 which took effect on March 21.000. the said claims are actually predicated on the petitioner’s acts and omissions which are separately. Eviota’s actions have compelled plaintiff to obtain the services of undersigned counsel for a fee.00. specifically and distinctly governed by the New Civil Code. As moral damages." (Annex "A. the amount of P2. the amount of P360. defendant should be held liable for exemplary damages of at least P1. the following cases involving all workers. Claims for actual.562.7 The petition is barren of merit. As exemplary damages.4 The respondent bank prayed. Assuming arguendo that Eviota had the right to terminate his employment with the Bank for no reason. As attorney’s fees. and as such is governed by the New Civil Code: The Court holds that here. the principal cause of action being the alleged omission of petitioner in giving notice to the respondent Bank employer of termination of their relationship.562. 3. not the Regional Trial Court.000. 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.00 18. 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. 14." p.3 The respondent bank alleged. 4. as amended (the "Civil Code"). the respondent bank claimed damages in its complaint against the petitioner based on his employment contract. it is the Labor Arbiter.1. the CA promulgated a decision dismissing the petition. 8. representing expenses referred to in items c to i of par. it is respectfully prayed that judgment be rendered ordering the defendant to pay the plaintiff: 1. and have undermined the Bank’s ability to recruit and retain the best personnel.00 signing bonus.000. 217.) 15. 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. 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. Annex "C").000. alleging that the court a quo committed grave abuse of its discretion amounting to excess or lack of jurisdiction in issuing the said orders. but the court issued an order denying the same. 386. and to deter other parties from committing similar acts in the future. With his motion for reconsideration of the decision having been denied by the CA. claiming that its action for damages was within the exclusive jurisdiction of the trial court. the following: First Cause of Action 14. 6 and the cost of the third-party services mentioned in par. rates of pay. exemplary and other forms of damages arising from the employeremployee relations. which has jurisdiction of the subject matter of the complaint in Civil Case No. 5. By his actions and representations.000.000. 5.00. the manner in and circumstances under which he exercised the same are clearly abusive and contrary to the rules governing human relations. the same are recoverable under the applicable provision of the Civil Code. If accompanied with a claim for reinstatement.562. Annex "B"). . Eviota’s actions constitute a clear violation of Articles 19.000. 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. Section 13 of the Employment Contract specifically provides that: "Your [i. Other just and equitable reliefs are likewise prayed for.—(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. the Bank is entitled to actual damages of P360. Eviota never complied with the Bank’s demand that he reimburse the latter for the other expenses incurred on his account. moral. Eviota had returned his P300.00. 2. whether agricultural or non-agricultural: 1. Previously. Costs of the suit. 1989 reads: ART. less the P48. hours of work and other terms and conditions of employment. 98-1397. As a result. the amount of P1. that after due proceedings. those cases that workers may file involving wages. damages in the amount of at least P100.e.00 he had advanced for the Honda CR-V’s purchase price.000. amounting to P360. As actual damages. The petitioner further asserted that contrary to the ruling of the court. holding that the trial court and not the Labor Arbiter had exclusive jurisdiction over the action of the respondent bank. Hence. 20 and 21 of Republic Act No. Act No. and 6. Eviota’s] employment may be terminated by either party giving notice of at least one month.12 (see. 442.12.000. 13. By way of example or correction for the public good.000.5 The respondent bank appended to its complaint a copy of the petitioner’s employment contract. 2. plaintiff is entitled to attorney’s fees of at least P200. 4. 1999. The petitioner filed a petition for certiorari with the Court of Appeals for the nullification of the orders of the trial court. On November 29.

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. 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. More so when we consider that the stipulation refers to the post-employment relations of the parties. a corporation engaged in the same line of business as that of petitioner. 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.Case law has it that the nature of an action and the subject matter thereof. Castro-Bartolome. G. the said causes of action are intrinsically civil. thus. respondents.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. In fact. and jurisdiction over the controversy belongs to the regular courts. 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. for illegal dismissal. separation pay. is limited to disputes arising from an employer-employee relationship which can only be resolved by reference to the Labor Code of the Philippines.: On January 3.R.. Not every controversy or money claim by an employee against the employer or vice-versa is within the exclusive jurisdiction of the labor arbiter. overtime compensation or separation pay. Isnani.14 we held that: Stated differently. without the requisite thirty-day notice under the contract and the Labor Code of the Philippines. Only if there is such a connection with the other claims can the claim for damages be considered as arising from employer-employee relations. we held that jurisdiction over the controversy belongs to the civil courts. the petitioner took off with the private respondent’s computer diskette. The fact that there was between the parties an employer-employee relationship does not negate the jurisdiction of the trial court.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. private respondents. and the NATIONAL LABOR RELATIONS COMMISSION. Villarama. depicting the private respondent as unworthy of trust. must have a reasonable causal connection with any of the claims provided for in that article. 121948 October 8. 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. Such cause of action is within the realm of Civil Law. be a consultant and/or be an informative body directly or indirectly.1âwphi1The primary relief sought is for liquidated damages for breach of a contractual obligation. IMELDA TAMAYO. Anent its third cause of action. with any business firm. the petitioner simply walked away from his employment with the private respondent sans any written notice. Forthwith. Inc. Fourth Division. thus. are determined by the material allegations of the complaint and the reliefs prayed for in relation to the law involved.10 we held that the jurisdiction of the Labor Arbiter under Article 217 of the Labor Code. BENEDICTO FABURADA.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. On its second cause of action. In Dai-Chi Electronics Manufacturing Corporation v. p. Moreover. SISINITA VILLAR.11 the complaint of the employer against the employee for damages for wanton justice and refusal without just cause to report for duty. Dumaguete City. premium pay on holidays and rest days. vs. petitioner. Paño. and/or employed.9 In Georg Grotjahn GMBH & Co. IN LIGHT OF ALL THE FOREGOING. 2001 PERPETUAL HELP CREDIT COOPERATIVE.18 In this case. Department of Labor and Employment (DOLE). intrinsically a civil dispute.12 The claims were the natural consequences flowing from a breach of an obligation. Petitioner further alleged that private respondent is holding the position of Head of the Material Management Control Department. the petitioner made false and derogatory statements that the private respondent reneged on its obligations under their contract of employment. entity or undertaking engaged in a business similar to or in competition with that of the EMPLOYER. the Petition is DENIED. Cebu City. filed a complaint against the Perpetual Help Credit Cooperative. The other items demanded are not labor benefits demanded by workers generally taken cognizance of in labor disputes. 1992. within two years from January 30. and its corporate plans and program in jeopardy and disarray. 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. No. its banking operations and the conduct of its business. Benedicto Faburada. The items claimed are the natural consequences flowing from breach of an obligation. 1990. as well as which court has jurisdiction over the same. papers and documents containing confidential information on employee compensation and other bank matters. Imelda Tamayo and Harold Catipay. forcing the private respondent to hire a replacement. and attorney's fees."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. In Singapore Airlines Limited v. 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- . wage differential. The petitioner volte face when. v. which is intrinsically a civil dispute. SO ORDERED.. 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. such as payment of wages. other labor laws or their collective bargaining agreements. 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. EMPLOYEE shall not in any manner be connected. We further stated that while seemingly the cause of action arose from employeremployee relations. HAROLD CATIPAY. to be cognizable by the Labor Arbiter. the complaint will be cognizable by the regular courts of justice. 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. v. The private respondent was left in a lurch. We reversed the order of the trial court and held. We stated that the action was for breach of a contractual 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. we ruled that jurisdiction over the action belongs to the civil court: On appeal to this court. Paño. J. the petitioner had already been replaced by the private respondent before the action was filed against the petitioner. In Medina v. intrinsically civil in nature. The Decision of the Court of Appeals dismissing the petition of the petitioner is AFFIRMED. 57). (PHCCI). to the prejudice of the private respondent. SANDOVAL-GUTIERREZ. Absent such a link. thus: Petitioner does not ask for any relief under the Labor Code of the Philippines. In Singapore Airlines Ltd. moral damages. Sisinita Vilar. the same position he held while in the employ of petitioner. as amended. petitioner seeks protection under the civil laws and claims no benefits under the Labor Code. with the Arbitration Branch. the date of private respondent’s resignation from petitioner’s employ. Thus. petitioner. as amended. Jr. Jurisprudence has evolved the rule that claims for damages under paragraph 4 of Article 217. he abandoned his office and rejoined his former employer.

Edilberto Lantaca. Worked with the Cooperative since October 19.m. and every Saturday from 8:00 to 11:30 a. Sisinita Vilar — Clerk. — Enter data into the computer.000. 1987 up to December 29.. private respondents were rendering services necessary to the day-to-day operations of petitioner PHCCI.00 from July to December 1989. were paid regular wages and made to accomplish daily time records just like any other regular employee. reconcile bank statements to the daily summary of disbursements. 1990.for at least three (3) hours. Hence. 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. Imelda C.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. P950 — from January to June 1989.1 the NLRC affirmed the Labor Arbiter's decision.8:00 to 11:30 a. (2) project employees or those whose employment has been fixed for a specific project or undertaking.00 — from June to December 1988. All other claims are hereby dismissed for lack of merit. and for at least three (3) hours during Sundays. accounting and collecting duties.m. to pay complainants 13th month pay. On November 23. 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. 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. reconcile passbooks and ledgers of members in the market. Tamayo — Clerk. P250. receive deposits from members. Worked with the Cooperative since June 1. and (3) casual employees or those who are neither regular nor project employees.000. Monthly salary: P900. Duties: Among others. and one Sunday each month — for at least three (3) hours. effect mortuary deductions and dividends on fixed deposits.m. 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. Saturday — 8:00 to 11:30 a. the same being supported by substantial evidence. P1.m. But unfortunately. Duties: Among others. they were dismissed. private respondents have not exhausted the remedies provided in the cooperative by-laws.m. he being a part-time employee.2 The above elements are present here. and perform such other bookkeeping and accounting duties as may be assigned to her from time to time..00 . check petty cash vouchers. whether such service is continuous or broken. take charge of loan releases every Monday morning. Catipay — Clerk. Any competent and relevant evidence may show the relationship. they cannot sue petitioner. holding that the case is impressed with employer-employee relationship and that the law on cooperatives is subservient to the Labor Code. Necessarily. 1990.4 Undeniably. judgment is hereby rendered declaring complainants illegally dismissed. Furthermore.00 — from October to November 1987. No particular form of proof is required to prove the existence of an employer-employee relationship. fill up members logbook of regular depositors. On the same date. The computation of the foregoing awards is hereto attached and forms an integral part of this decision. 6939. 1989 to December 31. This fact alone qualified them as regular employees. On September 3. In determining the existence of an employer-employee relationship. and P1. to 5:30 p. Bookkeeping. 1987 up to December 29.m and 1:00 to 4:00 p. Work schedule: — Monday to Friday — 8:00 to 11:30 a. All of them were given a memorandum of termination on January 2. 1987 to December 31.00 . Not being regular employees. 1989. and 1:00 to 4:00 p. the Labor Arbiter rendered a decision.m. dividends and patronage funds. through Mr. were assigned specific duties.00 — from July 1. 1993.150. thus: Benedicto Faburada —Regular part-time Computer programmer/ operator. 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. They worked regularly on regular working hours. P1. P1. and P1. 1989. 1988 up to December 29.m and 2:00 to 5:30 p. Monthly salary: P1. (3) the payment of wages by whatever means. No.00 for December 1987. However. (2) the power to dismiss. mortuary. Work schedule: Tuesdays and Thursdays. perform various forms for mimeographing. maintain the masterlist of the cooperative members. petitioner filed a supplemental motion to dismiss alleging that Article 121 of R. Petitioner PHCCI. journal vouchers. schedule loans. carefully considered by respondent NLRC in affirming the Labor Arbiter's decision. worked with petitioner for more than one (1) year: Benedicto Faburada. junior depositors and special accounts. Worked with the Cooperative since December 1. hired private respondents to work for it. wage differentials and Ten Percent (10%) attorney's fees from the aggregate monetary award. except Harold D..050. from 1:00 p. mortuary and patronage funds. and for one Sunday each month . otherwise known as the Cooperative Development Authority Law which took effect on March 26. take charge of the preparation of new passbooks and ledgers for new applicants. with the latter assuming primacy in the overall consideration. Monthly salary: P60.00 — from January 1. for one and a half (1 1/2) years. Petitioner PHCCI contends that private respondents are its members and are working for it as volunteers. like this one. compute interests on savings deposits. Harold D.A. with respect to the activity in which they are employed.m.from January to June 1989. the following elements are considered: (1 ) the selection and engagement of the worker or the power to hire.from July to December 1989. its Manager. pick up balances for the computation of interests on savings deposit. separation pay for one month for every year of service since reinstatement is evidently not feasible anymore." On appeal. for two (2) years.00 — from March to June 1989. Sisinita Vilar. effective December 29. Jr. That Benedicto Faburada worked only on a part-time basis.owners of the cooperative.350. 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 . 1989. and assist the other clerks in their duties. 1990. daily summary of disbursements to respective classifications. post the monthly balance of fixed and savings deposits in preparation for the computation of interests. this petition by the PHCCI. Catipay. They worked under the supervision of the cooperative manager.m. 1989 to June 30. such as.m. 1989. P500.500. and perform such other bookkeeping and accounting duties as may be assigned her from time to time. and Imelda C. prepare cash vouchers. and perform such other duties as may be assigned from time to time. and (4) the power to control the worker's conduct. 1989. and 1:00 to 4:00 p. for two (2) years and two (2) months. dividends. disburse checks during regular and emergency loans. and (b) those casual employees who have rendered at least one (1 ) year of service. Worked with the Cooperative since March 3 to December 29.m. We are not prepared to disregard the findings of both the Labor Arbiter and respondent NLRC. 1989. and P1. every Saturday — 8:00 to 11:30 a.00 — from January to December 1988. the Labor Arbiter denied petitioner's motion to dismiss. assist in the posting and preparation of deposit slips.Duties: Among others. this leads us to the issue of whether or not private respondents are regular employees. Tamayo. and 2:00 to 5:30 p. prepare checks and cash vouchers for regular and emergency loans. Work schedule: Monday to Friday .000.00 — from December 1. That an employer-employee exists between the parties is shown by the averments of private respondents in their respective affidavits.Work schedule: Regular working hours.00 from July to December 1989. post daily collections from the two (2) collectors in the market. does not mean that he is not a regular employee. Monthly salary: P500. premises considered. requires conciliation or mediation within the cooperative before a resort to judicial proceeding. Prepare summary of salary advances.. 1988. Duties: Among others. the dispositive portion of which reads: WHEREFORE. that quantum of evidence required in quasi judicial proceedings. 1989. All of them.

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

is as follows: WHEREFORE.Sagay. and. and threw the phone. Moral Damages — P 50. petitioner banged the attaché case of Pastor Buhat on the table. petitioner tried to persuade Pastor Buhat to convene the Executive Committee for the purpose of settling the dispute between him and the private respondent. The dispute between Pastor Rodrigo and petitioner arose from an incident in which petitioner assisted his friend. He held the position of district pastor until his services were terminated on 31 October 1991. Subsequently. On 17 October 1991. the NLRC issued a Resolution reversing its original decision. Pastor Buhat denied the request of petitioner since some committee members were out of town and there was no quorum.000. the OSG filed a manifestation and motion in lieu of comment16 setting forth its stand that it cannot sustain the resolution of the NLRC. the dispositive portion of which reads thus: WHEREFORE. PREMISES CONSIDERED.770. willful breach of trust. dismissed the complaint of petitioner. Balintawak and Toboso. For two (2) days. In a decision. the OSG submits that the termination of petitioner from his employment may be questioned before the NLRC as the same is secular in nature. "Pastor daw inisog na ina iya (Pador you are talking tough).5 Due to the assistance of petitioner in collecting Pastor Rodrigo's debt. scattered the books in his office. at around 7:30 a. without ruling on the merits of the case. 7 Fortunately. the fact-finding committee conducted an investigation of petitioner.830. to collect from Pastor Rodrigo the unpaid balance for the repair of the latter's motor vehicle which he failed to pay to Diamada. Reacting against the adverse decision of the SDA. Taculing.27 SO ORDERED. Thereafter. SO ORDERED. not ecclesiastical. this case is hereby DISMISSED for lack of jurisdiction. Petitioner then left the office of Pastor Buhat. During said call.00) without deductions and qualificatioons. on 16 October 1991. Our decision dated August 26. Respondent CPUMCSDA is further ordered to pay complainant the following: A. involves the separation of church and state. petitioner filed a complaint11 on 14 November 1991.10. reversed itself once again. On various occasions from August up to October. serious misconduct. Negros Occidental. the treasurer of the Negros Mission asking him to admit accountability and responsibility for the church tithes and offerings collected by his wife. the case was submitted for decision. requesting that certain members of the fact-finding committee be excluded in the investigation and resolution of the case. Attorney's Fee — P 22. since it was heavy. and 3) Whether or not such termination is valid. moral and exemplary damages and other labor law benefits. respondents CENTRAL PHILIPPINE UNION MISSION CORPORATION OF THE SEVENTH-DAY ADVENTISTS (CPUMCSDA) and its officers.m." 6 Irked by such remark. sustained the argument posed by private respondents and. Pastor David Rodrigo.00 B. without loss of seniority and other rights and backwages in the amount of ONE HUNDRED FIFTEEN THOUSAND EIGHT HUNDRED THIRTY PESOS (P115. On 15 February 1993. petitioner went to the office of Pastor Buhat. petitioner overheard Pastor Buhat saying. subject of the present petition. 1991. Fourth Division. though unsuccessfully.000. the president of the Negros Mission. Eufronio Ibesate. at nine in the morning.13 Petitioner filed a motion for reconsideration of the above-named decision. before the Labor Arbiter for illegal dismissal against the SDA and its officers and prayed for reinstatement with backwages and benefits. To be discussed in the meeting were the non-remittance of church collection and the events that transpired on 16 October 1991. 1993 is REINSTATED. gross and habitual neglect of duties. In January.060. While on his way out.12 The SDA. Thelma Austria. for the first time on appeal. petitioner was transferred to Bacolod City. Sideño rendered a decision in favor of petitioner. Thereafter.00 E. 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. petitioner immediately wrote Pastor Rueben Moralde. the latter harbored ill-feelings against petitioner. he immediately proceeded to the office of Pastor Buhat on the date abovementioned and asked the latter to convene the Executive Committee.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. are hereby ordered to immediately reinstate complainant Pastor Dionisio Austria to his former position as Pastor of Brgy.078. Allowance — P 4. dated 26 August 1994. only two (2) were actually excluded. The dispositive portion of the resolution reads: WHEREFORE. from October 21 and 22. through its officers. 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. 13th month pay — P 21. Thereafter. the NLRC vacated the findings of the Labor Arbiter. Mrs. the Court ordered the Office of the Solicitor General (the "OSG") to file its comment on behalf of public respondent NLRC. SO ORDERED. 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. Cebu City. as grounds for the termination of his services.14 In view of the reversal of the original decision of the NLRC. Service Incentive Leave Pay — P 3.012. Interestingly. accordingly. the Decision appealed from is hereby VACATED and a new one ENTERED dismissing this case for want of merit. Danny Diamada. In its manifestation. as such. After the submission of memoranda of all the parties. in view of all the foregoing. in his district which amounted to P15.. The dispositive portion of the NLRC resolution dated 23 January 1996. Sensing that the result of the investigation might be one-sided. the instant motion for reconsideration is hereby granted.9 Out of the six (6) members requested to inhibit themselves from the investigation and decision-making. on 29 October 1991. and to remit the same to the Negros Mission. Bacolod City. 2) Whether or not the termination of the services of petitioner is an ecclesiastical affair. 1991. respondents herein. A fact-finding committee was created to investigate petitioner.461. namely: Pastor Buhat and Pastor Rodrigo.85 D. SO ORDERED. private respondents Pastors Yonilo Leopoldo and Claudio Montaño were around and they pacified both Pastor Buhat and petitioner. and commission of an offense against the person of employer's duly authorized representative. 1994 is VACATED and the decision of the Labor Arbiter dated February 15. premises considered. president of the SDA and chairman of the fact-finding committee. Labor Arbiter Cesar D.83 C. the two exchanged heated arguments. petitioner received several communications3 from Mr. with twelve (12) churches under his jurisdiction. petitioner received a letter of dismissal10 citing misappropriation of denominational funds. On 18 July 1995. Progreso and Banago. petitioner returned to the office of Pastor Buhat. The NLRC. 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 decretal portion of the NLRC decision states: WHEREFORE. and tried to overturn the latter's table. Notable in the motion for reconsideration filed by private respondents is their invocation. appealed the decision of the Labor Arbiter to the National Labor Labor Relations Commission. When news reached petitioner that Pastor Rodrigo was about to file a complaint against him with the Negros Mission. . Exemplary Damages — P 25.15 Hence. the recourse to this Court by petitioner. the SDA filed a motion for reconsideration of the above resolution.00 F. Accordingly. After the filing of the petition. In his written explanation dated 11 October 1991.

From all of these it is clear that when the SDA terminated the services of petitioner. The first notice. Aside from these. 30 Before the services of an employee can be validly terminated. and giving to said employee reasonable opportunity within which to explain his side. the settled rule is that the burden of proving that the termination was for a valid or authorized cause rests on the employer. coupled with his failure to object to the jurisdiction of the court or quasi-judicial body where the action is pending. has the right to take cognizance of the case and to determine whether the SDA. categorically includes religious institutions in the coverage of the law. the State. the same must be measured against the requisites for a valid dismissal. the matter of terminating an employee. As a matter of fact. rightfully exercised its management prerogative to dismiss an employee. 21 Based on this definition. findings of fact of administrative bodies like the NLRC are binding upon this Court. what is involved here is the relationship of the church as an employer and the minister as an employee. it is palpable that the reason for petitioner's dismissal from the service is not religious in nature. the grounds invoked for petitioner's dismissal. whether for profit or not. 26 When the findings of NLRC do not agree with those of the Labor Arbiter. 27 We turn now to the crux of the matter. it was merely exercising its management prerogative to fire an employee which it believes to be unfit for the job. serious misconduct. gross and habitual neglect of duties and commission of an offense against the person of his employer's duly authorized representative. in the eyes of the law. Mr. the active participation of private respondents in the proceedings before the Labor Arbiter and the NLRC mooted the question on jurisdiction. SDA admitted in a certification 23 issued by its officer. in instances when the findings of the NLRC differ from those of the labor arbiter. It is purely secular and has no relation whatsoever with the practice of faith. administration of sacraments and other activities with attached religious significance. which may be considered as the proper charge. Coverage. whether operated for profit or not. willful breach of trust. — This Rule shall apply to all establishments and undertakings. 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. Simply stated. 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. as employer. worship or doctrines of the church. it is to be considered a purely ecclesiastical affair to which the State has no right to interfere. The contention of private respondents deserves scant consideration. In this case.34 Non-compliance therewith is fatal because these requirements are conditions sine quanon before dismissal may be validly effected. namely: misappropriation of denominational funds. are all based on Article 282 of the Labor Code which enumerates the just causes for termination of employment. the worker's records of petitioner have been submitted by private respondents as part of their exhibits. Article 278 of the Labor Code on post-employment states that "the provisions of this Title shall apply to all establishments or undertakings. The jurisdictional question now settled. The rationale of the principle of the separation of church and state is summed up in the familiar saying. 28 Thus. religious doctrines. the provision which governs the dismissal of employees.22 By this alone. private respondents must not merely rely on the weaknesses of petitioner's evidence but must stand on the merits of their own defense.." Obviously. 32 This decision. petitioner was not ex-communicated or expelled from the membership of the SDA but was terminated from employment. in cases of regular employment with the exception of the Government and its political subdivisions including government-owned or controlled corporations. This is in consonance with the mandate of the Constitution to afford full protection to labor. The Court has already ruled that the active participation of a party against whom the action war brought. To be concrete. or the adoption and enforcement within a religious association of needful laws and regulations for the government of the membership. (b) the dismissal must be for a valid cause as provided in Article 282 of the Labor Code. namely: (a) the employee must be afforded due process. such as the SDA. While the matter at hand relates to the church and its religious minister it does not ipso facto give the case a religious significance. as in this case. 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. 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. ordinations of religious ministers. 31 The second notice on the other hand seeks to inform the employee of the employer's decision to dismiss him. if he so desires. particularly. 25 Thus. and. As pointed out by the OSG in its memorandum. In termination cases. Article 277 (b) of the Labor Code and Section 2. Indeed. this again is an eloquent admission by private respondents that NLRC has jurisdiction over the case. Ibesate. is comprehensive enough to include religious corporations. we note that as a general rule. private respondents are estopped from raising the issue of lack of jurisdiction for the first time on appeal. This is made more evident by the fact that the Rules Implementing the Labor Code. At the outset. including educational. an ecclesiastical affair involves the relationship between the church and its members and relate to matters of faith. serves to apprise the employee of the particular acts or omissions for which his dismissal is sought. creed. that petitioner has been its employee for twenty-eight (28) years. and. to wit: (a) a written notice served on the employee specifying the ground or grounds for termination. he must be given an opportunity to be heard and to defend himself. Finally. The principle of separation of church and state finds no application in this case. Book VI on the Termination of Employment and Retirement. worship and governance of the congregation. is different from the ecclesiastical act of expelling a member from the religious congregation. however. charitable and religious institutions and organizations. through the Labor Arbiter and the NLRC. (b) a written notice of termination served on the employee indicating that upon due consideration of all the circumstances."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."19 While the state is prohibited from interfering in purely ecclesiastical affairs. 29 Without the concurrence of this twin requirements.The first two issues shall be resolved jointly. examples of this so-called ecclesiastical affairs to which the State cannot meddle are proceedings for excommunication. An ecclesiastical affair is "one that concerns doctrine. Coupled with this is the act of the SDA in furnishing NLRC with a copy of petitioner's letter of termination. to wit: Sec. as correctly pointed out by petitioner. and the power of excluding from such associations those deemed unworthy of membership. be illegal. the Church is likewise barred from meddling in purely secular matters. i. grounds have been established to justify his termination. Rule XXIII.24 With this clear mandate.e. SDA even registered petitioner with the Social Security System (SSS) as its employee. 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. 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. which is purely secular in nature. Since the matter at bar allegedly involves the discipline of a religious minister. Private respondents contend that by virtue of the doctrine of separation of church and state. since they are related. "Strong fences make good-neighbors. As aptly stated by the OSG. the cited article does not make any exception in favor of a religious corporation. The case at bar does not even remotely concern any of the abovecited examples.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. the termination would. in its coverage. As such. Under the Labor Code. or form of worship of the church. we shall now proceed to determine whether the dismissal of petitioner was valid. this Court must of necessity review the records to determine which findings should be preferred as more comfortable to the evidentiary facts. medical.35 . A review of such findings is justified. Section 1. The issue being the legality of petitioner's dismissal. the Labor Arbiter and the NLRC have no jurisdiction to entertain the complaint filed by petitioner. Book V of the Rules Implementing the Labor Code further require the employer to furnish the employee with two (2) written notices. 1. however.

