YUPANGCO COTTON MILLS, INC., petitioner, vs.

COURT OF APPEALS,
HON. URBANO C. VICTORIO, SR., Presiding Judge, RTC Branch 50,
Manila, RODRIGO SY MENDOZA, SAMAHANG MANGGAGAWA NG
ARTEX (SAMAR-ANGLO) represented by its Local President RUSTICO
CORTEZ, and WESTERN GUARANTY CORPORATION, respondents.

4. It appealed to the NLRC the order of the Labor Arbiter dated August 13,
1995 which dismissed the appeal for lack of merit on December 8, 1995.
5. It filed an original petition for mandatory injunction with the NLRC on
November 16, 1995. This was docketed as Case No. NLRC-NCR-IC. 000060295. This case is still pending with that Commission.

DECISION
PARDO, J.:

6. It filed a complaint in the Regional Trial Court in Manila which was

docketed as Civil Case No. 95-76395. The dismissal of this case by public
respondent triggered the filing of the instant petition.

The Case
The case is a petition for review on certiorari of the decision of the Court of
Appeals[1] dismissing the petition ruling that petitioner was guilty of forum
shopping and that the proper remedy was appeal in due course, not
certiorari or mandamus.

In all of the foregoing actions, petitioner raised a common issue, which is

that it is the owner of the properties located in the compound and buildings
of Artex Development Corporation, which were erroneously levied upon by
the sheriff of the NLRC as a consequence of the decision rendered by the
said Commission in a labor case docketed as NLRC-NCR Case No. 00-0502960-90.[2]

In its decision, the Court of Appeals sustained the trial courts ruling that the
remedies granted under Section 17, Rule 39 of the Rules of Court are not
available to the petitioner because the Manual of Instructions for Sheriffs of
the NLRC does not include the remedy of an independent action by the
owner to establish his right to his property.

On March 29, 1996, the Court of Appeals promulgated a decision[3]

dismissing the petition on the ground of forum shopping and that petitioners
remedy was to seek relief from this Court.

The Facts
The facts, as found by the Court of Appeals, are as follows:
From the records before us and by petitioners own allegations and
admission, it has taken the following actions in connection with its claim that
a sheriff of the National Labor Relations Commission erroneously and
unlawfully levied upon certain properties which it claims as its own.
1. It filed a notice of third-party claim with the Labor Arbiter on May 4, 1995.
2. It filed an Affidavit of Adverse Claim with the National Labor Relations
Commission (NLRC) on July 4, 1995, which was dismissed on August 30,
1995, by the Labor Arbiter.
3. It filed a petition for certiorari and prohibition with the Regional Trial Court
of Manila, Branch 49, docketed as Civil Case No. 95-75628 on October 6,
1995. The Regional Trial Court dismissed the case on October 11, 1995 for
lack of merit.

On April 18, 1996, petitioner filed with the Court of Appeals a motion for
reconsideration of the decision.[4] Petitioner argued that the filing of a
complaint for accion reinvindicatoria with the Regional Trial Court was proper
because it is a remedy specifically granted to an owner (whose properties
were subjected to a writ of execution to enforce a decision rendered in a
labor dispute in which it was not a party) by Section 17 (now 16), Rule 39,
Revised Rules of Court and by the doctrines laid down in Sy v. Discaya,[5]
Santos v. Bayhon[6] and Manliguez v. Court of Appeals.[7]
In addition, petitioner argued that the reliefs sought and the issues involved
in the complaint for recovery of property and damages filed with the
Regional Trial Court of Manila, presided over by respondent judge, were
entirely distinct and separate from the reliefs sought and the issues involved
in the proceedings before the Labor Arbiter and the NLRC. Besides, petitioner
pointed out that neither the NLRC nor the Labor Arbiter is empowered to
adjudicate matters involving ownership of properties.
On August 27, 1996, the Court of Appeals denied petitioners motion for
reconsideration.[8]
Hence, this appeal.[9]

The Issues
The issues raised are (1) whether the Court of Appeals erred in ruling that
petitioner was guilty of forum shopping, and (2) whether the Court of
Appeals erred in dismissing the petitioners accion reinvindicatoria on the
ground of lack of jurisdiction of the trial court.
The Courts Ruling

In Chemphil Export & Import Corporation v. Court of Appeals,[12] we ruled

that:
Forum-shopping or the act of a party against whom an adverse judgment has
been rendered in one forum, of seeking another (and possible) opinion in
another forum (other than by appeal or the special civil action of certiorari),
or the institution of two (2) or more actions or proceedings grounded on the
same cause on the supposition that one or the other would make a favorable
disposition.

On the first issue raised, we rule that there was no forum shopping.
In Golangco v. Court of Appeals,[10] we held:
What is truly important to consider in determining whether forum shopping
exists or not is the vexation caused the courts and parties-litigant by a party
who asks different courts and/or administrative agencies to rule on the same
or related causes and/or grant the same or substantially the same reliefs, in
the process creating possibility of conflicting decisions being rendered by the
different for a upon the same issues.

On the second issue, a third party whose property has been levied upon by a
sheriff to enforce a decision against a judgment debtor is afforded with
several alternative remedies to protect its interests. The third party may
avail himself of alternative remedies cumulatively, and one will not preclude
the third party from availing himself of the other alternative remedies in the
event he failed in the remedy first availed of.
Thus, a third party may avail himself of the following alternative remedies:
a) File a third party claim with the sheriff of the Labor Arbiter, and

xxx xxx xxx

There is no forum-shopping where two different orders were questioned, two
distinct causes of action and issues were raised, and two objectives were
sought. (Underscoring ours)
In the case at bar, there was no identity of parties, rights and causes of
action and reliefs sought.
The case before the NLRC where Labor Arbiter Reyes issued a writ of
execution on the property of petitioner was a labor dispute between Artex
and Samar-Anglo. Petitioner was not a party to the case. The only issue
petitioner raised before the NLRC was whether or not the writ of execution
issued by the labor arbiter could be satisfied against the property of
petitioner, not a party to the labor case.
On the other hand, the accion reinvindicatoria filed by petitioner in the trial
court was to recover the property illegally levied upon and sold at auction.
Hence, the causes of action in these cases were different.
The rule is that for forum-shopping to exist both actions must involve the
same transactions, the same circumstances. The actions must also raise
identical causes of action, subject matter and issues.[11]

b) If the third party claim is denied, the third party may appeal the denial to
the NLRC.[13]
Even if a third party claim was denied, a third party may still file a proper
action with a competent court to recover ownership of the property illegally
seized by the sheriff. This finds support in Section 17 (now 16), Rule 39,
Revised Rules of Court, to wit:
SEC. 17 (now 16). Proceedings where property claimed by third person. -If
property claimed by any other person than the judgment debtor or his agent,
and such person makes an affidavit of his title thereto or right to the
possession thereof, stating the grounds of such right or title, and serve the
same upon the officer making the levy, and a copy thereof upon the
judgment creditor, the officer shall not be bound to keep the property, unless
such judgment creditor or his agent, on demand of the officer, indemnify the
officer against such claim by a bond in a sum not greater than the value of
the property levied on. In case of disagreement as to such value, the same
shall be determined by the court issuing the writ of execution.
The officer is not liable for damages, for the taking or keeping of the
property, to any third-party claimant unless a claim is made by the latter and
unless an action for damages is brought by him against the officer within one
hundred twenty (120) days from the date of the filing of the bond. But

nothing herein contained shall prevent such claimant or any third person
from vindicating his claim to the property by any proper action.

be brought against the sheriff within one hundred twenty (120) days from
the filing of the bond.

When the party in whose favor the writ of execution runs, is the Republic of
the Philippines, or any officer duly representing it, the filing of such bond
shall not be required, and in case the sheriff or levying officer is sued for
damages as a result of the levy, he shall be represented by the Solicitor
General and if held liable therefor, the actual damages adjudged by the
court shall be paid by the National Treasurer out of such funds as may be
appropriated for the purpose. (Underscoring ours)

The aforesaid remedies are nevertheless without prejudice to any proper

action that a third-party claimant may deem suitable to vindicate his claim to
the property. Such a proper action is, obviously, entirely distinct from that
explicitly prescribed in Section 17 of Rule 39, which is an action for damages
brought by a third-party claimant against the officer within one hundred
twenty (120) days from the date of the filing of the bond for the taking or
keeping of the property subject of the terceria.

In Sy v. Discaya,[14] we ruled that:

Quite obviously, too, this proper action would have for its object the recovery
of ownership or possession of the property seized by the sheriff, as well as
damages resulting from the allegedly wrongful seizure and detention thereof
despite the third-party claim; and it may be brought against the sheriff and
such other parties as may be alleged to have colluded with him in the
supposedly wrongful execution proceedings, such as the judgment creditor
himself. Such proper action, as above pointed out, is and should be an
entirely separate and distinct action from that in which execution has issued,
if instituted by a stranger to the latter suit.

The right of a third-party claimant to file an independent action to vindicate

his claim of ownership over the properties seized is reserved by Section 17
(now 16), Rule 39 of the Rules of Court, x x x:
xxxxxxxxx
As held in the case of Ong v. Tating, et. al., construing the aforecited rule, a
third person whose property was seized by a sheriff to answer for the
obligation of a judgment debtor may invoke the supervisory power of the
court which authorized such execution. Upon due application by the third
person and after summary hearing, the court may command that the
property be released from the mistaken levy and restored to the rightful
owner or possessor. What said court do in these instances, however, is
limited to a determination of whether the sheriff has acted rightly or wrongly
in the performance of his duties in the execution of judgment, more
specifically, if he has indeed taken hold of property not belonging to the
judgment debtor. The court does not and cannot pass upon the question of
title to the property, with any character of finality. It can treat of the matter
only insofar as may be necessary to decide if the sheriff has acted correctly
or not. It can require the sheriff to restore the property to the claimants
possession if warranted by the evidence. However, if the claimants proof do
not persuade the court of the validity of his title or right of possession
thereto, the claim will be denied.
Independent of the above-stated recourse, a third-party claimant may also
avail of the remedy known as terceria, provided in Section 17 (now 16), Rule
39, by serving on the officer making the levy an affidavit of his title and a
copy thereof upon the judgment creditor. The officer shall not be bound to
keep the property, unless such judgment creditor or his agent, on demand of
the officer, indemnifies the officer against such claim by a bond in a sum not
greater than the value of the property levied on. An action for damages may

The remedies above mentioned are cumulative and may be resorted to by a

third-party claimant independent of or separately from and without need of
availing of the others. If a third-party claimant opted to file a proper action to
vindicate his claim of ownership, he must institute an action, distinct and
separate from that in which the judgment is being enforced, with the court of
competent jurisdiction even before or without need of filing a claim in the
court which issued the writ, the latter not being a condition sine qua non for
the former. In such proper action, the validity and sufficiency of the title of
the third-party claimant will be resolved and a writ of preliminary injunction
against the sheriff may be issued. (Emphasis and underscoring ours)
In light of the above, the filing of a third party claim with the Labor Arbiter
and the NLRC did not preclude the petitioner from filing a subsequent action
for recovery of property and damages with the Regional Trial Court. And, the
institution of such complaint will not make petitioner guilty of forum
shopping.[15]
In Santos v. Bayhon,[16] wherein Labor Arbiter Ceferina Diosana rendered a
decision in NLRC NCR Case No. 1-313-85 in favor of Kamapi, the NLRC
affirmed the decision. Thereafter, Kamapi obtained a writ of execution
against the properties of Poly-Plastic Products or Anthony Ching. However,
respondent Priscilla Carrera filed a third-party claim alleging that Anthony
Ching had sold the property to her. Nevertheless, upon posting by the

judgment creditor of an indemnity bond, the NLRC Sheriff proceeded with the
public auction sale. Consequently, respondent Carrera filed with Regional
Trial Court, Manila an action to recover the levied property and obtained a
temporary restraining order against Labor Arbiter Diosana and the NLRC
Sheriff from issuing a certificate of sale over the levied property. Eventually,
Labor Arbiter Santos issued an order allowing the execution to proceed
against the property of Poly-Plastic Products. Also, Labor Arbiter Santos and
the NLRC Sheriff filed a motion to dismiss the civil case instituted by
respondent Carrera on the ground that the Regional Trial Court did not have
jurisdiction over the labor case. The trial court issued an order enjoining the
enforcement of the writ of execution over the properties claimed by
respondent Carrera pending the determination of the validity of the sale
made in her favor by the judgment debtor Poly-Plastic Products and Anthony
Ching.
In dismissing the petition for certiorari filed by Labor Arbiter Santos, we ruled
that:
x x x. The power of the NLRC to execute its judgments extends only to
properties unquestionably belonging to the judgment debtor (Special
Servicing Corp. v. Centro La Paz, 121 SCRA 748).
The general rule that no court has the power to interfere by injunction with
the judgments or decrees of another court with concurrent or coordinate
jurisdiction possessing equal power to grant injunctive relief, applies only
when no third-party claimant is involved (Traders Royal Bank v. Intermediate
Appellate Court, 133 SCRA 141 [1984]). When a third-party, or a stranger to
the action, asserts a claim over the property levied upon, the claimant may
vindicate his claim by an independent action in the proper civil court which
may stop the execution of the judgment on property not belonging to the
judgment debtor. (Underscoring ours)
In Consolidated Bank and Trust Corp. v. Court of Appeals, 193 SCRA 158
[1991], we ruled that:
The well-settled doctrine is that a proper levy is indispensable to a valid sale
on execution. A sale unless preceded by a valid levy is void. Therefore, since
there was no sufficient levy on the execution in question, the private
respondent did not take any title to the properties sold thereunder x x x.
A person other than the judgment debtor who claims ownership or right over
the levied properties is not precluded, however, from taking other legal
remedies. (Underscoring ours)

