Republic of the Philippines The Facts
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 196047 January 15, 2014
LEPANTO CONSOLIDATED MINING
CORPORATION, Petitioner,
vs.
BELIO ICAO, Respondent.
DECISION
SERENO, CJ:
This Petition under Rule 45 of the Rules of Court seeks to annul
and set aside the Court of Appeals (CA) Decision dated 27
September 2010 and the Resolution dated 11 March 2011 in CA-
G.R. SP. No. 113095.1 In the assailed Decision and Resolution, the
CA upheld the Order of the National Labor and Relations
Commission (NLRC) First Division dismissing petitioner s appeal
for allegedly failing to post an appeal bond as required by the
Labor Code. Petitioner had instead filed a motion to release the
cash bond it posted in another NLRC case which had been
decided with finality in its favor with a view to applying the bond
to the appealed case before the NLRC First Division. Hence, the
Court is now asked to rule whether petitioner had complied with
the appeal bond requirement. If it had, its appeal before the
NLRC First Division should be reinstated.
We quote the CA s narration of facts as follows:
The instant petition stemmed from a complaint for illegal
dismissal and damages filed by private respondent Belio C. Icao
[Icao] against petitioners Lepanto Consolidated Mining Company
(LCMC) and its Chief Executive Officer [CEO] Felipe U. Yap [Yap]
before the Arbitration Branch of the NLRC.
Private respondent essentially alleged in his complaint that he
was an employee of petitioner LCMC assigned as a lead miner in
its underground mine in Paco, Mankayan, Benguet. On January 4,
2008, private respondent reported for the 1st shift of work
(11:00 p.m. to 7:00 a.m.) and was assigned at 248-8M2, 750
Level of the mining area. At their workplace, private respondent
did some barring down, installed five (5) rock bolt support, and
drilled eight (8) blast holes for the mid-shift blast. They then had
their meal break. When they went back to their workplace, they
again barred down loose rocks and drilled eight (8) more blast
holes for the last round of blast. While waiting for the time to
ignite their round, one of his co-workers shouted to prepare the
explosives for blasting, prompting private respondent to run to
the adjacent panels and warn the other miners. Thereafter, he
decided to take a bath and proceeded at [sic] the bathing station
where four (4) of his co-workers were also present. Before he
could join them, he heard a voice at his back and saw Security
Guard (SG) Larry Bulwayan instructing his companion SG Dale
Papsa-ao to frisk him. As private respondent was removing his
boots, SG Bulwayan forcibly pulled his skullguard from his head
causing it to fall down [sic] to the ground including its harness
and his detergent soap which was inserted in the skullguard
harness. A few minutes later, private respondent saw SG
Bulwayan [pick] up a wrapped object at the bathing station and
gave it to his companion. SGs Bulwayan and Papsa-ao invited the
private respondent to go with them at the investigation office to
answer questions regarding the wrapped object. He was then
charged with "highgrading" or the act of concealing, possessing
or unauthorized extraction of highgrade material/ore without
proper authority. Private respondent vehemently denied the
charge. Consequently, he was dismissed from his work.
Private respondent claimed that his dismissal from work was
without just or authorized cause since petitioners failed to prove
by ample and sufficient evidence that he stole gold bearing
highgrade ores from the company premises. If private
respondent was really placing a wrapped object inside his boots,
he should have been sitting or bending down to insert the same,
instead of just standing on a muckpile as alleged by petitioners.
Moreover, it is beyond imagination that a person, knowing fully
well that he was being chased for allegedly placing wrapped ore
inside his boots, will transfer it to his skullguard. The tendency in
such situation is to throw the object away. As such, private
respondent prayed that petitioners be held liable for illegal
dismissal, to reinstate him to his former position without loss of
seniority rights and benefits, and to pay his full backwages,
damages and attorneys fees.
For their defense, petitioners averred that SG Bulwayan saw
private respondent standing on a muckpile and inserting a
wrapped object inside his right rubber boot. SG Bulwayan
immediately ran towards private respondent, but the latter ran
away to escape. He tried to chase private respondent but failed
to capture him. Thereafter, while SG Bulwayan was on his way to
see his co-guard SG Papsa-ao, he saw private respondent moving
out of a stope. He then shouted at SG Papsa-ao to intercept him.
When private respondent was apprehended, SG Bulwayan
ordered him to remove his skullguard for inspection and saw a
wrapped object placed inside the helmet. SG Bulwayan grabbed
it, but the harness of the skullguard was also detached causing
the object to fall on the ground. Immediately, SG Bulwayan
recovered and inspected the same which turned out to be pieces
of stone ores. Private respondent and the stone ores were later
turned over to the Mankayan Philippine National Police where
he was given a written notice of the charge against him. On
January 9, 2008, a hearing was held where private respondent,
together with the officers of his union as well as the
apprehending guards appeared. On February 4, 2008, private
respondent received a copy of the resolution of the company
informing him of his dismissal from employment due to breach
of trust and confidence and the act of highgrading.2
THE LABOR ARBITERS RULING THAT
PETITIONER LCMC IS LIABLE FOR ILLEGAL DISMISSAL
On 30 September 2008, the labor arbiter rendered a Decision
holding petitioner and its CEO liable for illegal dismissal and
ordering them to pay respondent Icao 345,879.45, representing
his full backwages and separation pay.3 The alleged highgrading
attributed by LCMCs security guards was found to have been
fabricated; consequently, there was no just cause for the
dismissal of respondent. The labor arbiter concluded that the
claim of the security guards that Icao had inserted ores in his
boots while in a standing position was not in accord with normal
human physiological functioning.4
The labor arbiter also noted that it was inconsistent with normal
human behavior for a man, who knew that he was being chased
for allegedly placing wrapped ore inside his boots, to then
transfer the ore to his skullguard, where it could be found once
he was apprehended.5 To further support the improbability of
the allegation of highgrading, the labor arbiter noted that
throughout the 21 years of service of Icao to LCMC, he had never
been accused of or penalized for highgrading or any other
infraction involving moral turpitude until this alleged incident.6
THE NLRC ORDER DISMISSING THE APPEAL
OF PETITIONER LCMC FOR FAILURE TO POST THE APPEAL
BOND
On 8 December 2008, petitioner and its CEO filed an Appearance
with Memorandum of Appeal7 before the NLRC. Instead of
posting the required appeal bond in the form of a cash bond or a
surety bond in an amount equivalent to the monetary award of
345,879.45 adjudged in favor of Icao, they filed a Consolidated
Motion For Release Of Cash Bond And To Apply Bond Subject For
Release As Payment For Appeal Bond (Consolidated
Motion).8 They requested therein that the NLRC release the cash
bond of 401,610.84, which they had posted in the separate case
Dangiw Siggaao v. LCMC,9 and apply that same cash bond to their
present appeal bond liability. They reasoned that since this Court
had already decided Dangiw Siggaao in their favor, and that the
ruling therein had become final and executory, the cash bond
posted therein could now be released.10 They also cited financial
difficulty as a reason for resorting to this course of action and
prayed that, in the interest of justice, the motion be granted.
In its Order dated 27 February 2009, the NLRC First Division
dismissed the appeal of petitioner and the latters CEO for non-
perfection.11 It found that they had failed to post the required
appeal bond equivalent to the monetary award of 345,879.45. It
explained that their Consolidated Motion for the release of the
cash bond in another case (Dangiw Siggaao), for the purpose of
applying the same bond to the appealed case before it, could not
be considered as compliance with the requirement to post the
required appeal bond. Consequently, it declared the labor
arbiters Decision to be final and executory. The pertinent
portions of the assailed Order are quoted below:
The rules are clear. Appeals from decision involving a monetary
award maybe [sic] perfected only upon posting of a cash or
surety-bond within the ten (10) day reglementary period for
filing an appeal. Failure to file and post the required appeal bond
within the said period results in the appeal not being perfected
and the appealed judgment becomes final and executory. Thus,
the Commission loses authority to entertain or act on the appeal
much less reverse the decision of the Labor Arbiter (Gaudia vs.
NLRC, 318 SCRA 439).
In this case, respondents failed to post the required appeal bond
equivalent to the monetary award of 345,879.45. The
Consolidated Motion for Release of Cash Bond (posted as appeal
bond in another case) with prayer to apply the bond to be
released as appeal bond may not be considered as compliance
with the jurisdictional requirement, as the application or posting
is subject to the condition that the cash bond would be released.
Besides, even if the motion for release is approved, the ten (10)
day period has long expired, rendering the statutory right to
appeal forever lost.
WHEREFORE, respondents appeal is hereby DISMISSED for non-
perfection and the questioned decision is declared as having
become final and executory. Let the Motion for Release of Cash
bond be forwarded to the Third Division, this Commission, for
appropriate action.
SO ORDERED.12 (Emphasis supplied)
Petitioner and its CEO filed a Motion for Reconsideration. They
emphasized therein that they had tried to comply in good faith
with the requisite appeal bond by trying to produce a cash bond
anew and also to procure a new surety bond. However, after
canvassing several bonding companies, the costs have proved to
be prohibitive.13 Hence, they resorted to using the cash bond
they posted in Dangiw Siggaao because the bond was now free,
unencumbered and could rightfully be withdrawn and used by
them.14 Their motion was denied in a Resolution dated 27
November 2009. Hence, they filed a Petition for Certiorari with
the CA.
THE CA RULING AFFIRMING THE ORDER OF THE NLRC
On 27 September 2010, the CA issued its assailed
Decision15 affirming the Order of the NLRC First Division, which
had dismissed the appeal of petitioner and the latters CEO.
According to the CA, they failed to comply with the requirements
of law and consequently lost the right to appeal.16
The CA explained that under Article 223 of the Labor Code, an
appeal from the labor arbiters Decision must be filed within 10
calendar days from receipt of the decision. In case of a judgment
involving a monetary award, the posting of a cash or surety bond
in an amount equivalent to the monetary award is mandatory for
the perfection of an appeal. In the instant case, the CA found that
petitioner and its CEO did not pay the appeal fees and the
required appeal bond equivalent to 345,879.45. Instead, it filed
a Consolidated Motion praying that the cash bond it had
previously posted in another labor case be released and applied
to the present one. According to the CA, this arrangement is not
allowed under the rules of procedure of the NLRC.17
Furthermore, the CA said that since the payment of appeal fees
and the posting of an appeal bond are indispensable
jurisdictional requirements, noncompliance with them resulted
in petitioners failure to perfect its appeal. Consequently, the
labor arbiters Decision became final and executory and, hence,
binding upon the appellate court.18
Nevertheless, the CA ruled that the CEO of petitioner LCMC
should be dropped as a party to this case.19 No specific act was
alleged in private respondents pleadings to show that he had a
hand in Icaos illegal dismissal; much less, that he acted in bad
faith. In fact, the labor arbiter did not cite any factual or legal
basis in its Decision that would render the CEO liable to
respondent. The rule is that in the absence of bad faith, an officer
of a corporation cannot be made personally liable for corporate
liabilities.
THE ISSUE
The sole issue before the Court is whether or not petitioner
complied with the appeal bond requirement under the Labor
Code and the NLRC Rules by filing a Consolidated Motion to
release the cash bond it posted in another case, which had been
decided with finality in its favor, with a view to applying the
same cash bond to the present case.
OUR RULING
The Petition is meritorious. The Court finds that petitioner
substantially complied with the appeal bond requirement.
Before discussing its ruling, however, the Court finds it necessary
to emphasize the well-entrenched doctrine that an appeal is not
a matter of right, but is a mere statutory privilege. It may be
availed of only in the manner provided by law and the rules.
Thus, a party who seeks to exercise the right to appeal must
comply with the requirements of the rules; otherwise, the
privilege is lost.20
In appeals from any decision or order of the labor arbiter, the
posting of an appeal bond is required under Article 223 of the
Labor Code, which reads:
Article 223. APPEAL. Decisions, awards, or orders of the Labor
Arbiter are final and executory unless appealed to the
Commission by any or both parties within ten (10) calendar days
from receipt of such decisions, awards, or orders. Such appeal
may be entertained only on any of the following grounds:
xxxx
In case of a judgment involving a monetary award, an appeal by
the employer may be perfected only upon the posting of a cash
or surety bond issued by a reputable bonding company duly
accredited by the Commission in the amount equivalent to the
monetary award in the judgment appealed from. (Emphasis and
underlining supplied)
The 2011 NLRC Rules of Procedure (NLRC Rules) incorporates
this requirement in Rule VI, Section 6, which provides:
SECTION 6. Bond. In case the decision of the Labor Arbiter or
the Regional Director involves a monetary award, an appeal by
the employer may be perfected only upon the posting of a bond,
which shall either be in the form of cash deposit or surety bond
equivalent in amount to the monetary award, exclusive of
damages and attorneys fees. (Emphases and underlining
supplied)
In Viron Garments Manufacturing Co., Inc. v. NLRC,21 the Court
explained the mandatory nature of this requirement as follows:
The intention of the lawmakers to make the bond an
indispensable requisite for the perfection of an appeal by the
employer, is clearly limned in the provision that an appeal by the
employer may be perfected "only upon the posting of a cash or
surety bond." The word "only" makes it perfectly clear, that the
lawmakers intended the posting of a cash or surety bond by the
employer to be the exclusive means by which an employer's
appeal may be perfected. (Emphases supplied)
We now turn to the main question of whether petitioners
Consolidated Motion to release the cash bond it posted in a
previous case, for application to the present case, constitutes
compliance with the appeal bond requirement. While it is true
that the procedure undertaken by petitioner is not provided
under the Labor Code or in the NLRC Rules, we answer the
question in the affirmative. We reiterate our pronouncement in
Araneta v. Rodas,22 where the Court said that when the law does
not clearly provide a rule or norm for the tribunal to follow in
deciding a question submitted, but leaves to the tribunal the
discretion to determine the case in one way or another, the judge
must decide the question in conformity with justice, reason and
equity, in view of the circumstances of the case. Applying this
doctrine, we rule that petitioner substantially complied with the
mandatory requirement of posting an appeal bond for the
reasons explained below.
First, there is no question that the appeal was filed within the 10-
day reglementary period.23 Except for the alleged failure to post
an appeal bond, the appeal to the NLRC was therefore in order.
Second, it is also undisputed that petitioner has an
unencumbered amount of money in the form of cash in the
custody of the NLRC. To reiterate, petitioner had posted a cash
bond of 401,610.84 in the separate case Dangiw Siggaao, which
was earlier decided in its favor. As claimed by petitioner and
confirmed by the Judgment Division of the Judicial Records Office
of this Court, the Decision of the Court in Dangiw Siggaao had
become final and executory as of 28 April 2008, or more than
seven months before petitioner had to file its appeal in the
present case. This fact is shown by the Entry of Judgment on file
with the aforementioned office. Hence, the cash bond in that case
ought to have been released to petitioner then.
Under the Rule VI, Section 6 of the 2005 NLRC Rules, "[a] cash or
surety bond shall be valid and effective from the date of deposit
or posting, until the case is finally decided, resolved or
terminated, or the award satisfied." Hence, it is clear that a bond
is encumbered and bound to a case only for as long as 1) the case
has not been finally decided, resolved or terminated; or 2) the
award has not been satisfied. Therefore, once the appeal is finally
decided and no award needs to be satisfied, the bond is
automatically released. Since the money is now unencumbered,
the employer who posted it should now have unrestricted access
to the cash which he may now use as he pleases as appeal bond
in another case, for instance. This is what petitioner simply did.
Third, the cash bond in the amount of 401,610.84 posted in
Dangiw Siggaao is more than enough to cover the appeal bond in
the amount of 345,879.45 required in the present case.
Fourth, this ruling remains faithful to the spirit behind the appeal
bond requirement which is to ensure that workers will receive
the money awarded in their favor when the employers appeal
eventually fails.24 There was no showing at all of any attempt on
the part of petitioner to evade the posting of the appeal bond. On
the contrary, petitioners move showed a willingness to comply
with the requirement. Hence, the welfare of Icao is adequately
protected.
Moreover, this Court has liberally applied the NLRC Rules and
the Labor Code provisions on the posting of an appeal bond in
exceptional cases. In Your Bus Lines v. NLRC,25 the Court excused
the appellants failure to post a bond, because it relied on the
notice of the decision. While the notice enumerated all the other
requirements for perfecting an appeal, it did not include a bond
in the list. In Blancaflor v. NLRC,26 the failure of the appellant
therein to post a bond was partly caused by the labor arbiters
failure to state the exact amount of monetary award due, which
would have been the basis of the amount of the bond to be
posted. In Cabalan Pastulan Negrito Labor Association v.
NLRC27 petitioner-appellant was an association of Negritos
performing trash-sorting services in the American naval base in
Subic Bay. The plea of the association that its appeal be given due
course despite its non-posting of a bond, on account of
its insolvency and poverty, was granted by this Court. In UERM-
Memorial Medical Center v. NLRC28 we allowed the appellant-
employer to post a property bond in lieu of a cash or surety
bond. The assailed judgment involved more than 17 million;
thus, its execution could adversely affect the economic survival
of the employer, which was a medical center.
If n the above-cited cases, the Court found exceptional
circumstances that warranted an extraordinary exercise of its
power to exempt a party from the rules on appeal bond, there is
all the more reason in the present case to find that petitioner
substantially complied with the requirement. We emphasize that
in this case we are not even exempting petitioner from the rule,
as in fact we are enforcing compliance with the posting of an
appeal bond. We are simply liberally applying the rules on what
constitutes compliance with the requirement, given the special
circumstances surrounding the case as explained above.
Having complied with the appeal bond requirement, petitioner s
appeal before the NLRC must therefore be reinstated.1wphi1
Finally, a word of caution. Lest litigants be misled into thinking
that they may now wantonly disregard the rules on appeal bond
in labor cases, we reiterate the mandatory nature of the
requirement. The Court will liberally apply the rules only in very
highly exceptional cases such as this, in keeping with the dictates
of justice, reason and equity.
WHEREFORE, premises considered, the instant Rule 45 Petition
is GRANTED. The Court of Appeals Decision dated 27 September
2010 and its Resolution dated March 2011 in CA-G.R. SP. No.
113095, which dismisse4 petitioner s Rule 65 Petition, are
hereby REVERSED. Finally, the National Labor Relations
Commission Resolutions dated 27 February 2009 and 27
November 2009 are SET ASIDE and the appeal of petitioner
before it is hereby REINSTATED.
SO ORDERED.
 Republic of the Philippines (MCCH), a tertiary medical institution owned by the United
SUPREME COURT Church of Christ in the Philippines (UCCP).
Manila
Considering the similar factual setting, we quote the relevant
SPECIAL FIRST DIVISION portions of the narration of facts in our Decision dated December
7, 2011 in Abaria v. NLRC2:
G.R. No. 196156 January 15, 2014
The National Federation of Labor (NFL) is the exclusive
VISAYAS COMMUNITY MEDICAL CENTER (VCMC), Formerly bargaining representative of the rank-and-file employees of
known as METRO CEBU COMMUNITY HOSPITAL MCCHI. Under the 1987 and 1991 Collective Bargaining
(MCCH), Petitioner, Agreements (CBAs), the signatories were Ciriaco B. Pongasi, Sr.
vs. for MCCHI, and Atty. Armando M. Alforque (NFL Legal Counsel)
ERMA YBALLE, NELIA ANGEL, ELEUTERIA CORTEZ and and Paterno A. Lumapguid as President of NFL-MCCH Chapter. In
EVELYN ONG, Respondents. the CBA effective from January 1994 until December 31, 1995,
the signatories were Sheila E. Buot as Board of Trustees
DECISION Chairman, Rev. Iyoy as MCCH Administrator and Atty. Fernando
Yu as Legal Counsel of NFL, while Perla Nava, President of
VILLARAMA, JR., J.: Nagkahiusang Mamumuo sa MCCH (NAMA-MCCH-NFL) signed
the Proof of Posting.
The present petition was included in the four consolidated cases
previously decided by this Court.1 However, its reinstatement On December 6, 1995, Nava wrote Rev. Iyoy expressing the
and separate disposition became necessary due to oversight in unions desire to renew the CBA, attaching to her letter a
the issuance of the order of consolidation. statement of proposals signed/endorsed by 153 union members.
Nava subsequently requested that the following employees be
The Facts allowed to avail of one-day union leave with pay on December
19, 1995: Celia Sabas, Jesusa Gerona, Albina Baez, Eddie Villa,
Respondents were hired as staff nurses (Ong and Angel) and Roy Malazarte, Ernesto Canen, Jr., Guillerma Remocaldo, Catalina
midwives (Yballe and Cortez) by petitioner Visayas Community Alsado, Evelyn Ong, Melodia Paulin, Sofia Bautista, Hannah
Medical Center (VCMC), formerly the Metro Cebu Community Bongcaras, Ester Villarin, Iluminada Wenceslao and Perla Nava.
Hospital, Inc. (MCCHI). MCCHI is a non-stock, non-profit However, MCCHI returned the CBA proposal for Nava to secure
corporation which operates the Metro Cebu Community Hospital
first the endorsement of the legal counsel of NFL as the official
bargaining representative of MCCHI employees.
Meanwhile, Atty. Alforque informed MCCHI that the proposed
CBA submitted by Nava was never referred to NFL and that NFL
has not authorized any other legal counsel or any person for
collective bargaining negotiations. By January 1996, the
collection of union fees (check-off) was temporarily suspended
by MCCHI in view of the existing conflict between the federation
and its local affiliate. Thereafter, MCCHI attempted to take over
the room being used as union office but was prevented to do so
by Nava and her group who protested these actions and insisted
that management directly negotiate with them for a new CBA.
MCCHI referred the matter to Atty. Alforque, NFLs Regional
Director, and advised Nava that their group is not recognized by
NFL.
In his letter dated February 24, 1996 addressed to Nava, Ernesto
Canen, Jr., Jesusa Gerona, Hannah Bongcaras, Emma Remocaldo,
Catalina Alsado and Albina Baez, Atty. Alforque suspended their
union membership for serious violation of the Constitution and
By-Laws. Said letter states:
xxxx
On February 26, 1996, upon the request of Atty. Alforque, MCCHI
granted one-day union leave with pay for 12 union members.
The next day, several union members led by Nava and her group
launched a series of mass actions such as wearing black and red
armbands/headbands, marching around the hospital premises
and putting up placards, posters and streamers. Atty. Alforque
immediately disowned the concerted activities being carried out
by union members which are not sanctioned by NFL. MCCHI
directed the union officers led by Nava to submit within 48 hours
a written explanation why they should not be terminated for
having engaged in illegal concerted activities amounting to
strike, and placed them under immediate preventive suspension.
Responding to this directive, Nava and her group denied there
was a temporary stoppage of work, explaining that employees
wore their armbands only as a sign of protest and reiterating
their demand for MCCHI to comply with its duty to bargain
collectively. Rev. Iyoy, having been informed that Nava and her
group have also been suspended by NFL, directed said officers to
appear before his office for investigation in connection with the
illegal strike wherein they reportedly uttered slanderous and
scurrilous words against the officers of the hospital, threatening
other workers and forcing them to join the strike. Said union
officers, however, invoked the grievance procedure provided in
the CBA to settle the dispute between management and the
union.
On March 13 and 19, 1996, the Department of Labor and
Employment (DOLE) Regional Office No. 7 issued certifications
stating that there is nothing in their records which shows that
NAMA-MCCH- NFL is a registered labor organization, and that
said union submitted only a copy of its Charter Certificate on
January 31, 1995. MCCHI then sent individual notices to all union
members asking them to submit within 72 hours a written
explanation why they should not be terminated for having
supported the illegal concerted activities of NAMA-MCCH-NFL
which has no legal personality as per DOLE records. In their
collective response/statement dated March 18, 1996, it was
explained that the picketing employees wore armbands to
protest MCCHIs refusal to bargain; it was also contended that
MCCHI cannot question the legal personality of the union which
had actively assisted in CBA negotiations and implementation.
On March 13, 1996, NAMA-MCCH-NFL filed a Notice of Strike but
the same was deemed not filed for want of legal personality on
the part of the filer. The National Conciliation and Mediation
Board (NCMB) Region 7 office likewise denied their motion for
reconsideration on March 25, 1996. Despite such rebuff, Nava
and her group still conducted a strike vote on April 2, 1996
during which an overwhelming majority of union members
approved the strike.
Meanwhile, the scheduled investigations did not push through
because the striking union members insisted on attending the
same only as a group. MCCHI again sent notices informing them
that their refusal to submit to investigation is deemed a waiver of
their right to explain their side and management shall proceed to
impose proper disciplinary action under the circumstances. On
March 30, 1996, MCCHI sent termination letters to union leaders
and other members who participated in the strike and picketing
activities. On April 8, 1996, it also issued a cease-and-desist
order to the rest of the striking employees stressing that the
wildcat concerted activities spearheaded by the Nava group is
illegal without a valid Notice of Strike and warning them that
non-compliance will compel management to impose disciplinary
actions against them. For their continued picketing activities
despite the said warning, more than 100 striking employees
were dismissed effective April 12 and 19, 1996.
Unfazed, the striking union members held more mass actions.
The means of ingress to and egress from the hospital were
blocked so that vehicles carrying patients and employees were
barred from entering the premises. Placards were placed at the
hospitals entrance gate stating:
"Please proceed to another hospital" and "we are on protest."
Employees and patients reported acts of intimidation and
harassment perpetrated by union leaders and members. With
the intensified atmosphere of violence and animosity within the
hospital premises as a result of continued protest activities by
union members, MCCHI suffered heavy losses due to low patient
admission rates. The hospitals suppliers also refused to make
further deliveries on credit.
With the volatile situation adversely affecting hospital
operations and the condition of confined patients, MCCHI filed a
petition for injunction in the NLRC (Cebu City) on July 9, 1996
(Injunction Case No. V-0006-96). A temporary restraining order
(TRO) was issued on July 16, 1996. MCCHI presented 12
witnesses (hospital employees and patients), including a security
guard who was stabbed by an identified sympathizer while in the
company of Navas group. MCCHIs petition was granted and a
permanent injunction was issued on September 18, 1996
enjoining the Nava group from committing illegal acts mentioned
in Art. 264 of the Labor Code.
On August 27, 1996, the City Government of Cebu ordered the
demolition of the structures and obstructions put up by the
picketing employees of MCCHI along the sidewalk, having
determined the same as a public nuisance or nuisance per se.
Thereafter, several complaints for illegal dismissal and unfair
labor practice were filed by the terminated employees against
MCCHI, Rev. Iyoy, UCCP and members of the Board of Trustees of
MCCHI.3
On August 4, 1999, Executive Labor Arbiter Reynoso A.
Belarmino rendered his Decision4 in the consolidated cases
which included NLRC Case No. RAB-VII-02-0309-98 filed by
herein respondents. The dispositive portion of said decision
reads:
WHEREFORE, premises considered, judgment is hereby
rendered dismissing the claim of unfair labor practice and illegal
dismissal and declaring the termination of the following as an
offshoot of the illegal strike: Perla Nava, Catalina Alsado, Albina
Baez, Hannah Bongcaras, Ernesto Canen, Jesusa Gerona and
Guillerma Remocaldo but directing the respondent Metro Cebu
Community Hospital to pay the herein complainants separation
pay in the sum of THREE MILLION EIGHTY FIVE THOUSAND
EIGHT HUNDRED NINETY SEVEN and [40]/100 (3,085,897.40)
detailed as follows:
xxxx
79. Erma Yballe
6/11/83 4/19/96: 12 years, 10 mos. (13 years)
5,000.00 2 x 13 = 32,500.00
80. Eleuteria Cortez
12/13/[74]5 4/12/96: 21 years, 4 mos. (21 years)
5,000.00 2 x 21 = 52,500.00
81. Nelia Angel
6/01/88 4/12/96: 7 years, 10 mos. (8 years)
5,000.00 2 x 8 = 20,000.00
82. Evelyn Ong
7/07/86 4/12/96: 9 years, 9 mos. (10 years)
5,000.00 2 x 10 = 25,000.00
xxxx
SO ORDERED.6
Executive Labor Arbiter Belarmino ruled that MCCHI and its
administrators were not guilty of unfair labor practice. He
likewise upheld the termination of complainants union officers
who conducted the illegal strike. The rest of the complainants
were found to have been illegally dismissed, thus:
We, however, see that the NAMA members deserve a different
treatment. As the Court said, members of a union cannot be held
responsible for an illegal strike on the sole basis of such
membership, or even on an account of their affirmative vote
authorizing the same. They become liable only if they actually
participated therein (ESSO Phil., Inc. vs. Malayang Manggagawa
sa Esso 75 SCRA 73). But the illegality of their participation is
placed in a state of doubt they, being merely followers. Under the
circumstances, We resort to Art. 4 of the Labor Code favoring the
workingman in case of doubt in the interpretation and
implementation of laws.
Obviously swayed by the actuations of their leaders, herein
complainants ought to be reinstated as a matter of policy but
without backwages for they cannot be compensated having
skipped work during the illegal strike (National Federation of