as admitted by their own witness. Private respondents allege that they have lost their confidence in petitioner for his failure. The Court does not find any cogent reason. it was Mrs. as proven by convincing and substantial evidence consisting of the testimonies of the witnesses for private respondents who are church treasurers. a forbidden act. The Decision of the Labor Arbiter. With regard to the first notice. the letter never even mentioned that petitioner would be subject to investigation. they still have separate and distinct personalities. dated 15 February 1993. the petition for certiorari is GRANTED. Ibesate. without justifiable excuse. whatever missteps may have been committed by the worker ought not be visited with a consequence so severe such as dismissal from employment. the cited actuation of petitioner does not justify the ultimate penalty of dismissal from employment. While admittedly.nêt SO ORDERED. this does not cure the initial defect of lack of the proper written charge required by law. revealed how petitioner travelled to different churches to attend to the faithful under his care. cannot be construed as the written charge required by law. but. The records show that there were only six (6) instances when petitioner personally collected and received from the church treasurers the tithes. After all. petitioner cannot be made accountable for the alleged infraction committed by his wife. throwing the telephone and scattering the books in the office of Pastor Buhat.39 It should be genuine and not simulated. 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. and that he pocketed the amount and used it for his personal purpose. he labored hard for the SDA. we believe that the act of petitioner in banging the attaché case on the table. private respondents complied with the second requirement. In fact. Thelma Austria. to remit the tithes and offerings amounting to P15.37 dated 29 October 1991. After all. A breach is willful if it is done intentionally. which private respondents failed to demonstrate. private respondents try to pin on petitioner the alleged non-remittance of the tithes collected by his wife. Mrs. rendered on 23 January 1996. Settled is the rule that under Article 282 (c) of the Labor Code. In fact. The challenged Resolution of public respondent National Labor Relations Commission. who failed to remit the same to the treasurer of the Negros Mission. Indeed. 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. heedlessly or inadvertently. Suffice it to say that all private respondents had were allegations but not proof. petitioner was surprised to find out that the alleged meeting turned out to be an investigation.43 For misconduct to be considered serious it must be of such grave and aggravated character and not merely trivial or unimportant. and. private respondents enumerated the following as grounds for the dismissal of petitioner. the Negros Mission Church Auditor and a witness for private respondents. In fact. This argument deserves little consideration. because of its subjective nature. the Labor Arbiter found it difficult to see the basis for the alleged loss of confidence and breach of trust. 160236 October 16. does not require an exhaustive discussion. For this reason. serious misconduct. Aside from merely citing the said ground. Hence. The final ground alleged by private respondents in terminating petitioner. 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. between petitioner and his wife. they were notable to establish that petitioner failed to remit the same to the Negros Mission. As such. the evidence on record shows otherwise. knowingly and purposely.1âwphi1. 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. It is the transgression of some established and definite rule of action. collections and offerings amounting to P15. as distinguished from an act done carelessly. Geniebla and Mr. otherwise the employee would eternally remain at the mercy of the employer. gross and habitual neglect of duties.078. the allegations of private respondents that petitioner breached their trust have no leg to stand on. caprices or suspicion.47 which consisted of petitioner's Worker's Reports. he was rewarded with a dismissal from the service for a non-existent cause.38 It must rest on substantial grounds and not on the employer's arbitrariness. petitioner remitted the amounts which he collected to the Negros Mission for which corresponding receipts were issued to him. which were collected in his district. Hence. gross and habitual neglect of duties. we find the same unmeritorious and. therefore. G. 2009 . show that Pastor Austria was able to remit all his collections to the treasurer of the Negros Mission. we sustain the finding of the Labor Arbiter that petitioner was terminated from service without just or lawful cause. in the churches under his jurisdiction. In a vain attempt to support their claim of breach of trust. and donations for the church. In the letter of termination. In view of the foregoing. willful in character. which notified petitioner and his wife to attend the meeting on 21 October 1991. Private respondents' evidence. The final ground invoked by private respondents is gross and habitual neglect of duties allegedly committed by petitioner. Thelma Austria who actually collected the tithes and donations from them. On the other hand. willful breach of trust. the notice of termination.078. private respondents failed to prove culpability on the part of petitioner. he did not physically assault Pastor Buhat or any other pastor present during the incident of 16 October 1991. we believe that the minor infraction committed by petitioner does not merit the ultimate penalty of dismissal. From the tenor of the letter. is REINSTATED and hereby AFFIRMED. as correctly observed by the Labor Arbiter. though petitioner committed damage to property. although improper. The testimony of these church treasurers were corroborated and confirmed by Ms.45 Where a penalty less punitive would suffice. as such. the letter. the breach of trust must be willful.Private respondent failed to substantially comply with the above requirements.41 The stenographic notes on the testimony of Naomi Geniebla.46 WHEREFORE. No. 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.44 Based on this standard. to digress from the findings of the Labor Arbiter which is fully supported by the evidence on record. With respect to the grounds of serious misconduct and commission of an offense against the person of the employer's duly authorized representative. the alleged offense committed upon the person of the employer's representatives was never really established or proven by private respondents. and commission of an offense against the person of employer's duly authorized representative. despite demands. 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. We cannot sustain the validity of dismissal based on the ground of breach of trust. 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.40 This ground has never been intended to afford an occasion for abuse.10 which were collected by his wife. it cannot be presumed that petitioner was actually on the verge of dismissal. is NULLIFIED and SET ASIDE. While the Constitution does condone wrongdoing by the employee. Having been illegally dismissed. namely: misappropriation of denominational funds. whims. Thus. a dereliction of duty. cannot be considered as grave enough to be considered as serious misconduct. in return. Misconduct has been defined as improper or wrong conduct. and implies wrongful intent and not mere error in judgment. 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.36 dated 17 October 1991. 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.46 For the foregoing reasons. For this reason. in the absence of conspiracy and collusion.42 Though private respondents were able to establish that petitioner collected and received tithes and donations several times.R. officers of the SDA. First of all. do not warrant petitioner's dismissal from the service. Thus. Naomi Geniebla.10. In fact. Petitioner's rise from the ranks disclose that he was actually a hard-worker. collections. thoughtlessly. it cannot be said that petitioner was given enough opportunity to properly prepare for his defense.

and Php248. vs. 2003 Decision1 of the Court of Appeals (CA) in CA-G. 2001. subject to GHI’s posting of a P5M bond. and "PESOS TWO HUNDRED FORTY EIGHT MILLION. The notes. 2283 Pasong Tamo Extension. that this deed was registered on February 24. Arturo D. Rolando V. 1997 Order in OS-AJ-10-96-014 (Quisumbing Order). on motion of NAMAWU. Region VI.00)" in the second note. directed the issuance of a partial writ of execution (Brion Writ). 13 On May 11. Brion.14Much later. is a domestic corporation primarily engaged in the business of owning and holding shares of stock of different companies. PHILIPPINES. the members of the union.00 in the second note. and several armed men implemented the Sto. its successors and/or assigns: 1. 1996.Php114. DECISION NACHURA. SEVEN HUNDRED THIRTY FOUR THOUSAND AND EIGHTY (Php248. 2002 Omnibus Order. a copy of which Certificate of Sale is hereto attached as Annex "B" and made an integral part hereof.15 affirmed the propriety of the issuance of the Brion Writ.560. with office at Bacolod City following the auction conducted pursuant to the provisions of Act 1508. Quisumbing.080. or on August 23. Manila Memorial Park Bldg. NAMAWU’s separate motions for the reconsideration of the injunction order and for the dismissal of the case. now also an Associate Justice of this Court. read as follows: PROMISSORY NOTE AMOUNT .R.. METRO MANILA. pursuant to a Purchase and Sale Agreement6 executed between GHI and Asset Privatization Trust (APT).25 Resolving. INC. 2000. Later. with the latter eventually filing with the National Conciliation and Mediation Board of Bacolod City a notice of strike. 133519 and 138996─filed with this Court.R. Negros Occidental.715. Special Civil Action (SCA) No. Nos..00) ["PESOS ONE HUNDRED EIGHTY SIX MILLION FIVE HUNDRED FIFTY THOUSAND FIFE HUNDRED AND SIXTY (Php186. 157696-97. the amount of PESOS ONE HUNDRED FOURTEEN MILLION.00 in the third note. Tomas Writ. a copy of which Catalogue is hereby made an integral part hereof by way of reference.550."G" HOLDINGS. and levied on the properties of MMC located at its compound in Sipalay. Brion and NAMAWU.360. Mortgages over assets listed in APT Specific Catalogue GC-031 for MMC. with office at Bacolod City following the auction sale conducted pursuant to the provisions of Act 3135. DEPARTMENT OF LABOR AND EMPLOYMENT. MMC hereby establishes and constitutes in favor of "G" HOLDINGS.5 On October 2. then Acting Department of Labor and Employment (DOLE) Secretary. a copy of which certificate of sale is hereto attached as Annex "A" and made an integral part hereof. NATIONAL MINES AND ALLIED WORKERS UNION Local 103 (NAMAWU). 2002. which were similarly worded except for their amounts. 1992. Sto. Ramirez. was the exclusive bargaining agent of the rank and file employees of Maricalum Mining Corporation (MMC). SP No. 10 Almost four years thereafter. MMC started its commercial operations in August 1985. 11 Then Labor Secretary. the former bought ninety percent (90%) of MMC’s shares and financial claims.19 GHI contended that the levied properties were the subject of a Deed of Real Estate and Chattel Mortgage.17 On October 11. The Facts The petitioner. Makati. Philippines. 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. GHI immediately took physical possession of the mine site and its facilities. 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.550. 75322. which became final and executory on January 26. Inc. among others. Punta. (GHI). 2002. Bacolod District Office. Tomas Writ and from conducting any public sale of the levied-on properties. Nos. He then ordered the reinstatement of the laid-off workers. Respondents. on or before October 2. APROSTA and ALBERTO MUNOZ. 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.. SHERIFFS RICHARD H. Bacolod City. and ordered the DOLE sheriffs to proceed to the MMC premises for the execution of the same. 2002. A mortgage over certain parcels of land. a labor dispute (refusal to bargain collectively and unfair labor practice) arose between MMC and NAMAWU. 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.: Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the October 14. the RTC issued its December 4. PHILIPPINE CURRENCY.360. the trial court ordered the issuance of a Writ of Injunction (issued on October 18.16 On motion of NAMAWU. as evidenced by the Certificate of Sale dated December 4. 2002 Alias Writ of Execution and Break-Open Order (Sto. 1992. 2001. GHI filed with the Regional Trial Court (RTC) of Kabankalan City. SEVEN HUNDRED FIFTEEN THOUSAND AND THREE HUNDRED SIXTY (Php114. at its office at Phimco Compound. "G" Holdings. more particularly listed and described in the Sheriff’s Certificate of Sale dated September 7. 1996 20executed by MMC in favor of GHI to secure the aforesaid P550M promissory notes. 1996 was illegal and that MMC committed unfair labor practice.22 The trial court issued ex parte a TRO effective for 72 hours. 26 the dispositive portion of which reads: . National Mines and Allied Workers Union Local 103 (NAMAWU).00)" in the third note]. Tomas Writ). Metro Manila. all acting Sheriffs. J. 2 It was registered with the Securities and Exchange Commission on August 3. and set the hearing on the application for a writ of injunction. Petitioner. 1992 For Value Received. A chattel mortgage over assets and personal properties more particularly listed and described in the Sheriff’s Certificate of Sale dated September 7. 2002) 24 enjoining the DOLE sheriffs from further enforcing the Sto. The Brion Writ was not fully satisfied because MMC’s resident manager resisted its enforcement.R.12 In two separate cases─G. 1984 issued by the Ex-Officio Provincial Sheriff of Negros Occidental. INC. then DOLE Secretary Patricia A.560. Sta. in G. 2000. Manalo Street. Tomas ordered the issuance of the July 18. Leonardo A.] MAKATI. 2001. 2. Ana.080. As collateral security. Ramirez. 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.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. Negros Occidental. on account of their foreclosure of Marinduque Mining and Industrial Corporation’s assets. October 2.734. 1984 issued by the Ex-Officio Provincial Sheriff of Negros Occidental. the respondent acting sheriffs. dated September 5.21 and that the mortgaged properties were already extrajudicially foreclosed in July 2001 and sold to GHI as the highest bidder on December 3. now Associate Justice of this Court. MARICALUM MINING CORPORATION (MMC) with postal address at 4th Floor. we sustained the validity of the Quisumbing Order. Manila.18 On October 14.23 On October 17. Private respondent.715. and took full control of the management and operation of MMC. with payment of full backwages and benefits.00 [Php186. Secretary Quisumbing declared that the lay-off (of workers) implemented on May 7. INC. this Court.3 an entity operating a copper mine and mill complex at Sipalay. 1996 and October 7.. later assumed jurisdiction over the dispute and ruled in favor of NAMAWU. in 2006. 3. In his July 30. Negros Occidental. hereby promises to pay "G" HOLDINGS. F. Rolando V.734. entitled Maricalum Mining Corporation v.4 MMC was incorporated by the Development Bank of the Philippines (DBP) and the Philippine National Bank (PNB) on October 19. 1984. DBP and PNB transferred it to the National Government for disposition or privatization because it had become a non-performing asset. 2002.

33 Stripped of non-essentials. ASSUMING ARGUENDO THAT THE VALIDITY OF THE SAID REAL AND CHATTEL MORTGAGE MAY BE COLLATERALLY ATTACKED. The Writ of Preliminary Injunction issued by the said court is lifted. respondent NAMAWU Local 103’s Motion for Reconsideration dated October 23. and thus.WHEREFORE. The assailed CA decision apparently failed to consider the impact of these two decisions on the case at bar. 2. 2000. Tomas Writ. GHI elevated the case to this Court via the instant petition for review on certiorari. 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. 2002 orders of the RTC. Pursuant thereto. 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. entitled to the delivery of the company notes accompanying the said purchase. 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. Petitioner’s Urgent Motion for the return of the levied firearms is GRANTED. firm or entity.29 The CA further ruled that the subsequent foreclosure of the mortgage was irregular. that it was executed two weeks after the labor dispute arose in 1996. more importantly. ASSUMING ARGUENDO THAT THE PERTINENT DECISION OR ORDER IN THE SAID LABOR DISPUTE BETWEEN MMC AND NAMAWU MAY BE ENFORCED AGAINST GHI. that the circumstances surrounding the execution of the September 5. were part of the documents executed in 1992 in the privatization sale of MMC by the Asset Privatization Trust (APT) to GHI. otherwise. in view of the foregoing considerations. 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.32 The Issues Dissatisfied. however. Branch 61 of Kabankalan City. to its labor claims. Thus. 2003. given the factual circumstances obtaining. The CA also found that the certificates of title to MMC’s real properties did not contain any annotation of a mortgage lien."30 Further. 2002 is likewise DENIED. but its failure "to satisfy any money judgment against it rendered by a court or tribunal of competent jurisdiction. 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. II WHETHER OR NOT. NAMAWU. the CA pierced the veil of corporate fiction of the two corporations. Hon. The resolution of this principal issue. Inc. To repeat. Each of these notes uniformly contains stipulations "establishing and constituting in favor of GHI" mortgages over MMC’s real and personal properties. is strictly warned not to resort again to disrespectful and contemptuous language in his pleadings. The stipulations were subsequently formalized in a separate document denominated Deed of Real Estate and Chattel Mortgage on September 5.000. Accordingly.27 Aggrieved. in favor of any person. the core issue is whether. the Asset Privatization Trust v. and. 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. 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. Atty. and 3. assailing the October 17. effected precisely to prevent the satisfaction of the judgment against MMC. "G" Holdings. fictitious and fraudulent. Our Ruling Before we delve into an extended discussion of the foregoing issues. 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. the Deed was registered on February 4. 1996. The CA ruled. Brion and NAMAWU.28 After due proceedings. Negros Occidental are hereby ANNULLED and SET ASIDE for having been issued in excess or without authority. The October 17. as will be explained below.34 in which we upheld the right of herein private respondent. NAMAWU filed with the CA a petition for certiorari under Rule 65. premises considered. 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. III WHETHER OR NOT GHI IS THE ABSOLUTE OWNER OF THE PROPERTIES UNLAWFULLY GARNISHED BY RESPONDENTS SHERIFFS. Respondent’s lawyer. the basis for the extrajudicial foreclosure was not the failure of MMC to pay the mortgage debt. 31 The dispositive portion of the appellate court’s decision reads: WHEREFORE. it was registered only on February 24. 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. the appellate court rendered a Decision setting aside the RTC issuances and directing the immediate execution of the Sto.R. 2002 and the December 4. 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. Tomas Writ. Whether the mortgage of the MMC’s properties to GHI was a sham.00 is hereby DENIED. Arturo D. immediately after the Court affirmed with finality the Quisumbing Order. among others.200. raising the following issues: I WHETHER OR NOT GHI IS A PARTY TO THE LABOR DISPUTE BETWEEN NAMAWU AND MMC. 1996 Deed of Real Estate and Chattel Mortgage yielded the conclusion that the deed was sham. IV WHETHER OR NOT THE HONORABLE HENRY D. VI WHETHER OR NOT. Jose Lapak. the main inquiry addressed by the CA decision was whether GHI could be treated as a third party or a . we acknowledge our Decision in Republic of the Philippines.36 We find both decisions critically relevant to the instant dispute. and.35 in which GHI was recognized as the rightful purchaser of the shares of stocks of MMC. It noted that the foreclosure proceedings were initiated in July 2001. Whether it was proper for the CA to pierce the veil of corporate fiction between MMC and GHI. on October 14." 38 However. the same shall be dealt with accordingly. the petition is GRANTED. Thereafter. without any legal ground or reason. 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.000. suspiciously. Judicial Notice. will necessitate a ruling on the following key and interrelated questions: 1.00. 18 and December 4. NOS. FICTITIOUS AND FRAUDULENT. THE SAID MORTGAGE IS SHAM. through its trustee. 157696-97. consisting of three (3) Promissory Notes. VII WHETHER OR NOT GHI IS A DISTINCT AND SEPARATE CORPORATE ENTITY FROM MMC. 2002 approving petitioner’s Injunction Bond in the amount of P5. but surprisingly. 2000. ARLES CORRECTLY ISSUED A WRIT OF INJUNCTION AGAINST THE UNLAWFUL EXECUTIOIN ON GHI’S PROPERTIES. Judicial notice must be taken by this Court of its Decision in Maricalum Mining Corporation v.. 2002 Order of the RTC. Whether there was an effective levy by the DOLE upon the MMC’s real and personal properties. 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). In fact. the RTC properly issued the writ of injunction to prevent the enforcement of the Sto. These company notes. SO ORDERED. Upon the same principle of judicial notice.

acknowledged the existence of the Purchase and Sale Agreement between the APT and the GHI. The mortgage was not a sham. 1996. 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. but instead reinforces. Inc. the mortgages cannot be characterized as sham. were a "fictitious" arrangement intended to defraud NAMAWU. Rolando V. that the Government.stranger to the labor dispute. Because the Government had actively negotiated and.000 with the balance divided into four tranches payable in installment over a period of ten years. then. Then.122. This presumption would cover all related transactional acts and documents needed to consummate the privatization sale. Mortgages over assets listed in APT Specific catalogue GC-031 for MMC. 95-76132 and subsequent incidents thereto. 1996. the appellate court dismissed the petition. 2. These cases may be so closely interwoven. The execution of this Deed in 1996 does not detract from. 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. SO ORDERED." The two cases that we have taken judicial notice of are of such character. "G" Holdings filed a complaint for specific performance and damages with the Regional Trial Court of Manila. all the more does it become imperative to take judicial notice of the two cases aforesaid. however. 2001. To repeat. Obviously. After all. It is obvious. v. x x x Finding that the grounds necessary for the annulment of judgment were inexistent. Contrary to the rules of procedure. As already adverted to above. Ramirez. computed pursuant to the prepayment provisions of the Agreement. Section 10 of the Rules of Court. and clothed with the presumption of regularity. 1996. Accordingly. the notice of appeal was filed with the Court of Appeals (CA).280. 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. eventually. etc. Ramirez. 1984 issued by the Ex-Officio Provincial Sheriff of Negros Occidental. inclusive of the Promissory Notes.161.and after "G" Holdings Inc. Even as the parties had already validly constituted the mortgages in 1992. a copy of which certificate of sale is hereto attached as Annex "A" and made an integral part hereof.42 It is difficult to conceive that these mortgages. "G" Holdings. 1992. This conclusion surfaces when we consider the genesis of Civil Case No. A chattel mortgage over assets and personal properties more particularly listed and described in the Sheriff’s Certificate of Sale dated September 7. No other judicial remedy was resorted to until July 2. in compliance with its mandate to privatize government assets. A mortgage over certain parcels of land.. APT sold the aforesaid MMC shares and notes to GHI. 1992. or so clearly interdependent. etc. Plaintiff shall pay the balance simultaneously with the delivery of the Deed of Transfer and actual delivery of the shares and notes. During the pre-trial. the manifest intention of the parties to "establish and constitute" the mortgages on MMC’s real and personal properties. 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. not with the trial court which rendered the judgment appealed from. Branch 49. 1996. the notes (and the stipulations therein) enjoy the benefit of the same presumption of regularity accorded to government actions." The Solicitor General filed a notice of appeal on behalf of the Republic on June 28. through APT. 5. 95-76132 became final in mid-1996."41 The "company notes" mentioned therein were actually the very same three (3) Promissory Notes amounting toP550M. Inc.. in this transaction is significant. It also provided for a down payment of P98. we now proceed to resolve the questions identified above. 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. While it is true that the Deed of Real Estate and Chattel Mortgage was executed only on September 5. situating the facts in proper perspective. In Juaban v. courts have also taken judicial notice of proceedings in other cases that are closely connected to the matter in controversy. The complaint was docketed as Civil Case No. as mentioned above. giving rise to the presumption of regularity in its execution. x x x x43 With the RTC decision having become final owing to the failure of the Republic to perfect an appeal. "established and constituted" in favor of GHI the following mortgages: 1.40 we held that "in some instances. "G" Holdings.. It may be remembered that APT acquired the MMC from the PNB and the DBP. Espina. It ruled in favor of "G" Holdings and held: "In line with the foregoing. a copy of which Catalogue is hereby made an integral part hereof by way of reference. Unable to settle the issue. 95-76132. then the transaction is imbued with an aura of official authority. "G" Holdings. whose properties were beyond the reach of the Writ of Execution dated December 18. On June 11. the Republic undertook to sell and deliver 90% of the entire issued and outstanding shares of MMC. 1984 issued by the Ex-Officio Provincial Sheriff of Negros Occidental. this Court has recognized this Purchase and Sale Agreement in Republic. 3. more particularly listed and described in the Sheriff’s Certificate of Sale dated September 7. executed the agreement. against the Republic to compel it to close the sale in accordance with the purchase and sale agreement. and "G" Holdings culminated in the execution of a purchase and sale agreement on October 2. almost four (4) years before NAMAWU filed its notice of strike. Having recognized these crucial Court rulings. 1996. Republic etc. through the APT as its trustee. Indeed. in order to enforce the trial court’s decision of June 11. and recounts the facts attendant to that transaction. Given the Government consent thereto. they were agreed upon long before the seeds of the labor dispute germinated. a disagreement on the matter of when installment payments should commence arose between the parties. 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. with office at Bacolod City following the auction conducted pursuant to the provision of Act 1508. the respective counsels of the parties manifested that the issue involved in the case was one of law and submitted the case for decision. as explicitly provided in the Promissory Notes. and our review of the instant case cannot stray from the findings and conclusions therein. at its present value of P241. The participation of the Government.86. this . executed on October 2. it may have become necessary to execute the Deed of Real Estate and Chattel Mortgage on September 5. 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. the trial court rendered its decision.702. as narrated in Republic. as to invoke a rule of judicial notice. within a period of thirty (30) days from receipt of this Decision. v. Under the agreement.704. as well as its company notes.. issued by MMC in favor of GHI. with office at Bacolod City following the auction sale conducted pursuant to the provisions of Act 3135. 1999 when the Republic. v. as follows: The series of negotiations between the petitioner Republic of the Philippines. Rolando V. as provided in the notes. these notes uniformly contained stipulations "establishing and constituting" mortgages over MMC’s real and personal properties. this Court having been convinced that the Purchase and Sale Agreement is indeed subject to the final closing conditions prescribed by Stipulation No. through APT. a copy of which Certificate of Sale is hereto attached as Annex "B" and made an integral part hereof. 1992. a specific deed of mortgage in a separate document may have been deemed necessary for registration purposes. Inc. filed a petition for annulment of judgment with the CA.02 and conformably to Rule 39. to "G" Holdings in consideration of the purchase price of P673. consented to the "establishment and constitution" of the mortgages on the assets of MMC in favor of GHI.. the three (3) Promissory Notes. already existing in 1992. shall have paid in full the entire balance. This appears to be the most plausible explanation for the execution of the Deed of Real Estate and Chattel Mortgage only in September 1996. through the APT.39 In this light. Inc. Apparently. viz: Subsequently. fictitious or fraudulent.