Jurisprudence is likewise replete with rulings that since the third-party

claimant is not one of the parties to the action, he could not, strictly
speaking, appeal from the order denying his claim, but should file a separate
reinvindicatory action against the execution creditor or the purchaser of the
property after the sale at public auction, or a complaint for damages against
the bond filed by the judgment creditor in favor of the sheriff.[17]
And in Lorenzana v. Cayetano,[18] we ruled that:
The rights of a third-party claimant should not be decided in the action
where the third-party claim has been presented, but in a separate action to
be instituted by the third person. The appeal that should be interposed if the
term appeal may properly be employed, is a separate reinvindicatory action
against the execution creditor or the purchaser of the property after the sale
at public auction, or complaint for damages to be charged against the bond
filed by the judgment creditor in favor of the sheriff. Such reinvindicatory
action is reserved to the third-party claimant.
A separate civil action for recovery of ownership of the property would not
constitute interference with the powers or processes of the Arbiter and the
NLRC which rendered the judgment to enforce and execute upon the levied
properties. The property levied upon being that of a stranger is not subject to
levy. Thus, a separate action for recovery, upon a claim and prima-facie
showing of ownership by the petitioner, cannot be considered as
interference.
The Fallo
WHEREFORE, the Court REVERSES the decision of the Court of Appeals and
the resolution denying reconsideration.[19] In lieu thereof, the Court renders
judgment ANNULLING the sale on execution of the subject property
conducted by NLRC Sheriff Anam Timbayan in favor of respondent SAMARANGLO and the subsequent sale of the same to Rodrigo Sy Mendoza. The
Court declares the petitioner to be the rightful owner of the property
involved and remands the case to the trial court to determine the liability of
respondents SAMAR-ANGLO, Rodrigo Sy Mendoza, and WESTERN GUARANTY
CORPORATION to pay actual damages that petitioner claimed.
Costs against respondents, except the Court of Appeals.
SO ORDERED.

On the other hand, the complaining workers (the workers) are sewers,
trimmers, helpers, a guard and a secretary who were hired by Weesan as
follows:

SY VS KNITCRAFT
DECISION

DEL CASTILLO, J.:

The issues of labor-only contracting and the acquisition of a labor tribunal of
jurisdiction over the person of a respondent are the matters up for
consideration in these consolidated Petitions for Review on Certiorari.
Assailed in G.R. No. 182915 is the May 9, 2008 Resolution[1] of the Special
Ninth Division of the Court of Appeals (CA) in CA-G.R. SP No. 93204 which
reversed and set aside the July 25, 2007 Decision[2] of the CAs First Division
and ordered the exclusion of Fairland Knitcraft Co., Inc. (Fairland) from the
decisions of the labor tribunals. Said July 25, 2007 Decision, on the other
hand, affirmed the November 30, 2004 Decision[3] and August 26, 2005
Resolution[4] of the National Labor Relations Commission (NLRC) which, in
turn, reversed and set aside the November 26, 2003 Decision[5] of the Labor
Arbiter finding the dismissal as valid.
On the other hand, assailed in G.R. No. 189658 is the July 20, 2009
Decision[6] of the CAs Special Former Special Eighth Division in CA-G.R. SP
No. 93860, which affirmed the aforesaid November 30, 2004 Decision and
August 26, 2005 Resolution of the NLRC. Likewise assailed is the October 1,
2009 CA Resolution[7] denying the Motion for Reconsideration thereto.
Factual Antecedents

Fairland is a domestic corporation engaged in garments business, while

Susan de Leon (Susan) is the owner/proprietress of Weesan Garments
(Weesan).

On December 23, 2002, workers Marialy O. Sy, Vivencia Penullar, Aurora

Aguinaldo, Gina Aniano, Gemma dela Pea and Efremia Matias filed with the
Arbitration Branch of the NLRC a Complaint[9] for underpayment and/or nonpayment of wages, overtime pay, premium pay for holidays, 13th month pay
and other monetary benefits against Susan/Weesan. In January 2003, the
rest of the aforementioned workers also filed similar complaints. Eventually
all the cases were consolidated as they involved the same causes of action.
On February 5, 2003, Weesan filed before the Department of Labor and
Employment-National Capital Region (DOLE-NCR) a report on its temporary
closure for a period of not less than six months. As the workers were not
anymore allowed to work on that same day, they filed on February 18, 2003
an Amended Complaint,[10] and on March 13, 2003, another pleading
entitled Amended Complaints and Position Paper for Complainants,[11] to
include the charge of illegal dismissal and impleaded Fairland and its
manager, Debbie Manduabas (Debbie), as additional respondents.
A Notice of Hearing[12] was thereafter sent to Weesan requesting it to
appear before Labor Arbiter Ramon Valentin C. Reyes (Labor Arbiter Reyes)
on April 3, 2003, at 10:00 a.m. On said date and time, Atty. Antonio A.
Geronimo (Atty. Geronimo) appeared as counsel for Weesan and requested
for an extension of time to file his clients position paper.[13] On the next
hearing on April 28, 2003, Atty. Geronimo also entered his appearance for
Fairland and again requested for an extension of time to file position paper.
[14]
On May 16, 2003, Atty. Geronimo filed two separate position papers one for
Fairland[15] and another for Susan/Weesan.[16] The Position Paper for
Fairland was verified by Debbie while the one for Susan/Weesan was verified
by Susan. To these pleadings, the workers filed a Reply.[17]
Atty. Geronimo then filed a Consolidated Reply[18] verified[19] both by
Susan and Debbie.
On November 25, 2003, the workers submitted their Rejoinder.[20]
Ruling of the Labor Arbiter
On November 26, 2003, Labor Arbiter Reyes rendered his Decision,[21] the
dispositive portion of which reads:

WHEREFORE, premises all considered, judgment is hereby rendered, as

follows:
Dismissing the complaint for lack of merit; and ordering the respondents to
pay each complainant P5,000.00 by way of financial assistance.
SO ORDERED.[22]
Ruling of the National Labor Relations Commission
The workers filed their appeal which was granted by the NLRC. The
dispositive portion of the NLRC Decision[23] reads:
WHEREFORE, premises considered, the appealed decision is hereby set
aside and the dismissal of complainants is declared illegal.
Respondents are, therefore, ordered to reinstate complainants to their
original or equivalent position with full backwages with legal interests
thereon from February 5, 2003, until actually reinstated and fully paid, with
retention of seniority rights and are further ordered to pay solidarily to the
complainants the difference of their underpaid/unpaid wages, unpaid
holidays, unpaid 13th month pays and unpaid service incentive leaves with
legal interests thereon, to wit:
xxxx
In the event that reinstatement is not possible, respondents are ordered to
pay solidarily to complainants their respective separation pays computed as
follows:
xxxx
Respondents are likewise ordered to pay ten (10%) percent of the gross
award as and by way of attorneys fees.

The NLRC however, denied both motions for lack of merit.[27]

Fairland and Susan thus filed their separate Petitions for Certiorari before
the CA docketed as CA-G.R. SP No. 93204 and CA-G.R. SP No. 93860,
respectively.
Ruling of the Court of Appeals in CA-G.R. SP No. 93204
On July 25, 2007, the CAs First Division denied Fairlands petition.[28] It
affirmed the NLRCs ruling that the workers were illegally dismissed and that
Weesan and Fairland are solidarily liable to them as labor-only contractor and
principal, respectively.
Fairland filed its Motion for Reconsideration[29] as well as a Motion for
Voluntary Inhibition[30] of Associate Justices Celia C. Librea-Leagogo and
Regalado E. Maambong from handling the case. As the Motion for Voluntary
Inhibition was granted through a Resolution[31] dated November 8, 2007,
the case was transferred to the CAs Special Ninth Division for resolution of
Fairlands Motion for Reconsideration.[32]
On May 9, 2008, the CAs Special Ninth Division reversed[33] the First
Divisions ruling. It held that the labor tribunals did not acquire jurisdiction
over the person of Fairland, and even assuming they did, Fairland is not
liable to the workers since Weesan is not a mere labor-only contractor but a
bona fide independent contractor. The Special Ninth Division thus annulled
and set aside the assailed NLRC Decision and Resolution insofar as Fairland is
concerned and excluded the latter therefrom. The dispositive portion of said
Resolution reads:
WHEREFORE, the Motion for Reconsideration filed by the movant is
GRANTED.
The July 25, 2007 Decision of the First Division of this Court finding that the
NLRC did not act with grave abuse of discretion amounting to lack or excess
of jurisdiction and denying the Petition is REVERSED and SET ASIDE.

SO ORDERED.[24]
Hence, Atty. Geronimo filed a Motion for Reconsideration.[25] However,
Fairland filed another Motion for Reconsideration[26] through Atty. Melina O.
Tecson (Atty. Tecson) assailing the jurisdiction of the Labor Arbiter and the
NLRC over it, claiming that it was never summoned to appear, attend or
participate in all the proceedings conducted therein. It also denied that it
engaged the services of Atty. Geronimo.

Consequently, the Decision and Resolution issued by the public respondent

on November 30, 2004 and August 26, 2005, respectively, are hereby
ANNULLED and SET ASIDE insofar as [it] concerns the petitioner Fairland
Knitcraft Co., Inc. [which] is hereby ordered dropped and excluded therefrom.
SO ORDERED.[34]

Aggrieved, the workers filed before us their Petition for Review on Certiorari
docketed as G.R. No. 182915.
Ruling of the Court of Appeals in CA-G.R. SP No. 93860
With regard to Susans petition, the CA Special Ninth Division issued on May
11, 2006 a Resolution[35] temporarily restraining the NLRC from enforcing its
assailed November 30, 2004 Decision and thereafter the CA Special Eighth
Division issued a writ of preliminary prohibitory injunction.[36] On July 20,
2009, the Special Former Special Eighth Division of the CA resolved the case
through a Decision,[37] the dispositive portion of which reads:
WHEREFORE, premises considered, the present petition is hereby DENIED
DUE COURSE and accordingly DISMISSED for lack of merit. The Decision
dated November 30, 2004 and Resolution dated August 26, 2005 of the
National Labor Relations Commission (NLRC) in CA No. 039375-04 (NLRC NCR
00-12-11294-02, 00-01-00027-03, 00-01-00131-03, 00-01-00820-03 and 0001-01249-03) are hereby AFFIRMED and UPHELD.
The writ of preliminary prohibitory injunction issued by this Court on July 13,
2006 is hereby LIFTED and SET ASIDE.