Sugar Workers vs. Overseas et al. 114 SCRA 354). But with their
positions already taken over by their replacements and with
strained relations between the parties having taken place, We
deem it fair that complainants except for the seven officers,
should be paid separation pay of one-half (1/2) month for every
year of service by the respondent hospital.7
Respondents and their co-complainants filed their respective
appeals before the National Labor Relations Commission (NLRC)
Cebu City. On February 15, 2001, respondents and MCCHI jointly
moved to defer resolution of their appeal (NLRC Case No. V-
001042-99) in view of a possible compromise. Consequently, in
its Decision8 dated March 14, 2001, the NLRCs Fourth Division
(Cebu City) resolved only the appeals filed by respondents co-
complainants. The dispositive portion of said decision reads:
WHEREFORE, premises considered, the decision of the Executive
Labor Arbiter dismissing the complaint for unfair labor practice
and illegal dismissal is AFFIRMED with MODIFICATIONS
declaring the dismissal of all the complainants in RAB Case No.
07-02-0394-98 and RAB Case No. 07-03-0596-98 valid and legal.
Necessarily, the award of separation pay and attorneys fees are
hereby Deleted.
Resolution on RAB Case No. 07-02-0309-98 is hereby Deferred
upon Joint Motion of the parties.
SO ORDERED.9
The NLRC denied the motion for reconsideration of the above
decision under its Resolution10 dated July 2, 2001.
Having failed to reach a settlement, respondents counsel filed a
motion to resolve their appeal on January 2, 2003. Thus, on
March 12, 2003, the NLRC-Cebu City Fourth Division rendered its
Decision,11 as follows:
WHEREFORE, premises considered, the decision of the Executive
Labor Arbiter dismissing the complaint for unfair labor practice
and illegal dismissal is AFFIRMED with MODIFICATIONS
declaring all the complainants to have been validly dismissed.
Necessarily, the award of separation pay and attorneys fees are
hereby Deleted.
SO ORDERED.12
In deleting the award of separation pay and attorneys fees, the
NLRC emphasized that respondents and their co-complainants
are guilty of insubordination, having persisted in their illegal
concerted activities even after MCCHI had sent them individual
notices that the strike was illegal as it was filed by NAMA-MCCH-
NFL which is not a legitimate labor organization. It held that
under the circumstances where the striking employees harassed,
threatened and prevented non-striking employees and doctors
from entering hospital premises, blocked vehicles carrying
patients to the hospital premises and caused anxiety to
recuperating patients by displaying placards along the corridors
of the hospital, and the resulting decrease in hospital admission,
refusal of suppliers to make further deliveries due to fears of
violence erupting as a result of picketing, and diminished income
due to low admission rates, it would be unfair to saddle MCCHI
with the burden of paying separation pay to complainants who
were validly dismissed. Respondents motion for reconsideration
was denied by the NLRC under its Resolution13 dated April 13,
2004.
Meanwhile, the petition for certiorari filed by respondents co-
complainants in the Court of Appeals (CA) Cebu Station (CA-G.R.
SP No. 66540) was initially dismissed by the CAs Eighth Division
on the ground that out of 88 petitioners only 47 have signed the
certification against forum shopping. On motion for
reconsideration filed by said petitioners, the petition was
reinstated but only with respect to the 47 signatories. Said ruling
was challenged by complainants before this Court via a petition
for review on certiorari, docketed as G.R. No. 154113 (Abaria, et
al. v. NLRC, et al.).14
On October 17, 2008, the CA dismissed the petition in CA-G.R. SP
No. 66540, as follows:
WHEREFORE, premises considered, judgment is hereby
rendered AFFIRMING the Decision of the National Labor
Relations Commission (NLRC) Fourth Division dated March 14,
2001 in NLRC Case No. V-001042-99, WITH MODIFICATIONS to
the effect that (1) the petitioners, except the union officers, shall
be awarded separation pay equivalent to one-half (1/2) month
pay for every year of service, and (2) petitioner Cecilia Sabas
shall be awarded overtime pay amounting to sixty-three (63)
hours.
SO ORDERED.15
The motion for reconsideration and motion for partial
reconsideration respectively filed by the complainants and
MCCHI in CA-G.R. SP No. 66540 were likewise denied by the
CA.16 Both parties elevated the case to this Court in separate
petitions: G.R. No. 187778 (Perla Nava, et al. v. NLRC, et al.) and
G.R. No. 187861 (Metro Cebu Community Hospital v. Perla Nava,
et al.). Herein respondents also filed in the CA a petition for
certiorari assailing the March 12, 2003 Decision and April 13,
2004 Resolution of the NLRC, docketed as CA-G.R. SP No. 84998
(Cebu City). By Decision17 dated November 7, 2008, the CA
granted their petition, as follows:
WHEREFORE, the challenged Decision of public respondent
dated March 12, 2003 and its Resolution dated April 13, 2004 are
herebyREVERSED AND SET ASIDE. Private respondent Metro
Cebu Community Hospital is ordered to reinstate petitioners
Erma Yballe, Eleuteria Cortes, Nelia Angel and Evelyn Ong
without loss of seniority rights and other privileges; to pay them
their full backwages inclusive of their allowances and other
benefits computed from the time of their dismissal up to the time
of their actual reinstatement.
No pronouncement as to costs.
SO ORDERED.18
Petitioner filed a motion for reconsideration which the CA
denied in its February 22, 2011 Resolution.19
The Case
The present petition (G.R. No. 196156) was filed on April 27,
2011. Records showed that as early as August 3, 2009, G.R. Nos.
187861 and 187778 were consolidated with G.R. No. 154113
pending with the Third Division.20 As to the present petition, it
was initially denied under the June 8, 2011 Resolution21 issued
by the Second Division for failure to show any reversible error
committed by the CA. Petitioner filed a motion for
reconsideration to which respondents filed an opposition. Said
motion for reconsideration of the earlier dismissal (June 8, 2011)
remained unresolved by the Second Division which, on June 29,
2011, issued a resolution ordering the transfer of the present
case to the Third Division.22
It is further recalled that on June 23, 2011, petitioner moved to
consolidate the present case with G.R. Nos. 154113, 187861 and
187778 which was opposed by respondents. Under Resolution
dated August 1, 2011, the Third Division denied the motion for
consolidation, citing the earlier dismissal of the petition on June
8, 2011.23 However, on motion for reconsideration filed by
petitioner, said resolution was set aside on October 19, 2011 and
the present case was ordered consolidated with G.R. Nos.
154113, 187778 and 187861 and transferred to the First
Division where the latter cases are pending.24
On December 7, 2011, the Decision25 in the consolidated cases
(G.R. Nos. 154113, 187778, 187861 and 196156) was rendered,
the dispositive portion of which states:
WHEREFORE, the petition for review on certiorari in G.R. No.
187861 is DENIED while the petitions in G.R. Nos. 154113,
187778 and 196156 are PARTLY GRANTED. The Decision dated
October 17, 2008 of the Court of Appeals in CA-G.R. SP No. 66540
is hereby AFFIRMED with MODIFICATIONS in that MCCHI is
ordered to pay the petitioners in G.R. Nos. 154113 and 187778,
except the petitioners who are union officers, separation pay
equivalent to one month pay for every year of service, and
reasonable attorneys fees in the amount of 50,000.00. The
Decision dated November 7, 2008 is likewise AFFIRMED with
MODIFICATIONS in that MCCHI is ordered to pay the private
respondents in G.R. No. 196156 separation pay equivalent to one
month pay for every year of service, and that the award of back
wages is DELETED.
The case is hereby remanded to the Executive Labor Arbiter for
the recomputation of separation pay due to each of the
petitioners union members in G.R. Nos. 154113, 187778 and
196156 except those who have executed compromise
agreements approved by this Court.
No pronouncement as to costs.
SO ORDERED.26
On February 7, 2012, respondents filed a Motion for
Reconsideration with Motion for Severance and
Remand27asserting that they were denied due process as they
had no opportunity to file a comment on the petition prior to the
rendition of the Decision dated December 7, 2011. They also
point out that the issues in the present case are different from
those raised in the petitions filed by their co-complainants.
On June 18, 2012, this Court issued a Resolution (1) reinstating
the petition and requiring the respondents to file their comment
on the petition; and (2) denying the motion for remand to the
Second Division.28 Respondents thus filed their Comment, to
which petitioner filed its Reply. Thereafter, the parties submitted
their respective memoranda.
Issues
In their Memorandum, respondents submit that since the
Decision dated December 7, 2011 in the consolidated cases of
Abaria v. NLRC have already declared the dismissal of
complainants union members as illegal but awarded separation
pay and reasonable attorneys fees, the remaining issue to be
resolved in this case is whether respondents are entitled to back
wages and damages.
Petitioner, however, further assail the CA in (a) allowing
respondents to change their theory on appeal, (b) finding that
respondents did not commit illegal acts during the strike and (c)
increasing the award of separation pay to one month pay for
every year of service as held in the December 7, 2011 Decision in
view of the damages suffered by petitioner.
Respondents Argument
Respondents maintain that there was no iota of evidence
presented by petitioner that they took part in the illegal strike
conducted by the Nava group or committed illegal acts like the
blocking of ingress and egress in the hospital premises. They
claim that they were never involved in work stoppage but
instead were locked out by petitioner as they were unable to
resume work because hospital security personnel prevented
them from entering the hospital upon petitioners instructions.
Claiming that they have consistently manifested their non-
participation in the illegal strike before the regional arbitration
branch, NLRC and the CA, respondents argue that there is
absolutely no reason to delete the awards of back wages and
separation pay in lieu of reinstatement.
Petitioners Argument
Petitioner contends that respondents have surreptitiously
changed their position from admitting in their pleadings before
the NLRC their participation in the illegal strike to that of mere
wearing of arm bands and alleged non-receipt of the notices in
their appeal before the CA. They stress the established facts on
record that: (1) respondents signed the March 18, 1996
collective reply of the union officers and members to the notices
sent by petitioner regarding their illegal concerted activities,
thus proving that they received the said notices; (2)
acknowledged Perla Nava as their union leader which belies
respondents belated attempt to distance themselves from the
Nava group who led the illegal strike; and (3) respondents did
not, in their motion for reconsideration of the NLRC Decision
dated March 12, 2003, make any denial of their participation in
the illegal strike but even justified their resort thereto due to the
prevailing labor dispute.
With the Decision in the consolidated cases (Abaria v. NLRC)
having already upheld the consistent rule that dismissed
employees who participated in an illegal strike are not entitled to
back wages, petitioner prays that the previous rulings in
Philippine Diamond Hotel and Resort, Inc. (Manila Diamond
Hotel) v. Manila Diamond Hotel Employees Union,29 G & S
Transport Corporation v. Infante,30 Philippine Marine Officers
Guild v. Compaia Maritima, et al.,31 and Escario v. National
Labor Relations Commission (Third Division)32 be likewise
applied in this case.
Our Ruling
The petition is partly meritorious.
Paragraph 3, Article 264(a) of the Labor Code provides that ". .
.any union officer who knowingly participates in an illegal strike
and any worker or union officer who knowingly participates in
the commission of illegal acts during a strike may be declared to
have lost his employment status . . ." In the Decision dated
December 7, 2011, we declared as invalid the dismissal of MCCH
employees who participated in the illegal strike conducted by
NAMA-MCCH-NFL which is not a legitimate labor organization.
Since there was no showing that the complainants committed
any illegal act during the strike, they may not be deemed to have
lost their employment status by their mere participation in the
illegal strike. On the other hand, the union leaders (Nava group)
who conducted the illegal strike despite knowledge that NAMA-
MCCH-NFL is not a duly registered labor union were declared to
have been validly terminated by petitioner.
We stress that the law makes a distinction between union
members and union officers. A worker merely participating in an
illegal strike may not be terminated from employment. It is only
when he commits illegal acts during a strike that he may be
declared to have lost employment status.33 In contrast, a union
officer may be terminated from employment for knowingly
participating in an illegal strike or participates in the commission
of illegal acts during a strike. The law grants the employer the
option of declaring a union officer who participated in an illegal
strike as having lost his employment. It possesses the right and
prerogative to terminate the union officers from service.34
In this case, the NLRC affirmed the finding of the Labor Arbiter
that respondents supported and took part in the illegal strike
and further declared that they were guilty of insubordination. It
noted that the striking employees were determined to force
management to negotiate with their union and proceeded with
the strike despite knowledge that NAMA-MCCH-NFL is not a
legitimate labor organization and without regard to the
consequences of their acts consisting of displaying placards and
marching noisily inside the hospital premises, and blocking the
entry of vehicles and persons.
On appeal, the CA reversed the rulings of the Labor Arbiter and
NLRC, ordered the reinstatement of respondents and the
payment of their full back wages. The CA found that respondents
participation was limited to the wearing of armband and thus,
citing Bascon v. CA,35 declared respondents termination as
invalid in the absence of any evidence that they committed any
illegal act during the strike.
In the Decision dated December 7, 2011, we likewise ruled that
the mass termination of complainants was illegal,
notwithstanding the illegality of the strike in which they
participated. However, since reinstatement was no longer
feasible, we ordered MCCHI to pay the dismissed employees
separation pay equivalent to one month pay for every year of
service. The claim for back wages was denied, consistent with
existing law and jurisprudence. Respondents argue that the CA
correctly awarded them back wages because while they
"supported the protest action" they were not part of the Nava
group who were charged with blocking the free ingress and
egress of the hospital, threatening and harassing persons
entering the premises, and making boisterous and unpleasant
remarks. They deny any participation in the illegal strike and
assert that no evidence of their actual participation in the strike
was shown by petitioner.
We are not persuaded by respondents attempt to dissociate
themselves from the Nava group who led the illegal strike. In
their motion for reconsideration filed before the NLRC,
respondents no longer denied having participated in the strike
but simply argued that no termination of employment in
connection with the strike "staged by complainants" cannot be
legally sustained because MCCHI "did not file a complaint or
petition to declare the strike of complainants illegal or declare
that illegal acts were committed in the conduct of the strike."
Respondents further assailed the NLRCs finding that they were
guilty of insubordination since "the proximate cause of the acts
of complainants was the prevailing labor dispute and the
consequent resort by complainants of [sic] a strike
action."36When the case was elevated to the CA, respondents
shifted course and again insisted that they did not participate in
the strike nor receive the March 15, 1996 individual notices sent
by petitioner to the striking employees.
Respondents inconsistent posture cannot be sanctioned. While
there was indeed no evidence of any illegal act committed by
respondents during the strike, the Labor Arbiter and NLRC were
one in finding that respondents actively supported the concerted
protest activities, signed the collective reply of union members
manifesting that they launched the mass actions to protest
managements refusal to negotiate a new CBA, refused to appear
in the investigations scheduled by petitioner because it was the
unions stand that they would only attend these investigations as
a group, and failed to heed petitioners final directive for them to
desist from further taking part in the illegal strike. The CA, on the
other hand, found that respondents participation in the strike
was limited to the wearing of armbands. Since an ordinary
striking worker cannot be dismissed for such mere participation
in the illegal strike, the CA correctly ruled that respondents were
illegally dismissed. However, the CA erred in awarding
respondents full back wages and ordering their reinstatement
despite the prevailing circumstances.
As a general rule, back wages are granted to indemnify a
dismissed employee for his loss of earnings during the whole
period that he is out of his job. Considering that an illegally
dismissed employee is not deemed to have left his employment,
he is entitled to all the rights and privileges that accrue to him
from the employment.37 The grant of back wages to him is in
furtherance and effectuation of the public objectives of the Labor
Code, and is in the nature of a command to the employer to make
a public reparation for his illegal dismissal of the employee in
violation of the Labor Code.38
Are respondents then entitled to back wages? This Court, in G & S
Transport Corporation v. Infante,39 ruled in the negative:
With respect to backwages, the principle of a "fair days wage for
a fair days labor" remains as the basic factor in determining the
award thereof. If there is no work performed by the employee
there can be no wage or pay unless, of course, the laborer was
able, willing and ready to work but was illegally locked out,
suspended or dismissed or otherwise illegally prevented from
working. x x x In Philippine Marine Officers Guild v. Compaia
Maritima, as affirmed in Philippine Diamond Hotel and Resort v.
Manila Diamond Hotel Employees Union, the Court stressed that
for this exception to apply, it is required that the strike be legal, a
situation that does not obtain in the case at bar. (Emphasis
supplied)
The alternative relief for union members who were dismissed for
having participated in an illegal strike is the payment of
separation pay in lieu of reinstatement under the following
circumstances: (a) when reinstatement can no longer be effected
in view of the passage of a long period of time or because of the
realities of the situation; (b) reinstatement is inimical to the
employers interest; (c) reinstatement is no longer feasible; (d)
reinstatement does not serve the best interests of the parties
involved; (e) the employer is prejudiced by the workers
continued employment; (f) facts that make execution unjust or
inequitable have supervened; or (g) strained relations between
the employer and employee.40
In the Decision dated December 7, 2011, we held that the grant
of separation pay to complainants is the appropriate relief under
the circumstances, thus:
Considering that 15 years had lapsed from the onset of this labor
dispute, and in view of strained relations that ensued, in addition
to the reality of replacements already hired by the hospital
which had apparently recovered from its huge losses, and with
many of the petitioners either employed elsewhere, already old
and sickly, or otherwise incapacitated, separation pay without
back wages is the appropriate relief. x x x41
In fine, we sustain the CA in ruling that respondents who are
mere union members were illegally dismissed for participating
in the illegal strike conducted by the Nava group. However, we
set aside the order for their reinstatement and payment of full
back wages.
WHEREFORE, the petition is PARTLY GRANTED. The Decision
dated November 7, 2008 and Resolution dated February 22,
2011 of the Court of Appeals in CA-G.R. SP No. 84998 are hereby
AFFIRMED with MODIFICATIONS. In lieu of reinstatement,
petitioner Visayas Community Medical Center formerly known
as the Metro Cebu Community Hospital) is ordered to PAY
respondents Erma Yballe, Evelyn Ong, Nelia Angel and Eleuteria
Cortez separation pay equivalent to one month pay for every
year of service. The award of back wages to the said respondents sufficient to justify the dismissal of rank and file employees, the
is DELETED. mere existence of a basis for believing that managerial
employees have breached the trust reposed on them by their
The case is hereby remanded to the Executive Labor Arbiter for employer would suffice to justify their dismissal.1
the recomputation of separation pay due to each of the
respondents. Before us is a Petition for Review on Certiorari2 assailing the
September 12, 2006 Decision3 of the Court of Appeals (CA) in CA-
SO ORDERED. G.R. SP No. 82379, which annulled the September 10, 2003
Decision4 and January 14, 2004 Resolution5 of the National Labor
Republic of the Philippines Relations Commission (NLRC), thereby reinstating the August
SUPREME COURT 30, 2001 Decision6of the Labor Arbiter for having attained
Manila finality as a result of petitioners failure to post the correct
amount of bond in their appeal before the NLRC. Likewise
SECOND DIVISION assailed is the May 23, 2007 Resolution7 of the CA which denied
petitioners Motion for Reconsideration.8
G.R. No. 178184 January 29, 2014
Factual Antecedents
GRAND ASIAN SHIPPING LINES, INC., EDUARDO P.
FRANCISCO and WILLIAM HOW, Petitioners, Petitioner Grand Asian Shipping Lines, Inc. (GASLI) is a domestic
vs. corporation engaged in transporting liquified petroleum gas
WILFREDO GALVEZ, JOEL SALES, CRISTITO GRUTA, DANILO (LPG) from Petron Corporations refinery in Limay, Bataan to
ARGUELLES, RENATO BATAYOLA, PATRICIO Petrons Plant in Ugong, Pasig and Petrons Depot in Rosario,
FRESMILLO,* JOVY NOBLE, EMILIO DOMINICO, BENNY Cavite. Petitioners William How and Eduardo Francisco are its
NILMAO, and JOSE AUSTRAL,Respondents. President and General Manager, respectively. Respondents, on
the other hand, are crewmembers of one of GASLIs vessels, M/T
DECISION Dorothy Uno, with the following designations: Wilfredo Galvez
(Galvez) as Captain; Joel Sales (Sales) as Chief Mate; Cristito
DEL CASTILLO, J.: Gruta (Gruta) as Chief Engineer; Danilo Arguelles (Arguelles) as
Radio Operator; Renato Batayola (Batayola), Patricio Fresmillo
The employer has broader discretion in dismissing managerial (Fresmillo) and Jovy Noble (Noble) as Able Seamen; Emilio
employees on the ground of loss of trust and confidence than
those occupying ordinary ranks. While plain accusations are not
Dominico (Dominico) and Benny Nilmao (Nilmao) as Oilers; and
Jose Austral (Austral) as 2nd Engineer.
Sometime in January 2000, one of the vessels Oilers, Richard
Abis (Abis), reported to GASLIs Office and Crewing Manager,
Elsa Montegrico (Montegrico), an alleged illegal activity being
committed by respondents aboard the vessel. Abis revealed that
after about four to five voyages a week, a substantial volume of
fuel oil is unconsumed and stored in the vessels fuel tanks.
However, Gruta would misdeclare it as consumed fuel in the
Engineers Voyage Reports. Then, the saved fuel oil is siphoned
and sold to other vessels out at sea usually at nighttime.
Respondents would then divide among themselves the proceeds
of the sale. Abis added that he was hesitant at first to report
respondents illegal activities for fear for his life.
An investigation on the alleged pilferage was conducted. After
audit and examination of the Engineers Voyage Reports, GASLIs
Internal Auditor, Roger de la Rama (De la Rama), issued a
Certification of Overstatement of Fuel Oil Consumption9 for M/T
Dorothy Uno stating that for the period June 30, 1999 to
February 15, 2000 fuel oil consumption was overstated by
6,954.3 liters amounting to 74,737.86.10
On February 11, 2000, a formal complaint11 for qualified theft
was filed with the Criminal Investigation and Detection Group
(CIDG) at Camp Crame against respondents, with Montegricos
Complaint-Affidavit12 attached. On February 14, 2000, Abis
submitted his Sinumpaang Salaysay,13 attesting to the facts
surrounding respondents pilferage of fuel oil while on board the
vessel, which he alleged started in August of 1999. On March 22,
2000, GASLIs Port Captain, Genaro Bernabe (Bernabe), and De la
Rama submitted a Complaint-Joint Affidavit,14 stating that in
Grutas Engineers Voyage Reports, particularly for the period
June 30, 1999 to February 15, 2000, he overstated the number of
hours the vessels main and auxiliary engines, as well as its
generators, were used resulting in the exaggerated fuel
consumption. They also stated that according to independent
surveyor Jade Sea-Land Inspection Services, the normal diesel
fuel consumption of M/T Dorothy Uno for Petron UgongBataan
RefineryPetron Ugong route averaged 1,021 liters only. Thus,
comparing this with the declared amount of fuel consumed by
the vessel when manned by the respondents, Bernabe and De la
Rama concluded that the pilferage was considerable.15 In her
Supplementary Complaint Affidavit,16 Montegrico implicated
respondents except Sales, in the illegal activity. Bernabe, in his
Reply-Affidavit,17 further detailed their analysis of the voyage
reports vis-a-vis the report of Jade Sea-Land Inspection Services
to strengthen the accusations.
In their Joint Counter-Affidavit18 and Joint Rejoinder-
Affidavit,19 respondents denied the charge. They alleged that the
complaint was based on conflicting and erroneous
computation/estimates of fuel consumption; that the complaint
was fabricated as borne out by its failure to specify the exact
time the alleged pilferage took place; that the allegations that the
pilferage has been going on since August 1999 and that Austral
and Sales acted as lookouts are not true because both embarked
on the vessel only on December 28, 1999 and January of 2000,
respectively; that four other officers who were on board the
vessel much longer than Austral and Sales were not included in
the charge; and, that the complaint was intended as a mere
leverage.
In a letter20 dated April 14, 2000, the CIDG referred the case to
the Office of the City Prosecutor of Manila, which, after finding a
prima facie case, filed the corresponding Information for
Qualified Theft21 dated August 18, 2000 with the Regional Trial
Court (RTC) of Manila.
Meanwhile, GASLI placed respondents under preventive
suspension. After conducting administrative hearings,
petitioners decided to terminate respondents from employment.
Respondents (except Sales) were thus served with
notices22 informing them of their termination for serious
misconduct, willful breach of trust, and commission of a crime or
offense against their employer.
It appears that several other employees and crewmembers of
GASLIs two other vessels were likewise suspended and
terminated from employment. Nine seafarers of M/T Deborah
Uno were charged and terminated for insubordination, defying
orders and refusal to take responsibility of cargo
products/fuel.23 For vessel M/T Coral Song, two crewmembers
were dismissed for serious act of sabotage and grave
insubordination.24 Proceedings before the Labor Arbiter
Respondents and the other dismissed crewmembers of M/T
Deborah Uno and M/T Coral Song (complainants) filed with the
NLRC separate complaints25 for illegal suspension and dismissal,
underpayment/non-payment of salaries/wages, overtime pay,
premium pay for holiday and rest day, holiday pay, service
incentive leave pay, hazard pay, tax refunds and indemnities for
damages and attorneys fees against petitioners. The complaints,
docketed as NLRC NCR Case Nos. 00-04-02026-00, 00-04-02062-
00, 00-05-02620-00 and 00-07-03769-00, were
consolidated.1wphi1
On August 30, 2001, the Labor Arbiter rendered a
Decision26 finding the dismissal of all 21 complainants illegal. As
regards the dismissal of herein respondents, the Labor Arbiter
ruled that the filing of a criminal case for qualified theft against
them did not justify their termination from employment. The
Labor Arbiter found it abstruse that the specific date and time
the alleged pilferage took place were not specified and that some
crewmembers who boarded the vessel during the same period
the alleged pilferage transpired were not included in the charge.
With regard to the other complainants, petitioners likewise
failed to prove the legality of their dismissal.
The Labor Arbiter ordered petitioners to reinstate complainants
with full backwages and to pay their money claims for unpaid
salary, overtime pay, premium pay for holidays and rest days,
holiday and service incentive leave pay, as indicated in the
Computation of Money Claims. Complainants were likewise
awarded damages due to the attending bad faith in effecting
their termination, double indemnity prescribed by Republic Act
(RA) No. 818827 in view of violation of the Minimum Wage Law,
as well as 10% attorneys fee. With respect to the claim for tax
refund, the same was referred to the Bureau of Internal Revenue,
while the claim for hazard pay was dismissed for lack of basis.
The Labor Arbiter modified and recomputed the money claims of
respondents, as follows:
1. WILFREDO GALVEZ Ten (10%) Percent
(Dismissed in Mar. 2000) Attorneys Fees P 26,025.82
Backwages from Mar. 2000
TOTAL P 286,284.05
to
May 2001 (8,658.74 x 14 2. JOEL SALES (Dismissed
mos.) ---------- P 121,225.16 in Mar. 2000)
Backwages from Mar. 2000
13th Month Pay for the
to May 2001 - P
period ---------- 8,658.94
(8,274.14 x 14 mos.) ---------- 115,840.76
Unpaid Salary from Feb 16
13th Month Pay for the
to 29, 2000 ---------- 3,985.38
period& ---------- 8,274.34
Non-payment of Premium
Actual, Moral, Exemplary &
Pay for Holiday;
Compensatory Damages ---------- P 100,000.00
Restday and Non-payment
of Holiday Pay; (224,115.10)
(limited to 3 years only =
7,372.90 x 3 yrs.) ---------- 22,188.70 Ten (10%) Percent
Attorneys Fees P 22,411.51
Non-payment of (5 days)
Service Incentive TOTAL P 246,526.61
Leave Pay (for every year
3. CRISTITO G. GRUTA
of service, but
(Dismissed in Mar. 2000)
Limited to 3 years only): =
Backwages from Mar.
1,423.35 x 3 yrs.) ---------- P 4,270.05
200[0] to May 2001
Actual Moral Exemplary & (8,274.14 x 14 mos.) ---------- P 115,840.76
Compensatory
13th Month Pay for the
Damages ---------- P 100,000.00 period ---------- 8,274.34
(260,258.23)
Non-payment of Premium Pay for Holiday; 14,091.51
Restday and A. From April 98 to Nov. 98
Non-payment of Holiday Pay: (7,045.57 x 2 (7 mos.)
yrs.) Minimum Wage 198 x
391.5 [/] 12 = P 6,459.75
Non-payment of (5 days)
Service Incentive Leave Actual Basic Wage for the
Pay period 4,320.00
(for every year of service =
Difference P 2,139.75
1,360.15 x 2 yrs.) ---------- 2,720.30
x 7 mos.
Actual, Moral, Exemplary &
Compensatory Damages ---------- P 100,000.00
P 14,978.25
(240,926.91)
Double Indemnity prescribed by Rep. Act
Ten (10%) Percent
8188, Sec. 4 P 29,956.50
Attorneys Fees ---------- P 24,092.69
B. From Dec. 98 to Mar.
TOTAL P 265,019.60
2000 (16 mos.)
4. DANILO ARGUELLES Minimum Wage 225
(Dismissed in Feb. 2000) 391.5 [/] 12 = P 7,340.62
Backwages from Mar. 2000
Actual Basic Wage for the
to May 2001 [P]110,109.3
period 6,240.00
(7,340.62 x 15 mos.) ---------- 0
Difference P 1,100.62
13th Month Pay for the
period ---------- 7,340.62 x 16 mos.
Unpaid Salary from Feb. 16
to 29, 2000 P 17,609.92
(225.00 x 14 days) ---------- 3,150.00
Double Indemnity prescribed by Rep. Act
Underpayment/Non-payment of Salary/Wages: 8188, Sec. 4 P 35,219.84
Underpayment/Non-payment of Overtime Pay: Non-payment of Premium Pay for Holiday;
A. From Apr. 98 to Nov. 98 (7 mos.) Restday and P 11,655.00
30% of Minimum Wage
Non-payment of Holiday Pay (5,872.50 x 2
(6,459.75 x yrs.)
30%) P 1,937.92 Non-payment of (5 days) Service Incentive
Leave Pay
30% of Salary Actually Paid
(for every year of service/but limited to 2
(4,320.00 x yrs. only): 2,250.00
30%) 1,872.00
= P 1,125.00 x 2 yrs.
Difference P 641.92
Actual, Moral, Exemplary & P 100,000.00
x 7 mos. Compensatory Damages