At issue in Tanongon was a third-party claim arising from a Deed of Absolute Sale executed between Olizon and Tanongon on July 29. after the NLRC decision became final and executory on April 29. etc.886. 9680083 by the Manila RTC. it is highly inconceivable that ADB. ADB and Marcopper executed.453.89. 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. 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. All that is necessary is to establish affirmatively that the conveyance is made in good faith and for a sufficient and valuable consideration. and need not have been obtained by the party seeking rescission. and the CA failed to consider the factual findings made by this Court in Republic. 1997 and the "Deed of Assignment" on December 8.47 To the appellate court. as discussed above.450.450. well ahead of the union’s notice of strike on August 23. the assignment contracts were connected with transactions that happened long before the rendition in 1997 of the Partial Judgment in Civil Case No. its major stockholder. is the fact that the mortgages were foreclosed on July 31. nor will it independently affect the right of the mortgagee to foreclose.the claimant did not exercise his option to file a separate action in court. In the case at bar. We find this Court’s ruling in MR Holdings.756. It bears reiterating that as early as November 4. To say otherwise. v. 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. First.791. 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 23.12 to ADB in satisfaction of Marcopper’s remaining debt as of March 20. Thus. it does not provide a sufficient basis to invalidate this public document. Solidbank cannot assert a better right than ADB. voluntary transfer in the form of a sale executed by the judgment debtor in favor of a dubious third-party. This presumption of fraud is not conclusive and may be rebutted by satisfactory and convincing evidence. etc.12 to ADB only for the purpose of defrauding Solidbank of the sum ofP52. 1996. And it is equally incredible for petitioner to be paying the huge sum of US$18. 2001. was remitted in favor of the Bank of Nova Scotia. Contrary to the CA decision. all the assets of MMC had already been transferred to GHI. However. 2000. "three years after its execution.06. Patent from the "Assignment Agreement" is the fact that petitioner assumed the payment of US$18.explanation is more logical and more sensible than the strained conjecture that the mortgage was executed on September 5.450. when the donor did not reserve sufficient property to pay all debts contracted before the donation. Tanongon v. as yet. Three other circumstances have been put forward by the CA to support its conclusion that the mortgage contract is a sham. thus allowing the NLRC Sheriff to levy on execution and to determine the rights of third-party claimants. Furthermore. The execution of the "Assignment Agreement" on March 20.52 . vest in NAMAWU any definitive right that could be prejudiced by the execution of the mortgage deed. The decision or attachment need not refer to the property alienated. "G" Holdings. When Marcopper ceased operations on account of disastrous mine tailings spill into the Boac River and ADB pressed for payment of the loan.453. In addition to these presumptions. Finally. All contracts by virtue of which the debtor alienates property by gratuitous title are presumed to have been entered into in fraud of creditors.1997 is not the alphaof this case. Besides. no trial was held. the questioned transaction in Tanongon was a plain.970. herein petitioner. "G" Holdings. As such. in Tanongon. the CA found that the mortgage deed itself was executed without any consideration. this fact alone cannot give rise to an adverse inference for two reasons. Second.."48 Furthermore." This article presumes the existence of fraud made by a debtor. not for the judgment credit of the mortgagor’s unsecured creditor. Those contracts cannot be viewed in isolation. the mere filing of a notice of strike by NAMAWU did not. Here. The facts of the case so far show that the assignment contracts were executed in good faith. In Tanongon.453. 1996. what is involved is a loan with mortgage agreement executed on October 2. Ltd. Considering that petitioner assumed Marcopper’s debt to ADB. 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 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.45 In this case. because at the time of its execution. and almost one month after the Supreme Court rendered its decision in the labor dispute. will connive with Marcopper to feign or simulate a contract in 1992 just to defraud Solidbank for its claim four years thereafter. 1996 only for the purpose of defrauding NAMAWU. after the DOLE had already issued a Partial Writ of Execution on May 9. Solidbank cannot deny this fact considering that a substantial portion of the said payment. Sheriff Bajar51 pertinent and instructive: Article 1387 of the Civil Code of the Philippines provides: "Art. If we may add. while the participation of APT in this case clothes the transaction in 1992 with such a presumption that has not been successfully rebutted. in favor of petitioner an "Assignment Agreement" and a "Deed of Assignment. a separate action was filed in the regular courts by GHI. 1997.49 These circumstances provided the CA with sufficient justification to apply Article 1387 of the Civil Code on presumed fraudulent transactions. pay ADB the amount of US$18. the design to defraud creditors may be proved in any other manner recognized by law and of evidence. There are material differences between the two cases. the timing of the registration of the mortgage deed was too coincidental. 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. 96-80083 by the Manila RTC. there was no intention on the part of petitioner to defeat Solidbank’s claim. 1992 in the Promissory Notes. v. while the date of the foreclosure signified that it was "effected precisely to prevent the satisfaction of the judgment awards. First. in the sum of US$13. and to invalidate the mortgage deed on this pretext. Thereupon. No presumption of regularity inheres in the deed of sale in Tanongon.50 We do not agree. a reputable international financial organization. Inc. The "Assignment Agreement" and the "Deed of Assignment" were executed for valuable considerations. however. the third-party claimant. the latter being a preferred creditor. 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. owing to the motion to dismiss filed by NAMAWU. 1997 of the Partial Judgment in Civil Case No. 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. 1992. it follows that Solidbank’s right as judgment creditor over the subject properties must give way to that of the former. which obliged APT to deliver the MMC shares and financial notes to GHI. 1997. Samson44 is not "on all fours" with the instant case. 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. v. in the absence of satisfactory evidence to the contrary. On the other hand. 1992. the mortgages had already been "established and constituted" as early as October 2. respectively."46 Equally suspicious. It would ignore our ruling in Republic. resulting in the inability of the judgment creditor to satisfy the judgment. While the execution of these assignment contracts almost coincided with the rendition on May 7. as far as the CA is concerned. 1992. 1997. Inc." Obviously. 2001. By itself. Placer Dome agreed to have its subsidiary. 1387. It is basic that mortgaged properties answer primarily for the mortgaged credit. the CA considered it highly suspect that the Deed of Real Estate and Chattel Mortgage was registered only on February 4.12. showing the clear intent of the parties to impose a lien upon MMC’s properties. and to declare that the mortgage deed was void for being simulated and fictitious.

Exhibit 2. But. and that G. attachment. 2001. 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. and NAMAWU could only have hoped for." that same foreclosure does not necessarily translate to having been "effected to prevent satisfaction of the judgment award" against MMC. not being a party to the labor dispute between NAMAWU and MMC. Section 51 of Act No. 157696 was decided by this Court only on February 9. He may use such forms. 55 Under the Torrens system. and in all cases under this Decree. we can draw parallel conclusions. it should be presumed that he did so. docketed as G. No. lease. in 1996. To paraphrase MR Holdings.59 The Purchase and Sale Agreement and the Promissory Notes themselves are the best evidence that there was ample consideration for the mortgage. Further. mortgage. Thus. This is all the more true in the present case." GHI’s mortgage rights. constituted in 1992. it is not accurate to say that the foreclosure made on July 31. he would acquire a better right than that which the vendor then had. it eventually became the subject of a review petition before this Court. The importance of registration and its binding effect is stated in Section 51 of the Property Registration Decree or Presidential Decree (P." 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.54 which reads: SECTION 51." If registered." In another case between two mortgagees. and without the least indication of fraud. mortgages. that said automobile was subject to a mortgage lien. shall take effect as a conveyance or bind the land. apart from the original agreement of October 2. 2001 was "effected [only] to prevent satisfaction of the judgment award. No. it "shall be the operative act to convey or affect the land insofar as third persons are concerned. was registered in the office of the register of deeds of Manila. instrument or entry affecting registered land. there is nothing in Act No. he knew. 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. that imposes a period within which to register annotations of "conveyance. The well-settled rule is that a mortgage lien is inseparable from the property mortgaged. it is alleged that after the Partial Writ of Execution was issued on May 9. Thus. it is presumed that he knew. "all the real and personal property of MMC had already been transferred in the hands of G Holdings. therefore. Section 25 of the Revised Rules). or after the DOLE had already issued a Partial Writ of Execution on May 9. 1992. that NAMAWU filed a notice of strike to protest non-payment of its rightful labor claims. This happened four and a half years after July 31. The execution of the subsequent Deed of Real Estate and Chattel Mortgage on September 5. the purchaser acquires no more than the right of redemption from the first mortgagee. except a will purporting to convey or effect registered land.—Every conveyance. or speculated about. but shall operate only as a contract between the parties and as evidence of authority to the Registry of Deeds to make registration.56 Thus. order. 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.D.D. 2001.53 But. judgment. 1529. instrument or entry affecting registered land shall. 1529. and even when the second mortgagee goes through the formality of an extrajudicial foreclosure.—An owner of registered land may convey. deeds. 157696. The act of registration shall be the operative act to convey or affect the land insofar as third persons are concerned. as amended by P. be constructive notice to all persons from the time of such registering. we note the narration of subsequent facts contained in the Comment of the Office of the Solicitor General. lien. by the mere fact that the instrument of mortgage. order. Section 16 of the Revised Rules of Court. Evangelista. lien. the outcome of that labor dispute was yet unascertainable at that time. Therein. charge or otherwise deal with the same in accordance with existing laws. Given this reality. It was a reasonable option open to a mortgagee which. then it "shall operate only as a contract between the parties and as evidence of authority to the Registry of Deeds to make registration. the Court of Appeals had no basis to conclude that this Deed of Real Estate and Chattel Mortgage. 2006. 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. RTC of Manila)." The superiority of the mortgagee's lien over that of a subsequent judgment creditor is now expressly provided in Rule 39.R." 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.From this ruling in MR Holdings. by reason of its late registration.D. judgment. the date when GHI foreclosed on the mortgaged properties. we must reject the conclusion of the CA that the Deed of Real Estate and Chattel Mortgage executed in 1996 was a simulated transaction. mortgage. mortgage. filed or entered in the Office of the Register of Deeds for the province or city where the land to which it relates lies. that when the appeal was dismissed by the CA on January 24. 1933. 496. No. 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.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.R. lease or other voluntary instrument. when substantially all of the properties of MMC were already mortgaged to GHI as early as October 2. Section 22 of the old Rules of Court (now Rule 39. 2006 would have been the earliest date for the unimpeded enforcement of the Partial Writ of Execution. These properties simply served as mortgaged collateral for the 1992 Promissory Notes. in good faith. It was also about this time. we held that "As between the first and second mortgagees. provides: SECTION 52. as amended by Section 52 of P. Yet. But no deed. the registration shall be made in the Office of the Register of Deeds for the province or the city where the land lies. since he should not have expected that with the purchase. attachment. or at least. Rule 39. GHI’s resort to foreclosure was a legitimate enforcement of a right to liquidate a bona fide debt. when the plaintiff purchased the automobile in question on August 22." 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. 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. if registered. as it was only then that this Court resolved the issue. 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 . as already mentioned. very much willing to respect the lien existing thereon. because. 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. antedated the Partial Writ of Execution by nearly ten (10) years. Constructive notice upon registration. Neither will the circumstance of GHI’s foreclosure of MMC’s properties on July 31. 2002. 9576132. 2001 against MMC. It should not be viewed in isolation. we cannot see how NAMAWU’s right was prejudiced by the Deed of Real Estate and Chattel Mortgage. was a simulated or fictitious contract. stood to suffer a loss if it did not avail itself of the remedy of foreclosure. Likewise. 2001. registration is the operative act which gives validity to the transfer or creates a lien upon the land. lease. On the issue of whether there had been an effective levy upon the properties of GHI. that the denial of the motion was appealed to the CA. And it cannot be denied that this original agreement was supported by an adequate consideration. lease. mortgage. Conveyance and other dealings by registered owner. This chronology of subsequent events shows that February 9. 496. leases or other voluntary instrument as are sufficient in law. filing or entering. a favorable ruling. In Cabral v. In purchasing it. No.) No. 1992." If liens were not so registered. or by its delayed registration. 1529. a motion for reconsideration was filed by MMC. entrenched in our jurisdiction is the doctrine that registration in a public registry creates constructive notice to the whole world."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. the second mortgagee has at most only the right to redeem. with full knowledge that such circumstances existed.

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

defendant brought an action to foreclose its mortgage.2d 1157).1 million project note on which LGV was the obligor and defendant was a guarantor. 82 N. will or existence of its own. Supreme Court thereafter rendered judgment in favor of defendant upon its findings that.upon the theory that LGV's transfer of certain assets constituted fraudulent transfers under the Debtor and Creditor Law.Y. see. not GHI. 2. liens against its property exceeded the value of its assets by several million dollars. 1992. accomplished solely for tax purposes. that wielded it. so that the corporate entity as to this transaction had at the time no separate mind.000 reduction in the deficiency judgment.2d 234. As properly concluded by Supreme Court. to wit: 1. Not only must there be a showing that there was majority or complete control. not mere majority or complete control. even if plaintiffs' analysis were utilized to eliminate the entire $3 million deficiency judgment.Y. and the two loans were consolidated into a first mortgage loan of $6 million. 623 N. 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". again guaranteed by defendant.2d 609.E.D.S.246. 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. Initial project funding was provided through a $2. it was APT. as a rule. It appears that if there was any control or domination exercised over MMC. the mere interlocking of directors and officers does not warrant piercing the separate corporate personalities of MMC and GHI.2d 749). Ultimately. later. MKI Sec. initially held 90% of the stock and all of the stock was ultimately transferred to defendant. Matter of Morris v. absent a finding of any inequitable consequence to plaintiffs.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.Y. New York State Dept. Francesco Galesi. Corp. National Labor Relations Commission. 77 Instructively.E.75 In this case. the U.2d 335.070. or dishonest and. it did not use that domination to commit a fraud or wrong on plaintiffs.S. at the time of the foreclosure sale.72 This doctrine is good law under Philippine jurisdiction.5 million balance on the term note and took an assignment of the first mortgage on the project's realty. the loan was modified by splitting the loan into a $1. we are at a loss as to how plaintiffs perceive themselves to have been inequitably affected by defendant's foreclosure action against LGV. 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. Following the foreclosure sale.1 million. "[e]vidence of domination alone does not suffice without an additional showing that it led to inequity. We previously upheld Supreme Court's denial of defendant's motion for summary judgment dismissing the complaint (252 A.50. Plaintiffs appealed. xxxx In reaching that conclusion. defendant purchased the project note from Chemical Bank for $3.246.50.D. The loan proceeds were utilized to purchase the real property upon which the project was to be established. both causes of action pleaded in the amended complaint must fail. It is undisputed that LGV was. fraud or malfeasance" (TNS Holdings v. we specifically reject a number of plaintiffs' assertions. LGV transferred to defendant all of the shares of Top of the World Water Company. Such control must have been used by the defendant to commit fraud or wrong. The mortgage deed transaction attacked as a basis for piercing the corporate veil was a transaction that was an offshoot.Y. a derivative. v. not only of finances but of policy and business practice in respect to the transaction attacked.S. and. 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. Fundamentally. 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. 3. in a full privatization process. Defendant's principal. absent which we would have granted summary judgment in favor of defendant. 675 N. a sufficient ground for disregarding a separate corporate personality. Notably.S. 675 N. 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.2d 609. or by defendant's transfer to LGV of a third party's uncollectible note.9 term note on which defendant was primary obligor and a $4.070. 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. Control.S..2d 135. 680 N. 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. To the contrary.Y. of Taxation & Fin.Y. a separate entity that had been organized to construct and operate the water supply and delivery system for the project.5 million to LGV. to perpetuate the violation of a statutory or other positive legal duty. In Concept Builders. Inc. by itself. paid the $1. 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.2d 609. including the entirely erroneous claims that our determination on the prior appeal (252 A.2d 234. secured by defendant's guarantee of repayment of the loan and completion of the project.5 million loan from Chemical Bank.2d 807. and for some period of time had been. Defendant bid in the property at the foreclosure sale and thereafter obtained a deficiency judgment in the amount of $3. Vera78 Petitioners' reliance on the provision of Art.D. the fact remains that subordinate mortgages totaling nearly an additional $2 million have priority over plaintiffs' judgments. The aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of.Y.73 we laid down the test in determining the applicability of the doctrine of piercing the veil of corporate fiction. Clear and convincing evidence is needed to pierce the veil of corporate fiction.1avvphi1 The trial evidence showed that LGV was incorporated in November 1985. In fact. xxxx Time and again.76 While. But these Promissory Notes with mortgage were executed by GHI with APT in the name of MMC. 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. 339. in exchange for a $950. 92 N. our decision was predicated upon the existence of such evidence. 675 N.2d 234) and the matter proceeded to a nonjury trial.2d 891. but complete domination. unjust act in contravention of plaintiffs legal rights. supra. National Mines and Allied Workers’ Union v. will or existence of its own.. Chemical Bank thereafter loaned an additional $3. by LGV's divestiture of the water company stock or the sports complex property. Ultimately. but complete domination. 610. and accepting that defendant exercised complete domination and control over LGV. 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. 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. of the mortgages earlier constituted in the Promissory Notes dated October 2. 703 N.S. 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 . even including the water company and sports complex at the values plaintiffs would assign to them. 603 N. 141. In 1989. defendant was forced to make monthly installments of principal and interest on LGV's behalf. After LGV failed to make payments on the indebtedness over the course of the succeeding two years. unable to meet its obligations and. since said action neither involves nor grows out of a labor dispute insofar as the third party is concerned. Supreme Court of New York held— Based on the foregoing. defendant obtained a judgment of foreclosure and sale in the amount of $6. although defendant dominated LGV.

2749 is whether the NLRC's decision and writ of execution. The registration of the mortgage document operated as notice to all on the matter of the mortgagee’s prior claims. under the pretext that no court of general jurisdiction can interfere with the writ of execution issued in a labor dispute. RTC Branch 61. petitioners. the recourse such as that availed of by the herein private respondents. RENAN HALILI. in issuing the questioned orders. because the mortgage has been previously recognized to exist. since the lower court is still to try the case filed with it and decide it on the merits. 2003 is SET ASIDE. Negros Occidental is AFFIRMED.R.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. Civil Case No. To deny the victim of the wrongful levy. ERNESTO LITADA. 2001 and the fact that a Sheriff’s Certificate of Sale was issued on December 3. therefore. To sustain petitioners' theory will inevitably lead to disastrous consequences and lend judicial imprimatur to deprivation of property without due process of law. all former employees of private respondent Philtread (Firestone) Tire and Rubber Corporation (Philtread. he cannot. the matter of whether the mortgage and foreclosure of the assets that are the subject of said foreclosure is ended herein. that could not have been the intendment of the law creating the NLRC. the Petition is GRANTED. the fact that petitioner initiated a foreclosure of said properties before the Clerk of Court and Ex-Officio Sheriff. for brevity). this case is not ended by this decision. VENTURA. strictly speaking. BONIFACIO URBANO. EDILBERTO VIRAY ANGELES BARON. PABLO ALULOD. does not constitute interference with the powers or processes of the labor department. since the third-party claimant is not one of the parties to the action. theoretically. however. cannot be considered as interference. still awaits final execution. can depart from our findings in those two cases because of the doctrine of stare decisis. our Decisions in Republic. Kabankalan City on July 13. "G" Holdings. WHEREFORE. nor even this Court. will be sanctioning a greater evil than that sought to be avoided by the Labor Code provision in question. 2001. Possession and Control over said mortgaged properties on July 19. MARIO CREDO BERNABE GERONIMO. Civil Case No. 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. and may still have. it thereby admitted that the mortgage was not void. RICARDO CUEVAS. petitioner is situated squarely as such third-party claimant. The Decision of the Court of Appeals dated October 14. and. The questioned restraining order of the lower court. ANICETO ARBAN. We are not unmindful. etc. Having resolved these principal issues with certainty. Thus. vs. above mentioned. and RICARDO B. STEVE VELECINA. that the lower court and the CA failed to take judicial notice of. Inc. Branch 61 of Kabankalan City." Likewise. the Court believes. appeal from the order denying his claim. ANANIAS HERMOCILLA. 2749 is one which neither "involves" nor "grows out" of a labor dispute.. It does not seek to enjoin the execution of the decision against the properties of the judgment debtor. What 'involves' or 'grows out' of a labor dispute is the NLRC case between petitioners and the judgment debtor. 1993. 2001 are the basis of its conclusion. RODOLFO MARIANO. hold that such an independent action cannot now be maintained. upon a claim and prima facie showing of ownership by the petitioner. ULDARICO GARCIA. 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. VICENTE CHAVEZ. FELOMENO BALLON. From our discussion above. "G" Holdings. and not of the judgment debtor named in the NLRC decision and writ of execution. Certainly.: Petitioners. HERNANI ABOROT. the fact that said Ex-Officio Sheriff and the Clerk of Court issue a Notice of Foreclosure. Brion and NAMAWU. ERNESTO BARENG. in Republic. ANDREW DE LA ISLA BAYANI PILAR. or a complaint for damages against the bond filed by the judgment creditor in favor of the sheriff. SEVERINO ROSETE. or to consider. that the petitioner has a clear and unmistakable right over the levied properties. VICENTE SANTOS. These include the examination of the judgment obligor when judgment is unsatisfied. 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.841avvphi1 While. NATIONAL LABOR RELATIONS COMMISSION and PHILTREAD (FIRESTONE) TIRE AND RUBBER CORPORATION. as well as the order granting preliminary injunction. and Maricalum Mining Corporation v. which were validly foreclosed by GHI. an independent action is needed to rescind the contract of mortgage. No costs.82 the examination of the obligors of judgment obligors. however. WALLY LEONES. 1992. but merely rescissible under Article 1381(3) of the Civil Code. much less the writ of execution issued thereunder. ORLANDO MENDOZA. JAIME ACEVEDO. They allege that its resolution . the presumption of regularity of transaction must be considered and said document must be looked [upon] as valid. because its issuance was amply supported by factual and legal bases. neither the lower court nor the CA. ample supplemental remedies found in Rule 39 of the Rules of Court in order to protect its rights against MMC. G. 1997 ALBERTO S. The private respondents are not parties to the said NLRC case. respondents. of the fact that the labor claims of NAMAWU. RICARDO ESCUETA. however. therefore. Notably. The existence of the subject Deed of Real Estate and Chattel Mortgage. VALERIANO MAUBAN. SILVA. with a valid consideration. What is sought to be tried in Civil Case No. acknowledged by this Court in Maricalum. a separate action for recovery. J. v. No. So also is the consequential issue of the separate and distinct personalities of GHI and MMC. At this stage. did not commit grave abuse of discretion. v. and the rights of NAMAWU to its labor claims. We have observed. 110226 June 19. Unless said mortgage contract is annulled or declared null and void. but he should file a separate reivindicatory action against the execution creditor or the purchaser of the property after the sale at public auction. we see that NAMAWU always had. we find no more need to remand the case to the lower court. NONILON DAWAL. Inc. 1992.83 or even the resort to receivership. This has no application to the case at bar.dispute' is not well-taken. dated April 7. As success fades from NAMAWU’s efforts to execute on the properties of MMC. 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. Rule 39 of the Rules of Court. 2749 does not put in issue either the fact or validity of the proceeding in theNLRC case nor the decision therein rendered. 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. only for the purpose of resolving again the matter of whether GHI owns the properties that were the subject of the latter’s foreclosure. RODOLFO JUAN. GERONIMO ESPLANA. etc. Philippine Iron Mines. ERNESTO BANAY. ROMERO. for the third and final time. Such a recourse is allowed under the provisions of Section 17. PASTOR VELUZ. in which we respectively recognized the entitlement of GHI to the shares and the company notes of MMC (under the Purchase and Sale Agreement).81 We. CEFERINO ROMERO. MANOLITO CUSTODIO. The Omnibus Order dated December 4. CARLITO CHOSAS. 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. and November 18. The property levied upon being that of a stranger is not subject to levy..80 Upon the findings and conclusions we have reached above. SO ORDERED.. impute grave abuse of discretion on the National Labor Relations Commission (NLRC) 1 for issuing two resolutions. shall be permitted to be satisfied against properties of private respondents. we now rule that the trial court. which reconsidered a resolution it rendered on April 15. 2002 of the Regional Trial Court.