One of the grounds for the denial of Susans petition was her failure to
indicate the date of filing her Motion for Reconsideration with the CA as
required under Section 4(b),[44] Rule 45 of the Rules of Court. However,
failure to comply with the rule on a statement of material [date] in the
petition may be excused [if] the [date is] evident from the records.[45] In the
case of Susan, records show that she received the copy of the Decision of
the CA on July 24, 2009. She then timely filed her Motion for Reconsideration
via registered mail on August 7, 2009 as shown by the envelope[46] with
stamped receipt of the Batangas City Post Office bearing the date August 7,
2009. The fact of such filing was also stated in the Motion for Extension of
Time to File Petition for Review[47] that she filed before this Court which
forms part of the records of this case. Hence, it is clear that Susan
seasonably filed her Motion for Reconsideration.
Moreover, while we note that Susans petition was also denied on the ground
of no reversible error committed by the CA, we deem it proper, in the
interest of justice, to take a second look on the merits of Susans petition and
reinstate G.R. No. 189658. This is also to harmonize our ruling in these
consolidated petitions and avoid confusion that may arise in their execution.
Hence, we grant Susans Motion for Reconsideration and consequently,
reinstate her Petition for Review on Certiorari.

With cost against petitioner.

SO ORDERED.[38]
Susan moved for reconsideration[39] which was denied by the CA in its
October 1, 2009 Resolution.[40]
Hence, she filed before this Court a Petition for Review on Certiorari docketed
as G.R. No. 189658 which was denied in this Courts December 16, 2009
Resolution[41] on technicality and for failure to sufficiently show any
reversible error in the assailed judgment.
Susan and Fairland filed their respective Motions for Reconsideration.[42] But
before said motions could be resolved, the Court ordered the consolidation of
Susans petition with that of the workers.[43]
Susans Motion for Reconsideration of this Courts December 16, 2009
Resolution in G.R No. 189658 is granted. Consequently, her Petition for
Review on Certiorari is reinstated.
With Susan and Fairlands respective Motions for Reconsideration still
unresolved, this Court shall first address them.

As to Fairlands Motion for Reconsideration, we shall treat the same as its

comment to Susans petition, Fairland being one of the respondents therein.
Issues
In G.R. No. 189658, Susan imputes upon the CA the following errors:
I.The Court of Appeals erred in finding that petitioner is a labor-only
contractor acting as an agent of respondent Fairland.
II.The Court of Appeals erred in finding that the individual private
respondents were illegally dismissed.
III.The Court of Appeals erred in not resolving the issue raised by petitioner in
her reply DATED JULY 8, 2006 regarding the propriety of the appeal taken by
private respondent Richon Cainoy Aparre who was already dead prior to the
filing of the memorandum of appeal before the NLRC.[48]
Susans Arguments
Susan insists that the CA erred in ruling that Weesan is a labor-only
contractor based on the finding that its workplace is owned by Fairland. She
maintains that the place is owned by De Luxe Shirt Factory, Inc. (De Luxe)

and not by Fairland as shown by the Contracts of Lease between Weesan and
De Luxe.

were actually its (Weesans) employees; and that, consequently, the workers
have no cause of action against Fairland.[52]

Susan also avers that the CA erred in ruling that Weesan was guilty of illegal
dismissal. She maintains that the termination of the workers was due to
financial losses suffered by Weesan as shown by various documents
submitted by the latter to the tribunals below. In fact, Weesan submitted its
Establishment Termination Report with the DOLE-NCR and same was duly
received by the latter.

At any rate, assuming that the workers have a cause of action against
Fairland, their claims are already barred by prescription. Of the 34 individual
complainants (the workers), only six were employees of Weesan during the
period of its contractual relationship with Fairland in 1996 and 1997. They
were Marialy Sy, Olivia Abuan, Amelia Pescadero, Regina Relox, Hermina
Hernandez and Trinidad Relox. These workers filed their complaints in
December 2002 and January 2003 or more than four years from the
expiration of Weesans contractual arrangement with Fairland in 1997. Article
291 of the Labor Code provides that all money claims arising from employeremployee relationship shall be filed within three years from the time the
cause of action accrued; otherwise, they shall be forever barred. Illegal
dismissal prescribes in four years and damages due to separation from
employment for alleged unjustifiable causes injuring a plaintiffs right must
likewise be brought within four years under the Civil Code. Clearly, the
claims of said six employees are already barred by prescription.[53]

Lastly, Susan argues that the appeal of one of the workers, Richon Cainoy
Aparre (Richon), should not have been given due course because in the
Notice of Appeal with Appeal Memorandum filed with the NLRC, a certain
Luzvilla A. Rayon (Luzvilla), whose identity was never established, signed for
and on his behalf. However, there is no information submitted before the
NLRC that Richon is already dead, and in any event, no proper substitution
was ever made.
The Workers Arguments

In G.R. No. 182915, the workers advance the following issues:

The workers claim that Weesan is a labor-only contractor because it does not
have substantial capital or investment in the form of tools, equipment,
machineries, and work premises, among others, and that the workers it
recruited are performing activities which are directly related to the garments
business of Fairland. Hence, Weesan should be considered as a mere agent
of Fairland, who shall be responsible to the workers as if they were directly
employed by it (Fairland).[49]
The workers also allege that the temporary suspension of operations of
Weesan was motivated not by a desire to prevent further losses, but to
discourage the workers from ventilating their claims for nonpayment/underpayment of wages and benefits. The fact that Weesan was
experiencing serious business losses was not sufficiently established and
therefore the termination of the workers due to alleged business losses is
invalid.[50]
Fairlands Arguments
Fairland maintains that it was never served with summons to appear in the
proceedings before the Labor Arbiter nor furnished copies of the Labor
Arbiters Decision and Resolution on the workers complaints for illegal
dismissal; that it never voluntarily appeared before the labor tribunals
through Atty. Geronimo;[51] that it is a separate and distinct business entity
from Weesan; that Weesan is a legitimate job contractor, hence, the workers

I.Whether x x x the National Labor Relations Commission acquired

jurisdiction over the [person of the] respondent[;]

II.Whether x x x the decision of the National Labor Relations Commission

became final and executory[; and]
III.Whether x x x respondent is solidarily liable with WEESAN GARMENT/
SUSAN DE LEON[.][54]
The Workers Arguments
The workers contend that the Labor Arbiter and the NLRC properly acquired
jurisdiction over the person of Fairland because the latter voluntarily
appeared and actively participated in the proceedings below when Atty.
Geronimo submitted on its behalf a Position Paper verified by its manager,
Debbie. As manager, Debbie knew of all the material and significant events
which transpired in Fairland since she had constant contact with the people
in the day-to-day operations of the company. Thus, the workers maintain that
the Labor Arbiter and the NLRC acquired jurisdiction over the person of

Fairland and the Decisions rendered by the said tribunals are valid and
binding upon it.
Lastly, the workers aver that Fairland is solidarily liable with Susan/ Weesan
because it was shown that the latter was indeed the sewing arm of the
former and is a mere labor-only contractor.

Here, there is no question that the workers, majority of whom are sewers,
were recruited by Susan/Weesan and that they performed activities which
are directly related to Fairlands principal business of garments. What must
be determined is whether Susan/Weesan has substantial capital or
investment in the form of tools, equipment, machineries, work premises,
among others.

Fairlands Arguments
In gist, Fairland contests the labor tribunals acquisition of jurisdiction over
its person either through service of summons or voluntary appearance. It
denies that it engaged the services of Atty. Geronimo and asserts that it has
its own legal counsel, Atty. Tecson, who would have represented it had it
known of the pendency of the complaints against Fairland.
Fairland likewise emphasizes that when it filed its Motion for Reconsideration
with the NLRC, it made an express reservation that the same was without
prejudice to its right to question the jurisdiction over its person and the
binding effect of the assailed decision. In the absence, therefore, of a valid
service of summons or voluntary appearance, the proceedings conducted
and the judgment rendered by the labor tribunals are null and void as
against it. Hence, Fairland cannot be held solidarily liable with
Susan/Weesan.
Our Ruling
We grant the workers petition (G.R. No. 182915) but deny the petition of
Susan (G.R. No. 189658).

We have examined the records but found nothing therein to show that
Weesan has investment in the form of tools, equipment or machineries. The
records show that Fairland has to furnish Weesan with sewing machines for it
to be able to provide the sewing needs of the former.[56] Also, save for the
Balance Sheets[57] purportedly submitted by Weesan to the Bureau of
Internal Revenue (BIR) indicating its fixed assets (factory equipment) in the
amount of P243,000.00, Weesan was unable to show that apart from the
borrowed sewing machines, it owned and possessed any other tools,
equipment, and machineries necessary to its being a contractor or subcontractor for garments. Neither was Weesan able to prove that it has
substantial capital for its business.
Likewise significant is the fact that there is doubt as to who really owns the
work premises occupied by Weesan. As may be recalled, the workers
emphasized in their Appeal Memorandum[58] filed with the NLRC that
Susan/Weesan was a labor-only contractor and that Fairland was its principal.
To buttress this, they alleged that the work premises utilized by Weesan is
owned by Fairland, which significantly, was not in the business of renting
properties. They also advanced that there was no showing that
Susan/Weesan paid any rentals for the use of the premises. They contended
that all that Susan had was a Mayors Permit for

G.R. No. 189658

Weesan indicating 715 Ricafort Street, Tondo, Manila as its address.
Susan/Weesan is a mere labor-only contractor.
There is labor-only contracting when the contractor or subcontractor merely
recruits, supplies or places workers to perform a job, work or service for a
principal. In labor-only contracting, the following elements are present:
(a)
The person supplying workers to an employer does not
have substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others; and
(b)
The workers recruited and placed by such person are
performing activities which are directly related to the principal business of
the employer.[55]

Susan failed to refute these allegations before the NLRC and attributed such
failure to her former counsel, Atty. Geronimo. But when Susans petition for
certiorari was given due course by the CA, she finally had the chance to
answer the same by denying that Fairland owned the work premises. Susan
instead claimed that Weesan rented the premises from another entity, De
Luxe. To support this, she attached to her petition two Contracts of Lease[59]
purportedly entered into by her and De Luxe for the lease of the premises
covering the periods August 1, 1997 to July 31, 2000 and January 1, 2001 to
December 31, 2004.
On the other hand, the workers in their Comment[60] filed in CA-G.R. SP No.
93204 (Fairlands petition for certiorari before the CA), pointed out that in

Fairlands Amended Articles of Incorporation,[61] five out of the seven

incorporators listed therein appeared to be residents of the same 715
Ricafort St., Tondo, Manila. To the workers, this is a clear indication that
Fairland indeed owned Weesans work premises. Fairland, for its part, tried to
explain this by saying that its incorporators, just like Weesan, were also mere
lessees of a portion of the multi-storey building owned by De Luxe located at
715 Ricafort St., Tondo, Manila. It also claimed that two years prior to
Weesans occupation of said premises in 1996, the five incorporators alluded
to already transferred.[62]

the monthly rent for the work premises was pegged at P25,000.00.[64]
However, in January to December 2001, same was increased to P27,500.00.
[65] There being an increase in the rentals for the work premises, how come
that Weesans rental expenses for the year 2001 is still P396,000.00? This
could only mean that said entry really only refers to the rentals of sewing
machines and does not include the rentals for the work premises. Moreover,
we note that Susan could have just simply submitted receipts for her
payments of rentals to De Luxe. However, she failed to present even a single
receipt evidencing such payment.

We cannot, however, ignore the apt observation on the matter made by the
CAs Special Former Special Eighth Division in its Decision in CA-G.R. SP No.
93860, viz:

In an attempt to prove that it is De Luxe and not Fairland which owned the
work premises, Susan attached to her petition the following: (1) a plain copy
of Transfer Certificate of Title (TCT) No. 139790[66] and Declaration of Real
Property[67] both under the name of De Luxe; and, (2) Real Property Tax
receipts issued to De Luxe for the years 2000-2004.[68] However, the Court
finds these documents wanting. Nowhere from the said TCT and Declaration
of Real Property can it be inferred that the property they refer to is the same
property as that located at 715 Ricafort St., Tondo, Manila. Although in said
Declaration, 715 Ricafort St., Tondo is the indicated address of the declarant
(De Luxe), the address of the property declared is merely Ricafort, Tondo I-A.
The same thing can also be said with regard to the real property tax receipts.
The entry under the box Location of Property in the receipt for 2001 is I - 718
Ricafort and in the receipts for 2002, 2003, and 2004, the entries are either I
Ricafort St., Tondo or merely I-Ricafort St.