(309,457.58)
P 4,493.44 P 4,493.44
Ten (10%) Percent Attorneys Fees P 30,945.75
B. From Dec. 98 to Mar. 2000 (16 mos.)
TOTAL P 340,403.33
30% of Minimum Wage
5. RENATO BATAYOLA
(7,340.62 x
6. PATRICIO FRESNILLO
30%) 2,202.18
7. JOVY NOBLE
30% of Salary Actually Paid 8. EMILIO DOMINICO
9. BENNY NILMAO (All dismissed in Feb. 2001)
(6,240.00 x 1,872.00
30%) Backwages from Mar. 2000
to May 2001
P 330.18 (7,340.62 x 15 mos.) P 110,109.30
x 16 mos.
Difference 13th Month Pay for the
period ---------- 7,340.62
P 5,282.88 P 5,282.88
Unpaid Salary from Feb. 16 to 29, 2000 x 10 mos.
(225.00 x 14 days) 3,150.00

Underpayment/Non- P 23,615.10
payment of Salary/Wages:

A. From Apr. 97 to Jan. 98 Double Indemnity

([9] mos.) prescribed by Rep. Act
Minimum Wage 185 x 8188, Sec. 4 P 47,230.20
391.5 [/] 12 = P 6,035.62
C. From Dec. 98 to Mar.
Actual Basic Wage for the 2000 (16 mos.)
period 4,098.24 Minimum Wage 225 x
391.5 [/] 12 = 7,340.62
Difference P 1,932.58
Actual Basic Wage for the
x 9 mos.
period 6,022.00

Difference P 1,318.62
P 17,436.42
x 16 mos.