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

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

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

it behooves Atty. 286 SCRA 478. NATIONAL LABOR RELATIONS COMMISSION and EQUITABLE PCI-BANK.A. the instant petition is hereby GRANTED. By failing to exercise either option. and its new address at that. DECISION AUSTRIA-MARTINEZ. Gutierrez cannot now blame the NLRC for serving its resolution at the address of the firm still on record. The law at bar. 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. SO ORDERED. is surprised to discover that the record bears a Notice of Change of Address dated March 12. . the National Labor Relations Commission (NLRC) affirmed the Labor Arbiter's Decision and dismissed petitioner's appeal for lack of merit. she held a position of trust. Gutierrez supposedly declared that he was exclusively representing Philtread. 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. respondent's position paper). why then did he use the firm's name. alleging that she was initially employed by Equitable PCI-Bank (respondent) in 1990 as Italian Remittance Marketing Consultant to the Frankfurt Representative Office. 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. As a remedy. instruments or acts of public authorities which would otherwise be void for want of conformity with certain existing legal requirements. Ermita. . All other cases within the exclusive and original jurisdiction of the Labor Arbiter. as what in fact happened here. indeed. created a situation where the jurisdiction of the Regional Directors and the Labor Arbiters overlapped. J. Similarly.A. Atty. Gutierrez and Atty. (National Sugar Refineries Corporation vs. Guerrero Streets. 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. the contention that it was Atty. Borreta were once partners in their law firm. 17 This. Gutierrez and Leogardo" whose address could be found at the "3rd Floor. R. European Head of PCIBank. is REINSTATED for immediate execution.A. 1988.: Corazon Sim (petitioner) filed a case for illegal dismissal with the Labor Arbiter. however. are lame excuses to cast doubt on the propriety of service to Atty. it was incumbent upon him not to have used the firm's name in the first place. As a lawyer. Borreta to have at least advised his former partner of the receipt of the resolution. as amended by then Executive Order No. does not seek reinstatement. therefore. There is here no overlapping of jurisdiction to speak of because matters involving interpretation and implementation of CBA provisions. the underlying reason for applying RA 6715 retroactively was the fact that prior to its amendment. in the aforementioned notice to the NLRC? Moreover. 2007 CORAZON C. Manila. On this premise." If. instead of the inherent defect in the law. and Managing Director of PCIB. Gutierrez who exclusively represented Philtread and that the law firm of Borreta.concurrent jurisdiction over cases involving money claims. vs. Gutierrez. 18 To our mind. The Court. as General Manager is an employee whom the respondent company reposed its trust and confidence.000.informing her that she was being dismissed due to loss of trust and confidence based on alleged mismanagement and misappropriation of funds. 6715 was passed and delineated the jurisdiction of the Labor Arbiters and Regional Directors. No. the Italian law allegedly provides severance pay which was applied and extended to herein complainant (Annex "P". this is not the first time that the Court refused to apply RA 6715 retroactively. hence. We do not find any reason why the Court should not apply the above ruling to the case at bar. 1988. Under R. Eventually. why did Atty. no longer being employed. 157376 October 2. as well as interpretation and enforcement of company personnel policies. 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. still. 1992. all ULP cases were exclusively within the jurisdiction of the Labor Arbiter. Assuming for the sake of argument that this Office has jurisdiction over this case. E. This Court. 797. 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. if the law firm of Borreta. 6715. as well as the factual circumstances to which they were made to apply. Presumably. This amendment. and Leogardo were really dissolved. 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. the Labor Arbiter rendered its Decision dismissing the case for want of jurisdiction and/or lack of merit. E. 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. 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. 2001. Hence. is not a curative statute. G. or he should have withdrawn the appearance of the firm and entered his own appearance. NLRC. 111 and R. Gutierrez declared during the Labor Arbiter's proceedings that he was exclusively representing Philtread. this Office is inclined to rule in favor of the respondent. . It is limited to the relationship between labor and capital within the Philippines.O. Finally. however. 1990.) xxx In this case.Europe -. must be applied retroactively. Commodore Condominium Arquiza corner M. the Court deemed it a rectification of such defect. Borreta. notwithstanding the fact that a different law is involved. the preliminary conferences adverted to by Atty. and April 7. No. WHEREFORE. In other words.00. Hence. we uphold the jurisdiction of the Labor Arbiter which attached to this case at the time of its filing on December 5. Actually. In Briad. especially since the 1987 Constitution adheres to the preferential use of voluntary modes of dispute settlement. she was promoted to Manager position. and (3) the aggregate money claim of the employee or househelper does not exceed P5. 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. No. 1993. although by a Philippine Corporation. The Court view it as merely a matter of change in policy of the lawmakers. As for Atty. or househelper under the Code. The assailed resolutions of the NLRC dated November 18. (2) the claimant. Article 217 of the Labor Code. is not impressed. 6715 are therefore curative statutes. must be the rationale that prompted the amendment. but looks incredulously at such superficial moves. Since complainant was hired and assigned in a foreign land.R. are SET ASIDE. It must be noted that the complaint of petitioners was filed on December 5. this case should be dismissed for want of jurisdiction. As can be gleaned from the foregoing. SIM. Borreta. 111. these excuses cannot camouflage the clever ploy of Philtread's counsel to earn a last chance to move for reconsideration. Respondent denied any employer-employee relationship between them. The same thing cannot be said of the case at bar. Like in Erectors.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. where Atty. the conclusion that it was curative in nature and. when she received a letter from Remegio David -. until September 1999.2 On appeal. indicating therein that the counsel for respondent (Philtread) was "Borreta. while its resolution dated April 15. 1992. This situation was viewed as a defect in the law so that when RA No. the respondent company had strong reason to believe that the complainant was guilty of the offense charged against her. transpired at around that date.O. petitioners. Gutierrez. Atty. Gutierrez. a further elucidation on the matter would be an exercise in futility. 6715 further amended Article 217 by delineating their respective jurisdictions. Complainant. On September 3. Gutierrez and Leogardo had been dissolved.the Senior Officer. in case the dissolution took place midstream. and sought the dismissal of the complaint.3 . it bears emphasizing. 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. filed by Atty. respondents*.

00 lire from the bank's account.Without filing a motion for reconsideration with the NLRC. Thus. A reading of the petition filed with the CA shows otherwise.Petitioner may not arrogate to himself the determination of whether a motion for reconsideration is necessary or not. the CA4 dismissed the petition due to petitioner's nonfiling of a motion for reconsideration with the NLRC. and adequate remedy in the ordinary course of law. The rule is that the Court is bound by the findings of facts of the Labor Arbiter or the NLRC. Claims for actual. 217. arising from employer-employee relations. . the following cases involving all workers. in a criminal case. (h) where the proceeding was ex parte or in which the petitioner had no opportunity to object. the Court of Appeals correctly dismissed the petition. the CA was not in error when it dismissed the petition. If accompanied with a claim for reinstatement. however. or any plain.: ART. including questions involving the legality of strikes and lockouts.00) regardless of whether accompanied with a claim for reinstatement. however. to wit: (a) where the order is a patent nullity. Except claims for Employees Compensation. are bereft of sufficient substantiation. however. In fact. as affirmed by the NLRC. 2002. also questions the NLRC's ruling affirming the Labor Arbiter's conclusion that she was validly dismissed by respondent. But it is not for petitioner to determine whether it is so. and valid reason for doing so. Petitioner alleges that: I. do not fall within the exception from the filing of a motion for reconsideration.000.13 The Court will not deviate from said doctrine without any clear showing that the findings of the Labor Arbiter. Hence. and 6. committed a breach of trust and confidence justifying her dismissal. compelling. Consequently. viz. To dispense with the requirement of filing a motion for reconsideration. she gives up some of the rigid guaranties available to ordinary workers. never issued except in the exercise of judicial discretion.000. which petitioner failed to do. (g) where the proceedings in the lower court are a nullity for lack of due process. These are mixed questions of fact and law and. Infractions which if committed by others would be overlooked or condoned or penalties mitigated may be visited with more severe disciplinary action. Unfair labor practice cases. 2003. hence. countered that at the time she withdrew said amount. 12 Petitioner. exemplary and other forms of damages arising from the employeremployee relations. an exception to the rule. – (a) Except as otherwise provided under this Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide. As stressed in Cervantes v. (e) where petitioner was deprived of due process and there is extreme urgency for relief. In a Resolution dated October 29. and. 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. unless it is shown that grave abuse of discretion or lack or excess of jurisdiction has been committed by said quasi-judicial bodies. the radio program was already off the air. Cases arising from any violation of Article 264 of this Code. the filing of which is an indispensable condition to the filing of a special civil action for certiorari. It was wrong for the Labor Arbiter to rule that "labor relations system in the Philippines has no extra-territorial jurisdiction. the remedy of filing a special civil action for certiorari is available only when there is no appeal. whether petitioner. indeed. those cases that workers may file involving wage. 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. all other claims. 5. relief from an order of arrest is urgent and the granting of such relief by the trial court is improbable.5 Petitioner filed a motion for reconsideration but it was nonetheless denied by the CA per Resolution dated February 26. Termination disputes. Under Rule 65. Petitioner argues that filing a motion for reconsideration with the NLRC would be merely an exercise in futility and useless. and (i) where the issue raised is one purely of law or public interest is involved. failed to qualify her case as among the few exceptions. What petitioner submits is that she used said amount for the Radio Pilipinas sa Roma radio program of the company. 4. of course.16 The Court notes. The issues raised in this case are mixed questions of fact and law. including those of persons in domestic or household service. Respondent. never demandable as a matter of right. (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. involving an amount of exceeding five thousand pesos (P5.8 This is to give the lower court the opportunity to correct itself. or are the same as those raised and passed upon in the lower court. 2. A company's resort to acts of self-defense would be more easily justified. 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. a motion for reconsideration would be useless. Jurisdiction of Labor Arbiters and the Commission. The legality of petitioner's dismissal hinges on the question of whether there was an employer-employee relationship. (f) where. as where the court a quo has no jurisdiction. within thirty (30) calendar days after the submission of the case by the parties for decision without extension. Petitioner does not deny having withdrawn the amount of P3. petitioner must show a concrete. (b) where the questions raised in the certiorari proceedings have been duly raised and passed upon by the lower court. 10 Petitioner. which was affirmed by the NLRC. petitioner went to the Court of Appeals (CA) via a petition for certiorari under Rule 65 of the Rules of Court. as such.9 There are."17 Article 217 of the Labor Code provides for the jurisdiction of the Labor Arbiter and the National Labor Relations Commission. whether agricultural or non-agricultural: 1. hours of work and other terms and conditions of employment.000.11 (Emphasis supplied) Petitioner also contends that the issue at bench is purely a question of law. Thus. 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.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. Court of Appeals: It must be emphasized that a writ of certiorari is a prerogative writ. speedy. There is a question of fact when doubt or difference arises as to the truth or falsehood of the alleged facts. 3. even in the absence of stenographic notes. the present recourse under Rule 45 of the Rules of Court. Medicare and maternity benefits. Hence. 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. 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. II. (d) where. if in the affirmative. 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. aside from questioning the ruling of the NLRC sustaining the Labor Arbiter's view that it does not have any jurisdiction over the case. with regard to the issue on jurisdiction.15 [w]hen an employee accepts a promotion to a managerial position or to an office requiring full trust and confidence. under the circumstances. Social Security. a palpable error in the Labor Arbiter's disposition of the case. rates of pay. 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. which was denied by respondent. moral. 7 A "plain" and "adequate remedy" is a motion for reconsideration of the assailed order or resolution. Respondent is a managerial employee. loss of trust and confidence is a valid ground for her dismissal. exceptions to the foregoing rule.

52911. Moreover. To pay the amount of Php20. race or creed. promote full employment. 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.00. The Metropolitan Trial Court’s Ruling On 28 December 1999. Article XIII. and just and humane conditions of work [Article 3 of the Labor Code of the Philippines. Meanwhile [in 1993]. or by determination or conventions agreed upon in a foreign country. 178610 is a petition for review1 assailing the Decision2 promulgated on 30 March 2006 by the Court of Appeals (CA) in CA-G. Thus." 21 (Emphasis supplied) In any event. Gerong and Editha Broqueza’s termination from employment resulted in the loss of continued benefits under their retirement plans. petitioner Gerong applied and was granted an emergency loan in the amount of Php35. et al. vs. Costs against petitioner. Section 10 of Republic Act (R. 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. the loans secured by their future retirement benefits to which they are no longer entitled are reduced to unsecured and pure civil obligations. respondent HSBCL-SRP considered the accounts of petitioners delinquent. On 11 December 2000. They are also members of respondent Hongkong Shanghai Banking Corporation. 2010 HONGKONG AND SHANGHAI BANKING CORP. premises considered and in view of the foregoing. 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.20 In Philippine National Bank v. The MeTC ruled that the nature of HSBCL-SRP’s demands for payment is civil and has no connection to the ongoing labor dispute. As unsecured and pure obligations. SPOUSES BIENVENIDO AND EDITHA BROQUEZA. Employees Union. 00-787 dated 11 December 2000. within ninety (90) calendar days after the filing of the complaint. This ruling is likewise rendered imperative by Article 17 of the Civil Code which states that laws "which have for their object public order. 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. the RTC affirmed the MeTC’s decision in toto. while the spouses Broqueza’s case was docketed as Civil Case No.000. Gerong’s case was docketed Civil Case No. the Court pronounced: x x x Whether employed locally or overseas. 1993.) No. collective bargaining. On December 12. 3.00. SO ORDERED.6 HSBCL-SRP. 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. DECISION CARPIO. security of tenure. Inc.12 at six percent per annum from the time of the filing of these cases.) Petitioner. 52911 against Gerong. the petition is DENIED. For the State assures the basic rights of all workers to self-organization. No. petitioners were not able to pay the monthly amortizations of their respective loans. 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. 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). 1990. exemplary and other forms of damages. contract stipulations to the contrary notwithstanding. the loans are immediately demandable. ordering the latter: 1.R. acting through its Board of Trustees and represented by Alejandro L. public policy and good customs shall not be rendered ineffective by laws or judgments promulgated. This pronouncement is in keeping with the basic public policy of the State to afford protection to labor. moral.A. These loans are paid through automatic salary deduction. or the Migrant Workers and Overseas Filipinos Act of 1995.740. The RTC later reconsidered the order of denial and resolved the issues in the interest of justice. as well as its Order 4 dated 5 September 2000.. exemplary and other forms of damages.00 at six percent interest per annum from the time of demand and in Civil Case No. and regulate the relations between workers and employers. until the amount is fully paid.18 provides: SECTION 10.000. J. filed Civil Case No. she again applied and was granted an appliance loan in the amount of Php24. including termination disputes involving all workers. On 19 September 1996. 52400 against the spouses Broqueza on 31 July 1996. Ltd. but they failed to pay. all Filipino workers enjoy the protective mantle of Philippine labor and social legislation.000. 62685. The employees then filed an illegal dismissal case before the National Labor Relations Commission (NLRC) against HSBC. to pay the amount of Php116. Both suits were civil actions for recovery and collection of sums of money. 00-787.8 Gerong and the spouses Broqueza filed a joint appeal of the MeTC’s decision before the RTC. 1991. ensure equal work opportunities regardless of sex. No. the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide. Ltd.9 . 56797. 1987 Constitution].R.(b) The commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters. Cabansag. to pay the amount of Php25. National Labor Relations Commission. The HSBCL-SRP is a retirement plan established by HSBC through its Board of Trustees for the benefit of the employees.A. moral. 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. On October 1. Under these provisions. CV No. et al. Staff Retirement Plan (HSBCL-SRP) for recovery of sum of money. 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. Because of their dismissal. 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. Thus. See also Section 18. HSBCLSRP filed Civil Case No. Section 62 of the Omnibus Rules and Regulations Implementing R. Custodio. The dispositive portion of the MeTC’s decision reads: WHEREFORE. petitioner [Editha] Broqueza obtained a car loan in the amount of Php175. 178610 November 17.00 each as reasonable attorney’s fees. SP No. entitledHongkong Shanghai Banking Corp.R. G. STAFF RETIREMENT PLAN. LTD. — Notwithstanding any provision of law to the contrary. Staff Retirement Plan (HSBCL-SRP. vs. In Civil Case No.00 on June 2. 00-786. among whom are petitioners Editha Broqueza and Fe Gerong. On the other hand. WHEREFORE. Money Claims. 52400 for Recovery of a Sum of Money. Article II and Section 3. among whom are overseas Filipino workers. 2. 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. a labor dispute arose between HSBC and its employees. it is clear that labor arbiters have original and exclusive jurisdiction over claims arising from employer-employee relations. No.R.780. Demands to pay the respective obligations were made upon petitioners. Majority of HSBC’s employees were terminated. the MeTC promulgated its Decision7 in favor of HSBCL-SRP. plaintiff below).: G. The legality or illegality of such termination is now pending before this appellate Court in CA G. 8042. Cost of suit. Also. subject to the rules and procedures of the NLRC. Respondents.344. Retirement Trust Fund. 52400. SO ORDERED.

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

not only must condemn all forms of discrimination against women. The Labor Code and. The allegations in the Petition do not make out a labor dispute arising from employer-employee relationship as none is shown to exist. Respondent court is ordered to DISMISS its Civil Case No. Part A of the PAL-FASAP CBA null and void. and the CEDAW. Section 114. as the controversy partakes of a labor dispute. As the issue involved is constitutional in character. Petitioners have the statutory right to equal work and employment opportunities with men under Article 3. which is within the Court's competence. including our courts. Part A of the PAL-FASAP 2000-20005 CBA on compulsory retirement from service is invidiously discriminatory against and manifestly prejudicial to Petitioners because. even criminal. with the male cabin attendants of Philippine Airlines. the allegations in the petition for declaratory relief plainly show that petitioners' cause of action is the annulment of Section 144. The dispute concerns the terms and conditions of petitioners' employment in PAL. 2004. Hence. The RTC set a hearing on petitioners' application for a TRO and. The RTC has the power to adjudicate all controversies except those expressly witheld from the plenary powers of the court. 04-886. and demanded for an equal treatment with their male counterparts. with the allegations in the Petition constituting the bases for such relief sought. The RTC has no jurisdiction over the subject matter of petitioners' petition for declaratory relief because the Voluntary Arbitrator or panel of Voluntary Arbitrators have original and exclusive jurisdiction to hear and decide all unresolved grievances arising from the interpretation or implementation of the CBA. Regular courts have no power to set and fix the terms and conditions of employment. and ruled that: WHEREFORE. Accordingly. This case is a matter of public interest not only because of Philippine Airlines' violation of the Constitution and existing laws. within the specific context of this case. "CEDAW"). This case is not directed specifically against respondent arising from any act of the latter. x x x. The RTC issued a TRO on August 10. the RTC issued an Order 8 upholding its jurisdiction over the present case. respondent alleged that petitioners' prayer before this Court to resolve their petition for declaratory relief on the merits is procedurally improper and baseless. the respondent court is by us declared to have NO JURISDICTION OVER THE CASE BELOW and. alleges that the labor tribunals have jurisdiction over the present case. 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. and (2) the petition be dismissed or the proceedings in this case be suspended. be annuled and set aside for having been issued without and/or with grave abuse of discretion amounting to lack of jurisdiction. all the proceedings. a multilateral convention that the Philippines ratified in 1981. SO ORDERED. The pertinent portion of the petition recites: CAUSE OF ACTION 24. 144 of the subject CBA which is allegedly discriminatory as it discriminates against female flight attendants. In a letter dated July 22. 37. For being patently unconstitutional and unlawful. 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. Petitioner filed a motion for reconsideration. the thrust of the Petition is Sec. 6725 or the Act Strengthening Prohibition on Discrimination Against Women. the petitioners pray that judgment be rendered on the merits declaring Section 144.13 which was denied by the CA in its Resolution dated March 7. but also because it highlights the fact that twenty-three years after the Philippine Senate ratified the CEDAW. it has the power to decide issues of constitutionality or legality of the provisions of Section 144. 2003. dated August 31. The petition is meritorious. granting the respondent's petition. 2004. Part A of the PAL-FASAP CBA. The RTC reasoned that: In the instant case. basis for Philippine Airlines to distinguish. this case seeks a declaration of the nullity of the questioned provision of the CBA. The respondent filed an omnibus motion 10 seeking reconsideration of the order overruling its objection to the jurisdiction of the RTC the lifting of the TRO. 2004. 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. thus. On July 29. 442. Finally. 2004. much less lawful. On July 12. 04-886. against respondent for the invalidity of Section 144. 33. on October 8. On August 9. 2005. Part A of the PAL-FASAP CBA.9 enjoining the respondent for implementing Section 144. docketed as Civil Case No. Branch 147. 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. 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. 28. Part A of the PAL-FASAP CBA. tribunal. 2006. required the parties to submit their respective memoranda. 14 In the case at bar. 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. Part A of the PAL-FASAP CBA pending the resolution of the case. at the soonest possible time. respondent.Subject to the grooming standards provisions of this Agreement. 26. Part A of the PAL-FASAP CBA. but must also implement measures towards its elimination. Respondent. thereafter. Section 114. 2004. the Labor Code. 29.4 petitioners and several female cabin crews manifested that the aforementioned CBA provision on compulsory retirement is discriminatory. compulsory retirement shall be fifty-five (55) for females and sixty (60) for males. . on the other hand. specifically their retirement age. There is no reasonable. person or body exercising judicial or quasi-judicial functions. 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. nor does it involve a claim against the respondent. 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. 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. 2004. in violation of the Constitution. 1987 of the Constitution and. 27. This discrimination against Petitioners is likewise against the Convention on the Elimination of All Forms of Discrimination Against Women (hereafter. 31. discrimination against women continues. consequently. which denied its objection to its jurisdiction. It further prayed that the (1) petitioners' application for the issuance of a writ of preliminary injunction be denied. Rather. orders and processes it has so far issued therein are ANNULED and SET ASIDE. The Government and its agents. Presidential Decree No. the labor arbiter or the National Labor Relations Commission (NLRC) has no jurisdiction over the case and. It is unlawful. within the specific context of this case. Article II. 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. On September 27. with the male cabin attendants of Philippine Airlines. Petitioners have the constitutional right to fundamental equality with men under Section 14. they are compelled to retire at a lower age (fifty-five (55) relative to their male counterparts (sixty (60). Anduiza. 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. The CA rendered a Decision. Aggrieved. Part A of the PAL-FASAP 20002005 CBA must be declared invalid and stricken down to the extent that it discriminates against petitioner. 144.

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

referral to the grievance machinery and voluntary arbitration would not serve the interest of the petitioners. the relations between capital and labor are not merely contractual. particularly those employed before November 22. "provided they are not contrary to law.29 The question as to whether said Section 114. which jurisdiction to hear the same is properly lodged with the the RTC. For being undervalued. is not merely contractual in nature but impressed with public interest. 86813 are REVERSED and SET ASIDE. Slimmers World preventively suspended Okol. 2005 and March 7. an absolute principle. . (Slimmers World) employed petitioner Leslie Okol (Okol) as a management trainee on 15 June 1992. addressed to PAL. public morals. applying the principle in the aforementioned case cited. Part A of the PAL-FASAP CBA is discriminatory or not is a question of fact. 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. 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. prior to Okol’s dismissal. contract. 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. endeavored to adjust. Inc.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. of our Civil Code is that the contracting parties may establish such stipulations as they may deem convenient. 2004. Branch 147 is DIRECTED to continue the proceedings in Civil Case No. these are imbued with public interest and therefore are subject to the police power of the state. INC. it was only private respondent on his own who questioned the compulsory retirement. respectively. since a contract is the law between the parties. The shipment of the equipment was placed under the names of Okol and two customs brokers for a value less than US$500. SO ORDERED. 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. statutes and treaties. The only controversy lies in its intrinsic validity. submitted its association's bargaining proposal for the remaining period of 2004-2005 of the PAL-FASAP CBA." Thus. Ople. Part A of PAL-FASAP CBA when several of its female flight attendants reached the compulsory retirement age of 55. and Moy (collectively called respondents) for illegal suspension.. This Court is not persuaded. Okol filed her written explanation. settle or negotiate with PAL for the removal of the difference in compulsory age retirement between its female and male flight attendants.Respondents. said rule is not absolute. petitioners sought relief before this Court through the instant petition for review under Rule 45. No. SP. 160146 December 11.1avvphi1 WHEREFORE. vs. However. On 17 September 1999."compulsory retirement" as embodied in the CBA. A CBA.x x x 26 The supremacy of the law over contracts is explained by the fact that labor contracts are not ordinary contracts. G. who have both previously agreed upon the provision on the compulsory retirement of female flight attendants as embodied in the CBA. Slimmers World terminated Okol’s employment. When petitioners in their individual capacities questioned the legality of the compulsory retirement in the CBA before the trial court. because it exerted no further efforts to pursue its proposal. 04-886 with deliberate dispatch. Through a letter dated 22 September 1999 signed by its president Ronald Joseph Moy (Moy). to say the least.R. which includes the renegotiation of the subject Section 144. J.: 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. On 19 September 1999. They are so impressed with public interest that labor contracts must yield to the common good. counter-balancing the principle of autonomy of contracting parties is the equally general rule that provisions of applicable law. Behavior Modifications. The rule in Article 1306. FASAP's attempt to change the questioned provision was shallow and superficial. morals. as their representative. 1996. No. the governing principle is that parties may not contract away applicable provisions of law especially peremptory provisions dealing with matters heavily impressed with public interest. The Supreme Court is not a trier of facts. The Regional Trial Court of Makati City. as a labor contract. If the retirement provisions in the CBA run contrary to law. the dispute in the case at bar is not between FASAP and respondent PAL. Besides.25 this Court held that: The principle of party autonomy in contracts is not. in CA-G. Interpretation. Slimmers World found Okol’s explanation to be unsatisfactory. is the art of or process of discovering and ascertaining the meaning of a statute. such provisions may very well be voided. The Facts Respondent Slimmers World International operating under the name Behavior Modifications. On 28 July 1999. which set aside the Resolutions dated 29 May 2001 and 21 December 2001 of the National Labor Relations Commission (NLRC). SLIMMERS WORLD INTERNATIONAL. Inc. Thus. DECISION CARPIO. The trial court in this case is not asked to interpret Section 144. SP No. 2006. good customs. Put a little differently.R.24 The provision regarding the compulsory retirement of flight attendants is not ambiguous and does not require interpretation. in a letter dated July 12. however. A full-blown trial is necessary. petitioners pray for the declaration of the alleged discriminatory provision in the CBA against its female flight attendants. the petition is PARTLY GRANTED. In the same vein. In Pakistan International Airlines Corporation v. Without FASAP's active participation on behalf of its female flight attendants. 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. However. The dispute is between respondent PAL and several female flight attendants who questioned the provision on compulsory retirement of female flight attendants. When the CA annuled and set aside the RTC's order. illegal dismissal. This mode of appeal is generally limited only to questions of law which must be distinctly set forth in the petition. or other written document. BEHAVIOR MODIFICATIONS. Also. and RONALD JOSEPH MOY. will. because the manner of implementing the same is clear in itself. 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. as defined in Black's Law Dictionary. 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. public order or public policy. dated August 31. Okol filed a complaint3 with the Arbitration branch of the NLRC against Slimmers World. 28 Finally. 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. the equipment were seized.R. 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. Neither is there any question regarding the implementation of the subject CBA provision. The Decision and Resolution of the Court of Appeals. especially provisions relating to matters affected with public policy. the utilization of the grievance machinery or voluntary arbitration would be pointless. FASAP. Petitioner. Further. 69893. are deemed written into the contract. 2009 LESLIE OKOL. Moreover. On 2 September 1999. 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. or public policy. Although it is a rule that a contract freely entered between the parties should be respected. A perusal of the petition before Us. there was no showing that FASAP. Therefore. x x x. Part A of the PAL-FASAP CBA.