The work premises are likewise owned by Fairland, which petitioner tried to
disprove by presenting a purported Contract of Lease with another entity, De
Luxe Shirt Factory Co., Inc. However, there is no competent proof it paid the
supposed rentals to said owner. Curiously, under the item Rent Expenses in
its audited financial statement, only equipment rental was listed therein
without any disbursement/expense for rental of factory premises, which only
buttressed the claim of private respondents that the place where they
reported to and performed sewing jobs for petitioner [Susan] and Fairland at
No. 715 Ricafort St., Tondo, Manila, belonged to Fairland.[63] (Emphasis
supplied.)
Susan contests this pronouncement by pointing out that although only
sewing machines were specified under the entry Rent Expenses in its
financial statement, the rent for the factory premises is already deemed
included therein since the contracts of lease she entered into with De Luxe
referred to both the factory premises and machineries.
We, however, find this contention implausible.
We went over the said contracts of lease and noted that same were
principally for the lease of the premises in 715 Ricafort St., Tondo, Manila.
Only incidental thereto is the inclusion therein of the equipment found in said
premises. Hence, we cannot see why the rentals for the work premises, for
which Susan even went to the extent of executing a contract with the
purported lessor, was not included in the entry for rent expenses in Weesans
financial statement. Even if we are to concede to Susans claim that the entry
for rent expenses already includes the rentals for the work premises, we
wonder why the rental expenses for the year 2000 which was P396,000.00 is
of the same amount with the rental expenses for the year 2001. As borne out
by the Contract of Lease covering the period August 1, 1997 to July 31, 2000,

In sum, the Court finds that Susans effort to negate Fairlands ownership of
the work premises is futile. The logical conclusion now is that Weesan does
not have its own workplace and is only utilizing the workplace of Fairland to
whom it supplied workers for its garment business.
Suffice it to say that [t]he presumption is that a contractor is a labor-only
contractor unless such contractor overcomes the burden of proving that it
has substantial capital, investment, tools and the like.[69] As Susan/Weesan
was not able to adduce evidence that Weesan had any substantial capital,
investment or assets to perform the work contracted for, the presumption
that Weesan is a labor-only contractor stands.[70]
The National Labor Relations Commission and the Court of Appeals did not
err in their findings of illegal dismissal.
To negate illegal dismissal, Susan relies on the due closure of Weesan
pursuant to the Establishment Termination Report it submitted to the DOLENCR.

Indeed, Article 283[71] of the Labor Code allows as a mode of termination of

employment the closure or termination of business. Closure or cessation of
business is the complete or partial cessation of the operations and/or shutdown of the establishment of the employer. It is carried out to either stave
off the financial ruin or promote the business interest of the employer.[72]
The decision to close business [or to temporarily suspend operation] is a
management prerogative exclusive to the employer, the exercise of which no
court or tribunal can meddle with, except only when the employer fails to
prove compliance with the requirements of Art. 283, to wit: a) that the
closure/cessation of business is bona fide, i.e., its purpose is to advance the
interest of the employer and not to defeat or circumvent the rights of
employees under the law or a valid agreement; b) that written notice was
served on the employees and the DOLE at least one month before the
intended date of closure or cessation of business; and c) in case of
closure/cessation of business not due to financial losses, that the employees
affected have been given separation pay equivalent to month pay for every
year of service or one month pay, whichever is higher.[73]
Here, Weesan filed its Establishment Termination Report[74] allegedly due to
serious business losses and other economic reasons. However, we are
mindful of the doubtful character of Weesans application for closure given
the circumstances surrounding the same.
First, workers Marialy Sy, Vivencia Penullar, Aurora Aguinaldo, Gina Aniano,
Gemma Dela Pea and Efremia Matias filed before the Labor Arbiter their
complaint for underpayment of salary, non-payment of benefits, damages
and attorneys fees against Weesan on December 23, 2002.[75]
Summons[76] was accordingly issued and same was received by Susan on
January 15, 2003.[77] Meanwhile, other workers followed suit and filed their
respective complaints on January 2, 6, 17 and 28, 2003.[78] Shortly
thereafter or merely eight days after the filing of the last complaint, Weesan
filed with the DOLE-NCR its Establishment Termination Report.
Second, the Income Tax Returns[79] for the years 2000, 2001 and 2002
attached to the Establishment Termination Report, although bearing the
stamped receipt of the Revenue District Office where they were purportedly
filed, contain no signature or initials of the receiving officer. The same holds
true with Weesans audited financial statements.[80] This engenders doubt
as to whether these documents were indeed filed with the proper authorities.
Third, there was no showing that Weesan served upon the workers written
notice at least one month before the intended date of closure of business, as
required under Art. 283 of the Labor Code. In fact, the workers alleged that
when Weesan filed its Establishment Termination Report on February 5,

2003, it already closed the work premises and did not anymore allow them to
report for work. This is the reason why the workers on February 18, 2003
amended their complaint to include the charge of illegal dismissal.[81]
It bears stressing that [t]he burden of proving that x x x a temporary
suspension is bona fide falls upon the employer.[82] Clearly here,
Susan/Weesan was not able to discharge this burden. The documents
Weesan submitted to support its claim of severe business losses cannot be
considered as proof of financial crisis to justify the temporary suspension of
its operations since they clearly appear to have not been duly filed with the
BIR. Weesan failed to satisfactorily explain why the Income Tax Returns and
financial statements it submitted do not bear the signature of the receiving
officers. Also hard to ignore is the absence of the mandatory 30-day prior
notice to the workers.
Hence, the Court finds that Susan failed to prove that the suspension of
operations of Weesan was bona fide and that it complied with the mandatory
requirement of notice under the law. Susan likewise failed to discharge her
burden of proving that the termination of the workers was for a lawful cause.
Therefore, the NLRC and the CA, in CA-G.R. SP No. 93860, did not err in their
findings that the workers were illegally dismissed by Susan/Weesan.
The formal substitution of the deceased worker Richon Aparre is not
necessary as his heir voluntarily appeared and participated in the
proceedings before the National Labor Relations Commission.
In Sarsaba v. Fe Vda. de Te, we held that:[83]
The rule on substitution of parties is governed by Section 16,[84] Rule 3 of
the [Rules of Court].
Strictly speaking, the rule on substitution by heirs is not a matter of
jurisdiction, but a requirement of due process. The rule on substitution was
crafted to protect every party's right to due process. It was designed to
ensure that the deceased party would continue to be properly represented in
the suit through his heirs or the duly appointed legal representative of his
estate. Moreover, non-compliance with the Rules results in the denial of the
right to due process for the heirs who, though not duly notified of the
proceedings, would be substantially affected by the decision rendered
therein. Thus, it is only when there is a denial of due process, as when the
deceased is not represented by any legal representative or heir, that the
court nullifies the trial proceedings and the resulting judgment therein.

Here, the lack of formal substitution of the deceased worker Richon did not
result to denial of due process as to affect the validity of the proceedings
before the NLRC since his heir, Luzvilla, was aware of the proceedings
therein. In fact, she is considered to have voluntarily appeared before the
said tribunal when she signed the workers Memorandum of Appeal filed
therewith. This Court has ruled that formal substitution of parties is not
necessary when the heirs themselves voluntarily appeared, participated, and
presented evidence during the proceedings.[85] Hence, the NLRC did not err
in giving due course to the appeal with respect to Richon.

these complaints, the Labor Arbiter issued summons[89] to Susan/Weesan

which was received by the latter on January 15, 2003.[90] The workers
thereafter amended their then already consolidated complaints to include
illegal dismissal as an additional cause of action as well as Fairland and
Debbie as additional respondents. We have, however, scanned the records
but found nothing to indicate that summons with respect to the said
amended complaints was ever served upon Weesan, Susan, or Fairland. True
to their claim, Fairland and Debbie were indeed never summoned by the
Labor Arbiter.

Fairlands claim of prescription deserves scant consideration.

The crucial question now is: Did Fairland and Debbie voluntarily appear
before the Labor Arbiter as to submit themselves to its jurisdiction?

Fairland asserts that assuming that the workers have valid claims against it,
same only pertain to six out of the 34 workers-complainants. According to
Fairland, these six workers were the only ones who were in the employ of
Weesan at the time Fairland and Weesan had existing contractual
relationship in 1996 to 1997. But then, Fairland contends that the claims of
these six workers have already been barred by prescription as they filed their
complaint more than four years from the expiration of the alleged
contractual relationship in 1997. However, the Court notes that the records
are bereft of anything that provides for such alleged contractual relationship
and the period covered by it. Absent anything to support Fairlands claim,
same deserves scant consideration.
Interestingly, we noticed Fairlands letter[86] dated January 31, 2003
informing Weesan that it would temporarily not be availing of the latters
sewing services and at the same time requesting for the return of the sewing
machines it lent to Weesan. Assuming said letter to be true, why was
Fairland terminating Weesans services only on January 31, 2003 when it is
now claiming that its contractual relationship with the latter only lasted until
1997? Thus, we find the contentions rather abstruse.
G.R. No. 182915
It is basic that the Labor Arbiter cannot acquire jurisdiction over the person
of the respondent without the latter being served with summons.[87]
However, if there is no valid service of summons, the court can still acquire
jurisdiction over the person of the defendant by virtue of the latters
voluntary appearance.[88]
Although not served with summons, jurisdiction over Fairland and Debbie
was acquired through their voluntary appearance.
It can be recalled that the workers original complaints for non-payment/
underpayment of wages and benefits were only against Susan/Weesan. For

Fairland argued before the CA that it did not engage Atty. Geronimo as its
counsel. However, the Court held in Santos v. National Labor Relations
Commission,[91] viz:
In the instant petition for certiorari, petitioner Santos reiterates that he
should not have been adjudged personally liable by public respondents, the
latter not having validly acquired jurisdiction over his person whether by
personal service of summons or by substituted service under Rule 19 of the
Rules of Court.
Petitioners contention is unacceptable. The fact that Atty. Romeo B. Perez
has been able to timely ask for a deferment of the initial hearing on 14
November 1986, coupled with his subsequent active participation in the
proceedings, should disprove the supposed want of service of legal
processes. Although as a rule, modes of service of summons are strictly
followed in order that the court may acquire jurisdiction over the person of a
defendant, such procedural modes, however, are liberally construed in quasijudicial proceedings, substantial compliance with the same being considered
adequate. Moreover, jurisdiction over the person of the defendant in civil
cases is acquired not only by service of summons but also by voluntary
appearance in court and submission to its authority. Appearance by a legal
advocate is such voluntary submission to a courts jurisdiction. It may be
made not only by actual physical appearance but likewise by the submission
of pleadings in compliance with the order of the court or tribunal.
To say that petitioner did not authorize Atty. Perez to represent him in the
case is to unduly tax credulity. Like the Solicitor General, the Court likewise
considers it unlikely that Atty. Perez would have been so irresponsible as to
represent petitioner if he were not, in fact, authorized. Atty. Perez is an
officer of the court, and he must be presumed to have acted with due
propriety. The employment of a counsel or the authority to employ an