Double Indemnity prescribed by Rep. Act

8188, Sec. 4 P 34,872.84 P 21,098.00

B. From Feb. 98 to Nov. 98 Double Indemnity prescribed by Rep. Act

(10 mos.) 8188, Sec. 4 P 42,196.00
Minimum Wage 198 x
Underpayment/Non-
391.5 [/] 12 = P 6,459.75
payment of Overtime Pay:
Actual Basic Wage for the
A. From Apr. 97 to Jan. 98
period 4,098.24
(9 mos.)
Difference P 2,361.51 30% Minimum Wage
 (6,035.62 x 2000 (16 mos.)
P 1,810.68
30%) 30% Minimum Wage

30% of Salary Actually (7,340.62 x 30%)

Paid
30% of Salary Actually
(4,098.24 x Paid P 1,806.75
30%) 1,226.77
(6,022.50 x 30%)
Difference P 583.91
x 16 mos.
x 9 mos. Difference

P 5,255.19 - P 5,255.19 P 6,326.97 - P 6,326.97

B. From Feb. 98 to Nov. 98

(10 mos.) Non-Payment of Premium
Pay for Holiday & Restday;
30% Minimum Wage
and
(6,459.75 x 30%) P 1,937.92 Non-Payment of Holiday
Pay: (5,827.50 x 3 yrs.) P 17,482.50
30% of Salary Actually
Paid Non-Payment of (5 days) Service Incentive
Leave Pay
1,226.72 (for every year of service/but limited to 3
(4,098.24 x 30%) years only)
= 1,125.00 x 3 yrs.) 3,375.00
Difference P 711.15
Actual, Moral, Exemplary &
x 10 mos.
Compensatory Damages ---------- 100,000.00

(384,450.12)
P 7,111.70 - P 7,111.70
Ten (10%) Percent Attorneys Fees P 38, 445.01
C. From Dec. 98 to Mar. P 2,202.18
 Inc., Eduardo P. Franscisco and William How to pay, jointly and
severally, each complainant the amounts, as follows, to wit:

(Total for 5 above-named 2,114,475.00)

Complainants A) 1. Wilfredo Galvez P 286,284.05

10. JOSE AUSTRAL (Dismissed in Feb. 2000) 2. Joel Sales 246,526.61

Backwages from Mar. 2000 to May 2001
3. Cristito G. Gruta 265,019.60
(8,900.00 x 15 mos.) P 133.500.00
4. Danilo Arguelles 340,403.33
13th Month Pay for the
5. Renato Batayola 422,895.13
period 8,900.00
6. Patricio Fresnillo 422,895.13
Unpaid Salary from Feb. 16
to 29, 2000 7. Jovy Noble 422,895.13
(8,900.00 x 12 mos. / 365
8. Emilio Dominico 422,895.13
days = (292.60 x 14 days) 4,096.40
9. Benny Nilmao 422,895.13
Actual, [M]oral, Exemplary
& 10. Jose Austral 271,146.04
Compensatory Damages ---------- P 100,000.00
11. Nobelito Rivas 281,900.13
(246,496.40)
12. Elias Facto 259,471.41
Ten (10%) Percent Attorneys Fees P 24,679.64
13. Jeremias Bonlagua 316,683.53
TOTAL P 271, 146.04 28

14. Rannie Canon 391,816.70

The dispositive portion of the Labor Arbiters Decision reads: 15. Fernando Malia 411,355.45