In a number of cases. The dispositive portion of the resolution states: WHEREFORE. Okol filed an appeal with the NLRC. (3) the power to dismiss. being an intra-corporate dispute. 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. Since it involved a corporate officer. reinstatement and back wages imputed by petitioner against respondents fall squarely within the ambit of intra-corporate disputes. The Issue The issue is whether or not the NLRC has jurisdiction over the illegal dismissal case filed by petitioner. by itself. and (3) petitioner was dismissed from employment not through a board resolution but by virtue of a letter from Moy. In an Order. Petitioner asserts that even as vice-president. docketed as CA-G. from the documents submitted by respondents. The Court of Appeals ruled that the case. The question of remuneration involving a stockholder and officer. or an intra-corporate controversy which arises between a stockholder and a corporation. 8799. the instant petition. Petitioner enumerated the instances that she was under the power and control of Moy. Okol filed a Motion for Reconsideration which was denied in a Resolution 11 dated 22 September 2003. Minutes14 of the meeting of the Board of Directors dated 14 April 1997 and Secretary’s Certificate. SO ORDERED. In a Resolution6 dated 29 May 2001. 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. Okol to her former position with full back wages which to date stood in the amount of P10.00 computed from July 28. the NLRC reversed and set aside the labor arbiter’s order. the dispute was an intra-corporate controversy falling outside the jurisdiction of the Arbitration branch. 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. It is the "four-fold" test. damages and attorney’s fees. On 22 February 2000. The GIS and minutes of the meeting of the board of directors indicated that petitioner was a member of the board of directors. secretary. 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. 2000 until fully reinstated. However. 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. Slimmers World’s president: (1) petitioner received salary evidenced by pay slips.250. In a Resolution8 dated 21 December 2001.10 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. NLRC. Section 25 of the Corporation Code enumerates corporate officers as the president. 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. (2) Moy deducted Medicare and SSS benefits from petitioner’s salary. xxx Article III Officers xxx 4. namely (1) the power to hire.00 as indemnity pay plus attorney’s fee equivalent to ten (10%) of the total monetary award. should reinstatement be not feasible separation pay equivalent to one month pay per year of service is awarded. the jurisdiction to hear and decide the case is vested with the labor arbiter and the NLRC. the Vice-President shall be elected by the Board of Directors from [its] own members. not a mere employee. petitioner was a director and officer of Slimmers World.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 respondents. illegal dismissal. Inc. treasurer and such other officers as may be provided for in the by-laws. However./Slimmers World International to reinstate complainant Leslie F. the work that she performed conforms to that of an employee rather than a corporate officer. in their motion to dismiss filed before the labor arbiter. the Order appealed from is SET ASIDE and REVERSED. In the present case. respondents filed a Motion to Dismiss4 the case with a reservation of their right to file a Position Paper at the proper time. falls within the jurisdiction of the regular courts pursuant to Republic Act No. having shown that an employer-employee relationship exists. the NLRC not only decided the case on the merits but did so in the absence of position papers from both parties. The Ruling of the Court of Appeals In a Decision9 dated 18 October 2002. The issue revolves mainly on whether petitioner was an employee or a corporate officer of Slimmers World. questioned the jurisdiction of the NLRC in taking cognizance of petitioner’s complaint. Mere title or designation in a corporation will not.unpaid commissions. On the other hand. The Court’s Ruling The petition lacks merit. 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. SP No. which facts provide further basis that petitioner’s separation from Slimmers World does not come under the NLRC’s jurisdiction. the factors cited by petitioner that she was a mere employee do not prove that she was not an officer of Slimmers World. the NLRC denied the motion for lack of merit.12 we held that an "office" is created by the charter of the corporation and the officer is elected by the directors or stockholders. Vice-President – Like the Chairman of the Board and the President.R. the appellate court set aside the NLRC’s Resolution dated 29 May 2001 and affirmed the labor arbiter’s Order dated 20 March 2000. on the other hand.5 dated 20 March 2000. All other claims are dismissed for lack of factual or legal basis. Respondents asserted that the NLRC had no jurisdiction over the subject matter of the complaint. unpaid commissions.000. is not a simple labor problem but a matter that comes within the area of . Respondents then filed an appeal with the Court of Appeals. 1999 to November 28. In the motion. holding one subscribed share of the capital stock. In Tabang v. The Vice-President will perform such duties as the Board of Directors may impose upon him from time to time. and (4) the power to control. (2) the payment of wages. The charges of illegal suspension.7 Respondents filed a Motion for Reconsideration with the NLRC. Also. and the further sum of P1. which must be applied. Thus.17 we have held that a corporate officer’s dismissal is always a corporate act. Respondents. determine the existence of an employer-employee relationship. A new one is hereby ENTERED ordering respondent Behavior Modification. the labor arbiter granted the motion to dismiss. Respondents assert that petitioner was not only an officer but also a stockholder and director. and an elected corporate officer. Hence. Respondents contended that the relief prayed for was confined only to the question of jurisdiction.000. The labor arbiter ruled that Okol was the vice-president of Slimmers World at the time of her dismissal. xxx Clearly.000. respondents attached the General Information Sheet 13 (GIS) dated 14 April 1998. with prayer for reinstatement and payment of backwages. 69893. a fraction of at least six months considered one whole year.

1999 Decision 3 and September 30.00 a month. his employment was terminated through OAB's July 9. is an intra-corporate dispute subject to the jurisdiction of the regular courts. Kingdom of Saudi Arabia on February 7. and on the same day. Thus. from the applicants' curricula vitae submitted to it for evaluation. 1994 letter. The Labor Arbiter reasoned that there was no underpayment of salaries since according to the POEA-Overseas Contract Worker (OCW) Information Sheet. The Ruling of the NLRC The NLRC held that EDI's seemingly harmless transfer of Gran's contract to ESI is actually "reprocessing.00. officers or managers of such corporations. (1) that Gran did not submit a single activity report of his daily activity as dictated by company policy. J. Section 5 of Republic Act No. OAB. Accordingly. 1993 letter for curricula vitae of qualified applicants for the position of "Computer Specialist. Quezon City." The faxed letter also stated that if Gran agrees to the terms and conditions of employment contained in it. on July 21.18 Prior to its amendment. transferred to regional trial courts the SEC’s jurisdiction over all cases listed in Section 5 of PD 902-A: 5. namely. NATIONAL LABOR RELATIONS COMMISSION and ELEAZAR S. EDI may arrange for Gran's immediate dispatch. Section 5(c) of Presidential Decree No. in Riyadh.2. After his arrival in the Philippines. and in his Confirmation of Appointment as Computer Specialist. EDIStaffbuilders International.R. and Omar Ahmed Ali Bin Bechr Est.250. the Labor Arbiter decided that Gran was validly dismissed from his work due to insubordination. Gran filed an Appeal15 on April 6. In addition. 1998 Decision. Thus.5 ESI is another recruitment agency which collaborated with EDI to process the documentation and deployment of private respondent to Saudi Arabia.12 3.00. Dissatisfied.R.. G. (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.00. F-5751-93.R. In addition. it selected Gran for the position of "Computer Specialist. OAB informed EDI that.00 representing his final pay.11 on the following grounds: 1.00. which took effect on 8 August 2000. This Decision is without prejudice to petitioner Leslie Okol’s taking recourse to and seeking relief through the appropriate remedy in the proper forum. Non-compliance to contract requirements by the recruitment agency primarily on your salary and contract duration. 2007 EDI-STAFFBUILDERS INTERNATIONAL.10 After Gran had been working for about five months for OAB. Subsection 5." which is a prohibited transaction under Article 34 (b) of the Labor Code. (EDI). 145587 October 26. Country Bankers Insurance Corporation. National Capital Region. which dealt directly with OAB.00 only. Kingdom of Saudi Arabia. Gran's monthly salary was USD 600. dated October 3.00 for a period of two years. 2000 Decision2 of the Court of Appeals (CA) in CA-G. 1993. the charge of insubordination was not . 1994. vs. JR. disobedience.00 (USD 600. DECISION VELASCO. to whom Gran's case was assigned. it shall have original and exclusive jurisdiction to hear and decide cases involving: xxx c) Controversies in the election or appointments of directors. Gran signed an employment contract 9 that granted him a monthly salary of USD 850. SO ORDERED. 56120 which affirmed the January 15. it appears from the records that Gran failed to furnish EDI with a copy of his Appeal Memorandum. towards him. we DENY the petition." 7 In a facsimile transmission dated November 29. The alleged non-compliance with contractual stipulations relating to Gran's salary and contract duration. it was found that Gran did not commit any act that constituted a legal ground for dismissal. petitioner. The Facts Petitioner EDI is a corporation engaged in recruitment and placement of Overseas Filipino Workers (OFWs). Upon arrival in Riyadh. 1993.500. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations. and his failure to submit daily activity reports. With regard to the issue of illegal dismissal. 8799. one of which was a monthly salary of SR (Saudi Riyal) 2. 1994. Arbiter Caday dismissed Gran's complaint for lack of merit. 5. which was equivalent to USD 600. 1994. and USD 350. The Ruling of the Labor Arbiter In his February 10. and Western Guaranty Corporation with the NLRC. Gran received from OAB the total amount of SR 2.00. INC. However. to justify that Gran had no claim for unpaid salaries or wages against OAB. WHEREFORE.150. Non-compliance to pre-qualification requirements by the recruitment agency[. (OAB) jointly and severally to pay Eleazar S. 902-A19 (PD 902-A) provided that intra-corporate disputes fall within the jurisdiction of the Securities and Exchange Commission (SEC): Sec. 8 After accepting OAB's offer of employment. Gran was then deployed to Riyadh. 2.00 as unpaid salaries. his monthly basic salary was fixed at SR 2. (4) that Gran's employment contract had never been substituted. 1998.6 It appears that OAB asked EDI through its October 3. if any.] vide OAB letter ref. partnerships or associations. 69893. Inc.corporate affairs and management and is a corporate controversy in contemplation of the Corporation Code.14 Labor Arbiter Manuel R. 902-A is hereby transferred to the Courts of general jurisdiction or the appropriate Regional Trial Court. respondents. OAB agreed to pay Gran USD 850. Caday. Insubordination or disobedience to Top Management Order and/or instructions (non-submittal of daily activity reports despite several instructions). on February 10. Gran instituted a complaint. Gran (Gran) the amount of USD 16. through the assistance of the EDI office in Riyadh. On July 11. ruled that there was neither underpayment nor illegal dismissal. against ESI/EDI.. the appellate court correctly ruled that it is not the NLRC but the regular courts which have jurisdiction over the present case. 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. The Commission’s jurisdiction over all cases enumerated under Section 5 of Presidential Decree No. partnerships and other forms of associations registered with it as expressly granted under existing laws and decrees. ordering Expertise Search International (ESI). Private respondent Gran was an OFW recruited by EDI. Gran questioned the discrepancy in his monthly salary—his employment contract stated USD 850.2.948. Arbiter Caday also cited the Declaration executed by Gran. However. GRAN. Third Division. while his Philippine Overseas Employment Agency (POEA) Information Sheet indicated USD 600.00 monthly as food allowance. and the absence of pre-qualification requirements cannot be attributed to Gran but to EDI. 1999 Resolution4 rendered by the National Labor Relations Commission (NLRC) (Third Division) in POEA ADJ (L) 94-06-2194. We AFFIRM the 18 October 2002 Decision and 22 September 2003 Resolution of the Court of Appeals in CA-G.00). and deployed by ESI to work for OAB. which was docketed as POEA ADJ (L) 94-06-2194 for underpayment of wages/salaries and illegal dismissal.: The Case This Petition for Review on Certiorari1 seeks to set aside the October 18. 1998 with the NLRC. 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. SP No. (5) and that Gran was paid a monthly salary of USD 850. (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. the Labor Arbiter found that Gran failed to refute EDI's allegations. SP No. No. trustees. he executed a Declaration 13 releasing OAB from any financial obligation or otherwise. xxx It is a settled rule that jurisdiction over the subject matter is conferred by law.

EDI filed a Petition for Certiorari before the CA. it was ruled that failure of appellant to furnish a copy of the appeal to the adverse party is not fatal to the appeal. v. on August 26. he would not have been hired and deployed abroad. Respondents Expertise Search International. The NLRC then ordered Gran to present proof of service. the appeal should not be dismissed. WHETHER GRAN WAS AFFORDED DUE PROCESS PRIOR TO TERMINATION. in such a situation. Hence. National Labor Relations Commission. Seeing that the NLRC did not act on Gran's motion after EDI had filed its Opposition. not a jurisdictional defect.150. This position is devoid of merit.D. v. Inc. In a catena of cases. Magpayo Customs Brokerage Corp. EDI Staffbuilders Int'l. and hence. 1999. the appellate court denied the petition to set aside the NLRC Decision. As a result of these findings. other than the termination letter. 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.20 The NLRC then issued a Resolution21 denying petitioner's Motion for Reconsideration. As for the charge of insubordination and disobedience due to Gran's failure to submit a "Daily Activity Report. but not dismissed. IS APPLICABLE IN THE INSTANT CASE. Magpayo." Unconvinced of the NLRC's reasoning. and Omar Ahmed Ali Bin Bechr Est. III. We act on the petitions and simply require the petitioners to comply with the rule. the abject failure of the NLRC to order Gran to furnish EDI with the Appeal Memorandum constitutes grave abuse of discretion. AS APPLIED BY THE COURT OF APPEALS. NLRC. in J. Finally. On the procedural issue. an excusable neglect and not a jurisdictional defect which would justify the dismissal of his appeal. he should have just been suspended or reprimanded. however. the dispositive portion of which reads: WHEREFORE. an excusable neglect. The CA also held that Gran was not afforded due process.substantiated. National Labor Relations Commission. 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. in such a case. Also. The records reveal that the NLRC discovered that Gran failed to furnish EDI a copy of the Appeal Memorandum. While Gran's failure to furnish EDI with a copy of the Appeal Memorandum is excusable. 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. ratiocinating that the issues and arguments raised in the motion "had already been amply discussed. II. In Estrada v. The Ruling of the Court of Appeals The CA subsequently ruled on the procedural and substantive issues of EDI's petition. the appellate court held that "Gran's failure to furnish a copy of his appeal memorandum [to EDI was] a mere formal lapse. The court found that Gran was terminated on the same day he received the termination letter.28 and in Sunrise Manning Agency. IV." 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.26 (Emphasis supplied. the NLRC reversed the Labor Arbiter's Decision and rendered a new one. NLRC RULING.27 Pagdonsalan v. (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. petitioner filed.150. WHETHER GRAN IS ENTITLED TO BACKWAGES FOR THE UNEXPIRED PORTION OF HIS CONTRACT. it should not be given due course either. The court also held that even if Gran was guilty of insubordination. Rule XIII of its Implementing Rules and Regulations. COROLLARY HERETO. Inc.16 Gran then filed a Motion for Execution of Judgment 17 on March 29.D. the CA held that the Declaration signed by Gran did not bar him from demanding benefits to which he was entitled. is to require the appellant to comply with the rule that the opposing party should be provided with a copy of the appeal memorandum.29 Thus. SO ORDERED. considered. a Motion for Reconsideration of the NLRC Decision after receiving a copy of the Decision on August 16.00.23 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. and that there was "no cogent reason or patent or palpable error that warrant any disturbance thereof. The court held that since the law requires the recruitment agencies to subject OFWs to trade tests before deployment.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. Rules of Court. 1999 with the NLRC and petitioner receiving a copy of this motion on the same date.. and Gran was not even afforded the required notice and investigation on his alleged offenses.) The J. 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. Thus. without having been apprised of the bases of his dismissal or afforded an opportunity to explain his side. As enunciated in J. and ruled upon" in the Decision. NLRC. WHETHER PETITIONER EDI HAS ESTABLISHED BY WAY OF SUBSTANTIAL EVIDENCE THAT GRAN'S TERMINATION WAS JUSTIFIABLE BY REASON OF INCOMPETENCE. NLRC. Accordingly. the assailed decision is SET ASIDE. The Court ratiocinated as follows: The failure to give a copy of the appeal to the adverse party was a mere formal lapse. Magpayo ruling was reiterated in Carnation Philippines Employees Labor Union-FFW v. WHETHER THE PRIETO VS.. the duty that is imposed on the NLRC. The appellate court ratiocinated that EDI had the burden of proving Gran's incompetence. 1999. 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 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. WHETHER PETITIONER HAS ESTABLISHED BY WAY OF SUBSTANTIAL EVIDENCE THAT GRAN'S TERMINATION WAS JUSTIFIABLE BY REASON OF INSUBORDINATION AND DISOBEDIENCE. and that Gran's Declaration releasing OAB from any monetary obligation had no force and effect. no evidence was presented to show how and why Gran was considered to be incompetent. 2000. 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. 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. Inc. 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. otherwise. V.00) representing his salaries for the unexpired portion of his contract. The Issues Petitioner raises the following issues for our consideration: I. Gran must have been competent and qualified. given that OAB did not abide by the twin notice requirement. this instant petition is before the Court.D. on October 18. however. The appellate court found that the Declaration was in the form of a quitclaim. In compliance with the . an excusable neglect.18 To prevent the execution.

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. Rule 13 of the Rules of Court. as this constitutes grave abuse of discretion. insubordination. 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.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. Proof of service.32 Proof and completeness of service. 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. (Emphasis supplied. termination procedures. 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. Gran should have immediately filed the registry return card. If service is made by registered mail. Managing Director of OAB. should be respected. proof thereof shall consist of an affidavit of the person mailing of facts showing compliance with section 7 of this Rule. or public policy. clauses. 5 of the NLRC Rules of Procedure (1990) provides for the proof and completeness of service in proceedings before the NLRC: Section 5. 13. and convincing evidence to prove that the dismissal is valid and legal.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. provides for proofs of service: Section 13.35 Unfortunately for petitioner. etc. Gran submitted a copy of Camp Crame Post Office's list of mail/parcels sent on April 7. morals. He is presumed to know only domestic or forum law. Hence. Nicolaou. Second and Third Issues: Whether Gran's dismissal is justifiable by reason of incompetence. de Guzman of Legaspi Village. EDI submitted two letters as evidence. even if pleaded. accurate. if the service is done through registered mail. however. terms and conditions as they may deem convenient. 1995 letter44 from OAB addressed to EDI and ESI. or the affidavit of the party serving. This claim has no merit. 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. afterwards. provided they are not contrary to law. place and manner of service. If the service is by ordinary mail. 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.The burden of proving that the termination was for a valid or authorized cause shall rest on the employer. and hence. which outlined the reasons why OAB had terminated Gran's employment. it did not prove the pertinent Saudi laws on the matter. from Andrea E. the NLRC Rules do not state what would constitute proper proof of service. The first is the July 9.31 of Ermita. the presumption is that foreign law is the same as ours.). Magpayo and the other cases. after seeing that Gran failed to attach the proof of service. it has been held that in termination disputes or illegal dismissal cases.g. This mailing list. Garcia (or Gran). He should have submitted an affidavit proving that he mailed the Appeal Memorandum together with the registry receipt issued by the post office. 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. but it should have required Gran to properly furnish the opposing parties with copies of his Appeal Memorandum as prescribed in J. One can only surmise the shock and dismay that OAB. 40 Taking into account the character of the charges and the penalty meted to an employee. Based on the foregoing provision. 1998.36 Where a foreign law is not pleaded or. 277. and the foreign employer/principal are governed by the employment contract.order. Being the law intended by the parties (lex loci intentiones) to apply to the contract. the employment contract signed by Gran specifically states that Saudi Labor Laws will govern matters not provided for in the contract (e. Saudi Labor Laws should govern all matters relating to the termination of the employment of Gran. 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.34 In the present case. is not a conclusive proof that EDI indeed received a copy of the Appeal Memorandum. Petitioner EDI claims that it had proven that Gran was legally dismissed due to incompetence and insubordination or disobedience. Manila—both of whom are not connected with petitioner. To prove its allegations. 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. is not proved. Worse. The rights of the employers to procedural due process cannot be cavalierly disregarded for they too have rights assured under the Constitution. the parties may establish such stipulations. However. 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.) Hence. the employer is bound to adduce clear. and failure to do so would necessarily mean that the dismissal was not justified and therefore illegal. the local recruiter/agent. 42 In the instant case.33 The second and third issues have a common matter—whether there was just cause for Gran's dismissal—hence. In illegal dismissal cases.D.Service by registered mail is complete upon receipt by the addressee or his agent.—Proof of personal service shall consist of a written admission of the party served or the official return of the server. public order. and disobedience In cases involving OFWs. EDI. and the other appears to be addressed to Neil B. the party who wants to have a foreign law applied to a dispute or case has the burden of proving the foreign law. The NLRC should not have proceeded with the adjudication of the case. the International Law doctrine ofpresumed-identity approach or processual presumption comes into play. proof shall be made by such affidavit and registry receipt issued by the mailing office. Section 33 of Article 277 of the Labor Code38 states that: ART. Makati. petitioner claims that private respondent Gran was validly dismissed for just cause. they will be discussed jointly. the NLRC should not have simply accepted the post office's list of mail and parcels sent. the rights and obligations among and between the OFW. Sec. The registry return card shall be filed immediately upon its receipt by the sender.—The return is prima facie proof of the facts indicated therein.37 Thus. In formulating the contract. nor is it conclusive proof that EDI received its copy of the Appeal Memorandum." 45 Petitioner . 1994 termination letter. the employer has the burden of proving that the dismissal is for just and valid causes. 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. A contract freely entered into is considered law between the parties.43 addressed to Gran. containing a full statement of the date. we apply Philippine labor laws in determining the issues presented before us. This is not level playing field and absolutely unfair and discriminatory against the employer and the job recruiters. specific causes for termination. consistent. 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). due to incompetence and insubordination or disobedience. x x x In many cases. 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. However. Sec. service shall take effect after such time. thus. and ESI experienced when they thought that the dismissal of Gran's complaint became final. The second is an unsigned April 11. 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. In international law. good customs.

benchmark. EDI should have provided a copy of the company policy. the worker shall be entitled to the full reimbursement of his placement fee with interest of twelve percent (12%) per annum. it can be presumed that Gran had passed the required trade test and that Gran is qualified for the job. Gran was notified and his employment arbitrarily terminated on the same day. were properly observed in the present case. lawful. made known to the employee. or any other document that would show that the "Daily Activity Reports" were required for submission by the employees. it was still EDI's responsibility to subject Gran to a trade test. cannot be given credence. are liable to Gran in the amount of PhP 30.59 On the other hand. OAB. when the termination of employment is without just. and (2) if the dismissal is based on authorized causes under Articles 283 and 284. other than the abovementioned letters. In between the first and second notice. NLRC. ruled that Gran must have passed the test. as enunciated in Santos. he was not qualified for the job for which he was hired.00 as indemnity. lawful. Jr. 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. and pertains to the duties which he had been engaged to discharge. he would not have been hired. 1995. insubordinate. insubordination. v. Petitioner EDI had clearly failed to overcome the burden of proving that Gran was validly dismissed.000. Petitioner EDI claims that private respondent Gran was afforded due process. (1) if the dismissal is based on a just cause under Article 282. made known to the employee and must pertain to the duties which he had been engaged to discharge. we must determine whether the order violated by the employee is reasonable.49 as used by the CA in its Decision. for cases arising after the effectivity of R. that is. In addition. 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. 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. Pursuant to the doctrine laid down in Agabon. and EDI.A. the issue is rendered moot and academic because Gran's incompetency is unproved. there was no intention to provide Gran with due process. thus. 1994 termination letter was effective on the same day. characterized by a wrongful and perverse attitude. As indicated by the second requirement provided for in Micro Sales Operation Network. the July 9. in cases arising before the effectivity of R. It is supposed to reveal applicants with false educational backgrounds. Even though EDI and/or ESI were merely the local employment or recruitment agencies and not the foreign employer. 47 EDI failed to discharge the burden of proving Gran's insubordination or willful disobedience. in the absence of proof of Saudi laws. Since OAB was in breach of the due process requirements under the Labor Code and its regulations.also claims that Gran was justifiably dismissed due to insubordination or disobedience because he continually failed to submit the required "Daily Activity Reports. through the same letter. OAB did not schedule a hearing or conference with Gran to defend himself and adduce evidence in support of his defenses.55 A careful examination of the records revealed that.54 this Court held that: Procedurally. The purpose of the required trade test is to weed out incompetent applicants from the pool of available workers. indeed. no other evidence was presented to show how and why Gran was considered incompetent. Incompetence may be shown by weighing it against a standard. Philippine Labor laws and regulations shall govern the relationship between Gran and EDI. No. NLRC. 51 EDI also claims that the requirements of due process. In the case at bar. or disobedient. While it furnished Gran the written notice informing him of his dismissal. jointly and solidarily. this Court ruled that "[i]t is presumed that before their deployment. In Prieto. In any case. Gran was not afforded due process.56 Consequently. EDI failed to establish any such bases to show how petitioner found Gran incompetent. 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. and (2) a second notice to communicate to the employees that their employment is being terminated. NLRC. In Agabon v. he was denied the opportunity to respond to said notice. ESI. Under the twin notice requirement. the employees should be given a hearing or opportunity to defend themselves personally or by counsel of their choice. 8042. NLRC. we held that: For willful disobedience to be a valid cause for dismissal. and for unjustified grounds. In Micro Sales Operation Network v. and its failure to do so only weakened its position but should not in any way prejudice Gran. or willful disobedience. the Prieto ruling is not applicable because in the case at hand. but is also solidarily liable with the foreign principal for any claims or liabilities arising from the dismissal of the worker. even before Gran was furnished the termination letter.A. in order to justify willful disobedience. We disagree. the elements that must concur for the charge of insubordination or willful disobedience to prosper were not present. Therefore. since he was allowed to work and improve his capabilities for five months prior to his termination. 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. 8042 58 (Migrant Workers and Overseas Filipinos Act) on August 25. valid or authorized cause as defined by law or contract." 46However. According to petitioner. and (2) the order violated must have been reasonable.52 and Malaya Shipping Services. Since EDI deployed Gran to Riyadh. they should have adduced additional evidence to convincingly show that Gran's employment was validly and legally terminated. The CA is correct in applying Prieto. they are entitled to the payment of their salaries corresponding to the unexpired portion of their contract.57 an employer is liable to pay nominal damages as indemnity for violating the employee's right to statutory due process. Inc. This position is untenable. Clearly. Gran misrepresented himself in his curriculum vitae as a Computer Specialist. This shows that OAB had already condemned Gran to dismissal. However. that when the contract is for a fixed term and the employees are dismissed without just cause.53 cited by the CA in its Decision. 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. Gran's job description. Summing up. Fourth Issue: Gran was not Afforded Due Process As discussed earlier. 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. Obviously. otherwise. our laws and rules on the requisites of due process relating to termination of employment shall apply. more particularly by a Computer Specialist. In addition. 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. and expose bogus qualifications. or criterion.48 Thus. a notice of the decision to dismiss.60 . An allegation of incompetence should have a factual foundation. Petitioner also raised the issue that Prieto v. is not applicable to the present case. as prescribed by the Labor Code. it failed to furnish Gran the written notice apprising him of the charges against him. without any other evidence. No. the following twin elements must concur: (1) the employee's assailed conduct must have been willful. 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. the employer must give the employee and the Department of Labor and Employment written notices 30 days prior to the effectivity of his separation. v." 50 The CA. Thus. Even if there was no objective trade test done by EDI. OAB's manner of dismissing Gran fell short of the two notice requirement. NLRC. Before the Labor Arbiter. 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. using the ruling in the said case. Moreover.