attorney, it might be pointed out, need not be proved in writing; such fact
could [be] inferred from circumstantial evidence. x x x[92] (Citations
omitted.)
From the records, it appears that Atty. Geronimo first entered his appearance
on behalf of Susan/Weesan in the hearing held on April 3, 2003.[93] Being
then newly hired, he requested for an extension of time within which to file a
position paper for said respondents. On the next scheduled hearing on April
28, 2003, Atty. Geronimo again asked for another extension to file a position
paper for all the respondents considering that he likewise entered his
appearance for Fairland.[94] Thereafter, said counsel filed pleadings such as
Respondents Position Paper[95] and Respondents Consolidated Reply[96] on
behalf of all the respondents namely, Susan/Weesan, Fairland and Debbie.
The fact that Atty. Geronimo entered his appearance for Fairland and Debbie
and that he actively defended them before the Labor Arbiter raised the
presumption that he is authorized to appear for them. As held in Santos, it is
unlikely that Atty. Geronimo would have been so irresponsible as to represent
Fairland and Debbie if he were not in fact authorized. As an officer of the
Court, Atty. Geronimo is presumed to have acted with due propriety.
Moreover, [i]t strains credulity that a counsel who has no personal interest in
the case would fight for and defend a case with persistence and vigor if he
has not been authorized or employed by the party concerned.[97]
We do not agree with the reasons relied upon by the CAs Special Ninth
Division in its May 9, 2008 Resolution in CA-G.R. No. 93204 when it ruled that
Fairland, through Atty. Geronimo, did not voluntarily submit itself to the
Labor Arbiters jurisdiction.
In so ruling, the CA noted that Atty. Geronimo has no prior authorization from
the board of directors of Fairland to handle the case. Also, the alleged
verification signed by Debbie, who is not one of Fairlands duly authorized
directors or officers, is defective as no board resolution or secretarys
certificate authorizing her to sign the same was attached thereto. Because of
these, the Special Ninth Division held that the Labor Arbiter committed grave
abuse of discretion in not requiring Atty. Geronimo to show his proof of
authority to represent Fairland considering that the latter is a corporation.
The presumption of authority of counsel to appear on behalf of a client is
found both in the Rules of Court and in the New Rules of Procedure of the
NLRC.[98]
Sec. 21, Rule 138 of the Rules of Court provides:
Sec. 21. Authority of attorney to appear An attorney is presumed to be
properly authorized to represent any cause in which he appears, and no

written power of attorney is required to authorize him to appear in court for

his client, but the presiding judge may, on motion of either party and
reasonable grounds therefor being shown, require any attorney who assumes
the right to appear in a case to produce or prove the authority under which
he appears, and to disclose whenever pertinent to any issue, the name of
the person who employed him, and may thereupon make such order as
justice requires. An attorney willfully appearing in court for a person without
being employed, unless by leave of the court, may be punished for contempt
as an officer of the court who has misbehaved in his official transactions.
On the other hand, Sec. 8, Rule III of the New Rules of Procedure of the
NLRC,[99] which is the rules prevailing at that time, states in part:
SECTION 8. APPEARANCES. - An attorney appearing for a party is presumed
to be properly authorized for that purpose. However, he shall be required to
indicate in his pleadings his PTR and IBP numbers for the current year.
Between the two provisions providing for such authority of counsel to
appear, the Labor Arbiter is primarily bound by the latter one, the NLRC
Rules of Procedure being specifically applicable to labor cases. As Atty.
Geronimo consistently indicated his PTR and IBP numbers in the pleadings he
filed, there is no reason for the Labor Arbiter not to extend to Atty. Geronimo
the presumption that he is authorized to represent Fairland.
Even if we are to apply Sec. 21, Rule 138 of the Rules of Court, the Labor
Arbiter cannot be expected to require Atty. Geronimo to prove his authority
under said provision since there was no motion to that effect from either
party showing reasonable grounds therefor. Moreover, the fact that Debbie
signed the verification attached to the position paper filed by Atty. Geronimo,
without a secretarys certificate or board resolution attached thereto, is not
sufficient reason for the Labor Arbiter to be on his guard and require Atty.
Geronimo to prove his authority. Debbie, as General Manager of Fairland is
one of the officials of the company who can sign the verification without
need of a board resolution because as such, she is in a position to verify the
truthfulness and correctness of the allegations in the petition.[100]
Although we note that Fairland filed a disbarment case against Atty.
Geronimo due to the formers claim of unauthorized appearance, we hold
that same is not sufficient to overcome the presumption of authority. Such
mere filing is not proof of Atty. Geronimos alleged unauthorized appearance.
Suffice it to say that an attorneys presumption of authority is a strong one.
[101] A mere denial by a party that he authorized an attorney to appear for
him, in the absence of a compelling reason, is insufficient to overcome the

presumption, especially when the denial comes after the rendition of an

adverse judgment,[102] such as in the present case.
Citing PNOC Dockyard and Engineering Corporation v. National Labor
Relations Commission,[103] the CA likewise emphasized that in labor cases,
both the party and his counsel must be duly served their separate copies of
the order, decision or resolution unlike in ordinary proceedings where notice
to counsel is deemed notice to the party. It then quoted Article 224 of the
Labor Code as follows:
ARTICLE 224. Execution of decisions, orders or awards. (a) the Secretary of
Labor and Employment or any Regional Director, the Commission or any
Labor Arbiter, or med-arbiter or voluntary arbitrator may, motu proprio or on
motion of any interested party, issue a writ of execution on a judgment
within five (5) years from the date it becomes final and executory, requiring
a sheriff or a duly deputized officer to execute or enforce final decisions,
orders or awards of the Secretary of Labor and Employment or [R]egional
Director, the Commission, the Labor Arbiter or Med-Arbiter, or Voluntary
Arbitrators. In any case, it shall be the duty of the responsible officer to
separately furnish immediately the counsels of record and the parties with
copies of said decision, orders or awards. Failure to comply with the duty
prescribed herein shall subject such responsible officer to appropriate
administrative sanctions x x x (Emphasis in the original).[104]
The CA then concluded that since Fairland and its counsel were not
separately furnished with a copy of the August 26, 2005 NLRC Resolution
denying the motions for reconsideration of its November 30, 2004 Decision,
said Decision cannot be enforced against Fairland. The CA likewise concluded
that because of this, said November 30, 2004 Decision which held
Susan/Weesan and Fairland solidarily liable to the workers, has not attained
finality.
We cannot agree. In Ginete v. Sunrise Manning Agency[105] we held that:
The case of PNOC Dockyard and Engineering Corporation vs. NLRC cited by
petitioner enunciated that in labor cases, both the party and its counsel must
be duly served their separate copies of the order, decision or resolution;
unlike in ordinary judicial proceedings where notice to counsel is deemed
notice to the party. Reference was made therein to Article 224 of the Labor
Code. But, as correctly pointed out by private respondent in its Comment to
the petition, Article 224 of the Labor Code does not govern the procedure for
filing a petition for certiorari with the Court of Appeals from the decision of
the NLRC but rather, it refers to the execution of final decisions, orders or
awards and requires the sheriff or a duly deputized officer to furnish both the

parties and their counsel with copies of the decision or award for that
purpose. There is no reference, express or implied, to the period to appeal or
to file a petition for certiorari as indeed the caption is execution of decisions,
orders or awards. Taken in proper context, Article 224 contemplates the
furnishing of copies of final decisions, orders or awards and could not have
been intended to refer to the period for computing the period for appeal to
the Court of Appeals from a non-final judgment or order. The period or
manner of appeal from the NLRC to the Court of Appeals is governed by Rule
65 pursuant to the ruling of the Court in the case of St. Martin Funeral Homes
vs. NLRC. Section 4 of Rule 65, as amended, states that the petition may be
filed not later than sixty (60) days from notice of the judgment, or resolution
sought to be assailed.
Corollarily, Section 4, Rule III of the New Rules of Procedure of the NLRC
expressly mandates that (F)or the purposes of computing the period of
appeal, the same shall be counted from receipt of such decisions, awards or
orders by the counsel of record. Although this rule explicitly contemplates an
appeal before the Labor Arbiter and the NLRC, we do not see any cogent
reason why the same rule should not apply to petitions for certiorari filed
with the Court of Appeals from decisions of the NLRC. This procedure is in
line with the established rule that notice to counsel is notice to party and
when a party is represented by counsel, notices should be made upon the
counsel of record at his given address to which notices of all kinds
emanating from the court should be sent. It is to be noted also that Section 7
of the NLRC Rules of Procedure provides that (A)ttorneys and other
representatives of parties shall have authority to bind their clients in all
matters of procedure a provision which is similar to Section 23, Rule 138 of
the Rules of Court. More importantly, Section 2, Rule 13 of the 1997 Rules of
Civil Procedure analogously provides that if any party has appeared by
counsel, service upon him shall be made upon his counsel. (Citations
omitted; emphasis supplied)
To stress, Article 224 contemplates the furnishing of copies of final
decisions, orders or awards both to the parties and their counsel in
connection with the execution of such final decisions, orders or awards.
However, for the purpose of computing the period for filing an appeal from
the NLRC to the CA, same shall be counted from receipt of the decision,
order or award by the counsel of record pursuant to the established rule that
notice to counsel is notice to party. And since the period for filing of an
appeal is reckoned from the counsels receipt of the decision, order or award,
it necessarily follows that the reckoning period for their finality is likewise the
counsels date of receipt thereof, if a party is represented by counsel. Hence,
the date of receipt referred to in Sec. 14, Rule VII of the then in force New
Rules of Procedure of the NLRC[106] which provides that decisions,

resolutions or orders of the NLRC shall become executory after 10 calendar

days from receipt of the same, refers to the date of receipt by counsel. Thus
contrary to the CAs conclusion, the said NLRC Decision became final, as to
Fairland, 10 calendar days after Atty. Tecsons receipt[107] thereof.[108] In
sum, we hold that the Labor Arbiter had validly acquired jurisdiction over
Fairland and its manager, Debbie, through the appearance of Atty. Geronimo
as their counsel and likewise, through the latters filing of pleadings on their
behalf.
Fairland is Weesans principal.
In addition to our discussion in G.R. No. 189658 with respect to the finding
that Susan/Weesan is a mere labor-only contractor which we find to be
likewise significant here, a careful examination of the records reveals other
telling facts that Fairland is Susan/Weesans principal, to wit: (1) aside from
sewing machines, Fairland also lent Weesan other equipment such as fire
extinguishers, office tables and chairs, and plastic chairs;[109] (2) no proof
evidencing the contractual arrangement between Weesan and Fairland was
ever submitted by Fairland; (3) while both Weesan and Fairland assert that
the former had other clients aside from the latter, no proof of Weesans
contractual relationship with its other alleged client is extant on the records;
and (4) there is no showing that any of the workers were assigned to other
clients aside from Fairland. Moreover, as found by the NLRC and affirmed by
both the Special Former Special Eighth Division in CA-G.R. SP No. 93860 and
the First Division in CA-G.R. SP No. 93204, the activities, the manner of work
and the movement of the workers were subject to Fairlands control. It bears
emphasizing that factual findings of quasi-judicial agencies like the NLRC,
when affirmed by the Court of Appeals, as in the present case, are conclusive
upon the parties and binding on this Court.[110]
Viewed in its entirety, we thus declare that Fairland is the principal of the
labor-only contractor, Weesan.
Fairland, therefore, as the principal employer, is solidarily liable with
Susan/Weesan, the labor-only contractor, for the rightful claims of the
employees. Under this set-up, Susan/Weesan, as the "labor-only" contractor,
is deemed an agent of the principal, Fairland, and the law makes the
principal responsible to the employees of the "labor-only" contractor as if the
principal itself directly hired or employed the employees.[111]
WHEREFORE, the Court,
1) in G.R. No. 189658, denies the Petition for Review on Certiorari. The
assailed Decision dated July 20, 2009 and Resolution dated October 1, 2009

of the Special Former Special Eighth Division of the Court of Appeals in CAG.R. No. 93860 are AFFIRMED.
2) in G.R. No. 182915, grants the Petition for Review on Certiorari. The
assailed Resolution dated May 9, 2008 of the Special Ninth Division of the
Court of Appeals in CA-G.R. No. 93204 is hereby REVERSED and SET ASIDE
and the Decision dated July 25, 2007 of the First Division of the Court of
Appeals is REINSTATED and AFFIRMED.
SO ORDERED.