WHEREFORE, premises all considered, judgment is hereby 16. Calixto Flores 411,355.45
rendered finding the dismissal of all 21 complainants herein as
17. Necito Llanzana 411,355.45
illegal and ordering respondents Grand Asian Shipping Lines,
 18. Ramie Barrido 411,355.45
19. Albert Faulan 265,982.28
20. Magno Tosalem 419,352.79
21. Rolando Dela Guardia 419,352.79
(Grand Total) P 7,104,483.84
B) The awards of 100,000.00 each, as indemnity for
damages and ten percent (10%) of the total amount, as
attorneys fees, are included in the above-individual
amount so awarded.
C) Respondents should immediately reinstate all the
complainants to their former position without loss of
seniority [sic] and other benefits; and to pay them full
backwages up to the time of their actual reinstatement.
All other claims of complainants, not included in the above
awards, are hereby ordered dismissed for lack of merit.
SO ORDERED.29
Proceedings before the National Labor Relations Commission
Petitioners filed a Notice of Appeal With A Very Urgent Motion to
Reduce Bond30 before the NLRC and posted a cash bond in the
amount of 500,000.00.
In a Supplemental Motion to Reduce Bond,31 petitioners cited
economic depression, legality of the employees termination,
compliance with labor standards, and wage increases as grounds
for the reduction of appeal bond.
The NLRC issued an Order32 dated February 20, 2002 denying
petitioners motion to reduce bond and directing them to post an
additional bond in the amount of 4,084,736.70 in cash or surety
within an unextendible period of 10 days; otherwise, their
appeal would be dismissed. Petitioners failed to comply with the
Order. Thus, on February 3, 2003, complainants moved for the
dismissal of the appeal since petitioners had thus far posted only
1.5 million supersedeas bond and 500,000.00 cash bond, short
of the amount required by the NLRC.33
In a Decision34 dated September 10, 2003, the NLRC, despite its
earlier Order denying petitioners motion for the reduction of
bond, reduced the amount of appeal bond to 1.5 million and
gave due course to petitioners appeal. It also found the appeal
meritorious and ruled that petitioners presented sufficient
evidence to show just causes for terminating complainants
employment and compliance with due process. Accordingly,
complainants dismissal was valid, with the exception of Sales.
The NLRC adjudged petitioners to have illegally dismissed Sales
as there was absence of any record that the latter received any
notice of suspension, administrative hearing, or termination.
The NLRC struck down the monetary awards given by the Labor
Arbiter, which, it ruled, were based merely on the computations
unilaterally prepared by the complainants. It also ruled that
Galvez, a ship captain, is considered a managerial employee not
entitled to premium pay for holiday and rest day, holiday pay
and service incentive leave pay. As for the other complainants,
the award for premium pay, holiday pay, rest day pay and
overtime pay had no factual basis because no proof was adduced
to show that work was performed on a given holiday or rest day
or beyond the eight hours normal work time. Even then, the
NLRC opined that these claims had already been given since
complainants salaries were paid on a 365-day basis. Likewise,
service incentive leave pay, awards for damages and double
indemnity were deleted. Further, the NLRC sustained
respondents contention that it is the Secretary of Labor or the
Regional Director who has jurisdiction to impose the penalty of
double indemnity for violations of the Minimum Wage Laws and
not the Labor Arbiter. The NLRC disposed of the case as follows:
WHEREFORE, premises considered, the assailed Decision is
hereby reversed as to all complainants but modified with respect
to Joel Sales.
Respondents are adjudged not guilty of illegal dismissal with
respect to all complainants except complainant Joel Sales. With
the exception of Joel Sales, all the monetary awards to all
complainants are deleted from the decision.1wphi1
Respondents are ordered to pay, jointly and severally
complainant Joel Sales his backwages in the amount of
124,115.10 as computed in the assailed decision plus ten (10%)
thereof as attorneys fees.
We also sustain the order to reinstate him to his former position
without loss of seniority rights and other benefits and to pay him
backwages up to the time of his actual reinstatement.
SO ORDERED.35
Complainants filed Motions for Reconsideration while
petitioners filed a Motion for Partial Reconsideration. In a
Resolution36 dated January 14, 2004, the NLRC reconsidered its
ruling with respect to Sales, absolving petitioners from the
charge of illegally dismissing him as Sales was neither placed
under preventive suspension nor terminated from the service.
The NLRC upheld petitioners claim that it was Sales who
abandoned his work by failing to report back for re-assignment.
The dispositive portion of the Resolution reads:
WHEREFORE, premises considered, the Motions for
Reconsideration filed by complainants are denied for lack of
merit. The Motion for Partial Reconsideration filed by
respondents is granted. The assailed decision is reconsidered in
that Respondents are likewise adjudged not guilty of illegal
dismissal with respect to complainant Joel Sales. The monetary
awards in favor of complainant Joel Sales as well as the
reinstatement order are hereby deleted from the Decision.
SO ORDERED.37
Proceedings before the Court of Appeals
Respondents, excluding the other complainants, filed a Petition
for Certiorari38 with the CA, attributing grave abuse of discretion
on the part of the NLRC in entertaining the appeal despite the
insufficiency of petitioners appeal bond. Respondents also
assailed the NLRCs ruling upholding the validity of their
dismissal. They posited that the charge of pilferage is not
supported by clear, convincing and concrete evidence. In fact, the
RTC, Branch 15 of Manila already rendered a Decision39 on
December 19, 2003 acquitting them of the crime of qualified
theft lodged by the petitioners. Respondents further prayed for
the reinstatement of the Labor Arbiters monetary awards in
their favor.
In a Decision40 dated September 12, 2006, the CA set aside the
NLRCs Decision and Resolution. It held that the NLRCs act of
entertaining the appeal is a jurisdictional error since petitioners
failure to post additional bond rendered the Labor Arbiters
Decision final, executory and immutable. The CA, nonetheless,
proceeded to discuss the merits of the case insofar as the illegal
dismissal charge is concerned. The CA conformed with the Labor
Arbiters ruling that petitioners evidence was inadequate to
support the charge of pilferage and justify respondents
termination. The CA ruled that Sales was also illegally dismissed,
stating that Sales active participation in the labor case against
petitioners belies the theory that he was not terminated from
employment. The dispositive portion of the CA Decision reads:
WHEREFORE, the petition is GRANTED and the assailed
September 10, 2003 Decision and January 14, 2003 Resolution
are, accordingly, ANNULLED and SET ASIDE. In lieu thereof, the
Labor Arbiters August 30, 2001 Decision is ordered
REINSTATED.
SO ORDERED.41
Petitioners filed a Motion for Reconsideration,42 questioning the
CA in finding that respondents were illegally dismissed, in
reinstating the monetary awards granted by the Labor Arbiter
without passing upon the merits of these money claims and in
ascribing grave abuse of discretion on the part of the NLRC in
taking cognizance of the appeal before it.
On May 23, 2007, the CA issued a Resolution43 denying
petitioners Motion for Reconsideration. Hence, the instant
Petition.
Issues
Petitioners assign the following errors:
I.
THE HONORABLE COURT OF APPEALS RULED CONTRARY TO
APPLICABLE JURISPRUDENCE WHEN IT CONCLUDED THAT
RESPONDENTS WERE ILLEGALLY DISMISSED.
A. THIS HONORABLE COURT OF APPEAL[S] OF APPEALS
[sic] DISREGARDED THE FACT THAT THE OFFICE OF
THE CITY PROSECUTOR OF MANILA DETERMINED
THAT THERE WAS A PRIMA FACIE CASE FOR QUALIFIED
THEFT AGAINST PETITIONERS, CONTRARY TO
DECISIONS THIS MOST HONORABLE COURT OF
APPEAL[S] HAS HELD WHERE SIMILAR FINDINGS OF
THE INVESTIGATING PUBLIC PROSECUTOR HAD BEEN
CONSIDERED SUBSTANTIAL EVIDENCE TO JUSTIFY
TERMINATION OF EMPLOYMENT BASED ON LOSS OF
TRUST AND CONFIDENCE.
 B. THIS HONORABLE COURT OF APPEAL[S] GRIEVOUSLY
ERRED IN DISCREDITING PRIVATE RESPONDENTS
EVIDENCE ONE BY ONE WHEN, TAKEN TOGETHER,
SUCH EVIDENCE PROVIDED ADEQUATE BASIS FOR THE
DISMISSAL OF PETITIONERS IN ACCORDANCE WITH
RELEVANT SUPREME COURT OF APPEAL [sic]
DECISIONS.
C. IN SUM, PETITIONERS WERE NOT ILLEGALLY
DISMISSED SINCE THE SUBSTANTIVE AND
PROCEDURAL REQUIREMENTS FOR THE TERMINATION
OF THEIR EMPLOYMENT WERE SATISFIED IN THIS
CASE.
D. THIS HONORABLE COURT OF APPEAL[S] GRIEVOUSLY
ERRED IN RULING THAT PETITIONER JOEL SALES WAS
ILLEGALLY DISMISSED.
II.
THE HONORABLE COURT OF APPEALS RULED CONTRARY TO
APPLICABLE JURISPRUDENCE WHEN IT CONCLUDED THAT
PETITIONERS WERE NOT ABLE TO VALIDLY PERFECT [THEIR]
APPEAL OF THE LABOR ARBITERS DECISION.44
Petitioners claim that the NLRC properly took cognizance of their
appeal and properly granted their motion for reduction of the
appeal bond, explaining that strict implementation of the rules
may be relaxed in certain cases so as to avoid a miscarriage of
justice. Petitioners also claim that there was adequate basis to
render respondents dismissal from service valid, as correctly
ruled by the NLRC.
Our Ruling
The assailed CA Decision must be vacated and set aside.
There was substantial compliance with
the rules on appeal bonds.
In order to perfect an appeal from the Decision of the Labor
Arbiter granting monetary award, the Labor Code requires the
posting of a bond, either in cash or surety bond, in an amount
equivalent to the monetary award. Article 223 of the Labor Code
provides:
ART. 223. Appeal. Decisions, awards, or orders of the Labor
Arbiter are final and executory unless appealed to the
Commission by any or both parties within ten (10) calendar days
from receipt of such decisions, awards, or orders. x x x
xxxx
In case of a judgment involving a monetary award, an appeal by
the employer [may] be perfected only upon the posting of a cash
or surety bond issued by a reputable bonding company duly
accredited by the Commission in the amount equivalent to the
monetary award in the judgment appealed from.
Nonetheless, we have consistently held that rules should not be
applied in a very rigid and strict sense.45 This is especially true in
labor cases wherein the substantial merits of the case must grounds relied upon.51 Hence, the NLRC did not err or commit
accordingly be decided upon to serve the interest of grave abuse of discretion in taking cognizance of petitioners
justice.46 When there has been substantial compliance, relaxation appeal before it.
of the Rules is warranted.47
Galvez and Gruta were validly dismissed
In Mendoza v. HMS Credit Corporation,48 we held that the on the ground of loss of trust and
posting of an appeal bond in the amount of 650,000.00 instead confidence; there were no valid grounds
of 1,025,081.82 award stated in the Decision of the Labor for the dismissal of Arguelles, Batayola,
Arbiter is substantial compliance with the requirement under Fresnillo, Noble, Dominico, Nilmao and
Article 223. Likewise, in Pasig Cylinder Mfg. Corp. v. Rollo,49 we Austral.
ruled that the filing of a reduced appeal bond of 100,000.00 is
not fatal in an appeal from the labor arbiters ruling awarding We do not, however, agree with the findings of the NLRC that all
3,132,335.57 to the dismissed employees. In Rosewood respondents were dismissed for just causes. In termination
Processing, Inc. v. National Labor Relations Commission,50 we disputes, the burden of proving that the dismissal is for a just or
allowed the filing of a reduced bond of 50,000.00, accompanied valid cause rests on the employers. Failure on their part to
with a motion, in an appeal from the Labor Arbiters award of discharge such burden will render the dismissal illegal.52
789,154.39.
As specified in the termination notice, respondents were
In the case at bench, petitioners appealed from the Decision of dismissed on the grounds of (i) serious misconduct, particularly
the Labor Arbiter awarding to crewmembers the amount of in engaging in pilferage while navigating at sea, (ii) willful breach
7,104,483.84 by filing a Notice of Appeal with a Very Urgent of the trust reposed by the company, and (iii) commission of a
Motion to Reduce Bond and posting a cash bond in the amount of crime or offense against their employer. Petitioners claim that
500,000.00 and a supersedeas bond in the amount of 1.5 based on the sworn statement of Abis, joint affidavit of Bernabe
million. We find this to be in substantial compliance with Article and De la Rama, letter of petitioner Francisco requesting
223 of the Labor Code. It is true that the NLRC initially denied the assistance from the CIDG, formal complaint sheet, complaint and
request for reduction of the appeal bond. However, it eventually supplementary complaint affidavit of Montegrico, CIDGs letter
allowed its reduction and entertained petitioners appeal. We referring respondents case to the Office of the City Prosecutor of
disagree with the CA in holding that the NLRC acted with grave Manila, resolution of the City Prosecutor finding a prima facie
abuse of discretion as the granting of a motion to reduce appeal case of qualified theft, and the Information for qualified theft,
bond lies within the sound discretion of the NLRC upon showing there is a reasonable ground to believe that respondents were
of the reasonableness of the bond tendered and the merits of the responsible for the pilferage of diesel fuel oil at M/T Dorothy
Uno, which renders them unworthy of the trust and confidence
reposed on them.
After examination of the evidence presented, however, we find
that petitioners failed to substantiate adequately the charges of
pilferage against respondents. "[T]he quantum of proof which
the employer must discharge is substantial evidence. x x x
Substantial evidence is that amount of relevant evidence as a
reasonable mind might accept as adequate to support a
conclusion, even if other minds, equally reasonable, might
conceivably opine otherwise."53
Here, the mere filing of a formal charge, to our mind, does not
automatically make the dismissal valid. Evidence submitted to
support the charge should be evaluated to see if the degree of
proof is met to justify respondents termination. The affidavit
executed by Montegrico simply contained the accusations of Abis
that respondents committed pilferage, which allegations remain
uncorroborated. "Unsubstantiated suspicions, accusations, and
conclusions of employers do not provide for legal justification for
dismissing employees."54 The other bits of evidence were also
inadequate to support the charge of pilferage. The findings made
by GASLIs port captain and internal auditor and the resulting
certification executed by De la Rama merely showed an
overstatement of fuel consumption as revealed in the Engineers
Voyage Reports. The report of Jade Sea Land Inspection Services
only declares the actual usage and amount of fuel consumed for a
particular voyage. There are no other sufficient evidence to show
that respondents participated in the commission of a serious
misconduct or an offense against their employer.
As for the second ground for respondents termination, which is
loss of trust and confidence, distinction should be made between
managerial and rank and file employees. "[W]ith respect to rank-
and-file personnel, loss of trust and confidence, as ground for
valid dismissal, requires proof of involvement in the alleged
events x x x [while for] managerial employees, the mere
existence of a basis for believing that such employee has
breached the trust of his employer would suffice for his
dismissal."55
In the case before us, Galvez, as the ship captain, is considered a
managerial employee since his duties involve the governance,
care and management of the vessel.56 Gruta, as chief engineer, is
also a managerial employee for he is tasked to take complete
charge of the technical operations of the vessel.57 As captain and
as chief engineer, Galvez and Gruta perform functions vested
with authority to execute management policies and thereby hold
positions of responsibility over the activities in the vessel.
Indeed, their position requires the full trust and confidence of
their employer for they are entrusted with the custody, handling
and care of company property and exercise authority over it.
Thus, we find that there is some basis for the loss of confidence
reposed on Galvez and Gruta. The certification issued by De la
Rama stated that there is an overstatement of fuel consumption.
Notably, while respondents made self-serving allegations that
the computation made therein is erroneous, they never
questioned the competence of De la Rama to make such
certification. Neither did they question the authenticity and
validity of the certification. Thus, the fact that there was an
overstatement of fuel consumption and that there was loss of a
considerable amount of diesel fuel oil remained unrefuted. Their notice. From the records, it appears Sales was not among those
failure to account for this loss of company property betrays the preventively suspended on February 26, 2000. To bolster this
trust reposed and expected of them. They had violated fact, petitioners presented the Payroll Journal Register for the
petitioners trust and for which their dismissal is justified on the period March 1-15, 200060 showing that Sales was still included
ground of breach of confidence. in the payroll and was not among those who were charged with
an offense to warrant suspension. In fact, Sales signature in the
As for Arguelles, Batayola, Fresnillo, Noble, Dominico, Nilmao Semi-Monthly Attendance Report for February 26, 2000 to
and Austral, proof of involvement in the loss of the vessels fuel March 10, 200061 proves that he continued to work as Chief Mate
as well as their participation in the alleged theft is required for for the vessel M/T Dorothy Uno along with a new set of
they are ordinary rank and file employees. And as discussed crewmembers. It is likewise worth noting that in the
above, no substantial evidence exists in the records that would Supplemental Complaint Affidavit of Montegrico, Sales was not
establish their participation in the offense charged. This renders included in the list of those employees who were accused of
their dismissal illegal, thus, entitling them to reinstatement plus having knowledge of the alleged pilferage. This only shows that
full backwages, inclusive of allowances and other benefits, he was never subjected to any accusation or investigation as a
computed from the time of their dismissal up to the time of prelude to termination. Hence, it would be pointless to
actual reinstatement. determine the legality or illegality of his dismissal because, in the
first place, he was not dismissed from employment.
No evidence of Sales dismissal from employment.
Respondents are not entitled to their
The rule that the employer bears the burden of proof in illegal money claims except 13th month pay for
dismissal cases finds no application when the employer denies the period of their illegal dismissal,
having dismissed the employee.58 The employee must first unpaid salaries, salary differentials,
establish by substantial evidence the fact of dismissal59 before double indemnity for violation of the
shifting to the employer the burden of proving the validity of Minimum Wage Law and attorneys fees.
such dismissal.
As for the money claims of respondents, we note that petitioners
We give credence to petitioners claim that Sales was not did not bring this issue before us or assign it as error in this
dismissed from employment. Unlike the other respondents, we Petition. It was raised by the petitioners only in their
find no evidence in the records to show that Sales was Memorandum of Appeal filed with the NLRC and in their Motion
preventively suspended, that he was summoned and subjected to for Reconsideration of the CAs Decision reinstating the Labor
any administrative hearing and that he was given termination Arbiters award. Nonetheless, in order to arrive at a complete
adjudication of the case and avoid piecemeal dispensation of
justice, we deem it necessary to resolve the validity of
respondents money claims and to discuss the propriety of the
Labor Arbiters award.
Galvez and Gruta, as managerial employees, are not entitled to
their claims for holiday pay, service incentive leave pay and
premium pay for holiday and restday. Article 82 of the Labor
Code specifically excludes managerial employees from the
coverage of the law regarding conditions of employment which
include hours of work, weekly rest periods, holidays, service
incentive leaves and service charges.62
As for Arguelles, Batayola, Fresnillo, Noble, Dominico, Nilmao
and Austral, we cannot sustain the argument that they are
classified as field personnel under Article 82 of the Labor Code
who are likewise excluded. Article 82 defines field personnel as
referring to "non-agricultural employees who regularly perform
their duties away from the principal place of business or branch
office of the employer and whose actual hours of work in the
field cannot be determined with reasonable certainty." They are
those who perform functions which "cannot be effectively
monitored by the employer or his representative."63 Here,
respondents, during the entire course of their voyage, remain on
board the vessel. They are not field personnel inasmuch as they
were constantly supervised and under the effective control of the
petitioners through the vessels ship captain.
Nevertheless, we cannot grant them their claims for holiday pay,
premium pay for holiday and restday, overtime pay and service
incentive leave pay. Respondents do not dispute petitioners
assertion that in computing respondents salaries, petitioners
use 365 days as divisor. In fact, this was the same divisor
respondents used in computing their money claims against
petitioners. Hence, they are paid all the days of the month, which
already include the benefits they claim.64 As for overtime pay and
premium pay for holidays and restdays, no evidence was
presented to prove that they rendered work in excess of the
regular eight working hours a day or worked during holidays
and restdays. In the absence of such proof, there could be no
basis to award these benefits.65
For the claim of service incentive leave pay, respondents did not
specify what year they were not paid such benefit. In addition,
records show that they were paid their vacation leave
benefits.66 Thus, in accordance with Article 95 of the Labor
Code,67 respondents can no longer claim service incentive leave
pay.
On the other hand, for failure to effectively refute the awards for
13th month pay for the period that respondents were illegally
dismissed, unpaid salaries and salary differentials,68 we affirm
the grant thereof as computed by the Labor Arbiter. Petitioners
evidence which consist of a mere tabulation69 of the amount of
actual benefits paid and given to respondents is self-serving as it
does not bear the signatures of the employees to prove that they
had actually received the amounts stated therein.
Next, we come to the legitimacy of the Labor Arbiters authority
to impose the penalty of double indemnity for violations of the
Minimum Wage Law. Petitioners argue that the authority to issue
compliance orders in relation to underpayment of wages is
vested exclusively on the Secretary of Labor or the Regional
Director and that the Labor Arbiter has no jurisdiction thereover.
They cite Section 12 of RA 6727,70 as amended by RA 8188,
which provides:
Sec. 12. Any person, corporation, trust, firm, partnership,
association or entity which refuses or fails to pay any of the
prescribed increases or adjustments in the wage rates made in
accordance with this Act shall be punished by a fine [of] not less
than Twenty-five thousand pesos (25,000) nor more than One
hundred thousand pesos (100,000) or imprisonment of not less
than two (2) years nor more than four (4) years or both such fine
and imprisonment at the discretion of the court: Provided, That
any person convicted under this Act shall not be entitled to the
benefits provided for under the Probation Law.
The employer concerned shall be ordered to pay an amount
equivalent to double the unpaid benefits owing to the
employees: Provided, That payment of indemnity shall not
absolve the employer from the criminal liability under this Act.
If the violation is committed by a corporation, trust or firm,
partnership, association or any other entity, the penalty of
imprisonment shall be imposed upon the entitys responsible
officers including but not limited to, the president, vice
president, chief executive officer, general manager, managing
director or partner.
Petitioners contention is untenable. First, there is no provision
in RA 6727 or RA 8188 which precludes the Labor Arbiter from
imposing the penalty of double indemnity against employers.
Second, Article 217 of the Labor Code gives the Labor Arbiter
jurisdiction over cases of termination disputes and those cases
accompanied with a claim for reinstatement. Thus, in Bay Haven,
Inc. v. Abuan71 the Court held that an allegation of illegal
dismissal deprives the
Secretary of Labor of jurisdiction over claims to enforce
compliance with labor standards law.1wphi1 This was also
pronounced in Peoples Broadcasting Service (Bombo Radyo
Phils., Inc.) v. Secretary of the Department of Labor and
Employment,72 wherein we stated that the Secretary of Labor has
no jurisdiction in cases where employer-employee relationship
has been terminated. We thus sustain the Labor Arbiters award
of double indemnity.
We also sustain the award of attorneys fees since respondents
were compelled to file a complaint for the recovery of wages and
were forced to litigate and incur expenses.73
The Labor Arbiters grant of actual/compensatory, moral and
exemplary damages in the amount of 100,000.00 is, however,
incorrect. In order to recover actual or compensatory damages, it
must be capable of proof and must be necessarily proved with a
reasonable degree of certainty.74 While moral damages is given
to a dismissed employee when the dismissal is attended by bad
faith or fraud or constitutes an act oppressive to labor, or is done
in a manner contrary to good morals, good customs or public
policy. Exemplary damages, on the other hand, is given if the
dismissal is effected in a wanton, oppressive or malevolent
manner.75 Here, the Labor Arbiter erred in awarding the
damages by lumping actual, moral and exemplary damages. Said
damages rest on different jural foundations and, hence, must be
independently identified and justified.76 Also, there are no
competent evidence of actual expenses incurred that would
justify the award of actual damages. Lastly, respondents were
terminated after being accused of the charge of pilferage of the
vessels fuel oil after examination of the report made by the
vessels chief engineer which showed a considerable amount of
fuel lost. Although the dismissal of Arguelles, Batayola, Fresnillo,
Noble, Dominico, Nilmao and Austral is illegal, based on the
circumstances surrounding their dismissal, petitioners could not
have been motivated by bad faith in deciding to terminate their
services.
Lastly, this Court exculpates petitioners Francisco and How from
being jointly and severally liable with GASLI for the illegal
dismissal and payment of money claims of herein respondents.
In order to hold them liable, it must first be shown by competent
proof that they have acted with malice and bad faith in directing
the corporate affairs.77 For want of such proof, Francisco and
How should not be held liable for the corporate obligations of
GASLI.
WHEREFORE, the Court of Appeals Decision dated September
12, 2006 and the Resolution dated May 23, 2007 in CA-G.R. SP
No. 82379 are ANNULLED and SET ASIDE. Respondents Wilfredo
Galvez and Cristito Gruta are hereby DECLARED dismissed from
employment for just cause while respondent Joel Sales was not
dismissed from employment. Respondents Danilo
Arguelles, Renato Batayola, Patricio Fresmillo, Jovy Noble, Emilio
Dominico, Benny Nilmao, and Jose Austral are DECLARED to
have been illegally dismissed; hence, petitioners are ordered to
reinstate them to their former position or its equivalent without
loss of seniority rights and to pay them full backwages, inclusive
of allowances and other benefits, computed from the time of
dismissal up to the time of actual reinstatement, as well as 13th
month pay for the period of their illegal dismissal.
Petitioner Grand Asian Shipping Lines, Inc. is also ordered to pay
respondents Wilfredo Galvez, Danilo Arguelles, Renato Batayola,
Patricio Fresnillo, Jovy Noble, Emilio Dominico, Benny Nilmao
and Jose Austral unpaid salaries from February 16 to 29, 2000,
as computed by the Labor Arbiter; and to pay respondents
Danilo Arguelles, Renato Batayola, Patricio Fresmillo, Jovy Noble,
Emilio Dominico and Benny Nilmao salary differentials plus
double indemnity, as computed by the Labor Arbiter. Ten
percent (10%) of the monetary award should be added as and by
way of attorneys fees. Interest at the rate of six percent (6%) per
annum shall be imposed on all monetary awards from date of
finality of this Decision until full payment pursuant to Nacar v.
Gallery Frames.78
Petitioners Eduardo P. Francisco and William How are absolved
from the liability adjudged against petitioner Grand Asian
Shipping Lines, Inc.
SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 200575 February 5, 2014
INTEL TECHNOLOGY PHILIPPINES, INC., Petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION AND JEREMIAS
CABILES, Respondents.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari under Rule 45 of the
Rules of Court filed by petitioner Intel Technology Philippines,
Inc. (Intel Phil.). It assails the October 28, 20111 and February 3,
20122 Resolutions of the Court of Appeals (CA) in CA-G.R. SP
No.118880, which dismissed the petition for certiorari filed by
Intel Phil. thereby affirming the September 2, 2010 Decision3 of
the National Labor Relations Commission (NLRC) and its
February 9, 2011 Resolution. The NLRC decision modified the
March 18, 2010 Decision4 of the Labor Arbiter (LA), and held
Intel Phil. solely liable for the retirement benefits of respondent
Jeremias Cabiles (Cabiles).
The Facts
This case concerns the eligibility of Cabiles to receive retirement
benefits from Intel Phil. granted to employees who had complied
with the ten (10)-year service period requirement of the
company.
Cabiles was initially hired by Intel Phil. on April 16, 1997 as an
Inventory Analyst. He was subsequently promoted several times
over the years and was also assigned at Intel Arizona and Intel
Chengdu. He later applied for a position at Intel Semiconductor
Limited Hong Kong (Intel HK).
In a letter,5 dated December 12, 2006, Cabiles was offered the
position of Finance Manager by Intel HK. Before accepting the
offer, he inquired from Intel Phil., through an email, the
consequences of accepting the newly presented opportunity in
Hong Kong, to wit:
Are there any clearance requirements I need to fulfil as I move as
a local hire to Hong Kong starting February 1?? I am still on my
expat assignment in Chengdu till it ends January 31. Then
immediately I become a HK local employee so I dont technically
repatriate and work back to my home site Philippines at all.
Nevertheless, I still need to close I think my employment there
and so that all my ES benefits and clearance will be closed like
conversion of my vacation leaves to cash, carry over of my
service tenure in CV to HK etc. Please do let me know what
process I need to go through or would an email notification be
enough?
Another issue I would like to clarify is with regard to my
retirement benefits. I will celebrate my 10th year of service with
Intel on April 16, 2007. However, because I will be moving to
Hong Kong as a local hire starting February 1, would I still be
entitled to retirement benefits?? Do we roundup the years of
service if its close enough to 10 years?? If not, what other
alternatives I have or do I just lose my years of service at Intel
Philippines? Any possibility that I keep my 9.5 years and start
from there when I work in the Philippines again in the future??6
On January 23, 2007, Intel Phil., through Penny Gabronino
(Gabronino), replied as follows:
Jerry you are not eligible to receive your retirement benefit
given that you have not reached 10 years of service at the time
you moved to Hong Kong. We do not round up the years of
service.
There will [be] no gap in your years of service. So in case that
you move back to the Philippines your total tenure of service will
be computed less on the period that you are out of Intel
Philippines.7 [Emphasis supplied]
On January 31, 2007, Cabiles signed the job offer.8
On March 8, 2007, Intel Phil. issued Cabiles his "Intel Final Pay
Separation Voucher" indicating a net payout of 165,857.62. On
March 26, 2007, Cabiles executed a Release, Waiver and
Quitclaim (Waiver)9 in favor of Intel Phil. acknowledging receipt
of 165,857.62 as full and complete settlement of all benefits due
him by reason of his separation from Intel Phil.
On September 8, 2007, after seven (7) months of employment,
Cabiles resigned from Intel HK.
About two years thereafter, or on August 18, 2009, Cabiles filed a
complaint for non-payment of retirement benefits and for moral
and exemplary damages with the NLRC Regional Arbitration
Branch-IV. He insisted that he was employed by Intel for 10
years and 5 months from April 1997 to September 2007 a
period which included his seven (7) month stint with Intel HK.
Thus, he believed he was qualified to avail of the benefits under
the companys retirement policy allowing an employee who
served for 10 years or more to receive retirement benefits.
The Labor Arbiters Decision
On March 18, 2010, the LA ordered Intel Phil. together with
Grace Ong, Nida delos Santos, Gabronino, and Pia Viloria, to pay
Cabiles the amount of HKD 419,868.77 or its peso equivalent as
retirement pay with legal interest and attorneys fees. The LA
held that Cabiles did not sever his employment with Intel Phil.
when he moved to Intel HK, similar to the instances when he was
assigned at Intel Arizona and Intel Chengdu. Despite the
clarification made by Intel Phil. regarding his ineligibility to
receive retirement benefits, the LA stated that Cabiles could not
be faulted if he was made to believe his non-entitlement to
retirement benefits. Thus, it should not prevent him from
asserting his right to receive them. Finally, the Waiver executed
by Cabiles when he left Intel Phil., was treated by the LA as no
bar for claiming his retirement pay because it merely covered
the last salary and commutation of sick leaves and vacation
leaves to the exclusion of retirement benefits. The dispositive
portion of the LA decision reads:
WHEREFORE, premises considered, Respondents are hereby
ordered to pay complainant the amount of Four Hundred
Nineteen Thousand Eight Hundred Sixty-Eight and 77/100 Hong
Kong Dollars (HKD419,868.77) or its Peso equivalent as
retirement pay with legal interest until satisfied, and to pay
attorneys fees equivalent to ten percent (10%) of the judgment
award.
SO ORDERED.10
The NLRC Ruling
On appeal, the NLRC affirmed with modification the LA decision.
In its September 2, 2010 Decision, the NLRC held Intel Phil.
solely liable to pay Cabiles his retirement benefits. It determined
that his decision to move to Intel HK was not definitive proof of
permanent severance of his ties with Intel Phil. It treated his
transfer to Hong Kong as akin to his overseas assignments in
Arizona and Chengdu. As to the email exchange between Cabiles
and Intel Phil., the NLRC considered the same as insufficient to
diminish his right over retirement benefits under the law.
Meanwhile, the NLRC disregarded the Waiver because at the
time it was signed, the retirement pay due him had not yet
accrued. Hence:
WHEREFORE, the appealed Decision is MODIFIED. Respondent-
appellant Intel Technology Phil., Inc. is ordered to pay
complainant-appellee Jeremias Cabiles the sum [xx] of Four
Hundred Nineteen Thousand Eight Hundred Sixty Eight and
77/100 Hong Kong Dollars (HKD419,868.77) or its equivalent in
Philippine peso as retirement pay together with legal interest
thereon and attorneys fees computed at ten percent (10%) of
the award.
The individual respondents-appellants Grace Ong, Nida delos
Santos, Penny Gabronino and Pia Viloria are RELIEVED from any
personal liability resulting from the foregoing.
SO ORDERED.11
Intel Phil. moved for reconsideration but its motion was denied
in the NLRC Resolution,12 dated February 9, 2011.
The CA Decision
Aggrieved, Intel Phil. elevated the case to the CA via a petition for
certiorari with application for a Temporary Restraining Order
(TRO) on April 5, 2011. The application for TRO was denied in a
Resolution, dated July 5, 2011. A motion for reconsideration,
dated July 27, 2011, was filed, but it was denied in a Resolution,
dated October 28, 2011, which also dismissed the petition for
certiorari.13
On December 1, 2011, Intel Phil. filed a motion for
reconsideration.
Earlier, on September 19, 2011, pending disposition of the
petition before the CA, the NLRC issued a writ of
execution14 against Intel Phil.:
NOW, THEREFORE, you are commanded to proceed to the
premises of respondent INTEL TECHNOLOGY PHILIPPINES,
INCORPORATED located at Gateway Business Park, Javalera,
General Trias, Cavite or anywhere in the Philippines where it
could be located to collect the amount of Three Million Two
Hundred One Thousand Three Hundred Ninety Eight Pesos and
Sixty Centavos (3,201,398.60) and turn over the same to this
Office for appropriate disposition.
You are likewise directed to collect from the respondents the
amount of Thirty One Thousand Five Hundred Ten Pesos
(31,510.00) representing the execution fees pursuant to the
provisions of the NLRC Manual of Execution of Judgment.
In case you fail to collect the said amount in cash, you are
directed to cause the satisfaction of the same out of the
respondents chattels or movable goods or in the absence
thereof, out of the immovable properties not exempt from
execution and return this Writ of Execution to the undersigned
not more than five (5) years from receipt hereof together with
the report not later than thirty (30) days from receipt and every
thirty (30) days thereafter pursuant to Section 12, Rule XI of the
2001 NLRC Rules of Procedures.15
As ordered by the NLRC, Intel Phil. satisfied the judgment on
December 13, 2011 by paying the amount of 3,201,398.60
which included the applicable withholding taxes due and paid to
the Bureau of InternalRevenue. Cabiles received a net amount of
2,485,337.35, covered by the Bank of the Philippine Islands
Managers Check No. 0000000806.16
By reason thereof, Intel Phil. filed on December 21, 2011 a
Supplement to the Petition for Certiorari17 praying, in addition to
the reliefs sought in the main, that the CA order the restitution of
all the amounts paid by them pursuant to the NLRCs writ of
execution, dated September 19, 2011.
In its February 3, 2012 Resolution,18 the CA noted without action
the supplement to the petition for certiorari of Intel Phil. and
denied the December 21, 2011 motion for reconsideration.
Hence, this petition.
ISSUES
I
The Court of Appeals committed serious error in dismissing the
Petition for Certiorari without expressing clearly and distinctly
the facts and the law on which its decision was based.
II
The Court of appeals committed serious and reversible error in
not finding that respondent NLRC gravely abused its discretion
when it ruled that private respondent was entitled to retire
under Intel Philippines retirement plan.
III
The Court of Appeals committed serious and reversible error in
not finding that respondent NLRC gravely abused its discretion
in annulling private respondents quitclaim.
IV
The Court of Appeals committed serious and reversible error in
not finding that Cabiles has the legal obligation to return all the
amounts paid by Intel pursuant to the writ of execution.19
Intel Phil. insists as serious error the CAs affirmation of the
NLRC decision holding it liable for the retirement benefits
claimed by Cabiles. It contends that he is disqualified to receive
the benefits for his failure to complete the required minimum ten
(10) years of service as he resigned to assume new
responsibilities with Intel HK effective February 1, 2007.
Respondents Position
In hisComment,20 Cabiles submits (1) that the petition presents
questions of fact which cannot be reviewed via Rule 45; and (2)
that the CA did not err when it affirmed the NLRC ruling:
(a) for his entitlement to retirement pay as he was under
the employ of Intel Phil. for more than ten (10) years in
accordance with the prevailing retirement policy;
(b) for the nullity of the quitclaim as he was misled to
believe that he was disqualified to receive retirement
benefits; and
(c) for his right to receive legal interest, damages and
attorneys fees.
Cabiles views his employment with Intel HK as a continuation of
his service with Intel Phil. alleging that it was but an assignment
by his principal employer, similar to his assignments to Intel
Arizona and Intel Chengdu. Having rendered 9.5 years of service
with Intel Phil. and an additional seven months with Intel HK, he
claims that he had completed the required 10 year continuous
service21 with Intel Phil., thus, qualifying him for retirement
benefits.
In its Reply, Intel Phil. reiterates the arguments contained in its
petition.
The Courts Ruling
Review of Factual Findings
As a general rule, this Court is not a trier of facts and a petition
for review on certiorari under Rule 45 of the Rules of Court must
exclusively raise questions of law.22 Nevertheless, this Court will
not hesitate to deviate from what are clearly procedural
guidelines and disturb and strike down the findings of the CA
and those of the labor tribunals if there is a showing that they are
unsupported by the evidence on record or there was a patent
misappreciation of facts. Indeed, that the impugned decision of
the CA is consistent with the findings of the labor tribunals does
not per se conclusively demonstrate its correctness. By way of
exception to the general rule, this Court will scrutinize the facts if
only to rectify the prejudice and injustice resulting from an
incorrect assessment of the evidence presented.23
It is in this wise that the Court agrees with Intel Phil. that the CA
seriously erred in affirming the findings of the NLRC on the face
of substantial evidence showing Cabiles disqualification to
receive the retirement benefits. The Court, therefore, reverses
the ruling of the CA for the reasons hereinafter discussed.
Cabiles Resigned from Intel Philippines
Cabiles calls the attention of the Court to the lack of evidence
proving his resignation. On the contrary, he states that no
severance of relationship was made upon his transfer to Intel
HK.
The Court is not convinced.
Resignation is the formal relinquishment of an office,24 the overt
act of which is coupled with an intent to renounce. This intent
could be inferred from the acts of the employee before and after
the alleged resignation.25
In this case, Cabiles, while still on a temporary assignment in
Intel Chengdu, was offered by Intel HK the job of a Finance
Manager.
In contemplating whether to accept the offer, Cabiles wrote Intel
Phil. providing details and asking as follows:
Are there any clearance requirements I need to fulfil as I move as
a local hire to Hong Kong starting February 1?? I am still on my
expat assignment in Chengdu till it ends January 31. Then
immediately I become a HK local employee so I dont technically
repatriate and work back to my home site Philippines at all.
Nevertheless, I still need to close I think my employment there
and so that all my ES benefits and clearance will be closed like
conversion of my vacation leaves to cash, carry over of my
service tenure in CV to HK etc. Please do let me know what
process I need to go through or would an email notification be
enough?
Another issue I would like to clarify is with regard to my
retirement benefits. Will celebrate my 10th year of service with
Intel on April 16, 2007. However, because I will be moving to
Hong Kong as a local hire starting February 1, would I still be
entitled to retirement benefits?? Do we roundup the years of
service if its close enough to 10 years?? If not, what other
alternatives I have or do I just lose my years of service at Intel
Philippines? Any possibility that I keep my 9.5 years and start it
from there when I work in the Philippines again in the
future??26 [Emphases supplied]
This communication manifested two of his main concerns: a)
clearance procedures; and b) the probability of getting his
retirement pay despite the non-completion of the required 10
years of employment service. Beyond these concerns, however,
was his acceptance of the fact that he would be ending his
relationship with Intel Phil. as his employer. The words he used -
local hire, close, clearance denote nothing but his firm resolve
to voluntarily disassociate himself from Intel Phil. and take on
new responsibilities with Intel HK.
Despite a non-favorable reply as to his retirement concerns,
Cabiles still accepted the offer of Intel HK.
His acceptance of the offer meant letting go of the retirement
benefits he now claims as he was informed through email
correspondence that his 9.5 years of service with Intel Phil.
would not be rounded off in his favor. He, thus, placed himself in
this position, as he chose to be employed in a company that
would pay him more than what he could earn in Chengdu or in
the Philippines.
The choice of staying with Intel Phil. vis--vis a very attractive
opportunity with Intel HK put him in a dilemma. If he would wait
to complete ten (10) years of service with Intel Phil. (in about 4
months) he would enjoy the fruits of his retirement but at the
same time it would mean forfeiture of Intel HKs compensation
offer in the amount of HK $ 942,500.00, an amount a lot bigger
than what he would receive under the plan. He decided to forfeit
and became Intel HKs newest hire.
All these are indicative of the clearest intent of Cabiles to sever
ties with Intel Phil. He chose to forego his tenure with Intel Phil.,
with all its associated benefits, in favor of a more lucrative job for
him and his family with Intel HK.
The position of Cabiles that he was being merely assigned leads
the Court to its next point.
No Secondment Contract Exists
Cabiles views his employment in Hong Kong as an assignment or
an extension of his employment with Intel Phil. He cited as
evidence the offer made to him as well as the letter, dated
January 8, 2007,27 both of which used the word "assignment" in
reference to his engagement in Hong Kong as a clear indication
of the alleged continuation of his ties with Intel Phil.
The foregoing arguments of Cabiles, in essence, speak of the
"theory of secondment."
The Court, however, is again not convinced.
The continuity, existence or termination of an employer-
employee relationship in a typical secondment contract or any
employment contract for that matter is measured by the
following yardsticks:
1. the selection and engagement of the employee;
2. the payment of wages;
3. the power of dismissal; and
4. the employers power to control the employees
conduct.28
As applied, all of the above benchmarks ceased upon Cabiles
assumption of duties with Intel HK on February 1, 2007. Intel HK
became the new employer. It provided Cabiles his compensation.
Cabiles then became subject to Hong Kong labor laws, and
necessarily, the rights appurtenant thereto, including the right of
Intel HK to fire him on available grounds. Lastly, Intel HK had
control and supervision over him as its new Finance Manager.
Evidently, Intel Phil. no longer had any control over him.
Although in various instances, his move to Hong Kong was
referred to as an "assignment," it bears stressing that it was
categorized as a "permanent transfer." In Sta. Maria v.
Lopez,29 the Court held that "no permanent transfer can take
place unless the officer or employee is first removed from the
position held, and then appointed to another position."
Undoubtedly, Cabiles decision to move to Hong Kong required
the abandonment of his permanent position with Intel Phil. in
order for him to assume a position in an entirely different
company. Clearly, the "transfer" was more than just an
assignment. It constituted a severance of Cabiles relationship
with Intel Phil., for the assumption of a position with a different
employer, rank, compensation and benefits.
Hence, Cabiles theory of secondment must fail.
The NLRC, however, was of the view that the transfer of Cabiles
to Intel HK was similar to his assignments in Intel Chengdu and
Intel Arizona.
The Court finds this conclusion baseless.
What distinguishes Intel Chengdu and Intel Arizona from Intel
HK is the lack of intervention of Intel Phil. on the matter. In the
two previous transfers, Intel Phil. remained as the principal
employer while Cabiles was on a temporary assignment. By
virtue of which, it still assumed responsibility for the payment of
compensation and benefits due him. The assignment to Intel HK,
on the other hand, was a permanent transfer and Intel Phil. never
participated in any way in the process of his employment there.
It was Cabiles himself who took the opportunity and the risk. If it
were indeed similar to Intel Arizona and Intel Chengdu
assignments, Intel Philippines would have had a say in it.
Release, Waiver and Quitclaim Valid Terms Are Clear
Contrary to the conclusion affirmed by the CA, the Waiver
executed by Cabiles was valid.
In Goodrich Manufacturing Corporation, v. Ativo,30 the Court
reiterated the standards that must be observed in determining
whether a waiver and quitclaim had been validly executed:
Not all waivers and quitclaims are invalid as against public
policy. If the agreement was voluntarily entered into and
represents a reasonable settlement, it is binding on the parties
and may not later be disowned simply because of a change of
mind. It is only where there is clear proof that the waiver was
wangled from an unsuspecting or gullible person, or the terms of
settlement are unconscionable on its face, that the law will step
in to annul the questionable transaction. But where it is shown
that the person making the waiver did so voluntarily, with full
understanding of what he was doing, and the consideration for
the quitclaim is credible and reasonable, the transaction must be
recognized as a valid and binding undertaking.
In Callanta v. National Labor Relations Commission,31 this Court
ruled that:
It is highly unlikely and incredible for a man of petitioners
position and educational attainment to so easily succumb to
private respondent companys alleged pressures without even
defending himself nor demanding a final audit report before
signing any resignation letter. Assuming that pressure was
indeed exerted against him, there was no urgency for petitioner
to sign the resignation letter. He knew the nature of the letter
that he was signing, for as argued by respondent company,
petitioner being "a man of high educational attainment and
qualification, x x x he is expected to know the import of
everything that he executes, whether written or oral.32
Here, the NLRC concluded in its February 9, 2011
Resolution33 that the Waiver was executed merely to allow Intel
Phil. to escape its obligation to pay the retirement benefits, thus,
violative of law, morals, and public policy. The Court, however,
sees no clear evidence in the records showing that Cabiles was
constrained into signing the document. Also, it cannot be said
that Cabiles did not fully understand the consequences of signing
the Waiver. Being a person well-versed in matters of finance, it
would have been impossible for him not to have comprehended
the consequences of signing a waiver. Failing to see any evidence
to warrant the disregard of the Waiver, the Court is unable to
affirm the CA and, hence, declares it as valid and binding
between Cabiles and Intel Phil..
Assuming the Waiver was valid, the NLRC contended that it
could not be construed to cover the claims for the retirement pay
because it had not yet accrued at the time the document was
signed by Cabiles.
The Court finds Itself unable to agree.
The terms of the Waiver are clear:
I, Jeremias P. Cabiles, Filipino, of legal age and a resident of xxx
hereby acknowledge receipt from Intel Technology Philippines,
Inc. (the Company) the amount of xxx, in full and complete
settlement of all benefits due me by reason of my lawful
separation from the Company effective February 1, 2007.
In consideration of the foregoing:
1. I release, remise and forever discharge the Company, its
successors-in-interest, its stockholders, its officers, directors,
agents or employees from any action, sum of money, damages,
claims and demands whatsoever, which in law or in equity I ever
had, now have, or which I, my heirs, successors and assigns
hereafter may have by reason of any matter, cause or thing
whatsoever, up to the time of these presents, the intention
thereof being to completely and absolutely release the Company,
its successors-in-interest, xxx from all liabilities arising wholly,
partially, or directly from my employment with the Company.
xxx xxx xxx
5. I acknowledge that I have received all amounts that are now or
in the future may be due me from the Company. I also
acknowledge that during the entire period of my employment
with the Company, I received or was paid all compensation,
benefits and privileges, to which I am entitled under all laws and
policies of the Company by reason of my past employment
and/or engagement therewith, and if I hereafter be found in any
manner to be entitled to any amount, the aforementioned
monetary amount is a full and final satisfaction of any and all
such undisclosed claims. (Emphasis supplied)34
Suffice it to state that nothing is clearer than the words used in
the Waiver duly signed by Cabiles - that all claims, in the present
and in the future, were waived in consideration of his receipt of
the amount of 165,857.62. Because the waiver included all
present and future claims, the non-accrual of benefits cannot be
used as a basis in awarding retirement benefits to him.
Lastly, even if the Court assumes that the Waiver was invalid, Republic of the Philippines
Cabiles nonetheless remains disqualified as a recipient of SUPREME COURT
retirement benefits because, as previously discussed, the ten- Manila
year minimum requirement was not satisfied on account of his
early resignation. SECOND DIVISION