Gran was instructed to depart Saudi Arabia and required to pay his plane ticket. or undue influence exerted on their person. in the amount of SR 2. But where it is shown that the person making the waiver did so voluntarily. 2. or coercion. It is only where there is clear proof that the waiver was wangled from an unsuspecting or gullible person. they are forfeiting or relinquishing their right to receive the benefits which are due them under the law. said agreements should contain the following: 1. and had fully understood the contents of the document and that their consent was freely given without any threat. The relevant portions of the Declaration are as follows: I.00 (USD 850. On July 10. it is also very much less than the USD 16. He had no other choice but to sign the Declaration as he needed the amount of SR 2. 1994. The court may however step in when such amount is unconscionably low or unreasonable although the employee voluntarily agreed to it. On July 12. 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. As correctly pointed out by the court a quo. No. is unreasonably low.150. 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. 66 Thus. Esquillo: Quitclaims. Certainly. the petition is DENIED. OAB.63 (Emphasis supplied. 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. 1994.00 is actually the payment for Gran's salary for the services he rendered to OAB as Computer Specialist. 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.948. ELEAZAR GRAN (COMPUTER SPECIALIST) AFTER RECEIVING MY FINAL SETTLEMENT ON THIS DATE THE AMOUNT OF: S. The court a quo is correct in its finding that the Declaration is a contract of adhesion which should be construed against the employer. There should be two (2) witnesses to the execution of the quitclaim who must also sign the quitclaim. In the case of the Declaration. 3. Filipino.61 Gran arrived in Riyadh.) Is the waiver and quitclaim labeled a Declaration valid? It is not. intimidation. Saudi Arabia and started to work on February 7. 1994. In addition. and e. and quitclaims: Not all waivers and quitclaims are invalid as against public policy. I HEREBY DECLARE THAT OAB EST. 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.64 the parameters for valid compromise agreements. 1994. Gran received a copy of his letter of termination.A. misrepresentation. A statement that the employees signed and executed the document voluntarily. which was equivalent to USD 16. (Emphasis supplied. 56120 of the Court of Appeals affirming the January 15.65 c. the NLRC or a labor attaché in a foreign country. 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. before the effectivity of R. and the consideration for the quitclaim is credible and reasonable. he signed the Declaration. waivers. NLRC.00 even if it was against his will—since he was told on July 10. or the terms of settlement are unconscionable on its face. 1999 Decision and September 30. violence. b. more particularly those executed by employees. 2.00. SIGNED. Such official shall assist the parties regarding the execution of the quitclaim and waiver. 1994. in regard not only to the words and terms used. This requirement was clearly articulated by Chief Justice Artemio V.R. Panganiban in Land and Housing Development Corporation v. If the agreement was voluntarily entered into and represents a reasonable settlement.) This Court had also outlined in Land and Housing Development Corporation. then the consideration should be much much more than the monthly salary of SR 3. the Bureau of Labor Relations.00 (USD 850. citing Periquet v. 4. 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. 2. or in the dialect known to the employees—that by signing the waiver or quitclaim. the foreign laws shall apply. that the law will step in to annul the questionable transaction. his employment contract is until February 7. On July 9. d. The Declaration reveals that the payment of SR 2. The Court finds the waiver and quitclaim null and void for the following reasons: 1. The salary paid to Gran upon his termination. SP No.190. HAS NO OBLIGATION TOWARDS ME IN WHATEVER FORM. duress. the amount is unreasonably small compared to the future wages of Gran. Saudi Arabia. The waivers should be carefully examined.948. 1994. it is binding on the parties and may not later be disowned simply because of a change of mind.00 (SAUDI RIYALS TWO THOUSAND NINE HUNDRED FORTY EIGHT ONLY) REPRESENTING COMPLETE PAYMENT (COMPENSATION) FOR THE SERVICES I RENDERED TO OAB ESTABLISHMENT. 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. In order to prevent disputes on the validity and enforceability of quitclaims and waivers of employees under Philippine laws. A statement that the employer has clearly explained to the employee in English. The factual circumstances surrounding the execution of the Declaration would show that Gran did not voluntarily and freely execute the document.00 is even lower than his monthly salary of SR 3.948.948. Gran departed from Riyadh.00)—although possibly less than the estimated Gran's salaries for the remaining duration of his contract and other benefits as employee of OAB. It is advisable that the stipulations be made in English and Tagalog or in the dialect known to the employee. Otherwise. 1994. Gran filed the Complaint before the NLRC. and 4.00 for the payment of his ticket. Since he was illegally dismissed on July 9. I ATTEST TO THE TRUTHFULNESS OF THIS STATEMENT BY AFFIXING MY SIGNATURE VOLUNTARILY. 1994.150. ELEAZAR GRAN Courts must undertake a meticulous and rigorous review of quitclaims or waivers. 8042. A fixed amount as full and final compromise settlement. the transaction must be recognized as a valid and binding undertaking.948.00 which is the amount Gran is legally entitled to get from petitioner EDI as backwages. Consider the following chronology of events: a. The October 18. On July 21.190. 1994 to leave Riyadh on July 12.00). with full understanding of what he was doing. WHEREFORE. 62 hence.R.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. the payment of SR 2. 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. but also the factual circumstances under which they have been executed. 2000 Decision in CA-G. On July 11. which the employees are giving up in consideration of the fixed compromise amount.948. HAS NO FINANCIAL OBLIGATION IN MY FAVOUR AFTER RECEIVING THE ABOVE MENTIONED AMOUNT IN CASH. I STATE FURTHER THAT OAB EST.In the present case. 1999 Resolution of the NLRC . The foregoing events readily reveal that Gran was "forced" to sign the Declaration and constrained to receive the amount of SR 2. 1996. The benefits of the employees if possible with the corresponding amounts. If the Declaration is a quitclaim. 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. 3. he is therefore entitled to backwages corresponding to the unexpired portion of his contract.

Inc. it did not prove the pertinent Saudi laws on the matter. . held that respondent was illegally dismissed and accordingly ordered petitioners to pay her US$3. 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. which she voluntarily entered into. By Decision3 of November 29. represented by petitioner. or that such foreign principal’s liability must first be established before it. Respondent was deployed on February 17. denominated as a Memorandum of Agreement (MOA). 2004. with a monthly salary of US$1.g. a private employment agency shall assume all responsibilities for the implementation of the contract of employment of an overseas worker. the same was not substantiated. AMALIA G. the International Law doctrine of presumed-identity approach or processual presumption comes into . as such. The petition fails. Unfortunately for petitioner. is immune from suit and. the employment contract signed by Gran specifically states that Saudi Labor Laws will govern matters not provided for in the contract (e. Petitioners further contended that Ikdal should not be liable as an officer of petitioner ATCI. Respondent. the present petition for review on certiorari was filed." Finally. public order or public policy. J. as in fact it did not sign any document agreeing to be held jointly and solidarily liable. they appealed to the Court of Appeals. 2000 but was terminated from employment on February 11. this will render nugatory the very purpose for which the law governing the employment of workers for foreign jobs abroad was enacted. as the foreign principal. JOSEFA ECHIN. (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. 2 of the POEA Rules and Regulations) accord respect to the "customs.: Josefina Echin (respondent) was hired by petitioner ATCI Overseas Corporation in behalf of its principal-co-petitioner. .600. 2004. DECISION CARPIO MORALES. a contract freely entered into is considered the law between the parties who can establish stipulations. Amalia Ikdal (Ikdal).00. IKDAL and MINISTRY OF PUBLIC HEALTHKUWAITPetitioners. the appellate court affirmed the NLRC Resolution. NLRC10 illuminates: In the present case. Further. 178551 October 11. No. 10 of Republic Act No. that the party invoking the application of a foreign law has the burden of proving the law. Indeed. shouldering her own air fare. Petitioners’ motion for reconsideration having been denied by Resolution5 of April 22. 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. 2007. 2002. Maguad8 explains: . thus. the Labor Arbiter. 2. she not having allegedly passed the probationary period. company policies and labor laws and legislation of the host country. 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. G. shall pay the amount of PhP 30. In international law. Petitioner ATCI.00. as long as they are not contrary to law. Under the MOA. In providing for the joint and solidary liability of private recruitment agencies with their foreign principals.200. Sec. No costs. Skippers United Pacific v. customs and practices of the host country. for the position of medical technologist under a two-year contract. 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. It is hornbook principle. On appeal of petitioners ATCI and Ikdal. As to Ikdal’s liability. He is presumed to know only domestic or forum law. 2007. vs. the appellate court held that under Sec. contending that their principal. the "Migrant and Overseas Filipinos’ Act of 1995. SO ORDERED. 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 party who wants to have a foreign law applied to a dispute or case has the burden of proving the foreign law. the Ministry. more so since the Ministry’s liability had not been judicially determined as jurisdiction was not acquired over it. 8042. termination procedures. as agent. 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 responsibilities of such parties towards the contracted employees under the agreement do not at all end. under the doctrine of processual presumption which. [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. 8042 precisely affords the OFWs with a recourse and assures them of immediate and sufficient payment of what is due them. good customs. clauses. in this case. she returned to the Philippines on March 17. MA. the NLRC affirmed the Labor Arbiter’s decision by Resolution4 of January 26. it can be sued jointly and severally with the foreign principal for any violation of the recruitment agreement or contract of employment.9 Verily. 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. morals. Saudi Labor Laws should govern all matters relating to the termination of the employment of Gran.R. petitioners failed to discharge. Being the law intended by the parties (lex loci intentiones) to apply to the contract. On July 27.000. Petitioners’ motion for reconsideration having been denied by the appellate court by Resolution7 of June 27. as a private recruitment agency. As the Ministry denied respondent’s request for reconsideration. 2010 ATCI OVERSEAS CORPORATION. 2001.. etc. representing her salary for the three months unexpired portion of her contract. v.00 to respondent Gran as nominal damages for non-compliance with statutory due process. given that the foreign principal is a government agency which is immune from suit. petitioners argue that even the Philippine Overseas Employment Act (POEA) Rules relative to master employment contracts (Part III.). respondent filed with the National Labor Relations Commission (NLRC) a complaint2 for illegal dismissal against petitioner ATCI as the local recruitment agency. the Ministry of Public Health of Kuwait (the Ministry). 2001. 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. however. being a foreign government agency. 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. petitioners posit that assuming arguendo that Philippine labor laws are applicable. By Decision6 of March 30. 2001. specific causes for termination. the appellate court noted that under the law. can be held jointly and solidarily liable. hence. 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. terms and conditions as they may deem convenient.Otherwise. As to petitioners’ contentions that Philippine labor laws on probationary employment are not applicable since it was expressly provided in respondent’s employment contract. practices." corporate officers. petitioner ATCI cannot likewise be held liable. and the Ministry.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. The Court’s ruling in EDI-Staffbuilders Int’l.is AFFIRMED with the MODIFICATION that petitioner EDI-Staffbuilders International. Republic Act No. 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. the immunity extended to them.

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

by its claim. . failed to refute respondent’s claim that it sent him a Violation Memorandum. By Decision15 of July 27. cannot be given credence. The petition is bereft of merit. 2003 but we are giving you a chance to report on August 11. 2003. You disrespect our office personnel. [the following day]. Thereby. 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. and REYES.. respondent just the same. Such refusal of petitioner. G. YNARES-SANTIAGO.00. was yet to expire on June 30. 2003. 2003 at 9 o’clock in the morning. I am hoping [for] your presence on the date mentioned above. 2003 [sic]. precipitated. He particularly highlights the fact that his one month suspension ended on July 31. the petition is. offered to reinstate him during the mandatory conference and even after receiving the promulgation of the decision of Labor Arbiter. For respondent’s claim of having settled it bears no documentation. the appellate court noted that the refusal occurred in August 2002 yet. On July 31.versus Chairperson. 2003. While the employer bears the burden in illegal dismissal cases to prove that the termination was for valid or authorized cause. On appeal." the NLRC granted him backwages and separation pay covering the period July 1. It thus held that if indeed respondent wanted to terminate the services of petitioner on the basis of such refusal. unreasonable or unlikely. With these offenses. 2003 but he was given "a chance to report on August 9(sic). .18 insisting that he was illegally/constructively dismissed and not merely suspended by respondent. Finally. however. or a demotion in rank or a diminution of pay. you showed insubordination [on] your part by answering back your immediate superior. cannot be considered an act of discrimination or insensibility to warrant a finding of constructive dismissal.000. 2003 belied the charge of illegal dismissal. The appellate court held that respondent’s June 27. there being no concrete proof that he had indeed rendered overtime service.22 Not any of these circumstances exists to call for a ruling that petitioner was constructively dismissed. 2003 of his Complaint.last April 15. 2003. Respecting petitioner’s claim that his refusal to sign the 5-month contract precipitated his suspension. 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. SP No. Labor Arbiter Ernesto F. insensibility or disdain by an employer becomes unbearable to the employee. which affirmed the Resolution2 dated 5 May 2006 of the National Labor Relations Commission (NLRC) in NLRC NCR CC No. NATIONAL UNION OF WORKERS IN HOTELS. That respondent advised petitioner on July 31. the last day of the 30-day suspension of petitioner. 2003 does not.R. Respondent’s inability to provide the letter-introduction for the renewal of petitioner’s Metro Ayala I. 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.10 By Decision11 of November 10. 179402 RESTAURANTS AND ALLIED INDUSTRIES— Present: MANILA PAVILLION HOTEL CHAPTER. Bare allegations of constructive dismissal. 2003" as amounting to constructive dismissal.19This petitioner failed to discharge. Respondents. and a subsequent Memorandum via registered mail.9 (Emphasis and underscoring supplied) Petitioner never ever reported for work. 96171. the NLRC. and ACESITE PHILIPPINES HOTEL CHICO-NAZARIO. you were given a second memo with a request of explanation on your part last June 17. it appealed via Certiorari to the Court of Appeals. subject to recomputation upon finality of the Decision. 2003 that he was "supposed to report . petitioner’s failure to report for work after the expiration of the period of his suspension notwithstanding. 2003. first was last April 15.: This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court. among other things. petitioner filed the present Petition for Review on Certiorari. As for petitioner’s claim for overtime pay.D. It bears noting that petitioner’s Metro Ayala I. which was duly received by him on April 15. In another vein. The same incident took place last June 26. the Court finds well-taken the Labor Arbiter’s grant thereto. suspended effective July 1. 2008 x-------------------------------------------------x DECISION CHICO-NAZARIO. 2003 but later advising him to resume work 10 days later or on August 11. 2005. assailing the Decision1dated 30 May 2007 rendered by the Court of Appeals in CA-G. Petitioner’s claim for overtime pay was denied as it was unsubstantiated. 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. 2003. 000307-05 NCMB NCR NS 09-199-05. You are supposed to report at the office this August 1. the Court of Appeals reversed and set aside the NLRC decision and reinstated the Labor Arbiter’s decision. 2006. petitioner’s filing on July 2. 2003" but that he was given a chance to report on August 11. in light of the foregoing discussions. by June 27. the appellate court held that respondent’s offer of reinstatement to petitioner runs counter to the charge of illegal dismissal. 2003. 2005.Petitioner. you are suspended for one month effective July 1. the same fails. Finally. Respondent’s Motion for Reconsideration 13 having been denied by Resolution14 of July 22. Instead. . backwages and other money claims. He was. J. it could have done so much earlier. Restaurants and Allied Industries-Manila Pavilion Hotel (NUWHRAIN) against Manila Pavilion Hotel (the Hotel).D. when uncorroborated by the evidence on record.8 (Emphasis and underscoring supplied) Hence. August 1. This memo serves as your last warning. the NLRC concluded. No. but the Violation Memoranda were issued to petitioner much later starting April 2003. quitting because continued employment is rendered impossible. J. 2003 Memorandum to petitioner suspending him for one month ending July 31. dismissing for lack of merit the complaint for unfair labor practice filed by petitioner National Union of Workers in Hotels. hence. This is the third time you did this. 2003 but you refuse[d] to sign. which claim he did not refute. CORPORATION. 2003. respondent advised petitioner as follows: This is to remind you that your suspension ends this July 31. 2007.20 requiring him to explain his habitual tardiness on the therein indicated dates but that he failed to comply therewith. 2003 to 2004. 2003.23 Respecting petitioner’s claim for service incentive leave. 21 Constructive dismissal contemplates. His Motion for Reconsideration16 having been denied by Resolution17 of January 23. however. JJ. SO ORDERED. 2003. NATIONAL LABOR RELATIONS COMMISSION AUSTRIA-MARTINEZ. and pay him service incentive leave pay in the amount of P3. in itself. Noting that "it is to the best interest of complainant that he should no longer be reinstated to his former position. Carreon. in fact. entitled to separation pay. You will resume work on August 1. . DENIED. finding that there was neither illegal dismissal nor abandonment. WHEREFORE. It clearly exists when an act of clear discrimination. He.R. and service incentive leave. leaving him with no option but to forego his continued employment. respondent claimed that it had paid petitioner overtime pay. Promulgated: September 30. NACHURA. 2003 Memorandum. Another situation that may arise after this memo will be a ground for your termination. amount to constructive dismissal. reversed and set aside the Labor Arbiter’s decision and entered a new one declaring petitioner to have been illegally dismissed.D. ordered respondent to reinstate petitioner without backwages.12 by Decision dated February 21. the employee must first establish by substantial evidence the fact of dismissal from service. allowance.

by filing a Petition for Certification Election on 28 June 2005. 000307-05 NCMB NCR NS 09-199-05. stated her preference to deal with HIMPHLU.6 On 21 June 2005.R.00 and exemplary damages of P20. It declared that the Hotel had acted prudently when it issued the Notices to the 36 employees after HIMPHLU demanded their dismissal. on 16 June 2006. respondent’s Vice President. It further denied that respondent’s Vice President Norma Azores and the Hotel’s Resident Manager Bernardo Corpus.Petitioner NUWHRAIN is a legitimate labor organization composed of rank-and-file employees of the Hotel. In the meantime. the NLRC declared that the claim for moral and exemplary damages of NUWHRAIN lacked sufficient factual and legal bases. 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 2005.15 The Secretary of Labor intervened and certified the case for compulsory arbitration with the NLRC. and clarified that none of the 36 employees were dismissed by the Hotel. 96171. the Resident Manager of the Hotel. It was denied by the NLRC in another Resolution dated 30 June 2006. however.. 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. paragraphs (a) and (b) of the Labor Code. Thus. HIMPHLU. Even thereafter. the Certification Election for regular rank and file employees of the Hotel was held.8 On 5 July 2007. Jr. which provided for a union security clause that reads: 12 Section 2. 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.000. the NLRC pronounced that the Hotel was not guilty of unfair labor practice. extending the effectivity of the existing Collective Bargaining Agreement. which HIMPHLU won. was entered into with the view of responding to the employees’ economic needs. Norma Azores. The reconciliatory conferences facilitated by the Hotel were held on 5 August 2005 and 1 September 2005. the Hotel and HIMPHLU negotiated the extension of the provisions of the existing Collective Bargaining Agreement for two years. 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 not intended to interfere with or restrain the exercise of the right to self-organization of NUWHRAIN’s members. the Hotel issued Disciplinary Action Notices 13 (Notices) to the 36 employees identified in the written demand of HIMPHLU. 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. 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.R. 9 After the lapse of the 60-day freedom period. but pending the disposition of the Petition for Certification Election filed by NUWHRAIN. 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 2005.7 Thereafter. 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. nor was it liable for moral and exemplary damages. Secondly. 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. NUWHRAIN filed a Petition forCertiorari before the Court of Appeals. respondent insisted that it did not commit unfair labor practice. On 1 September 2005. 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. An Investigation Report11 was attached to the said written demand. docketed as C. The HOTEL shall not. The parties signed the Memorandum of Agreement on 20 May 2005 and the employees ratified it on 27 May 2005. implored NUWHRAIN’s members to withdraw their Petition for Certification Election and reaffirm their membership in HIMPHLU.A.A. Bernardo Corpus.18 In a Resolution19 dated 5 May 2006. Jr. . joined NUWHRAIN. starting on 1 May 2005 and ending on 30 June 2005. provided.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. 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. in violation of Section 2. 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. upholding the Resolution dated 5 May 2006 of the NLRC in NLRC NCR CC No. DISMISSAL PURSUANT TO UNION SECURITY CLAUSE. 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.5 During the 60-day freedom period which preceded the expiration of the Collective Bargaining Agreement. Finally. 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. NUWHRAIN was accorded by the Labor Relations Division of the Department of Labor and Employment (DOLE) the status of a legitimate labor organization. the Industrial Relations Division of the DOLE allowed the registration of the Memorandum of Agreement executed between HIMPHLU and the Hotel.3 while respondent Acesite Philippines Hotel Corporation is the owner and operator of said Hotel. During the reconciliatory conference held on 5 August 2005.0017 Respondent countered that it merely complied with its contractual obligations with HIMPHLU when it issued the assailed Notices. SP No. the Hotel had not acted improperly as it did not wrongfully terminate any of the 36 employees.14 However. 000307-05 NCMB NCR NS 09-199-05. G. stating that the 36 employees. however.21 On 30 May 2007. The case was docketed as NLRC NCR CC No. Thirdly. made the statements attributed to them. It was accordingly certified as the exclusive bargaining agent for rank and file employees of the Hotel. NUWHRAIN exercised the right to challenge the majority status of the incumbent union. Accordingly. NUWHRAIN claimed that it was entitled to moral damages in the amount of P50. NUWHRAIN filed a Motion for Reconsideration of the foregoing NLRC Resolution. and the economic provisions of the same were to be effective for three years or until 30 June 2003. the exclusive bargaining agent of the rank-and-file employees of the Hotel.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). entitled IN RE: Labor Dispute at Manila Pavilion Hotel. purportedly expressing their preference for HIMPHLU during the reconciliatory conferences. SP No. while blaming NUWHRAIN for the labor problems of the Hotel.000.20 Thus. Firstly. 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. G. 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. Article IV of the Collective Bargaining Agreement. 96171. the NLRC adjudged that the execution of the Memorandum of Agreement between respondent and HIMPHLU. 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. 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. effective 1 July 2005 to 30 June 2007. who were members of HIMPHLU. extending the effectivity of the existing Collective Bargaining Agreement for another two years. (Emphasis provided) On 1 August 2005. both of whom did not agree in the suggested course of action or to any other manner of settling the dispute. the Court of Appeals promulgated its Decision 22 in C.