DECISION
NACHURA, J.:
Before this Court is a Petition for Review on Certiorari[1] under Rule 45 of the
Rules of Court. Petitioner Paquito V. Ando (petitioner) is assailing the
Decision[2] dated February 21, 2008 and the Resolution[3] dated July 25,
2008 of the Court of Appeals (CA) in CA-G.R. CEB-SP. No. 02370.
Petitioner was the president of Premier Allied and Contracting Services, Inc.
(PACSI), an independent labor contractor. Respondents were hired by PACSI
as pilers or haulers tasked to manually carry bags of sugar from the
warehouse of Victorias Milling Company and load them on trucks.[4] In June
1998, respondents were dismissed from employment. They filed a case for
illegal dismissal and some money claims with the National Labor Relations
Commission (NLRC), Regional Arbitration Branch No. VI, Bacolod City.[5]
On June 14, 2001, Labor Arbiter Phibun D. Pura (Labor Arbiter) promulgated
a decision, ruling in respondents favor.[6] PACSI and petitioner were directed
to pay a total of P422,702.28, representing respondents separation pay and
the award of attorneys fees.[7]
Petitioner and PACSI appealed to the NLRC. In a decision[8] dated October
20, 2004, the NLRC ruled that petitioner failed to perfect his appeal because
he did not pay the supersedeas bond. It also affirmed the Labor Arbiters
decision with modification of the award for separation pay to four other
employees who were similarly situated. Upon finality of the decision,
respondents moved for its execution.[9]
To answer for the monetary award, NLRC Acting Sheriff Romeo Pasustento
issued a Notice of Sale on Execution of Personal Property[10] over the
property covered by Transfer Certificate of Title (TCT) No. T-140167 in the
name of Paquito V. Ando x x x married to Erlinda S. Ando.
PAQUITO V. ANDO,
- versus -

Petitioner,

ANDRESITO Y. CAMPO, ET AL.,

Respondents.
G.R. No. 184007

This prompted petitioner to file an action for prohibition and damages with
prayer for the issuance of a temporary restraining order (TRO) before the
Regional Trial Court (RTC), Branch 50, Bacolod City. Petitioner claimed that
the property belonged to him and his wife, not to the corporation, and,
hence, could not be subject of the execution sale. Since it is the corporation
that was the judgment debtor, execution should be made on the latters
properties.[11]

On December 27, 2006, the RTC issued an Order[12] denying the prayer for
a TRO, holding that the trial court had no jurisdiction to try and decide the
case. The RTC ruled that, pursuant to the NLRC Manual on the Execution of
Judgment, petitioners remedy was to file a third-party claim with the NLRC
Sheriff. Despite lack of jurisdiction, however, the RTC went on to decide the
merits of the case.
Petitioner did not file a motion for reconsideration of the RTC Order. Instead,
he filed a petition for certiorari under Rule 65[13] before the CA. He
contended that the RTC acted without or in excess of jurisdiction or with
grave abuse of discretion amounting to lack or excess of jurisdiction in
issuing the Order. Petitioner argued that the writ of execution was issued
improvidently or without authority since the property to be levied belonged
to him in his personal capacity and his wife. The RTC, respondent contended,
could stay the execution of a judgment if the same was unjust.[14] He also
contended that, pursuant to a ruling of this Court, a third party who is not a
judgment creditor may choose between filing a third-party claim with the
NLRC sheriff or filing a separate action with the courts.[15]
In the Decision now assailed before this Court, the CA affirmed the RTC
Order in so far as it dismissed the complaint on the ground that it had no
jurisdiction over the case, and nullified all other pronouncements in the same
Order. Petitioner moved for reconsideration, but the motion was denied.
Petitioner then filed the present petition seeking the nullification of the CA
Decision. He argues that he was never sued in his personal capacity, but in
his representative capacity as president of PACSI. Neither was there any
indication in the body of the Decision that he was solidarily liable with the
corporation.[16] He also concedes that the Labor Arbiters decision has
become final. Hence, he is not seeking to stop the execution of the judgment
against the properties of PACSI. He also avers, however, that there is no
evidence that the sheriff ever implemented the writ of execution against the
properties of PACSI.[17]
Petitioner also raises anew his argument that he can choose between filing a
third-party claim with the sheriff of the NLRC or filing a separate action.[18]
He maintains that this special civil action is purely civil in nature since it
involves the manner in which the writ of execution in a labor case will be
implemented against the property of petitioner which is not a corporate
property of PACSI.[19] What he is seeking to be restrained, petitioner
maintains, is not the Decision itself but the manner of its execution.[20]
Further, he claims that the property levied has been constituted as a family
home within the contemplation of the Family Code.[21]

The petition is meritorious.

Initially, we must state that the CA did not, in fact, err in upholding the RTCs
lack of jurisdiction to restrain the implementation of the writ of execution
issued by the Labor Arbiter.
The Court has long recognized that regular courts have no jurisdiction to
hear and decide questions which arise from and are incidental to the
enforcement of decisions, orders, or awards rendered in labor cases by
appropriate officers and tribunals of the Department of Labor and
Employment. To hold otherwise is to sanction splitting of jurisdiction which is
obnoxious to the orderly administration of justice.[22]
Thus, it is, first and foremost, the NLRC Manual on the Execution of
Judgment that governs any question on the execution of a judgment of that
body. Petitioner need not look further than that. The Rules of Court apply
only by analogy or in a suppletory character.[23]
Consider the provision in Section 16, Rule 39 of the Rules of Court on thirdparty claims:
SEC. 16. Proceedings where property claimed by third person.If the property
levied on is claimed by any person other than the judgment obligor or his
agent, and such person makes an affidavit of his title thereto or right to the
possession thereof, stating the grounds of such right or title, and serves the
same upon the officer making the levy and a copy thereof upon the
judgment obligee, the officer shall not be bound to keep the property, unless
such judgment obligee, on demand of the officer, files a bond approved by
the court to indemnify the third-party claimant in a sum not less than the
value of the property levied on. In case of disagreement as to such value, the
same shall be determined by the court issuing the writ of execution. No claim
for damages for the taking or keeping of the property may be enforced
against the bond unless the action therefor is filed within one hundred
twenty (120) days from the date of the filing of the bond.
The officer shall not be liable for damages for the taking or keeping of the
property, to any third-party claimant if such bond is filed. Nothing herein
contained shall prevent such claimant or any third person from vindicating
his claim to the property in a separate action, or prevent the judgment
obligee from claiming damages in the same or a separate action against a
third-party claimant who filed a frivolous or plainly spurious claim.
When the writ of execution is issued in favor of the Republic of the
Philippines, or any officer duly representing it, the filing of such bond shall

not be required, and in case the sheriff or levying officer is sued for damages
as a result of the levy, he shall be represented by the Solicitor General and if
held liable therefor, the actual damages adjudged by the court shall be paid
by the National Treasurer out of such funds as may be appropriated for the
purpose.

writ of execution of a decision rendered on a case properly within the

jurisdiction of the Labor Arbiter, to wit: Illegal Dismissal and Unfair Labor
Practice. Considering the factual setting, it is then logical to conclude that
the subject matter of the third party claim is but an incident of the labor
case, a matter beyond the jurisdiction of regional trial courts.

On the other hand, the NLRC Manual on the Execution of Judgment deals
specifically with third-party claims in cases brought before that body. It
defines a third-party claim as one where a person, not a party to the case,
asserts title to or right to the possession of the property levied upon.[24] It
also sets out the procedure for the filing of a third-party claim, to wit:

xxxx
x x x. Whatever irregularities attended the issuance an execution of the alias
writ of execution should be referred to the same administrative tribunal
which rendered the decision. This is because any court which issued a writ of
execution has the inherent power, for the advancement of justice, to correct
errors of its ministerial officers and to control its own processes.

SECTION 2. Proceedings. If property levied upon be claimed by any person

other than the losing party or his agent, such person shall make an affidavit
of his title thereto or right to the possession thereof, stating the grounds of
such right or title and shall file the same with the sheriff and copies thereof
served upon the Labor Arbiter or proper officer issuing the writ and upon the
prevailing party. Upon receipt of the third party claim, all proceedings with
respect to the execution of the property subject of the third party claim shall
automatically be suspended and the Labor Arbiter or proper officer issuing
the writ shall conduct a hearing with due notice to all parties concerned and
resolve the validity of the claim within ten (10) working days from receipt
thereof and his decision is appealable to the Commission within ten (10)
working days from notice, and the Commission shall resolve the appeal
within same period.
There is no doubt in our mind that petitioners complaint is a third- party
claim within the cognizance of the NLRC. Petitioner may indeed be
considered a third party in relation to the property subject of the execution
vis--vis the Labor Arbiters decision. There is no question that the property
belongs to petitioner and his wife, and not to the corporation. It can be said
that the property belongs to the conjugal partnership, not to petitioner alone.
Thus, the property belongs to a third party, i.e., the conjugal partnership. At
the very least, the Court can consider that petitioners wife is a third party
within contemplation of the law.
The Courts pronouncements in Deltaventures Resources, Inc. v. Hon.
Cabato[25] are instructive:
Ostensibly the complaint before the trial court was for the recovery of
possession and injunction, but in essence it was an action challenging the
legality or propriety of the levy vis-a-vis the alias writ of execution, including
the acts performed by the Labor Arbiter and the Deputy Sheriff
implementing the writ. The complaint was in effect a motion to quash the

The broad powers granted to the Labor Arbiter and to the National Labor
Relations Commission by Articles 217, 218 and 224 of the Labor Code can
only be interpreted as vesting in them jurisdiction over incidents arising
from, in connection with or relating to labor disputes, as the controversy
under consideration, to the exclusion of the regular courts.[26]
There is no denying that the present controversy arose from the complaint
for illegal dismissal. The subject matter of petitioners complaint is the
execution of the NLRC decision. Execution is an essential part of the
proceedings before the NLRC. Jurisdiction, once acquired, continues until the
case is finally terminated,[27] and there can be no end to the controversy
without the full and proper implementation of the commissions directives.
Further underscoring the RTCs lack of jurisdiction over petitioners complaint
is Article 254 of the Labor Code, to wit:
ART. 254. INJUNCTION PROHIBITED. No temporary or permanent injunction
or restraining order in any case involving or growing out of labor disputes
shall be issued by any court or other entity, except as otherwise provided in
Articles 218 and 264 of this Code.
That said, however, we resolve to put an end to the controversy right now,
considering the length of time that has passed since the levy on the property
was made.
Petitioner claims that the property sought to be levied does not belong to
PACSI, the judgment debtor, but to him and his wife. Since he was sued in a
representative capacity, and not in his personal capacity, the property could
not be made to answer for the judgment obligation of the corporation.

The TCT[28] of the property bears out that, indeed, it belongs to petitioner
and his wife. Thus, even if we consider petitioner as an agent of the
corporation and, therefore, not a stranger to the case such that the provision
on third-party claims will not apply to him, the property was registered not
only in the name of petitioner but also of his wife. She stands to lose the
property subject of execution without ever being a party to the case. This will
be tantamount to deprivation of property without due process.
Moreover, the power of the NLRC, or the courts, to execute its judgment
extends only to properties unquestionably belonging to the judgment debtor
alone.[29] A sheriff, therefore, has no authority to attach the property of any
person except that of the judgment debtor.[30] Likewise, there is no showing
that the sheriff ever tried to execute on the properties of the corporation.
In sum, while petitioner availed himself of the wrong remedy to vindicate his
rights, nonetheless, justice demands that this Court look beyond his
procedural missteps and grant the petition.
WHEREFORE, the foregoing premises considered, the petition is GRANTED.
The Decision dated February 21, 2008 and the Resolution dated July 25,
2008 of the Court of Appeals in CA-G.R. CEB-SP. No. 02370 are hereby
REVERSED and SET ASIDE, and a new one is entered declaring NULL and
VOID (1) the Order of the Regional Trial Court of Negros Occidental dated
December 27, 2006 in Civil Case No. 06-12927; and (2) the Notice of Sale on
Execution of Personal Property dated December 4, 2006 over the property
covered by Transfer Certificate of Title No. T-140167, issued by the Acting
Sheriff of the National Labor Relations Commission.

EMPLOYEES UNION OF BAYER PHILS., FFW and JUANITO S. FACUNDO, in his

capacity as President,
Petitioners,
- versus G.R. No. 162943
BAYER PHILIPPINES, INC., DIETER J. LONISHEN (President), ASUNCION
AMISTOSO (HRD Manager), AVELINA REMIGIO AND ANASTACIA VILLAREAL,
DECISION

SO ORDERED.
This petition for review on certiorari assails the Decision[1] dated December
15, 2003 and Resolution[2] dated March 23, 2004 of the Court of Appeals
(CA) in CA-G.R. SP No. 73813.
Petitioner Employees Union of Bayer Philippines[3] (EUBP) is the exclusive
bargaining agent of all rank-and-file employees of Bayer Philippines (Bayer),
and is an affiliate of the Federation of Free Workers (FFW). In 1997, EUBP,
headed by its president Juanito S. Facundo (Facundo), negotiated with Bayer
for the signing of a collective bargaining agreement (CBA). During the
negotiations, EUBP rejected Bayers 9.9% wage-increase proposal resulting in
a bargaining deadlock. Subsequently, EUBP staged a strike, prompting the
Secretary of the Department of Labor and Employment (DOLE) to assume
jurisdiction over the dispute.