Cabiles is not entitled to the Retirement Benefits G.R. No. 180972 January 20, 2014

Having effectively resigned before completing his 10th year
anniversary with Intel Phil. and after having validly waived all
the benefits due him, if any, Cabiles is hereby declared ineligible
to receive the retirement pay pursuant to the retirement policy
of Intel Phil.
For that reason, Cabiles must return all the amounts he received
from Intel Phil. pursuant to the Writ of Execution issued by the
NLRC, dated September 19, 2011.
WHEREFORE, the petition is GRANTED. The assailed October 28,
2011 and February 3, 2012 Resolutions of the Court of Appeals
are hereby REVERSED and SET ASIDE.
JONAS MICHAEL R. GARZA, Petitioner,
vs.
COCA-COLA BOTILERS PHILIPPINES, INC. and CHRISTINE
BANAL/CALIXTO MANAIG, Respondents.
DECISION
DEL CASTILLO, J.:
Unsubstantiated accusations or baseless conclusions of the
employer are insufficient legal justifications to dismiss an
employee. "The unflinching rule in illegal dismissal cases is that
the employer bears the burden of proof."1

Respondent Jeremias P. Cabiles is ordered to make restitution to
petitioner Intel Technology Philippines Inc. for whatever
amounts he received pursuant to the Writ of Execution issued by
the National Labor Relations Commission, dated September 19,
2011.
SO ORDERED.
This Petition for Review on Certiorari2 seeks a review and setting
aside of the September 26, 2007 Decision3 and the November 16,
2007 Resolution4 of the Court of Appeals (CA) in CA-G.R. SP Nos.
97915 and 97916.
Factual Antecedents
Respondent Coca-Cola Bottlers Philippines, Inc. (CCBPI) is a
manufacturer of soft drink products, employing salesman and
account specialists to sell these products to customers and
outlets.
Petitioner Jonas Michael R. Garza (petitioner) became a regular
employee of CCBPI on December 16, 1997, designated as its
Salesman in Iriga City. In 2001, he was promoted to the position
of Dealer Development Coordinator and assigned at Tabaco City.
During his stint therein, he was likewise designated as Acting
District Sales Supervisor.
In 2003, due to changes in CCBPIs structure and operating
systems, the position of Dealer Development Coordinator was
abolished, and petitioner was designated as Account Specialist
and assigned to the CCBPI Naga City Plant and at Iriga City. For
his services, petitioner received a monthly salary of 29,350.00,
exclusive of commissions and allowances. Prior to his dismissal
from CCBPI, petitioner was an employee of good standing with
an unblemished record.
As Account Specialist, petitioner was tasked mainly with booking
customers orders and collecting on their accounts;5 petitioner
merely books customers orders, but does not deliver the
product to them; the independent dealer makes the delivery.6 In
effect, petitioner performed the functions of a CCBPI salesman,
except that he operates in concentrated or dense areas.7
As a matter of company policy, CCBPI Account
Specialists/Salesmen are obliged to remit all cash sales and
credit cash collections to the company office on the same day
that payments are received in cash or check from customers,
dealers and outlets.8 Thus, before allowing the Account
Specialists/Salesmen to work the following day, the CCBPI
Cashier shall first issue a clearance which is given to the
company security guard stating whether they incurred shortages
or have not remitted collections. If so, the Account
Specialist/Salesman concerned is not allowed to leave the
company premises unless his shortages are settled.9 Moreover,
shortages are recovered against the monthly salary of the
concerned employee.10
Petitioner received an October 30, 2003 memorandum11 from his
immediate supervisor, George C. Macatangay (Macatangay),
directing him to explain alleged past unliquidated collections and
cash shortages, thus:
You are directed to explain within twenty four (24) hours upon
receiving this x x x for your shortages for past unliquidated
reports and cash shortages.
For your strict compliance.
(signed)
GEORGE C. MACATANGAY
DSS-District 4512
On April 23, 2004, petitioner received another memorandum13 of
even date from Macatangay directing him
x x x to explain in writing within twenty four hours from receipt
hereof why you should not be charged [with] violation of Rule
005-85 SEC. 10 of CCBPI EMPLOYEES CODE OF DISCIPLINARY
RULES AND REGULATIONS specifically misappropriation or
embezzlement of Company funds, withholding of Company
fund[s], unauthorized retrieval of empties by converting the
same to cash for personal use, unremitted or short remittance of
collection, non-issuance or mis-issuance of invoices.14
Petitioner sought verbal clarification from Macatangay, claiming
that the memorandum did not specify the acts and transactions
covered by the charge, and said that he could not submit a
written explanation unless the charges against him are specified.
Instead of furnishing details, Macatangay issued to petitioner
another memorandum15 dated April 26, 2004, which was for all
intents and purposes identical to the April 23, 2004
memorandum. This time, petitioner confronted Macatangay and
reiterated his request for a detailed account of his alleged
violations, but the latter told him not to worry about the
memorandum because it was just a scheme adopted by local
CCBPI management to cover up problems in the Naga City
Plant.16
On May 6, 2004, Macatangay issued another memorandum17 to
petitioner, informing him that he had been placed under
preventive suspension for 30 days effective May 12, 2004, and
directing him to attend a formal investigation to be conducted on
May 11, 2004 at the Naga City Plant. Macatangay personally
handed the said memorandum to petitioner at the Mother Seton
Hospital where the latters wife had just given birth. Petitioner
sought a rescheduling of the investigation, as he had to attend to
his wife and the hospital obligations, and to have time to prepare
for the investigation.18 Significantly, the memorandum included
the following paragraph:
Postponement will not be allowed unless prior notice thereof is
made at least two (2) days before the scheduled investigation.
Total postponement shall not exceed two (2) times [sic].19
Instead of rescheduling the investigation as requested, CCBPI
through its Territory Sales Manager, Joselito Seradilla (Seradilla)
sent a Notice of Termination20 dated June 14, 2004, thus:
Reference is [made to] the administrative investigation
conducted on you by Management relative to your alleged
violation of Section 10, Rule 005-85 of our Companys
Employees Code of Disciplinary Rules and Regulation[s].
After carefully evaluating the records of the investigation and
other pertinent documents, indeed you have misappropriated,
embezzled or fail [sic] to remit company funds amounting to
Php105,653.00.
In view of this, it is with much regret to [sic] inform you that
your services are hereby terminated effective upon your receipt
of this memo, in accordance with our Employees Code of
Disciplinary Rules and Regulations and pertinent provisions of
Article 282 of the Labor Code.
At the same time, formal demand is being made to
[pay]/restitute to the Company the amount of One Hundred Five
Thousand Six Hundred and Fifty Three Pesos (Php105,653.00)
within five (5) days from the receipt hereof. Failure to do so shall
constrain us to file necessary charges against you to protect the
interest of the Company.
(signed) Relations Commission (NLRC), which was docketed as Case No.
Joselito G. Seradilla SUB-RAB V 05-08-0022-A-04. Petitioner prayed for
TSM T4 SLA21 reinstatement, backwages, 100,000.00 moral damages,
100,000.00 exemplary damages, and 10% attorneys fees.27
After petitioner received the above termination notice on June
15, 2004, he sought permission from the CCBPI Finance In their Position Paper28 and Rejoinder to Complainants
Department to review CCBPI financial records in order to be Supplemental Position Paper,29 respondents for the first time
apprised of the basis for the finding that he misappropriated specified in detail the alleged violations of petitioner. They
company funds, but his request was denied.22 He was also denied claimed that petitioner was guilty of misappropriation of
access to the plant.23 cash/check collections, kiting of checks, and delayed remittances
covering the following customer accounts:
At around 6:30 in the morning of June 15,24 2004, Macatangay
visited petitioner at his residence and told him that he was being 1avvphi1
summoned to the CCBPI office by Area Sales Manager Dodie 1. Alice Asanza - P 8,160.00
Peniera (ASM Peniera). At the CCBPI Human Resource
Department office, where Peniera, Seradilla, Macatangay, and 2. Kathryn Serrano/New Ongto
10,645.00
Human Resource Manager, Christine Banal (Banal), were Expressmart (Supermart) -
present, Peniera ordered Macatangay to assist petitioner in
3. Ceguera Bakeshop - 2,558.00
reconciling the latters accounts. At the same time, Banal directed
petitioner to receive two Notices of Investigation apparently 4. Marlene Yu - 21,826.00
issued on different dates, and affix his signature on the
"received" portion thereof, which he did.25 5. Ofelia Ong - 5,100.00