NLRC. Unfair labor practices of employers. Inciong. Still.. including the delayed reinstatement of striking employees and the offering of bribes. LTD.27 this Court held that employees have the right to disaffiliate from their union and form a new organization of their own. THE INSULAR LIFE ASSURANCE CO. 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...) 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.33 And in labor cases.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. 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. Jr. In the present case. did make the statements being attributed to them. The self-serving statement signed by six of NUWHRAIN’s members have very little weight. 362 SCRA 56 [2001]. NO. Greenfield v. gives the impression that it was signed in a perfunctory manner and motivated by a sense of union solidarity. the only sensible option left to the Hotel. NLRC. CIR. The cases cited by NUWHRAIN are not applicable to the present case given their diverse factual backgrounds. Had the Hotel totally ignored this demand. Ltd. JRS BUSINESS CORPORATION V.32 for (1) the dismissal of some of its striking employees without even giving them an opportunity to explain their side. respondent denied that such statements were made and that the officers of the respondent and the Hotel were merely misquoted. they must suffer the consequences of their separation from the union under the security clause of the Collective Bargaining Agreement. The employer was found guilty of unfair labor practice in Insular Life Assurance Co. 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. 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. despite the insistence of HIMPHLU. the quantum of proof necessary is substantial evidence. 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. the Collective Bargaining Agreement includes a union security provision." "union shop. and must accordingly be denied. 80 SCRA 434 [1977] and INSULAR LIFE ASSURANCE CO." "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. It is important to note that the Hotel did not take further steps to terminate the 36 employees. Before the Court of Appeals. Ltd. and other terms and conditions of employment in order to encourage or discourage membership in any labor organization. NUWHRAIN has the burden of proving its allegation that Norma Azores and Bernardo Corpus. The fact that six members of the union signed a single statement. 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. and the Hotel’s Resident Manager Bernardo Corpus. bonuses. wherein the officers of the respondent and the Hotel acted as mediators. 23 Hence. 1999. the present Petition. upon its receipt of the demand of HIMPHLU for the dismissal of the 36 employees.34 which NUWHRAIN failed to discharge in the present case. During the reconciliatory conferences. 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. on the basis of the union security clause of the Collective Bargaining Agreement. 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. demanding the dismissal of 36 of its former members who joined NUWHRAIN. and ASUNCION V. (e) To discriminate in regard to wages. for HIMPHLU to re-accept the employees without sanctions. even afforded the employees involved a chance to be heard. the sole bargaining agent for the rank and file employees of the Hotel. former members of HIMPHLU.25 Article 248(e) of the Labor Code recognizes the effectivity of a union shop clause: Art. the Hotel would have been subjected to a suit for its failure to comply with the terms of the Collective Bargaining Agreement. 248. Insular Life Assurance Co. SEPTEBMER 3. None of these acts were attributed to the respondent in the present case..26 In Villar v. The burden of proof rests upon the party who asserts the affirmative of an issue. especially since the success of this case would also redound to their benefit. the members of NUWHRAIN would owe their loyalty to their union. In its letter. and wage increases to loyal employees after refusing to bargain with the union. Undoubtedly. SUCH A RULING CONTRADICTS EXISTING JURISPRUDENCE SUCH AS MASAGANA CONCRETE PRODUCTS INC. respondent’s Vice President Norma Azores expressed her preference to deal with HIMPHLU. V. (Emphasis supplied. instead of each member presenting their sincere and individual narrations of events. who switched allegiance to NUWHRAIN. 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.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. Employees Association-NATU v. LTC EMPLOYEES ASSOCIATION-NATU V. 106916. The only act attributed to the respondent is its issuance of the Notices which. 246 SCRA 445 [1995]. This Court. Jr. absent any other independent evidence which indicates that . 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. NUWHRAIN maintains that the respondent committed unfair labor practice when (1) the Hotel issued the Notices to the 36 employees.. By thus promoting unionism. Instead. 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. while blaming NUWHRAIN for the Hotel’s labor problems. as NUWHRAIN suggests it should have done.R. or such amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion. 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.24 The instant Petition lacks merit. implored NUWHRAINs’ members to withdraw their Petition for Certification Election and reaffirm their membership in HIMPHLU. contrary to being an unfair labor practice. G. "Union security" is a generic term which is applied to and comprehends "closed shop. NUWHRAIN claimed that during the reconciliatory conferences. The records clearly show that the Notices were issued after HIMPHLU served the Hotel with a letter dated 28 July 2005. 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. in return. there is even less possibility of sustaining a finding of guilt for unfair labor practice where respondent did not dismiss the 36 employees. and (2) the acts of discrimination. In Progressive Development Corporation v. a natural bias which somewhat puts into question their credibility as witnesses. in Malayang Samahan ng Manggagawa sa M. however. 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. 30 In the case at bar. even if made under oath. and eventually dismissing said employees. NLRC. This argument is specious. 37 SCRA 244 [1971]. hours of work. 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.

the respondent failed to respond. 6 During the conciliation proceedings on October 9. Other letters were sent to the respondent by registered mail. SP No. the respondent formally amended his complaint to include his claim of illegal dismissal. The NLRC Ruling The respondent appealed the labor arbiter’s decision to the NLRC on November 14. the instant Petition is DENIED. the NLRC also considered the strained relationship existing between the parties and. Subsequently. In their Reply before the NLRC. The petitioner sent another letter to the respondent on August 21. the respondent presented a medical certificate issued by the company physician. Costs against petitioner NUWHRAIN. the respondent again reported for work on August 21 and 23. SO ORDERED. 2005.166. 96171 is hereby AFFIRMED. 2002. the NLRC Third Division vacated and set aside the decision of the labor arbiter. separation pay. all pointing out his absences. G. Petitioner. the labor arbiter found that no dismissal took place. backwages. the findings of administrative agencies of the Department of Labor are generally accorded not only respect. No. 2002 without giving prior notice of his absence. 1979 in its wire drawing department.R. The labor arbiter noted that the respondent’s allegation that he reported for work is not reliable for lack of corroborating evidence. 2002. in addition to backwages. a corporation engaged in the manufacture of G. 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. however.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. 2002. and in awarding the respondent separation pay and backwages. that the officers of the respondent and the Hotel did not make statements that would have constituted unfair labor practice. 2002. 13th month pay.66). the decision was confined to the directive to pay service incentive leave and 13th month pay. The respondent alleged that on August 6. written in Filipino. On January 20. The petitioner alleged that the respondent absented himself from work on August 7. did not allow him to resume work on the same date. to no avail. The CA Ruling On May 6. 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). however. the respondent refused to return to work and insisted that he be paid his separation pay. In a Decision dated June 28. they were not dismissed for their affiliation with NUWHRAIN.R. specifically questioning the ruling that no illegal dismissal took place. 2003. 35 Considering the expertise of these agencies in matters pertaining to labor disputes. the petitioner sent him a letter by registered mail dated August 12. COURT OF APPEALS. the respondent again reported for work. IN VIEW OF THE FOREGOING. 2003. 2002. 3 and (b) the Resolution of the CA dated August 15. As a consequence. On August 19. The petitioner refused the respondent’s demand for separation pay for lack of basis. alleging grave abuse of discretion on the part of the NLRC in ruling that illegal dismissal took place. 2002 to August 21. informing him that he had been absent without official leave (AWOL) from August 7. 4 denying the motion for reconsideration that the petitioner subsequently filed. On October 22. the NLRC found. THE FACTUAL ANTECEDENTS The petitioner. holiday pay. On March 31. the respondent presented the medical certificate covering his period of absence. 2002 and October 10 and 18. When the respondent finally reported for work on August 17. NUWHRAIN admitted that before issuing its Notices. the NLRC denied the petitioner’s motion for reconsideration. but modified the challenged decision by adding reinstatement and the payment of "full backwages. vs. awarded separation pay in lieu of reinstatement. The assailed Decision dated 30 May 2007 of the Court of Appeals in CA-G. In the case at bar.Respondents. The NLRC found it difficult to accept the petitioner’s allegation that the respondent absented himself for unknown reasons. the labor arbiter rendered his decision dismissing the illegal dismissal charge. the respondent filed a complaint with the Arbitration Branch of the NLRC for underpayment/nonpayment of salaries and wages. this kind of action is inconsistent with the respondent’s twenty-three (23) years of service and lack of derogatory record during these years. 2005. NATIONAL LABOR RELATIONS COMMISSION and PERFECTO BALOGO. to submit himself to the company physician to determine whether he was fit to return to work in accordance with existing policies. 2006. requiring an explanation for his absence. and service incentive leave. As a result. 2002. 2003. 2002. respondent had not committed any act which would constitute unfair labor practice. 37 Neither did the respondent threaten the 36 employees who shifted their allegiance to NUWHRAIN with any form of reprisal. the petitioner refused to take him back despite the medical certificate he submitted. the petitioner never carried the burden of proving the legality of a dismissal.9 The decision directed the company to pay the respondent separation pay. according to the petitioner. 13th month pay. The petitioner required him.7 The Labor Arbiter Ruling On October 27. Findings of fact of the NLRC are given much weight and are considered conclusive by this Court. also by registered mail. the petitioner considered him on AWOL from August 7. but also finality. 5 On September 13. 2009 PENTAGON STEEL CORPORATION. On January 31. 2006. The petitioner.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. The records are bereft of any instance that would show that respondent rode roughshod over its employees’ freedom to decide which union to join. 174141 June 26. Thus. and ECOLA."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. overtime pay. 20062 modifying the Decision of the National Labor Relations Commission (NLRC) dated January 31. 2006. and the Court of Appeals affirmed. 2002. wire and nails.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. 2002. the NLRC held that the respondent was illegally dismissed. The respondent maintained that his illness had prevented him from reporting for work for ten (10) days. however.I. the respondent maintained a neutral stand in the dispute between HIMPHLU and NUWHRAIN. 2002. Thus. He was thus driven to file a complaint against the petitioner. Together with this conclusion. as the respondent in fact failed to respond to the petitioner’s memoranda. 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. . the petitioner filed a special civil action for certiorari11 with the CA. 2002. however. In all. still during the conciliation proceedings. he contracted flu associated with diarrhea and suffered loose bowel movement due to the infection. 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. 2005. employed respondent Perfecto Balogo (the respondent) since September 1. for this reason. It seeks to set aside: (a) the Decision of the Court of Appeals (CA) dated June 28."8 In dismissing the respondent’s claim of illegal dismissal. exhibiting a note from his doctor indicating that he was fit to work. the CA affirmed the NLRC’s finding that the dismissal was illegal. thus. service incentive leave. 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.

however. many settlements would be prevented and unnecessary litigation would result.21 To constitute abandonment. We quote with approval the following discussion in the CA’s decision: In his case. hence.13 In this present petition. was not grounded solely on the parties’ statements during conciliation. or on the part of a plaintiff. 2) in declaring that respondent was illegally dismissed by the petitioner. which we discuss below. thus negating the petitioner’s charge of abandonment. Conciliators and similar officials shall not testify in any court or body regarding any matters taken up at conciliation proceedings conducted by them. a person is entitled to "buy his or her peace" without danger of being prejudiced in case his or her efforts fail. since they are supported by substantial evidence. and (2) a clear intent. for it is . involve an admission on the part of a defendant that he or she is legally liable. 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. disagreed with the NLRC’s application of the doctrine of "strained relations. The petitioner points out that it wrote the respondent various memoranda requiring him to explain why he incurred absences without leave. THE COURT’S RULING We do not find the petition meritorious. 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. Before going into the substantive merits of the controversy. since it is made with a view to avoid controversy and save the expense of litigation. but the CA denied the motion for lack of merit in the Resolution dated August 15. to sever the employer-employee relationship. 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. The CA. offers for compromise are irrelevant because they are not intended as admissions by the parties making them. v.24 In addition. 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. any communication made toward that end will be regarded as privileged. 2006.18 A true offer of compromise does not. thus. our ruling regarding the statement made during conciliation has no effect at all on our final conclusion. Petitioner moved for reconsideration of the decision. there was no clear intention on the respondent’s part to sever the employeremployee relationship. we find that the CA did indeed consider the statements the parties made during conciliation. 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. The petitioner never effectively refuted the respondent’s reason for his absence. Secretary of Labor15 when we pointedly disallowed the award made by the public respondent Secretary." citing jurisprudence that the doctrine should be strictly applied in order not to deprive an illegally dismissed employee of his right to reinstatement. manifested through overt acts.22 We agree with the CA that the petitioner failed to prove the charge of abandonment. the jurisprudential rule is that abandonment is a matter of intention that cannot be lightly presumed from equivocal acts. we shall first resolve the propriety of the CA’s consideration of the proceedings that transpired during the mandatory preliminary conference of the case. the respondent’s filing of the amended complaint for illegal dismissal on January 20. 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. the award was based on the information NCMB Administrator Olalia secured from the confidential position given him by the company during conciliation. Based on these other pieces of evidence. It is the distinguishing mark of an offer of compromise that it is made tentatively. however. using the lack of written explanation as a clever ruse to terminate Balogo’s employment. 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. Considering that "intention" is a mental state. Second. the respondent had a valid reason for absenting himself from work. Rule 130 of the Rules of Court. never bothered to reply in writing. and requiring him as well to report for work. 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. 2003 strongly speaks against the petitioner’s charge of abandonment. the petitioner must show that the respondent’s overt acts point unerringly to his intent not to work anymore. but consider as final.20 In the present case. First. First. in legal contemplation. These findings of fact we duly accept as findings that we must not only respect. Both tribunals found that after the respondent presented his medical certificate to the petitioner to explain his absence. Inc. but was amply supported by other evidence on record. 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 claims that there was no illegal dismissal since the respondent abandoned his job. two elements must concur: (1) the failure to report for work or absence without valid or justifiable reason.23 In this case. In evaluating a charge of abandonment. the respondent.14 We agree with the petitioner. however. and in contemplation of mutual concessions. 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. 16 Indeed.17 Second. The refusal is indicative of the petitioner’s ill motive towards him. The employer bears the burden of showing a deliberate and unjustified refusal by the employee to resume his employment without any intention of returning. 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. hypothetically. In the present case.The CA also disregarded the petitioner’s charge of abandonment against the respondent. if every offer to buy peace could be used as evidence against a person who presents it. the respondent was illegally dismissed. 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. 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. the CA’s conclusion on illegal dismissal. that his or her claim is groundless or even doubtful." 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. and 3) in ordering that respondent be reinstated to his former position with backwages. he even went back to his doctor for a certification that he was already fit to return to work. but for a different reason. The reasons behind the exclusion are two-fold.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. hence." This was the provision we cited in Nissan Motors Philippines. 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. since the law favors the settlement of controversies out of court.

20063 and June 23." The respondent’s situation is no different from what Hyatt defined. too. First. GODFREY D. after 23 years of service. And confirmatory tests were conducted by the Philippine Drug Screening Laboratory. sufficient proof of the existence of strained relations that would rule out the possibility of reinstatement. 20064 Resolutions of the National Labor Relations Commission (NLRC) in Case No. Catinoy27describes this type of company action when it ruled that "[c]onstructive dismissal does not always involve forthright dismissal or diminution in rank. by itself. thereafter. the respondent manifested his willingness to comply with the petitioner’s rules and regulations and his desire to continue working for the latter. occasioned by the respondent’s filing of an illegal dismissal case. the petitioner did not raise the defense of strained relationship with the respondent before the labor arbiter. Respondent is entitled to reinstatement not separation pay As the CA correctly ruled. the respondent’s service record was unblemished having had no record of infraction of company rules. Under the given facts. The existence of strained relations between the parties was not clearly established. said to have been carried out with the assistance of the Philippine National Police-Scene of Crime Operations (SOCO). this issue – factual in nature – was not the subject of evidence on the part of both the petitioner and the respondent. if any. Hyatt Taxi Services. The circumstances in this case do not warrant an exception to the rule that reinstatement is the consequence of an illegal dismissal. 2008 Resolution2dismissing their petition and affirming the March 24. a Department of Health-accredited laboratory. that the respondent was dismissed without just cause. To our mind. barred him from resuming his work under the pretext that he had violated a company directive.illogical for an employee to abandon his employment and. the degree of hostility attendant to a litigation is not. illegal dismissal results because the employee is thus prevented from returning to work under the façade of a violation of a company directive.25 The prayer for reinstatement. Respondents are former employees of Plantation Bay located in Cebu. We take note. speaks against any intent to sever the employer-employee relationship. shall in a few years retire. VILLAFLOR. Respondent Romel Dubrico (Dubrico) failed to take the drug test conducted on September 14. 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. On several dates in September 2004. given the result of the petitioner’s action and the attendant insensibility and disdain the employer exhibited. 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. 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. SP No.R.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. G. abandonment after the respondent’s long years of service and the consequent surrender of benefits earned from years of hard work are highly unlikely. v. benefit and privileges – there may be constructive dismissal if an act of clear discrimination." and the phrase cannot be given an overarching interpretation. hence. J. V-000366-2005 in favor of herein respondents. in compliance with Republic Act No. but will deprive the respondent of compensation for the future productive years that his security of tenure protects. file a complaint for illegal dismissal. Since the application of this doctrine will result in the deprivation of employment despite the absence of just cause. Consequently. Respondents. were administered on about 122 employees by the Martell Medical Trade and Lab Services (Martell). except only to the extent recognized by the law itself as expressed in jurisprudence. 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. 31 In the present case. any separation pay paid at this point cannot equal the retirement pay due the respondent upon retirement. (Phil. and. Prior to his dismissal.32 We agree with the CA’s specific finding that the conflict. 89587. The petitioner. no basis in reason exists for the petitioner’s theory that the respondent abandoned his job. premises considered. the filing of the complaint for illegal dismissal is proof enough of the desire to return to work.30 Indeed. Petitioners. 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. as affirmed by the CA. petitioners Plantation Bay Resort and Spa (Plantation Bay) and Efren Belarmino (Belarmino) challenge the Court of Appeals August 30. The drug tests. of which Belarmino is the Manager.26 We additionally take note of the undisputed fact that the respondent had been in the petitioner’s employ for 23 years. ROMEL S. insensibility. Drug). 2009 PLANTATION BAY RESORT and SPA and EFREN BELARMINO. that the respondent. 2004. Inc. compensation. As the NLRC correctly held. Separation pay may take into account the respondent’s past years of service. For all these reasons. Again. however. A dismissal need not be expressed orally or in writing. otherwise. an unjustly dismissed employee can never be reinstated. for it can also be implied. 2006 and its Resolution dated August 15.R. we hereby DENY the petition.1avvphi1 The petitioner’s actions. inclusive of allowances and other benefits or their monetary equivalent. WHEREFORE. labor disputes almost always result in "strained relations. consequently. does not merit the severance of the employee-employer relationship between the parties. 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. Inc. AFFIRM the Decision of the Court of Appeals dated June 28. 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. When the employer continuously refuses to accept the employee back despite his having a valid reason for his absence from work. computed from the time his compensation was withheld from him up to the time of his actual reinstatement. We significantly note that by reporting for work repeatedly. 182216 December 4. a drug testing laboratory. 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. 2006 in CA-G. he was issued a memorandum7 requiring him to appear in a mandatory . 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. but who had to absent himself because of illness.: Via petition for review on certiorari. Respondent was constructively dismissed The above conclusion necessarily leads us to sustain the NLRC’s finding. constitute constructive dismissal. 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. 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. Second. we find no evidentiary support for the conclusion that strained relations existed between the parties. No. To be sure. 2007 Decision1 and March 3. DUBRICO. 29 The imposition of this legal consequence is a matter of law that allows no discretion on the part of the decision maker. NGUJO and JULIUS D. conducted surprise random drug tests on its employees.6 Plantation Bay. DECISION CARPIO MORALES. vs. SO ORDERED. after Plantation Bay issued a series of memoranda and conducted seminars5relative to its drug-free workplace policy. the NLRC erred when it awarded separation pay instead of reinstatement. as in this case. 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. under these circumstances. 9165 (Comprehensive Dangerous Drugs Act of 2002).

m. Plantation Bay appealed to the Court of Appeals. arguing that. we agree with complainants that either or both drug tests and confirmatory tests conducted on them were fabricated. On appeal. 9165. by giving the opposing party sufficient opportunity to meet and rebut the new or additional evidence15 introduced. 2006.conference on September 20. Godfrey Ngujo Urine sample received on 09/29/04 at 5:24 p. The Constitution no less directs the State to afford full protection to labor.m. (Underscoring supplied) As reflected in the above matrix. 14 there are exceptions thereto among which are for reasons of public policy or interest. We thus agree with complainants that if the drug tests against them were true.13 Its motion for reconsideration having been denied by Resolution of June 23. By Decision11 of April 18. Thus. the petition just the same fails. it. they maintain that in terminating the services of respondents. Dubrico was later tested and found positive for use of methamphetamine hydrochloride (shabu). 16 On the merits. Labor Arbiter Jose G. Issued on 09/29/04 at p. petitioners reiterating the same issues raised in the appellate court. (a) the dismissal must be for a valid cause and (b) the employee must be afforded due process. 2004. they were guilty of serious misconduct. these could not have been gotten from their urine samples which were yet to undergo drug testing. 2005. 2006 Resolution with modification by deleting the award of damages. there is not only doubt that on the version of respondents but also their conduct is highly suspicious based on their own evidence. 2004 their respective complaints10 for illegal dismissal. Respondents Dubrico. Before the scheduled conference or on September 19. 2004. (Emphasis and underscoring supplied)1avvphi1 On the issue of due process. provided due process is observed. Such move is proper. In compliance with separate memoranda9 issued by the management of Plantation Bay. we now rule that respondents were not really into drugs. hence. inter alia. we have ruled that where there is no showing of a clear. It was Plantation Bay’s responsibility to ensure that the tests would be properly administered. they having been issued memoranda as to the mandatory investigation and given the chance to. It ratiocinated: Considering the indubitable documentary evidence on record notably submitted by respondents [petitioners herein] themselves. farce or sham. SO ORDERED. as was the case here. the procedure for the random drug testing was not followed such that he was not informed about his selection. based on the reports on respondents’ respective drug tests18 administered by Martell and confirmatory tests19 undertaken by the Phil. and that he was at the appointed time and place for the pre-test meeting but that the duty manager was not around. Julius Villaflor Urine sample received on 09/29/04 at 5:32 p. For an employee's dismissal to be valid.m. questioning the conduct of the drug tests without the presence of the DOLE Regional Director or his representative. Issued on 09/29/04 at p. he averring that. On respondents’ motion for reconsideration. For how could one "confirm" some thing which was yet to be established or discovered? Needless to say. disposing as follows: WHEREFORE. Time and again. requiring that a confirmatory test must be conducted if an employee is found positive for drugs in the Employee’s Prior Screening Test. Gutierrez dismissed the employees’ complaints. The appellate court affirmed the NLRC March 24. by Decision of October 26. the NLRC gravely abused its discretion when it reversed its findings based on such new issue. hence. Indeed. To achieve this goal. and the assailed Decision is AFFIRMED in toto. Plantation Bay dismissed them including herein respondents. however. the veracity of the confirmatory tests was raised by respondents only when they filed a belated Motion for Reconsideration of the NLRC Decision. the results thereof being the bases in terminating the employees’ services." in compliance with Republic Act No. While it is a well-settled rule. Plantation Bay validly terminated their employment. In finding for respondents. the NLRC abandoned its earlier statement that it was the SOCO which conducted the drug tests. the present petition. The petition is bereft of merit. technical rules of procedure shall be liberally construed in favor of the working class in accordance with the demands of substantial justice.20 (Emphasis supplied) . Or that is the confirmatory tests were correct. Twenty other employees were found positive for use of shabu including herein respondents Godfrey Ngujo (Ngujo) and Julius Villaflor (Villaflor). new or additional evidence may be introduced on appeal before the NLRC. the law considers the case a matter of illegal dismissal. 2005 Decision and declared that respondents were illegally dismissed. they should not be made liable therefor. affirmed the Decision of the Labor Arbiter. which explanations were found unsatisfactory. 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. they relied on the results of the random drug tests undertaken by an accredited and licensed drug testing facility. and if the results turned out to be questionable or erroneous. hence. Technical rules of procedure are not strictly adhered to in labor cases. the NLRC. The burden is on the employer to prove that the termination of employment was for a valid and legal cause. Hence. thereby casting doubts on the veracity of the confirmatory results. reversed its October 26.m. that issues not raised below cannot be raised for the first time on appeal. inter alia. holding that in testing positive for the use of shabu.m. not the other way around. Drug: Name Drug Test Confirmatory Test Romel Dubrico Urine sample received on 09/29/04 at 5:14 p. the Appeal is DISMISSED. At any rate. it being crucial in determining the validity of respondents’ dismissal from their employment. Ngujo and Villaflor and three others thereupon filed on November 18. It added that respondents were not given the opportunity to examine the evidence and confront the witnesses against them through their counsel. he left and failed to be tested. Issued on 09/29/04 at p. Additionally. hence. In the interest of substantial justice. the confirmatory test results were released earlier than those of the drug test.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. Dubrico explained in writing8 his failure to undergo the drug test. 2005. also applicable in labor cases. and that both tests must arrive at the same positive result.m. The importance of the confirmatory test is underscored in Plantation Bay’s own "Policy and Procedures. the drug testing should always come ahead of the confirmatory testing. this time declaring that it was Martell which actually administered them. 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 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. the employees submitted their explanations on the result of the tests. 2006. and that they were afforded due process. the supposed confirmatory tests conducted on them were not based on their urine samples that were the subject of the drug tests. The NLRC accordingly reversed the Decision of the Labor Arbiter. as they did refute the results of the drug tests by submitting results of recent drug tests. by Resolution of March 24.171avvphil1 Records show the following timeline. valid and legal cause for termination of employment.