In November 1997, pending the resolution of the dispute, respondent Avelina

Remigio (Remigio) and 27 other union members, without any authority from
their union leaders, accepted Bayers wage-increase proposal. EUBPs
grievance committee questioned Remigios action and reprimanded Remigio
and her allies. On January 7, 1998, the DOLE Secretary issued an arbitral
award ordering EUBP and Bayer to execute a CBA retroactive to January 1,
1997 and to be made effective until December 31, 2001. The said CBA[4]
was registered on July 8, 1998 with the Industrial Relations Division of the
DOLE-National Capital Region (NCR).[5]
Meanwhile, the rift between Facundos leadership and Remigios group
broadened. On August 3, 1998, barely six months from the signing of the
new CBA, during a company-sponsored seminar,[6] Remigio solicited
signatures from union members in support of a resolution containing the
decision of the signatories to: (1) disaffiliate from FFW, (2) rename the union
as Reformed Employees Union of Bayer Philippines (REUBP), (3) adopt a new
constitution and by-laws for the union, (4) abolish all existing officer
positions in the union and elect a new set of interim officers, and (5)
authorize REUBP to administer the CBA between EUBP and Bayer.[7] The
said resolution was signed by 147 of the 257 local union members. A
subsequent resolution was also issued affirming the first resolution.[8]
A tug-of-war then ensued between the two rival groups, with both seeking
recognition from Bayer and demanding remittance of the union dues
collected from its rank-and-file members. On September 8, 1998, Remigios
splinter group wrote Facundo, FFW and Bayer informing them of the decision
of the majority of the union members to disaffiliate from FFW.[9] This was
followed by another letter informing Facundo, FFW and Bayer that an interim
set of REUBP executive officers and board of directors had been appointed,
and demanding the remittance of all union dues to REUBP. Remigio also
asked Bayer to desist from further transacting with EUBP. Facundo,
meanwhile, sent similar requests to Bayer[10] requesting for the remittance
of union dues in favor of EUBP and accusing the company of interfering with
purely union matters.[11] Bayer responded by deciding not to deal with
either of the two groups, and by placing the union dues collected in a trust
account until the conflict between the two groups is resolved.[12]
On September 15, 1998, EUBP filed a complaint for unfair labor practice (first
ULP complaint) against Bayer for non-remittance of union dues. The case
was docketed as NLRC-NCR-Case No. 00-09-07564-98.[13]
EUBP later sent a letter dated November 5, 1998 to Bayer asking for a
grievance conference.[14] The meeting was conducted by the management
on November 11, 1998, with all REUBP officers including their lawyers

present. Facundo did not attend the meeting, but sent two EUBP officers to
inform REUBP and the management that a preventive mediation conference
between the two groups has been scheduled on November 12, 1998 before
the National Conciliation and Mediation Board (NCMB).[15]
Apparently, the two groups failed to settle their issues as Facundo again sent
respondent Dieter J. Lonishen two more letters, dated January 14, 1999[16]
and September 2, 1999,[17] asking for a grievance meeting with the
management to discuss the failure of the latter to comply with the terms of
their CBA. Both requests remained unheeded.
On February 9, 1999, while the first ULP case was still pending and despite
EUBPs repeated request for a grievance conference, Bayer decided to turn
over the collected union dues amounting to P254,857.15 to respondent
Anastacia Villareal, Treasurer of REUBP.
Aggrieved by the said development, EUBP lodged a complaint[18] on March
4, 1999 against Remigios group before the Industrial Relations Division of the
DOLE praying for their expulsion from EUBP for commission of acts that
threaten the life of the union.
On June 18, 1999, Labor Arbiter Jovencio Ll. Mayor, Jr. dismissed the first ULP
complaint for lack of jurisdiction.[19] The Arbiter explained that the root
cause for Bayers failure to remit the collected union dues can be traced to
the intra-union conflict between EUBP and Remigios group[20] and that the
charges imputed against Bayer should have been submitted instead to
voluntary arbitration.[21] EUBP did not appeal the said decision.[22]
On December 14, 1999, petitioners filed a second ULP complaint against
herein respondents docketed as NLRC-RAB-IV Case No. 12-11813-99-L. Three
days later, petitioners amended the complaint charging the respondents with
unfair labor practice committed by organizing a company union, gross
violation of the CBA and violation of their duty to bargain.[23] Petitioners
complained that Bayer refused to remit the collected union dues to EUBP
despite several demands sent to the management.[24] They also alleged
that notwithstanding the requests sent to Bayer for a renegotiation of the
last two years of the 1997-2001 CBA between EUBP and Bayer, the latter
opted to negotiate instead with Remigios group.[25]
On even date, REUBP and Bayer agreed to sign a new CBA. Remigio
immediately informed her allies of the managements decision.[26]
In response, petitioners immediately filed an urgent motion for the issuance
of a restraining order/injunction[27] before the National Labor Relations

Commission (NLRC) and the Labor Arbiter against respondents. Petitioners

asserted their authority as the exclusive bargaining representative of all
rank-and-file employees of Bayer and asked that a temporary restraining
order be issued against Remigios group and Bayer to prevent the employees
from ratifying the new CBA. Later, petitioners filed a second amended
complaint[28] to include in its complaint the issue of gross violation of the
CBA for violation of the contract bar rule following Bayers decision to
negotiate and sign a new CBA with Remigios group.
Meanwhile, on January 26, 2000, the Regional Director of the Industrial
Relations Division of DOLE issued a decision dismissing the issue on
expulsion filed by EUBP against Remigio and her allies for failure to exhaust
reliefs within the union and ordering the conduct of a referendum to
determine which of the two groups should be recognized as union officers.
[29] EUBP seasonably appealed the said decision to the Bureau of Labor
Relations (BLR).[30] On June 16, 2000, the BLR reversed the Regional
Directors ruling and ordered the management of Bayer to respect the
authority of the duly-elected officers of EUBP in the administration of the
prevailing CBA.[31]
Unfortunately, the said BLR ruling came late since Bayer had already signed
a new CBA[32] with REUBP on February 21, 2000. The said CBA was
eventually ratified by majority of the bargaining unit.[33]
On June 2, 2000, Labor Arbiter Waldo Emerson R. Gan dismissed EUBPs
second ULP complaint for lack of jurisdiction.[34] The Labor Arbiter explained
the dismissal as follows:
All told, were it not for the fact that there were two (2) [groups] of
employees, the Union led by its President Juanito Facundo and the members
who decided to disaffiliate led by Ms. Avelina Remigio, claiming to be the
rightful representative of the rank and file employees, the Company would
not have acted the way it did and the Union would not have filed the instant
case.
Clearly then, as the case involves intra-union disputes, this Office is bereft of
any jurisdiction pursuant to Article 226 of the Labor Code, as amended,
which provides pertinently in part, thus:
Bureau of Labor Relations The Bureau of Labor Relations and the Labor
Relations Divisions in the regional offices of the Department of Labor and
Employment shall have original and exclusive authority to act, at their own
initiative or upon request of either or both parties, on all inter-union and
intra-union conflicts, and all disputes, grievances or problems arising from or

affecting labor-management relations in all workplaces whether agricultural

or non-agricultural, except those arising from the implementation or
interpretation of collective bargaining agreements which shall be the subject
of grievance procedure and/or voluntary arbitration.
Specifically, with respect to the union dues, the authority is the case of Cebu
Seamens Association[,] Inc. vs. Ferrer-Calleja, (212 SCRA 51), where the
Supreme Court held that when the issue calls for the determination of which
between the two groups within a union is entitled to the union dues, the
same cannot be taken cognizance of by the NLRC.
xxxx
WHEREFORE, premises considered, the instant complaint is hereby
DISMISSED on the ground of lack of jurisdiction.
SO ORDERED.[35]
On June 28, 2000, the NLRC resolved to dismiss[36] petitioners motion for a
restraining order and/or injunction stating that the subject matter involved
an intra-union dispute, over which the said Commission has no jurisdiction.
[37]
Aggrieved by the Labor Arbiters decision to dismiss the second ULP
complaint, petitioners appealed the said decision, but the NLRC denied the
appeal.[38] EUBPs motion for reconsideration was likewise denied.[39]
Thus, petitioners filed a Rule 65 petition to the CA. On December 15, 2003,
the CA sustained both the Labor Arbiter and the NLRCs rulings. The appellate
court explained,
A cursory reading of the three pleadings, to wit: the Complaint (Vol. I, Rollo,
p[p]. 166-167); the Amended Complaint (Vol. I, Rollo[,] pp. 168-172) and the
Second Amended Complaint dated March 8, 2000 (Vol. II, Rollo, pp. 219-225)
will readily show that the instant case was brought about by the action of the
Group of REM[I]GIO to disaffiliate from FFW and to organized (sic) REUBP
under the tutelage of REM[I]GIO and VILLAREAL. At first glance of the case at
bar, it involves purely an (sic) inter-union and intra-union conflicts or
disputes between EUBP-FFW and REUBP which issue should have been
resolved by the Bureau of Labor Relations under Article 226 of the Labor
Code. However, since no less than petitioners who admitted that
respondents committed gross violations of the CBA, then the BLR is divested
of jurisdiction over the case and the issue should have been referred to the

Grievance Machinery and Voluntary Arbitrator and not to the Labor Arbiter as
what petitioners did in the case at bar. x x x

EXCLUSIVE BARGAINING AGENT ARE ACTS CONSTITUTING OR TANTAMOUNT

TO UNFAIR LABOR PRACTICE.[42]

xxxx

Respondents Bayer, Lonishen and Amistoso, meanwhile, identify the issues

as follows:

Furthermore, the CBA entered between BAYER and EUBP-FFW [has] a life
span of only five years and after the said period, the employees have all the
right to change their bargaining unit who will represent them. If there exist[s]
two opposing unions in the same company, the remedy is not to declare that
such act is considered unfair labor practice but rather they should conduct a
certification election provided [that] it should be conducted within 60 days of
the so[-]called freedom period before the expiration of the CBA.

I. WHETHER OR NOT THE UNIFORM FINDINGS OF THE COURT OF APPEALS,

THE NLRC AND THE LABOR ARBITER ARE BINDING ON THIS HONORABLE
COURT;
II. WHETHER OR NOT THE LABOR ARBITER AND THE NLRC HAVE
JURISDICTION OVER THE INSTANT CASE;

WHEREFORE, premises considered, this Petition is DENIED and the assailed

Decision dated September 27, 2001 as well as the Order dated June 21,
2002, denying the motion for reconsideration, by the National Labor
Relations Commission, First Division, in NLRC Case No. RAB-IV-12-11813-99L, are hereby AFFIRMED in toto. Costs against petitioners.