6. Beatriz Orolfo - 312.00

However, the agreed reconciliation of petitioners accounts did
not materialize, as Macatangay became uncooperative and CCBPI 7. Henry Botor - 8,920.00
denied him access to its records.26
8. Noe Sabularse - 16,090.00
On August 19, 2004, petitioner filed a Complaint for illegal 9. MCM Fastfood - 1,260.00
dismissal against respondents CCBPI, Banal and CCBPI Naga City
Plant Logistics Head Calixto Manaig with the Naga City Sub- 10. Leon Trinidad - 15,186.00
Regional Arbitration Branch No. V of the National Labor
 P 1. The charges against him are false; he was not guilty of
TOTAL
90,057.00
Respondents alleged that misappropriation/embezzlement is a
violation of CCBPIs November 18, 2002 Inter-Office
Memorandum30 which defined misappropriation, non-
remittance or delayed remittance of cash/check collections and
specified outright dismissal as punishment for the first offense.
They claimed that petitioners total unremitted collections
amounted to 105,653.00 and for this reason, his dismissal was
necessary and proper. They added that due to petitioners failure
to attend the scheduled May 11, 2004 investigation, CCBPI was
compelled to terminate his services, after which the proper
notice was given the Department of Labor and Employment
(DOLE). Finally, they contended that since petitioner was
dismissed for just cause, he was not entitled to reinstatement,
backwages, damages, and attorneys fees.
CCBPI relied mainly on the strength of an audit conducted by its
Territory Finance Head, Ronaldo D. Surara (Surara), which
concluded that petitioner failed to remit cash and credit
collections covering the above accounts.31
In his Position Paper,32 Supplemental Position Paper,33 and Reply
to Respondents Rejoinder to Complainants Position
Paper,34 petitioner claimed essentially that (1) his dismissal was
without just cause, and (2) he was denied due process during the
proceedings leading to his dismissal. Relative to his claim of
dismissal without just cause, petitioner contended that:
embezzlement. All his transactions as Account Specialist
are duly accounted for, all cash sales were remitted to
CCBPI and all check payments were remitted and
credited to CCBPIs account. Nor did he delay the
remittance of these cash and check payments, nor used
them in kiting operations for his personal benefit;
2. With regard to cash collections covering the Henry
Botor and Noe Sabularse accounts, CCBPI policies and
procedures make it impossible for Salesmen/Account
Specialists to commit embezzlement. Each working day,
they are required to account for their sales/collections
and obtain clearance from the company cashier before
they are allowed to leave company premises at the end of
their shift and report for work the next day; in case of a
shortage, the concerned employee is not allowed to leave
the company premises until he settles the shortage. In
addition, shortages are deducted against the employees
salaries. The fact that he continued to report for work up
to June 2004 without any adverse action from CCBPI
proved that the irregularities attributed to him which
CCBPI claims were committed against his April and May
2003 accounts were manufactured and untrue;
3. With respect to the Alice Asanza (Asanza) account,
CCBPIs claim that he failed to remit the customers
payment is belied by the customer herself, who admitted
in her sworn statement35 that during a meeting with
CCBPI auditors, she made a mistake in affirming that a
delivery of CCBPI products worth 8,160.00 was made
on January 30, 2004 and that the same was paid for in
cash. She admitted that after consulting her records,
delivery of said 8,160.00 worth of CCBPI products was
in fact made on October 15, 2003, and that up to now the
same remained unpaid. She admitted that she was
confused by the CCBPI records which were shown to her,
which indicated "Date of Invoice 01-30-04"; thus she
mistakenly assumed that a delivery of 8,160.00 worth of
CCBPI products was indeed made on such date, and that
the same was paid for by her, when in fact no such
transaction took place;
4. Contrary to CCBPIs claim, all the concerned CCBPI
customers, through their submitted affidavits and
certifications,36 belied claims that petitioner embezzled
their cash or check payments;
5. He could not have committed "kiting" of CCBPIs
checks, as CCBPI claims, for the simple reason that these
checks were made payable to CCBPI specifically, and
were not issued in his name. Thus, even for CCBPI
products paid for in advance through checks ("payment
upon order" or "PUO" accounts), there is no opportunity
for embezzlement because the checks are made out to
CCBPI;37
6. On the claim of delayed remittances of check payments
pertaining to the Leon Trinidad and MCM Fastfood
accounts, petitioner claims that although it appears that
the checks were issued or dated in the name of CCBPI
days earlier, or upon the booking of orders by the
petitioner, delivery of its products by the dealer was
made days later. Naturally, the checks would only be
released by the customers to the petitioner upon/after
delivery of products by the dealer; which means that
although it would appear that the checks were
issued/dated by customers earlier upon the booking of
the customers orders they were delivered/handed
over to petitioner only upon/after completion of
delivery, which come days after the checks were
issued/dated. CCBPI operates through private
independent dealers over whom/which petitioner has no
control, which means that after petitioner books an
order, prompt delivery by the dealer is not guaranteed,
and actual delivery could be made days later;38
7. With regard to transactions with Kathryn Serrano
(Serrano) of New Ongto Supermart, what CCBPI claims
was a different transaction covering an alleged
unremitted amount of 10,645.00 was already paid for
by Serrano in check issued to CCBPI, and the amount has
been debited from her account.39 CCBPI made a mistake
in its records, which showed that Serrano paid by check
for her order of CCBPI products worth 10,645.00, but
which account was recorded by it as a different sale
transaction of 10,615.00. These two transactions are
but one and the same; in fact, CCBPI itself claims in its
Rejoinder to Complainants Position Paper that Serranos
check for 10,645.00 was used to pay the 10,615.00
transaction, which only proves that the 10,615.00
transaction was an erroneous entry;
 8. With respect to the Marlene Yu, Beatriz Orolfo, Ofelia
Ong, and Ceguera Bakeshop accounts, their own sworn
statements and certifications will show that all their
check payments were issued in the name of CCBPI, not
the petitioner. And all the amounts covered by these
checks have been duly debited from their accounts.40
In conclusion, petitioner argued that the evidence showed that
he did not commit the alleged embezzlement; that CCBPI failed
to prove just cause for his dismissal; and that the charges against
him were contrived and the evidence self-serving.
As for his contention that he was denied due process during the
proceedings leading to his dismissal, petitioner claimed that he
was not provided ample opportunity to be heard. The April 23,
2004 written charge against him did not specify the particular
transactions and acts which formed the basis for the accusations
against him, for which reason he was unable to prepare the
required written explanation. He verbally informed Macatangay
of this predicament, but instead of acceding to his lawful request,
the latter issued the April 26, 2004 memorandum which was
identical to that issued on April 23. Petitioner argued that he
could not be considered to have ignored the written charge
against him. Nor may it be said that he waived his right to an
investigation, as the evidence showed that he sought a
rescheduling of the May 11, 2004 hearing for valid reasons his
wife had just given birth; he had to attend to her and their
newborn child, as well as take care of their financial obligations
to the hospital. CCBPIs failure and refusal to grant a
postponement of the investigation was thus unreasonable and
violative of his rights. Petitioner added that he waited in vain for
CCBPI to furnish him the proper detailed charges and
accusations against him; instead, CCBPI issued the June 14, 2004
Notice of Termination. And immediately after receiving the said
notice, he was called by ASM Peniera to his office where he was
ostensibly told that he could have access to company records in
order to reconcile his accounts, but which never materialized as
thereafter he was in fact prohibited from entering the company
premises and denied access to the records.
Ruling of the Labor Arbiter
On March 28, 2005, the Labor Arbiter issued a Decision,41 the
decretal portion of which states:
WHEREFORE, finding merit on [sic] the causes of action set forth
by the complainant, judgment is hereby rendered declaring his
termination or dismissal from employment by the respondents
as ILLEGAL and thereby ORDERING x x x the following:
A. To reinstate the complainant within ten (10) days
upon receipt of this Decision to his former position
without loss of seniority rights and other privileges, and
to submit compliance thereto within the same period.
B. To pay backwages, inclusive of allowances and other
benefits or his [sic] monetary equivalent, computed from
the date of his respective dismissal up to the time of his
actual reinstatement, whether physically or on payroll,
which as of the date of this decision amounted to
282,625.00 computed from June 14, 2004 to this date of
decision, at the rate of 29,750.00 per month.
 C. To pay Attorneys Fees corresponding to 10% of the
total amount of 282,625.00 due to the complainant
which is equivalent to the sum of 28,262.50.
Other than the above, all other claims are hereby ordered
DISMISSED for lack of merit.
SO ORDERED.42
The Labor Arbiter held that CCBPI failed to adduce in evidence
the particular provision in the CCBPI Employees Code of
Disciplinary Rules and Regulations which forms the basis of its
accusations against petitioner. He added that the accusation that
petitioner embezzled company funds totaling 105,653.00 was
couched in general terms; the particulars thereof were not stated
with sufficient clarity. Moreover, the alleged violations were not
clearly made known to petitioner, such that he could not
properly refute them. And instead of allowing a postponement of
the investigation as requested by petitioner, he was summarily
dismissed.
The Labor Arbiter further held that CCBPI violated the notice and
hearing requirements, in serving upon petitioner a first notice
which failed to correctly and fully inform him of the charges
against him; for unreasonably denying him an opportunity to be
heard during the investigation; and for issuing a second notice of
termination that did not contain clear and sufficient reasons for
his dismissal.
The Labor Arbiter however denied petitioners prayer for moral
and exemplary damages, stating that CCBPI and its co-
respondents do not appear to be guilty of bad faith, malice or
fraud, nor did they act in a manner contrary to morals, good
customs or public policy. However, petitioner was awarded
attorneys fees, as he was compelled to litigate and thus secure
the services of counsel to protect his interest.
Ruling of the National Labor Relations Commission
Respondents appealed to the NLRC.43 Meanwhile, in May 2005,
while the NLRC appeal was pending, petitioner was reinstated
pursuant to Art. 223 of the Labor Code.44 He was designated as
Route Salesman, and was assigned tasks relative to booking and
delivery of CCBPI products, and collection of accounts. In fact, he
was awarded a Certificate of Achievement for exemplary sales
performance.45
On July 31, 2006, the NLRC issued its Decision46 which decreed
as follows:
WHEREFORE, as modified, respondents-appellants are ordered
to pay complainant-appellee Jonas Michael R. Garza his full
backwages, inclusive of allowances and other benefits or their
monetary equivalent, to be computed from the time of his illegal
dismissal up to the promulgation of this Decision in the amount
of Php760,583.53, separation pay of one (1) month for his every
year of service computed from the time of his employment up to
the promulgation of this Decision in the amount of
Php267,750.00 and, ten percent (10%) attorneys fees of the
total monetary award.
SO ORDERED.47
In affirming the Labor Arbiters finding of illegal dismissal, the
NLRC held that CCBPI failed to adduce sufficient evidence of
petitioners alleged embezzlement; quite the contrary, the
latters evidence showed that no embezzlement took place, as all
check payments he received were credited to CCBPIs account.
With regard to cash payments, the NLRC held that CCBPIs
documentary evidence consisting of delivery and payment
receipts, other than showing the fact of delivery of products to
customers and payment made by them, do not prove
embezzlement on the part of petitioner.
The NLRC likewise held that in dismissing petitioner, CCBPI
failed to comply with the twin requirements of notice and
hearing. The first two memorandum-notices of April 23 and April
26, 2004 requiring an explanation from petitioner did not
indicate the particular transactions covered by the charges
against him, despite clarification sought by him. The May 6, 2004
memorandum of suspension and investigation, on the other
hand, merely reiterated the charges against petitioner, and did
not state the basis for the investigation.
Finally, the NLRC reversed the Labor Arbiters order of
reinstatement, finding that relations between the petitioner and
CCBPI have been strained.
Petitioner and respondents filed their respective motions for
reconsideration,48 which were denied in an October 27, 2006
Resolution.49 Both thus went up to the CA on certiorari, with
petitioner raising only the issue of reinstatement.
In the meantime, petitioner received a January 16, 2007
Memorandum informing him that effective January 17, 2007,
petitioner may no longer report for work on account of the
NLRCs October 27, 2006 Resolution.
Ruling of the Court of Appeals
The CA consolidated the two petitions. On September 26, 2007, it
issued the assailed Decision, the dispositive portion of which
reads, as follows:
WHEREFORE, premises considered, the assailed Decision dated
July 31, 2006 and the Resolution dated October 27, 2006 of the
NLRC, Second Division in NLRC CA No. 044656-05 NLRC-SUB-
RAB V Case No. 05-08-00122-04 are REVERSED AND SET ASIDE.
Petitioner CCBPI is hereby ORDERED to pay Jonas Michael R.
Garza the amount of 30,000.00 as nominal damages for non-
compliance with statutory due process.
SO ORDERED.50
The CA ruled that petitioners dismissal was proper. It paid
particular attention to the Asanza account, saying that CCBPIs
evidence showed that petitioner was guilty of non-remittance of
Asanzas 8,160.00 cash payment which appears to have been
made on January 30, 2004 on an October 15, 2003 delivery. The
payment is evidenced by Official Receipt No. 30320351 issued by
petitioner to Asanza on January 30, 2004, and a January 31, 2004
Route Header Form52 where petitioner specifically indicated that
Asanza no longer had payables to CCBPI. The CA held that from
this, CCBPI was able to prove that petitioner was guilty of non-
remittance of the 8,160.00 collected from Asanza.
With regard to the manner in which petitioner was dismissed,
the CA conceded that the procedure observed by CCBPI was
defective, but since the dismissal was for just cause, the lack of
due process did not nullify the dismissal, but merely entitled
petitioner to an award of nominal damages.
Petitioner filed a Motion for Reconsideration, but in the second
assailed November 16, 2007 Resolution, the CA denied the same.
Issues
In this Petition,53 the following issues are raised:
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN
REVERSING THE DECISION OF THE NATIONAL LABOR
RELATIONS COMMISSION DESPITE CLEAR AND CONVINCING
EVIDENCE THAT PETITIONER WAS ILLEGALLY DISMISSED;
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN
NOT MODIFYING THE DECISION OF THE NATIONAL LABOR
RELATIONS COMMISSION WITH [REGARD] TO THE ORDER OF
THE HONORABLE COMMISSION FOR PAYMENT OF
SEPARATION PAY IN LIEU OF REINSTATEMENT;
THE HONORABLE COURT OF APPEALS ERRED WHEN IT FAILED
TO AWARD DAMAGES AND ATTORNEYS FEES TO THE
PETITIONER.54
Petitioners Arguments
Petitioner prays for the reinstatement of the Labor Arbiters
Decision, with an additional prayer for the award of moral and
exemplary damages. He argues that he is innocent of the charges
against him, pointing to the fact that all cash and check payments
were remitted to CCBPI or credited to the latters account. He
insists that CCBPIs evidence consisting of the affidavit of its
Territory Finance Head, Surara, is self-serving and without basis.
Petitioner directs the Courts attention to the fact that company
policies make it impossible for him to embezzle cash and check
payments made to him by CCBPI customers, and his evidence
consisting of customers affidavits and certifications prove that
all payments are made in the name of and for the account of
CCBPI.
With regard to the Asanza account, petitioner claims that the CA
erred in finding him guilty of failure to remit the 8,160.00 cash
payment made by Asanza, contending that Asanza herself
admitted under oath that no payment has in fact been made; that
his issuance of Official Receipt No. 303203 was conditioned on
Asanza issuing a postdated check later on, which she failed to do;
that Asanzas account, as indicated in the receipts and invoices, is
precisely an RCS account, or "Regular Charge Sale", which means
that deliveries to her are on a credit not cash basis; that the
January 31, 2004 Route Header Form which indicated that
Asanza no longer had payables to CCBPI refers to deliveries
made specifically on January 30, 2004, and did not include or
refer to the October 15, 2003 transaction, which to date remains
unpaid.
Finally, petitioner contends that he should be reinstated to his
former position, and awarded moral and exemplary damages, as
well as attorneys fees.
Respondents Arguments
Respondents, apart from echoing the pronouncements of the CA,
flatly submit that the Petition involves purely questions of fact
revolving around CCBPI customers, who confirmed in their
affidavits55 that their cash payments were not remitted by
petitioner to CCBPI.
Our Ruling
The Court grants the Petition.
There is no issue on the manner by which petitioner was
dismissed. Since respondents did not appeal the unanimous
findings of the Labor Arbiter, NLRC and the CA in this regard,
their pronouncements on the issue are deemed final and
executory.
The only issue that needs to be resolved, therefore, is whether
there is just cause for petitioners dismissal. The sole basis for
the CAs ruling that petitioner was validly dismissed is that he
failed to remit a cash collection of 8,160.00 from one of its
customers, Asanza. What seems to have escaped the appellate
courts notice is that in order to be able to come to such a
conclusion, an important issue concerning CCBPI policies and
procedures must first be tackled.
One of CCBPIs policies requires that, on a daily basis, CCBPI
Salesmen/ Account Specialists must account for their
sales/collections and obtain clearance from the company Cashier
before they are allowed to leave company premises at the end of
their shift and report for work the next day. If there is a
shortage/failure to account, the concerned Salesmen/Account
Specialist is not allowed to leave the company premises until he
settles the same. In addition, shortages are deducted from the
employees salaries. Petitioner made repeated reiterations of this
company policy all throughout the proceedings, and not once did
respondents deny or dispute its existence and implementation.
In fact, respondents confirmed existence of this policy when they
stated in their Position Paper,56that "[a]s a matter of policy,
salesmen in respondents company are obliged to remit all cash
sales and credit cash collections to the company office on the
same day that said payments are made by various customers,
dealers and outlets."57
It is altogether reasonable to suppose that this policy actually
exists, because undeniably, such policy insured a fool-proof
system of accountability within CCBPI, where shortages are
immediately detected, presumably through the reconciliation of
daily orders and deliveries to customers with the daily
collections of CCBPIs salesmen, and simultaneously accounted
for. With such a policy, no transaction is left unnoticed, and
erring salesmen are instantaneously made to account for their
shortages before they can even leave the premises and come
back to work the following day.
Within the context of said policy, it can be said that since
petitioner continued to work for CCBPI until June 2004, this
should necessarily mean that he was clear of daily cash and
check accountabilities, including those transactions covered by
the charges against him. If not, the company cashier would not
have issued the required clearance and petitioner would have
been required to settle these shortages as soon as they were
incurred. Indeed, he would not have been allowed to leave
company premises until they were settled in accordance with
company policy. And he would not have been allowed to report
for work the following day.
"Where facts are in evidence affording legitimate inferences
going to establish the ultimate fact that the evidence is designed
to prove, and the party to be affected by the proof, with an
opportunity to do so, fails to deny or explain them, they may well
be taken as admitted with all the effect of the inferences
afforded."58 If CCBPI expects to proceed with its case against
petitioner, it should have negated this policy, for its existence
and application are inextricably tied to CCBPIs accusations
against petitioner. In the first place, as petitioners employer,
upon it lay the burden of proving by convincing evidence that he
was dismissed for cause.59 If petitioner continued to work until
June 2004, this meant that he committed no infraction, going by
this company policy; it could also mean that any infraction or
shortage/non-remittance incurred by petitioner has been duly
settled. Respondents decision to ignore this issue generates the
belief that petitioner is telling the truth, and that the alleged
infractions are fabricated, or have been forgiven. Coupled with
Macatangays statement which remains equally unrefuted to charge him for violation of the November 18, 2002 Inter-Office
that the charges against petitioner are a scheme by local CCBPI
management to cover up problems in the Naga City Plant, the
conclusion is indeed telling that petitioner is being wrongfully
made to account.
The irregularity attributed to petitioner with regard to the
Asanza account should fail as well. To be sure, Asanza herself
confirmed that she did not make any payment in cash or check of
8,160.00 covering the October 15, 2003 delivery for which
petitioner is being held to account. This being the case, petitioner
could not be charged with embezzlement/failure to remit for the
simple reason that as regards such October 15, 2003 delivery,
there was nothing to embezzle or remit because no payment
thereon has as yet been made by the customer Asanza. It may
appear from Official Receipt No. 303203 issued to Asanza that
the October 15 delivery of products to her has been paid; but as
admitted by her, she has not paid for the said delivered products.
The reason for petitioners issuance of said official receipt to
Asanza is the latters concurrent promise that she would
immediately issue the check covering the said amount, which she
nevertheless failed to do.
Although petitioner may be faulted for this act issuing an
official receipt without receiving the corresponding payment
he could not be accused of embezzlement or failure to remit as
defined and punished under CCBPIs November 18, 2002 Inter-
Office Memorandum, because he received no cash or check from
Asanza. Without receiving anything from her, there was nothing
for petitioner to embezzle or remit, and thus CCBPI had no basis
Memorandum which punished embezzlement and failure/delay
in remitting collections.
The Court likewise finds convincing petitioners arguments that
it was impossible for him to embezzle/not remit the other
customers cash and check payments, not only because of the
existence of the abovementioned policy, but likewise due to the
sworn avowals of these customers that all their check payments
have been issued in CCBPIs name and have been duly debited
from their accounts. Certainly, petitioner could not have
encashed check payments because they were issued in the name
of CCBPI; for the same reason, he could not have engaged in
kiting operations. Quite certainly, he would have easily been
found out.
Regarding the claim that petitioner delayed the remittance of
check payments covering PUO accounts, the Court finds
petitioners explanation to be satisfactory. Suffice it to state that
in selling its products, CCBPI, like other manufacturers, operates
through independent dealer-businessmen, whose delivery
schedules are beyond CCBPIs control. Thus, if a CCBPI salesman
places a customers order with the independent dealer, this does
not mean that the latter would immediately deliver the product;
it could do so later. Meanwhile, the customer would write and
date his/her check to coincide with the date of the order,
expecting that delivery would be made the very same day. But
actual delivery could be made days later; naturally, the customer
would release the check which is dated days earlier to the
CCBPI salesmen (including petitioner) only after the delivery is
completed. As correctly argued by petitioner, this constitutes a
cogent explanation for his apparent late remittance of PUO or
"date of order=date of check" checks.
In a bid to further pin down petitioner, respondents rely heavily
on CCBPI customers affidavits60 which state that their cash
payments were not remitted by petitioner to CCBPI. How these
customers came to the knowledge and conclusion that petitioner
did not remit their cash payments to CCBPI is beyond the Court.
If there should be actual knowledge of petitioners
embezzlement, it could only come from respondents; it is not for
the CCBPI customers to prove, for the benefit of respondents,
that petitioner embezzled their cash payments. They have gained
no knowledge superior to that of respondents regarding this fact,
and offhand are not adequately equipped with the means to
come to such a conclusion. Thus, for respondents to even present
their sworn statements to such effect is truly beyond
comprehension.
As earlier stated, the burden is on the employer to prove that the
termination was for valid cause.1wphi1 Unsubstantiated
accusations or baseless conclusions of the employer are
insufficient legal justifications to dismiss an employee. "The
unflinching rule in illegal dismissal cases is that the employer
bears the burden of proof."61
It may also be said that CCBPIs subsequent award of a Certificate
of Achievement to petitioner for his exemplary sales
performance, while the NLRC appeal was pending, constitutes
recognition of petitioners abilities and accomplishments in
CCBPI. It indicates that he is a responsible, trustworthy and
hardworking employee of CCBPI. It constitutes adequate proof
weighing in his favor.
Having thus seen that petitioner is innocent of the charges
leveled against him, the Court must order his reinstatement. As a
matter of course, the NLRC and CA pronouncements inconsistent
with this declaration are necessarily rendered null and void.
However, no moral and exemplary damages are forthcoming.
Petitioners failure to appeal the Labor Arbiters ruling denying
his claims for these damages rendered such pronouncement final
and executory; he may no longer obtain a modification or
reversal of the Decision on the issue. A party who did not appeal
from the decision cannot seek any relief other than what is
provided in the judgment appealed from.62
In addition, the awards in petitioners favor shall earn interest at
the rate of six percent (6%) per annum on outstanding balance
from finality of this Decision until full payment thereof.
The computation division of the NLRC-SUB-RAB-Branch No. V is
hereby ORDERED to immediately update and compute the
awards as herein granted, excluding therefrom the period during
which petitioner was actually reinstated and compensated, after
which respondent Coca-Cola Bottlers Philippines, Inc. is
ORDERED to immediately pay the petitioner Jonas Michael R.
Garza these amounts