the same is in order. against Hilario Ramirez (Ramirez). secretary of Ramirez. 4th Division. 27 February 2006.6 In the end. 2009 HILARIO S. Second were the mechanics paid on pakyaw basis.98 Total Award - P45. The mechanic assigned in the area was then absent at that time. presented a different version of the antecedents. on the other hand. and eventually as mechanic. By 2002. complainant would be guilty of abandonment and respondent of illegal dismissal. he was paid a daily wage of P140. the petition is DENIED. Ramirez insisted that Valcueba was never terminated from his employment. however. RAMIREZ. He was not also paid the complete amount of his 13th month pay. the Commission found that the same does not comply with Section 6. Lapu-Lapu City when respondent Ramirez ordered him to answer an emergency call. there being no clear showing that the termination of respondents’ services was actuated by bad faith. OWNER OF H. which required him to fix the respondent’s troubled taxi unit. VALCUEBA the following: a. respondents are deemed to have been illegally dismissed. HON. 13th month pay differential. Cebu City and MARIO S. NLRC. Consequently. Taxi.00 in 2005. which was increased to P165. judgment is hereby rendered declaring respondent HILARIO RAMIREZ. holiday pay. Nonetheless. 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.98 Philippine currency. Consequently. and finally. Resolving the motion. The refusal of complainant to obey the lawful order of respondent Ramirez is bolstered by his failure to report for work the following day. it is best that the parties to this case should be restored to their previous employment relations.R. 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.538. On 27 February 2006. also within ten (10) days from receipt of this decision. DECISION CHICO-NAZARIO. within ten (10) days from receipt hereof. the NLRC issued a Resolution9 dated 29 September 2006. He was not paid for holidays and rest days. Other claims are DISMISSED for failure to substantiate. WHEREFORE. as the records are bereft of any evidence that respondent sent complainant a letter which advised the latter to report for work. the Labor Arbiter rendered her decision. he was assigned to various stations to perform emergency/rescue work. After hearing. and service incentive leaves with claims for moral and exemplary damages and attorney’s fees.7 Records show that Ramirez received the Labor Arbiter’s decision on 5 June 2006. A fortiori. Valcueba advanced no reason regarding his failure to answer an emergency call of duty. temporarily assigned at Babag Station. there being no dismissal nor abandonment involved in this case.000. then as helper of the mechanic. respondent HILARIO RAMIREZ. 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). On the contrary. on February 26. is hereby ordered to pay complainant MARIO S. VALCUEBA. On 26 February 2006. 2006. while he was assigned at the Babag station. There were three categories of mechanics at the workplace. As rescue or emergency mechanic temporarily assigned at Babag Station. J. 2006. The refusal of Valcueba to obey the lawful order of Ramirez was bolstered by his failure to report for work the following day. 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.4 Aggrieved.00 a day in 2003 and to P190. he alleged that it was complainant who abandoned his job. he filed this case.Respondents. Valcueba. Valcueba did not report to the Calawisan station. On the contrary. As emergency/rescue mechanic. as a unit had developed engine trouble and the mechanic assigned in that area was absent. Valcueba belonged to the last category. Wage Differential .P30. Josephine Torres. through the Cashier of this Arbitration Branch. did not report at Calawisan. complainant did not report at Calawisan. which required him to fix Ramirez’s troubled taxi unit. he insisted that complainant was never terminated from his employment.00 he posted is not a reasonable amount in relation to the monetary . premium pay for holidays and rest days. COURT OF APPEALS. 13th Month Pay - 15. No documentary evidence purporting to clearly indicate that complainant was discharged was submitted for Our judicious consideration. as he allegedly intended to return to Mindanao. 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. Proof of compliance hereof.825. 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. 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. those who were classified as rescue/emergency mechanics. informed Valcueba that he would not be allowed to return to work unless he agreed to work on pakyaw basis. HON. as rescue or emergency mechanic. whichever comes first. In fact. it was the latter who abandoned his job.: 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. while respondent must accept complainant back to work. he did not report for work anymore. the Labor Arbiter decreed: WHEREFORE. Complainant must go back to work within ten (10) days from receipt of this judgment. February 27.5 Further. xxxx Respondent has not offered a meritorious ground for the reduction of the appeal bond and the amount ofP10. No. owner of H. Valcueba claimed that Ramirez hired him as mechanic on 28 May 1999.287.R. it appearing that there is no dismissal to speak of in this case. In addition. which reads: Upon a careful perusal of the motion to reduce bond. complainant is ordered to report back for work within ten (10) days from receipt hereof. Ramirez directed him to proceed to Calawisan. must be submitted within the same period (sic).R. Lapu-lapu City. Petitioner. asserting that Valcueba was first hired as construction worker.In fine. On the side of respondent Ramirez. 182626 December 4. As to the appellate court’s deletion of the award of damages. First were the mechanics assigned to specific stations. Lapu-lapu City when Ramirez ordered him to answer an emergency call. The mechanic assigned in the area was then absent at that time. On 26 February 2006. Not even a declaration under oath by any affiant attesting to the credibility of complainant’s allegation is presented. TAXI.00 b. NOT GUILTY of illegally dismissing complainant from the service. SO ORDERED. nor did he file an application for a leave of absence when he failed to report for work that day. Cebu City. Rule VI of the NLRC Rules of Procedure. The facts are: Respondent Mario Valcueba (Valcueba) filed a Complaint3 for illegal dismissal and nonpayment of wage differential. Ramirez.00. vs. VIEWED FROM THE FOREGOING. G.

The word "may" refers to the perfection of an appeal as optional on the part of the defeated party. If the decision. the appeal of respondent is hereby DISMISSED for non-perfection due to want of an appeal bond.Decisions. and iv) proof of service upon the other parties. In a resolution dated 13 July 2007. which shall either be in the form of cash deposit or surety bond equivalent in amount to the monetary award. Requisites for Perfection of Appeal. awards. 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. At the outset. Bond. namely: (1) payment of the appeal fees. 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. Verily. with no evidence to support of (sic). Such appeal may be entertained only on any of the following grounds: a. or orders." 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. (2) filing of the memorandum of appeal. xxxx SECTION 6.10 Ramirez filed a Motion for Reconsideration. awards. reaffirms the explicit jurisdictional principle in Article 223 even as it allows in justifiable cases the reduction of the appeal bond. Ramirez’s Motion for Reconsideration was denied by the Court of Appeals in a resolution dated 7 March 2008. premises considered. The case was docketed as CA-G. Non-compliance with the requirement renders the decision of the Labor Arbiter final and executory. II THE DISMISSAL RESOLUTION (ANNEX "A") HAS NOT RESOLVED THE LEGAL ISSUES RAISED IN CA-G. c. If made purely on questions of law. order or award was secured through fraud or coercion.20 In this case. If serious errors in the finding of facts are raised which would cause grave or irreparable damage or injury to the appellant. 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.825. as amended. premises considered. Rule 7 of the Rules of Court. iii) a certificate of non-forum shopping. 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. . The party who seeks to avail himself of the same must comply with the requirements of the rules. 223. he loses the right to appeal. resolution or order. Moreover. and 5) accompanied by i) proof payment of the required appeal fee. 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.19 Clearly. and where there is no ambiguity in the words used."15 The issues are: I PUBLIC RESPONDENT COURT OF APPEALS ERRED IN NOT CONSIDERING THE SUBSTANTIAL COMPLIANCE OF THE FILED PETITION. The NLRC then held: WHEREFORE.98. ii) posting of a cash or surety bond as provided in Section 6 of this Rule. If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter.13 the Court of Appeals dismissed the Petition outright for failure of Ramirez to properly verify his petition and to state material dates. an appeal by the employer may be perfected only upon the posting of a bond. 21 Colby Construction and Management Corporation v. the motion for reconsideration of respondent is hereby DENIED for lack of merit. xxxx No motion to reduce bond shall be entertained except on meritorious grounds. 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. . 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. exclusive of damages and attorney's fees. respondent’s failure to abide with the requisites so mentioned has not perfected his appeal.17 Article 223 of the Labor Code provides for the procedure in case of appeal to the NLRC: Art. they will receive the money judgment in their favor upon the dismissal of the employer's appeal.) Sections 4(a) and 6 of Rule VI of the New Rules of Procedure of the NLRC.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. (Emphasis supplied. While the filing of a motion to reduce bond can be considered as a motion of preference in case of an appeal. as it was not equivalent to the monetary award of the Labor Arbiter. the same holds true only when such motion complies with the requirements stated above. since the assailed Decision of the Labor Arbiter contains a monetary award in favor of complainant. for in three (3) legibly type written or printed copies. it behooves upon respondent to post the required bond. but not to the compulsory posting of an appeal bond. then there is no room for construction. although Ramirez posted an appeal bond. as amended. Failing to do so. the relief prayed for. if he desires to appeal. and (3) payment of the required cash or surety bond. and with a statement of the date the appellant received the appealed decision.R. Consequently. 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.12 Ramirez went up to the Court of Appeals. 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. appeals involving monetary awards are perfected only upon compliance with the following mandatory requisites. 02614. it should be stressed that the right to appeal is not a natural right or a part of due process. when Ramirez sought a reduction of the bond. it is merely a statutory privilege. — In case the decision of the Labor Arbiter or the Regional Director involves a monetary award. SP No. This requirement is intended to assure the workers that if they prevail in the case. Under the Rules. and d. even pending resolution of his motion.R. We first resolve the propriety of dismissal by the NLRC. WHEREFORE. It is intended to discourage employers from using an appeal to delay or evade their obligation to satisfy their employees’ just and lawful claims.(a) The appeal shall be: 1) filed within the reglementary period provided in Section 1 of this Rule. The meaning and the intention of the legislature in enacting a statute must be determined from the language employed. the same was insufficient. Appeal. including graft and corruption. In case of a judgment involving a monetary award. SP NO. 02614. . b. The relevant provision states: SECTION 4. Consequently. 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. 3) in the form of a memorandum of appeal which shall state the grounds relied upon and the arguments in support thereof. 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. Thus. he merely said that the bond was excessive and baseless without amplifying why he considered it as such.award of P45.14hence. 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. 2) verified by the appellant himself in accordance with Section 4. and may be exercised only in the manner prescribed by and in accordance with the provisions of law.

Section [6] that the filing of such motion does not stay the reglementary period. We have consistently enucleated that a mere claim of excessive bond without more does not suffice. On the other hand. Ramirez violated basic tenets of remedial law. All given. 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. and certainly none premised on the ground that its requirements are mere technicalities. National Labor Relations Commission. 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. Guanzon. particularly Rule 65 of the Rules of Court. but none obtains in this case. 2. No. even if it runs into millions. we next resolve the issue of whether or not the Court of Appeals correctly dismissed the petition of Ramirez. 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. in Mcburnie v. unless considerations of equity and substantial justice present cogent reasons to hold otherwise. Thus. and the Court should give utmost regard to this intention.29 That settled. Thus. There is a concession to the employer. even pro hac vice.M. The qualification effectively requires that unless the NLRC grants the reduction of the cash bond within the ten (10)-day reglementary period. Again as in the NLRC. otherwise.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. which under Section 3. the NLRC justifiably denied the motion to reduce bond. we never intend to forge a weapon for erring litigants to violate the rules with impunity. We have always stressed that Article 223. produces no legal effect. or would deem such insufficient postage as sufficient to perfect the appeal. but lies within the sound discretion of the NLRC upon a showing of meritorious grounds. The qualification effectively requires that unless the NLRC grants the reduction of the cash bond within the 10-day reglementary period. National Labor Relations Commission. it is true that verification is merely a formal requirement intended to secure an assurance that matters that are alleged are true and correct. The Court found no basis for therein respondent’s contention that the awards of the Labor Arbiter were null and excessive. It must be emphasized that there is no inherent right to an appeal in a labor case. In Calabash Garments.Very recently.27 While Section 6. For the same reasons above. we allow a relaxation in the application of the rules to set right an arrant injustice. Not even the filing of a motion to reduce bond is deemed to stay the period for requiring an appeal. Ramirez did not even come near to substantially complying with the requirements of Art. v. Inc. this is subject to the conditions that (1) the motion to reduce the bond shall be based on meritorious grounds. 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. 30 On Ramirez’s failure to verify his petition. as it had no basis upon which it could actually and completely determine Ramirez’s motion to reduce bond. 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. which states: SECTION 1. the correct relief would be to reduce the cash or surety bond already posted by the employer within the ten (10)-day period. Failure of petitioner to properly verify the petition in accordance with A. the exercise of the authority is not a matter of right on the part of the movant. Rule VI of the NLRC’s New Rules of Procedure allows the Commission to reduce the amount of the bond. Court of Appeals. the Labor Code. While the bond may be reduced upon motion by the employer. this Court invariably sustains the Court of Appeals’ dismissal of the petition on technical grounds under this provision. 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. Rule 7 of the Rules of Court. there is that proviso in Rule VI. 00-2-10SC amending Section 4. petitioner has not presented any persuasive reason for this Court to be liberal. .28 It is daylight-clear from the foregoing that while the bond may be reduced upon motion by the employer. in Ong v.23 By stating that the bond is excessive and baseless without more. The liberal interpretation and application of rules apply only to proper cases of demonstrable merit and under justifiable causes and circumstances. The Court of Appeals found that he committed the following fatal defects in his petition: 1. as it arises solely from grant of statute. in excluding damages and attorney's fees from the computation of the appeal bond. 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. because in filing a special civil action for certiorari without indicating the requisite material date therein. for the same failed to elucidate why the amount of the bond was either unjustified or prohibitive. we have repeatedly emphasized that the requirement for posting the surety bond is not merely procedural but jurisdictional and cannot be trifled with. The NLRC had. 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. 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. If the NLRC does eventually grant the motion for reduction after the reglementary period has elapsed. 31 However. Rule 7 in relation to Section 1. therefore. the full discretion to grant or deny Ramirez’s motion to reduce the amount of the appeal bond. the respondents therein filed their memorandum of appeal and motion to reduce bond on the 10th or last day of the reglementary period. Noncompliance with such legal requirements is fatal and has the effect of rendering the judgment final and executory. 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. In Moncielcoji Corporation v. does not necessarily give the employer-appellant a `meritorious case’ and does not automatically warrant a reduction of the appeal bond. and (2) a reasonable amount in relation to the monetary award is posted by the appellant. the employer is still expected to post the cash or surety bond securing the full amount within the said 10-day period. Thus. 223 of the Labor Code and NLRC Rule of Procedure. 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. For the same reason. which prescribes the appeal bond requirement. namely.24 this Court held that the NLRC did not act with grave abuse of discretion when it denied petitioner’s motion. 25 it was held that "a substantial monetary award. Rule 46 of the Rules of Court. the filing of the motion to reduce bond shall not stop the running of the period to perfect an appeal. the same was inadequate compared to the monetary award.26 (Emphases supplied. is a rule of jurisdiction and not of procedure. the court may simply order the correction of unverified pleadings or act on them and waive strict compliance with the rules. and without proof that he is incapable of raising the amount of the bond. But. Given that Ramirez is involved in taxi business. as a consequence of which the petition is treated as an unsigned pleading. the employer is still expected to post the cash or surety bond securing the full amount within the said ten (10)-day period. There is little leeway for condoning a liberal interpretation thereof. Although they posted an initial appeal bond. such that strict adherence thereto is required. Petition for certiorari. or deems such insufficient posting as sufficient to perfect the appeal. – x x x. we sustain the dismissal of its petition by the Court of Appeals on technical grounds. The application of the Rules may be relaxed only when rigidity would result in a defeat of equity and substantial justice.) While in certain instances." 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.

We are not unmindful of exceptional cases where this Court has set aside procedural defects to correct a patent injustice. CEBU CITY. 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 .84 c. in violation of Rule 65. 106915 August 31. Therefore.000. and an entry of judgment was accordingly made on 20 August 1992. Inc. x x x. in the alternative. and a sworn certification of non-forum shopping as provided in the third paragraph of Section 3. dated 17 October 1991. 1 in compliance with the writ of execution issued by the Labor Arbiter pursuant to Article 223. No. Costs against petitioner. the date when notice of the denial thereof was received. moral and exemplary damages. The controversy that spawned two (2) special Civil actions for certiorari (this instance included) with this Court.). Respondent Salvador Salutin ("Salutin") was employed by petitioner Jardine Davies. Section 1 (2nd par. which is ten percent (10%) of the total awarded amount. and third. neither do we see any.R. There are three material dates that must be stated in a petition for certiorari brought under Rule 65. Ramirez’s failure to verify and state material dates as required under the rules warranted the outright dismissal of his petition. if any. in denying due course to and dismissing the petition for certiorari for its procedural defects.) Moral Damages 20. Rule 46. dated 26 February 1992. was filed and when notice of the denial thereof was received. NLRC dismissed JDI's appeal for lack of merit but modified the decision by eliminating the awards given for holiday pay. when a motion for new trial or reconsideration. In actions filed under Rule 65. holiday pay. The resolution of 26 February 1992 became final and executory on 19 June 1992. 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. docketed as G. copies of all pleadings and documents relevant and pertinent thereto.xxxx The petition shall be accompanied by a certified true copy of the judgment. in amount of FIFTY SIX THOUSAND SEVEN HUNDRED PESOS (P56. 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. beginning 26 August 1991. SO ORDERED. First.557. No. order or resolution subject thereof.) Holiday pay 13. 1avvphi1 As explicitly stated in the aforementioned Rule.700. and attorney's fees. order or Resolution sought to be assailed. vs. In a decision.R. INC. Hilado. effect of non-compliance with requirements. the promotion and use of JDI's pesticides and other products. 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.) Service Incentive pay 1.00 b. without deduction and qualification. On the other hand. Hagad. dated 22 July 1992.00 e. 3 On 14 February 1992. service incentive leave pay.60 d. Court of Appeals. The desired leniency cannot be accorded. In our resolution. ("JDI"). xxxx The failure of the petitioner to comply with any of the foregoing requirements shall be sufficient ground for the dismissal of the petition. absent valid and compelling reasons for such procedural lapse. thirteenth (13th) month pay. Respondent is further ordered to pay complaint the following: a.33 the court explains that the requirement is for purpose of determining the timeliness of the petition. Section 3 (2nd par. 28-91 on forum-shopping.100. second.respondents. without loss of seniority and other rights. Such a petition is required to be filed not later than sixty (60) days from notice of the judgment. FOURTH DIVISION. with prayer for reinstatement and backwages or. separation pay plus wage differential. Inc. Its subsequent motion for reconsideration was itself denied on 20 May 1992. we find no sufficient justification to set aside the NLRC and Court of Appeals resolutions.00 f. the date when notice of the judgment or final order or resolution was received. dated 08 August 1991. VITUG. Thus. Romeo B. JDI appealed the case to the National Labor Relations Commission (NLRC). In the case before us. At the time when the above narrated events were still unfolding. service incentive leave pay. 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. In the instant case. moral and exemplary damages.) and Rule 46. that the petition for certiorari was filed forty-one (41) days from receipt of the denial of the motion for reconsideration is hardly relevant. 2 A motion for reconsideration was filed which was denied in NLRC's resolution of 13 January 1992./Jardine Agchem is hereby ordered to reinstate complaint to his former position. and to give advice on. In sum. respondent Jardine Davies. the petition was bereft of any persuasive explanation as to why Ramirez failed to observe procedural rules properly. 36 Wherefore. began when respondent Salutin filed a complaint against petitioner JDI for illegal dismissal. and it posted a supersedeas bond to answer for the monetary awards. the petition is Denied for lack of merit. much less commit grave abuse of discretion. 34 Quite apparent from the foregoing is that the Court of Appeals did not err. It also reinstated Salutin. the petition was dismissed for failure to comply with this Court's Circular No. 1993 JARDINE DAVIES. assailing the 17 October 1991 decision and the resolution of 13 January 1992 of respondent Commission. and SALVADOR SALUTIN.35 The relaxation of procedural rules cannot be made without any valid reasons proffered for or underpinning it. JDI filed its first petition for certiorari with this Court.) Exemplary Damages 10. the date when a motion for new trial or for reconsideration was filed.) 13th month pay P 8. 103720.115. 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. 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. some material facts occured beginning with JDI's appeal to the NLRC on the 08 August 1991 decision of the . "on payroll only". G. To merit liberality. on 15 July 1985. SO ORDERED.000. Contents and filing of petition. PREMISES CONSIDERED. petitioner. premises considered. Esuerte for private respondent. the pertinent provision under Rule 46 is explicit: Sec. failure to comply with any of the requirements shall be sufficient ground for the dismissal of the petition. The complaint was decided by the Labor Arbiter in favor of respondent Salutin in a decision. the decretal portion of which reads: WHEREFORE. of the Labor Code. paragraph 3. as a demonstrator/agronomist to provide services relating to. The appellate court saw no compelling need meriting the relaxation of the rules. J. NATIONAL LABOR RELATIONS COMMISSION.: The instant petition for certiorari seeks the reversal of the resolution of respondent National Labor Relations Commission. 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. 3. The rationale for this strict provision of the Rules of Court is not difficult to appreciate.. & Hilado Law Office for petitioner. However. and with backwages.00).) Attorney's fees. the decision of the Labor Arbiter is already final and executory and binding upon this Court. In Santos v.

and on 11 December 1991. He submitted a medical certificate to support his claim. JDI filed an ex parte motion. JDI sent a letter. Prescinding from its receipt of an information that Salutin was employed elsewhere. 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. did seek medical consultation on 7 November 1991. SO ORDERED. Inc. among other things. In its resolution. did not stain the picture at all. the petition is hereby DISMISSED. certain uncontroverted facts show just exactly the opposite. Inc. manifest his desire to assume his work with the petitioner. on his part. HENCE HE WAS RECEIVING SALARIES FROM BOTH. The questioned resolutions of the National Labor Relations Commission are AFFIRMED.146. 8 On 22 July 1992. JDI filed a "Manisfestation and Motion" with the respondent Commission stating. respondent Commission denied JDI's "Manifestation & Motion" stating. to set for hearing the Manifestation and Motion of 17 October 1991. since after fifteen minutes or so. during the period from 01 September to 31 December 1991. He did not stay long. 7 claiming that he had reported for work when he recovered from his ailment on 11 December 1991. for which he was paid P5. The final determination of the rights and obligations respectively of the parties is the ultimate and final resolution of this Commission. he left and was reported not to have thereafter returned for work. he foregoes such a temporary relief and is not paid of his salary. 5 On 13 January 1992. dated 3 March 1993. 11 A shift to a new focus took place when. 6715 granted to a dismissed employee to cushion him and his family against the impact of economic dislocation or abrupt loss of earnings. received a lettercertification issued by the Officer-in-Charge of King's Enterprises of Iloilo City that Salutin was employed by Monsato Philippines. as directed reported on the 24th of September 1991 at around 9:20 a. If the employee chooses not to report for work pending resolution of the case appeal. where the charge of abandonment is seriously controverted. the petitioner should really now be barred from invoking anew that issue in this present (second) petition. did respondent Commission not gravely abuse its discretion when it did not take into consideration such other employment? Our answer is in the negative. Be that as it may. on 24 September 1991. more especially in the present case. and the temporary restraining order issued by this Court is hereby LIFTED. 12 Thus. The records show that at the time JDI filed its Manifestation and Motion.m. dated 16 June 1992. Hence. assailing the 17 October 1991 decision of NLRC. dated 17 October 1991. that: As to the issue of whether the complaint-appellee Salvador Salutin is guilty of work abandonment.Labor Arbiter. During the pendency of this petition. In this instance. in cases of illegal dismissal is an ancillary relief under R. until he formally seeks for the enforcement of the decision is likewise denied. 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. 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. 103720) with this Court on 14 February 1992. we second the wellconsidered view of NLRC. in fact. Petitioner raises this sole assignment of error. denying the petition in G. also filed a motion praying that JDI be ordered to release his withheld salary. JDI forthwith stopped further payment of salary to Salutin. as directed. however. . Shortly after the reinstatement of Salutin "on payroll only". who was then on payroll reinstatement since 26 August 1991. Here. JDI. the fact that he was gainfully employed elsewhere. but that he could not stay long because he was ailing at that time.. . to Salutin directing him to report for work to their Bacolod Branch Manager. respondent Commission issued its assailed resolution stating. in the Arbiter's decision subject of this appeal be considered and held as waived or lost. viz: WHEREFORE. stressed by the petitioner. he. to set for hearing the aforestated "Manifestation and Motion. it may still wade through the records of a case if only to prevent any possible misgiving in its ultimate disposition. however.. it also raised. Premises considered. JDI paraphrased the assigned issue in this wise: Is Salutin. 103720. on 30 January 1992. the same fate of dismissal is still inevitable. 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 . This Court's resolution of 26 February 1992. although perhaps belatedly made. as Aggressive Crop Technician. The complainant's motion for release of his salary since 24 September 1991. SO ORDERED. at its request. WHEREFORE. for "peptic ulcer". became final and executory on 19 June 1992. as an added argument on the alleged abandonment of work by Salutin. this is a new and factual matter which has to be determined and resolved in appropriate proceedings before the Arbitration Branch. Although this Court is not a trier of facts. Salutin. this was the reason given by JDI in its ex parte motion. 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. inter alia. without loss of seniority and other rights. This refusal must be clearly shown. 15 Abandonment of position is a matter of intention expressed in clearly certain and unequivocal acts. there must be a deliberate unjustified refusal of the employee to resume his employment. he did. which this Court dismissed with finality. this Court resolved to issue a temporary restraining order. thus — The order of immediate reinstatement pending appeal. Salutin did report.A. and that any award for reinstatement to his former position. JDI instituted on 18 September 1992 the present petition for certiorari. . 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. 13 Considering that this matter was thus already taken up by the petitioner in its first petition for certiorari. Respondent Salutin's interim employment.00 per month. 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. Is this enough? What we have heretofore said is this — For abandonment to constitute a valid cause for termination of employment. NLRC denied the said ex parte motion in the now assailed resolution of 22 July 1992.R. dated 21 September 1991. at the Corazon Locsin Montelibano Memorial Regional Hospital. it must be accompanied by overt acts pointing to the fact that the employee simply does not want to work anymore. 4 Salutin opposed the motion. No. dated 16 June 1992. Mere absence is not sufficient. In the subsequent pages of its petition. 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." 6 Salutin.R. On 17 October 1991. from 01 September to 31 December 1991. No. When JDI filed its first petition for certiorari (in G. claiming that he was forced to leave in haste because he was then suffering from a serious ailment. When the motion for reconsideration was likewise denied.

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