III. WHETHER OR NOT THE INSTANT CASE INVOLVES AN INTRA-UNION

DISPUTE;

SO ORDERED.[40]

V. WHETHER OR NOT THE INSTANT CASE HAS BECOME MOOT AND

ACADEMIC.[43]

Undaunted, petitioners filed this Rule 45 petition before this Court. Initially,
the said petition was denied for having been filed out of time and for failure
to comply with the requirements provided in the 1997 Rules of Civil
Procedure, as amended.[41] Upon petitioners motion, however, we decided
to reinstate their appeal.
The following are the issues raised by petitioners, to wit:
I. WHETHER OR NOT THE HONORABLE COURT OF APPEALS, IN ARRIVING AT
THE DECISION PROMULGATED ON 15 DECEMBER 2003 AND RESOLUTION
PROMULGATED ON 23 MARCH 2004, DECIDED THE CASE IN ACCORDANCE
WITH LAW AND JURISPRUDENCE; AND
II. WHETHER OR NOT THE HONORABLE COURT OF APPEALS, IN ARRIVING AT
THE DECISION PROMULGATED ON 15 DECEMBER 2003 AND RESOLUTION
PROMULGATED ON 23 MARCH 2004, GRAVELY ABUSE[D] ITS DISCRETION IN
ITS FINDINGS AND CONCLUSION THAT:
THE ACTS OF ABETTING OR ASSISTING IN THE CREATION OF ANOTHER
UNION, NEGOTIATING OR BARGAINING WITH SUCH UNION, WHICH IS NOT
THE SOLE AND EXCLUSIVE BARGAINING AGENT, VIOLATING THE DUTY TO
BARGAIN COLLECTIVELY, REFUSAL TO PROCESS GRIEVABLE ISSUES IN THE
GRIEVANCE MACHINERY AND/OR REFUSAL TO DEAL WITH THE SOLE AND

IV. WHETHER OR NOT RESPONDENTS COMPANY, LONISHEN AND AMISTOSO

COMMITTED AN ACT OF UNFAIR LABOR PRACTICE; AND

Essentially, the issue in this petition is whether the act of the management
of Bayer in dealing and negotiating with Remigios splinter group despite its
validly existing CBA with EUBP can be considered unfair labor practice and, if
so, whether EUBP is entitled to any relief.
Petitioners argue that the subject matter of their complaint, as well as the
subsequent amendments thereto, pertain to the unfair labor practice act of
respondents Bayer, Lonishen and Amistoso in dealing with Remigios splinter
union. They contend that (1) the acts of abetting or assisting in the creation
of another union is among those considered by the Labor Code, as amended,
specifically under Article 248 (d)[44] thereof, as unfair labor practice; (2) the
act of negotiating with such union constitutes a violation of Bayers duty to
bargain collectively; and (3) Bayers unjustified refusal to process EUBPs
grievances and to recognize the said union as the sole and exclusive
bargaining agent are tantamount to unfair labor practice.[45]
Respondents Bayer, Lonishen and Amistoso, on the other hand, contend that
there can be no unfair labor practice on their part since the requisites for
unfair labor practice i.e., that the violation of the CBA should be gross, and
that it should involve violation in the economic provisions of the CBA were
not satisfied. Moreover, they cite the ruling of the Labor Arbiter that the
issues raised in the complaint should have been ventilated and threshed out

before the voluntary arbitrators as provided in Article 261 of the Labor Code,
as amended.[46] Respondents Remigio and Villareal, meanwhile, point out
that the case should be dismissed as against them since they are not real
parties in interest in the ULP complaint against Bayer,[47] and since there
are no specific or material acts imputed against them in the complaint.[48]
The petition is partly meritorious.
An intra-union dispute refers to any conflict between and among union
members, including grievances arising from any violation of the rights and
conditions of membership, violation of or disagreement over any provision of
the unions constitution and by-laws, or disputes arising from chartering or
disaffiliation of the union.[49] Sections 1 and 2, Rule XI of Department Order
No. 40-03, Series of 2003 of the DOLE enumerate the following
circumstances as inter/intra-union disputes, viz:

(i)

opposition to application for union and CBA registration;

(j)
violations of or disagreements over any provision in a union or
workers association constitution and by-laws;
(k)
disagreements over chartering or registration of labor organizations
and collective bargaining agreements;
(l)
violations of the rights and conditions of union or workers
association membership;
(m)
violations of the rights of legitimate labor organizations, except
interpretation of collective bargaining agreements;
(n)
such other disputes or conflicts involving the rights to selforganization, union membership and collective bargaining

RULE XI
(1) between and among legitimate labor organizations;
INTER/INTRA-UNION DISPUTES AND
(2) between and among members of a union or workers association.
OTHER RELATED LABOR RELATIONS DISPUTES
Section 1. Coverage. - Inter/intra-union disputes shall include:
(a)
cancellation of registration of a labor organization filed by its
members or by another labor organization;
(b)
conduct of election of union and workers association
officers/nullification of election of union and workers association officers;
(c)

audit/accounts examination of union or workers association funds;

(d)

deregistration of collective bargaining agreements;

(e)

validity/invalidity of union affiliation or disaffiliation;

(f)
validity/invalidity of acceptance/non-acceptance for union
membership;
(g)
validity/invalidity of impeachment/expulsion of union and workers
association officers and members;
(h)

validity/invalidity of voluntary recognition;

Section 2. Coverage. Other related labor relations disputes shall include any
conflict between a labor union and the employer or any individual, entity or
group that is not a labor organization or workers association. This includes:
(1) cancellation of registration of unions and workers associations; and (2) a
petition for interpleader.
It is clear from the foregoing that the issues raised by petitioners do not fall
under any of the aforementioned circumstances constituting an intra-union
dispute. More importantly, the petitioners do not seek a determination of
whether it is the Facundo group (EUBP) or the Remigio group (REUBP) which
is the true set of union officers. Instead, the issue raised pertained only to
the validity of the acts of management in light of the fact that it still has an
existing CBA with EUBP. Thus as to Bayer, Lonishen and Amistoso the
question was whether they were liable for unfair labor practice, which issue
was within the jurisdiction of the NLRC. The dismissal of the second ULP
complaint was therefore erroneous.
However, as to respondents Remigio and Villareal, we find that petitioners
complaint was validly dismissed.
Petitioners ULP complaint cannot prosper as against respondents Remigio
and Villareal because the issue, as against them, essentially involves an
intra-union dispute based on Section 1 (n) of DOLE Department Order No. 40-

03. To rule on the validity or illegality of their acts, the Labor Arbiter and the
NLRC will necessarily touch on the issues respecting the propriety of their
disaffiliation and the legality of the establishment of REUBP issues that are
outside the scope of their jurisdiction. Accordingly, the dismissal of the
complaint was validly made, but only with respect to these two respondents.
But are Bayer, Lonishen and Amistoso liable for unfair labor practice? On this
score, we find that the evidence supports an answer in the affirmative.
It must be remembered that a CBA is entered into in order to foster stability
and mutual cooperation between labor and capital. An employer should not
be allowed to rescind unilaterally its CBA with the duly certified bargaining
agent it had previously contracted with, and decide to bargain anew with a
different group if there is no legitimate reason for doing so and without first
following the proper procedure. If such behavior would be tolerated,
bargaining and negotiations between the employer and the union will never
be truthful and meaningful, and no CBA forged after arduous negotiations
will ever be honored or be relied upon. Article 253 of the Labor Code, as
amended, plainly provides:
ART. 253. Duty to bargain collectively when there exists a collective
bargaining agreement. Where there is a collective bargaining agreement, the
duty to bargain collectively shall also mean that neither party shall terminate
or modify such agreement during its lifetime. However, either party can
serve a written notice to terminate or modify the agreement at least sixty
(60) days prior to its expiration date. It shall be the duty of both parties to
keep the status quo and to continue in full force and effect the terms and
conditions of the existing agreement during the 60-day period and/or until a
new agreement is reached by the parties. (Emphasis supplied.)
This is the reason why it is axiomatic in labor relations that a CBA entered
into by a legitimate labor organization that has been duly certified as the
exclusive bargaining representative and the employer becomes the law
between them. Additionally, in the Certificate of Registration[50] issued by
the DOLE, it is specified that the registered CBA serves as the covenant
between the parties and has the force and effect of law between them
during the period of its duration. Compliance with the terms and conditions
of the CBA is mandated by express policy of the law primarily to afford
protection to labor[51] and to promote industrial peace. Thus, when a valid
and binding CBA had been entered into by the workers and the employer,
the latter is behooved to observe the terms and conditions thereof bearing
on union dues and representation.[52] If the employer grossly violates its
CBA with the duly recognized union, the former may be held administratively
and criminally liable for unfair labor practice.[53]

Respondents Bayer, Lonishen and Amistoso, contend that their acts cannot
constitute unfair labor practice as the same did not involve gross violations
in the economic provisions of the CBA, citing the provisions of Articles 248
(1) and 261[54] of the Labor Code, as amended.[55] Their argument is,
however, misplaced.
Indeed, in Silva v. National Labor Relations Commission,[56] we explained
the correlations of Article 248 (1) and Article 261 of the Labor Code to mean
that for a ULP case to be cognizable by the Labor Arbiter, and for the NLRC to
exercise appellate jurisdiction thereon, the allegations in the complaint must
show prima facie the concurrence of two things, namely: (1) gross violation
of the CBA; and (2) the violation pertains to the economic provisions of the
CBA.[57]
This pronouncement in Silva, however, should not be construed to apply to
violations of the CBA which can be considered as gross violations per se,
such as utter disregard of the very existence of the CBA itself, similar to what
happened in this case. When an employer proceeds to negotiate with a
splinter union despite the existence of its valid CBA with the duly certified
and exclusive bargaining agent, the former indubitably abandons its
recognition of the latter and terminates the entire CBA.
Respondents cannot claim good faith to justify their acts. They knew that
Facundos group represented the duly-elected officers of EUBP. Moreover,
they were cognizant of the fact that even the DOLE Secretary himself had
recognized the legitimacy of EUBPs mandate by rendering an arbitral award
ordering the signing of the 1997-2001 CBA between Bayer and EUBP.
Respondents were likewise well-aware of the pendency of the intra-union
dispute case, yet they still proceeded to turn over the collected union dues
to REUBP and to effusively deal with Remigio. The totality of respondents
conduct, therefore, reeks with anti-EUBP animus.
Bayer, Lonishen and Amistoso argue that the case is already moot and
academic following the lapse of the 1997-2001 CBA and their renegotiation
with EUBP for the 2006-2007 CBA. They also reason that the act of the
company in negotiating with EUBP for the 2006-2007 CBA is an obvious
recognition on their part that EUBP is now the certified collective bargaining
agent of its rank-and-file employees.[58]
We do not agree. First, a legitimate labor organization cannot be construed
to have abandoned its pending claim against the management/employer by
returning to the negotiating table to fulfill its duty to represent the interest of
its members, except when the pending claim has been expressly waived or

compromised in its subsequent negotiations with the management. To hold

otherwise would be tantamount to subjecting industrial peace to the
precondition that previous claims that labor may have against capital must
first be waived or abandoned before negotiations between them may
resume. Undoubtedly, this would be against public policy of affording
protection to labor and will encourage scheming employers to commit
unlawful acts without fear of being sanctioned in the future.
Second, that the management of Bayer decided to recognize EUBP as the
certified collective bargaining agent of its rank-and-file employees for
purposes of its 2006-2007 CBA negotiations is of no moment. It did not
obliterate the fact that the management of Bayer had withdrawn its
recognition of EUBP and supported REUBP during the tumultuous
implementation of the 1997-2001 CBA. Such act of interference which is
violative of the existing CBA with EUBP led to the filing of the subject
complaint.
On the matter of damages prayed for by the petitioners, we have held that
as a general rule, a corporation cannot suffer nor be entitled to moral
damages. A corporation, and by analogy a labor organization, being an
artificial person and having existence only in legal contemplation, has no
feelings, no emotions, no senses; therefore, it cannot experience physical
suffering and mental anguish. Mental suffering can be experienced only by
one having a nervous system and it flows from real ills, sorrows, and griefs of
life all of which cannot be suffered by an artificial, juridical person.[59] A
fortiori, the prayer for exemplary damages must also be denied.[60]

Nevertheless, we find it in order to award (1) nominal damages in the

amount of P250,000.00 on the basis of our ruling in De La Salle University v.
De La Salle University Employees Association (DLSUEA-NAFTEU)[61] and
Article 2221,[62] and (2) attorneys fees equivalent to 10% of the monetary
award. The remittance to petitioners of the collected union dues previously
turned over to Remigio and Villareal is likewise in order.
WHEREFORE, the petition for review on certiorari is PARTLY GRANTED. The
Decision dated December 15, 2003 and the Resolution dated March 23, 2004
of the Court of Appeals in CA-G.R. SP No. 73813 are MODIFIED as follows:
1)
Respondents Bayer Phils., Dieter J. Lonishen and Asuncion Amistoso
are found LIABLE for Unfair Labor Practice, and are hereby ORDERED to remit
to petitioners the amount of P254,857.15 representing the collected union
dues previously turned over to Avelina Remigio and Anastacia Villareal. They
are likewise ORDERED to pay petitioners nominal damages in the amount of
P250,000.00 and attorneys fees equivalent to 10% of the monetary award;
and
2)
The complaint, as against respondents Remigio and Villareal. is
DISMISSED due to the lack of jurisdiction of the Labor Arbiter and the NLRC,
the complaint being in the nature of an intra-union dispute.
No pronouncement as to costs.
SO ORDERED.