Finally, consistent with the Courts pronouncement in Nacar v. SO ORDERED.

Gallery Frames,63 the awards herein are subject to interest at the
rate of six percent (6%) per annum, to be computed from the
finality of the Decision in this case until the total award is fully
paid.

WHEREFORE, the Petition is GRANTED. The September 26, 2007

Decision and November 16, 2007 Resolution of the Court of
Appeals in CA-G.R. SP Nos. 97915 and 97916 are ANNULLED and
SET ASIDE. The July 31, 2006 Decision of the National Labor
Relations Commission is REINSTATED, with the modification
that petitioner Jonas Michael R. Garza is ORDERED reinstated to
his former position as Account Specialist or its equivalent,
without loss of seniority, rank, emolument and privileges, and
with full backwages from the date of his illegal dismissal up to
his actual reinstatement.
 Republic of the Philippines 2000, or twenty (20) days after the expiration of his contract of
SUPREME COURT employment. Petitioner averred that since he was allowed to
Manila stay in the vessel for another twenty (20) days, there was an
implied renewal of his contract of employment. Hence, when he
THIRD DIVISION was repatriated on November 14, 2000 without a valid cause, he
was illegally dismissed.
G.R. No. 184318 February 12, 2014
Due to the foregoing, petitioner filed a case against the
ANTONIO E. UNICA, Petitioner, respondent for illegal dismissal, payment of retirement,
vs. disability and medical benefits, separation and holiday pay. In its
ANSCOR SWIRE SHIP MANAGEMENT defense, respondent argued that petitioner was hired for a fixed
CORPORATION, Respondent. period, the duration of which depends upon the mutual
agreement of the parties. Petitioners employment was,
DECISION therefore, co-terminus with the term of his contract. Hence, the
claim of petitioner that he was illegally dismissed must fail,
PERALTA, J.: because he was repatriated due to the completion of the term of
his contract.
Before this Court is a petition for review on certiorari under Rule
45 of the Rules of Court seeking to set aside the Decision1 and On May 31, 2004, the Labor Arbiter (LA) ruled in favor of
Resolution2 of the Court of Appeals (CA) in CA-G.R. CEB-SP No. petitioner.3 The LA ruled that since petitioner was not
01417, which annulled and set aside the Decision of the National repatriated at the expiration of his contract on October 25, 2000,
Labor Relations Commission, Fourth Division in NLRC Case No. and was allowed by respondent to continue working on board its
OFW V-000031-2005 (RAB Case No. Vl-OFW-(M) 02-12-0083). vessel up to November 14, 2000, his contract with respondent
was impliedly renewed for another nine months. The LA directed
The antecedents are as follows: respondent to pay petitioner his salary for the unexpired portion
of his impliedly renewed contract, his medical benefits and
Respondent Anscor Swire Ship Management Corporation is a attorney's fees.
manning agency. Since the late 1980s, petitioner was employed
by respondent under various contracts. In his last contract, Aggrieved by the decision, respondent appealed to the NLRC. On
petitioner was deployed for a period of nine (9) months from August 24, 2005, the NLRC affirmed with modification the LA's
January 29, 2000 to October 25, 2000. However, since the vessel decision.4 Like the LA, the NLRC ruled that the contract did not
was still at sea, petitioner was only repatriated on November 14,
expire on October 25, 2000, but was impliedly extended for
another nine months. This is because it was only on November
14, 2000 when petitioner was told by respondent to disembark
because he would be repatriated. Since there was an implied
extension of the contract for another nine months, petitioner is,
therefore, entitled to payment of the unexpired term of his
implied contract. The NLRC, however, deleted the award of
medical benefits and reduced the amount of attorney's fees.
Undaunted, respondent filed a Petition for Certiorari with the CA.
The CA, in its Decision5 dated August 15, 2006, annulled and set
aside the decision of the NLRC. The CA ruled that there was no
implied renewal of contract and the 20 days extension was due
to the fact that the ship was still at sea. Petitioner filed a motion
for reconsideration, which was denied by the CA in a
Resolution6 dated August 11, 2008. Hence, the present petition.
The main issue in this case is whether or not there was an
implied renewal of petitioner's contract of employment with
respondent.
The petition is not meritorious.
In the case at bar, although petitioner's employment contract
with respondent ended on October 25, 2000 and he disembarked
only on November 14, 2000 or barely 20 days after the
expiration of his employment contract, such late disembarkation
was not without valid reason. Respondent could not have
disembarked petitioner on the date of the termination of his
employment contract, because the vessel was still in the middle
of the sea. Clearly, it was impossible for petitioner to safely
disembark immediately upon the expiration of his contract, since
he must disembark at a convenient port. Thus, petitioner's stay
in the vessel for another 20 days should not be interpreted as an
implied extension of his contract. A seaman need not physically
disembark from a vessel at the expiration of his employment
contract to have such contract considered terminated.7
It is a settled rule that seafarers are considered contractual
employees.1wphi1 Their employment is governed by the
contracts they sign everytime they are rehired and their
employment is terminated when the contract expires. Their
employment is contractually fixed for a certain period of
time.8 Thus, when petitioner's contract ended on October 25,
2000, his employment is deemed automatically terminated, there
being no mutually-agreed renewal or extension of the expired
contract.
However, petitioner is entitled to be paid his wages after the
expiration of his contract until the vessel's arrival at a
convenient port. Section 19 of the Standard Terms and
Conditions Governing the Employment of Filipino Seafarers On-
Board Ocean-Going Vessels is clear on this point:
REPATRIATION. A. If the vessel is outside the Philippines upon
the expiration of the contract, the seafarer shall continue his
service on board until the vessel's arrival at a convenient port
and/or after arrival of the replacement crew, provided that, in
any case, the continuance of such service shall not exceed three
months. The seafarer shall be entitled to earned wages and
benefits as provided in his contract.
WHEREFORE, the petition is DENIED. The Decision and
Resolution of the Court of Appeals, in CA-G.R. CEB-SP No. 01417,
dated August 15, 2006 and August 11, 2008, respectively, are
AFFIRMED with MODIFICATION that respondent is DIRECTED to
PAY petitioner his salary from October 26, 2000 until November
14, 2000. The case is REMANDED to the Labor Arbiter for the
purpose of computing the aforementioned monetary award to
petitioner.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
Article 192 (c)(l) of the Labor Code and Rule X, Section 2 of the
Amended Rules on Employees Compensation (AREC). If he fails
to do so and the seafarer's medical condition remains
unresolved, the latter shall be deemed totally and permanently
disabled. On the other hand, an employee's disability becomes
permanent and total even before the lapse of the statutory 240-
day treatment period, when it becomes evident that the
employee's disability continues and he is unable to engage in
gainful employment during such period because, for instance, he
underwent surgery and it evidently appears that he could not
recover therefrom within the statutory period.
This Petition for Review on Certiorari2 assails the April 20, 2010
Decision3 of the Court of Appeals (CA) in CA-G.R. SP No. 107330
and its July 21, 2010 Resolution4 denying reconsideration
thereof.

G.R. No. 193047 March 3, 2014 Factual Antecedents

FIL-PRIDE SIDPPING COMPANY, INC., CAPTAIN NICOLAS T.
DOLLOLASA and OCEAN EAGLE SIDPMANAGEMENT
COMPANY, PTE.LTD., Petitioners,
vs.
EDGAR A. BALASTA, Respondent.
DECISION
DEL CASTILLO, J.:
The company-designated physician must arrive at a definite
assessment of the seafarer's fitness to work or permanent
disability within the period of 120 or 240 days,1 pursuant to
Respondent Edgar A. Balasta was hired by petitioner Fil-Pride
Shipping Company, Inc. (Fil-Pride) for its foreign principal,
petitioner Ocean Eagle Ship Management Company, PTE. Ltd.
(Ocean Eagle). Respondent was assigned as Able Seaman
onboard M/V Eagle Pioneer. His Employment Contract5 states
the following terms and conditions:
Duration of Contract : TWELVE MONTHS
Position : ABLE SEAMAN
Basic Monthly Salary : US$390.00
 Hours of Work : 48 HRS/WEEK
Overtime : FIXED US$156.00
(CONTAINER ALLOW US$39.00)
Vacation leave with pay : US$52.00
Point of hire : MANILA/PHILS
Respondent was declared fit to work after undergoing the
mandatory Pre-Employment Medical Examination (PEME). He
commenced his duties as Able Seaman aboard M/V Eagle Pioneer
on February 23, 2005. Among respondents duties as Able
Seaman are the following:
a. Watch standers and may be required to supervise day
work of junior rating;
b. Stands watch at bow or on wing of bridge to look for
obstructions in path of vessel;
c. Measures depth of water in shallow or unfamiliar
waters, using lead line, and telephones or shouts
information to bridge;
d. Steers ship by automatic/remote control or manual
control and/or uses emergency steering apparatus to
steer vessel as directed by navigating officer, chief mate
or the ship captain;
e. Breaks out rigs, overhauls and stows cargo handling
gears, stationary rigging, and running gears;
f. Overhauls lifeboats, winch and falls;
g. Paints and chips rust on deck and superstructure of
ship;
h. May be concerned only with one phase of duties such
as:
1. Maintenance of ships gears and decks or watch
duties;
2. May be known as skilled deckhand on various
repairs and maintenance works on deck;
3. Performs other deck works as required by
superior officers.6
Sometime in August and September 2005, while aboard M/V
Eagle Pioneer, respondent experienced chest pains, fatigue, and
shortness of breath. He was examined by a physician in Gangyou
Hospital in Tianjin, China, and was diagnosed as having
myocardial ischemia and coronary heart disease. He was
declared unfit for duty and was recommended for repatriation.7
Respondent was thus repatriated on September 18, 2005 and
was immediately referred to the company-designated physician,
Dr. Nicomedes G. Cruz (Dr. Cruz). He was subjected to laboratory,
X-ray, 2D echo, and electrocardiogram tests, as well as 24-hour
Holter monitoring. In Dr. Cruzs September 18, 2005 medical
report,8respondent was diagnosed with hypertension and Hypertensive cardiovascular disease
myocardial ischemia. Coronary artery disease, 3[-]vessel involvement
Stable angina pectoris
Respondent was further examined by Dr. Cruz on September 21, Impediment Grade 1 (120%)
23 and 30, 2005; October 6, 2005; February 2, 13 and 17, 2006;
March 6 and 20, 2006; and on April 19, 2006.9 From the (signed)
February 2, 2006 medical report onward, it may be seen that EFREN R. VICALDO, M.D.
respondent was diagnosed with severe 3-vessel coronary artery JUSTIFICATION OF IMPEDIMENT GRADE 1 (120%)
disease, and was scheduled for coronary artery bypass surgery FOR SEAMAN EDGAR A. BALASTA
on February 24, 2006.
This patient/seaman presented with a history of chest pain, easy
On his own initiative, respondent underwent coronary fatigue and shortness of breath noted [in] August 2005 after
angiogram at the St. Lukes Medical Center (St. Lukes) on some strenuous activity while working on board ship. He was
October 14, 2005. In a medical report10 of even date signed by St. seen in consult in Mainland China where he underwent chest
Lukes Cardiac Catheterization Laboratory Interventional Xray and ECG. He was diagnosed as [sic] coronary artery disease.
Cardiologist Paterno F. Dizon, Jr., respondent was diagnosed with
coronary artery atherosclerosis and severe three-vessel He was repatriated on September 18, 2005 and was admitted for
coronary artery disease. 1 week at Manila Medical Center. He underwent laboratory
exams which included Chest Xray, ECG, 2D echo and 24 hour
On February 16, 2006, respondent consulted and was examined Holter monitoring. He consequently underwent coronary
by an independent physician, Dr. Efren R. Vicaldo (Dr. Vicaldo), angiography at St. Lukes Medical Center on October 14, 2005
who issued a medical certificate11 containing the following which revealed severe 3 vessel disease involving the proximal
diagnosis: LAD, first diagonal and proximal and distal LCx.

February 16, 2006 When seen at the clinic, his blood pressure was elevated at
140/90 mmHg; the rest of the PE findings were unremarkable.
TO WHOM IT MAY CONCERN:
He is now unfit to resume work as seaman in any capacity.
This is to certify that, Edgar A. Balasta, 48 years of age, of Imus,
Cavite was examined and treated as out[-]patient/confined in His illness is considered work aggravated/related.
this hospital on/from February 16, 2006 with the following
findings and/or diagnosis/diagnoses:
He requires maintenance medication to maintain normal blood
pressure and low cholesterol to prevent worsening of his
coronary artery disease and other cardiovascular complications
such as stroke and renal insufficiency.
He requires immediate coronary artery bypass graft surgery to
alleviated (sic) his symptom of angina and prevent the
occurrence of possible acute myocardial infarction.
He has to modify his lifestyle to include low salt, low fat diet,
regular exercise and nicotine abstinence.
He is not expected to land a gainful employment given his
medical background.
Thank you.
(signed)
Efren R. Vicaldo, M.D.12
Respondent filed a claim for permanent disability benefits with
petitioners, but the latter denied the same.
On February 10, 2006, respondent filed against the petitioners a
Complaint13 for the recovery of disability benefits, illness
allowance, reimbursement of medical expenses, damages and
attorneys fees.
It appears from the record that on February 24, 2006,
respondent underwent coronary artery bypass graft surgery. He
then continued his treatment with Dr. Cruz, who for his part
continued to diagnose respondent with severe coronary artery
disease.
In his Position Paper14 and Reply,15 respondent stated and
argued that in the performance of his duties as Able Seaman, he
inhaled, was exposed to, and came into direct contact with
various injurious and harmful chemicals, dust, fumes/ emissions,
and other irritant agents; that he performed strenuous tasks
such as lifting, pulling, pushing and/or moving equipment and
materials on board the ship; that he was constantly exposed to
varying temperatures of extreme hot and cold as the ship
crossed ocean boundaries; that he was exposed as well to harsh
weather conditions; that in most instances, he was required to
perform overtime work; that the work of an Able Seaman is both
physically and mentally stressful; and that as a result, he
contracted his illness which required him to undergo bypass
surgery. He added that despite being examined by the company-
designated physician, he continued to suffer episodes of severe
chest pain, difficulty in breathing and other discomforts related
to his illness; that his health has not improved, and was instead
deteriorating, which thus led him to consult an independent
physician (Dr. Vicaldo); that Dr. Vicaldo declared him unfit to
work as seaman in any capacity and that his illness was work-
related; that despite the lapse of more than six months, the
company-designated physician has failed to make a finding
regarding his condition, which thus entitles him to permanent
total disability benefits; that his just claim for disability benefits
was denied by petitioners, which forced him to file the labor
complaint; and that he should thus be paid US$60,000.00
disability benefits with interest, 120 days illness allowance
based on his salary of US$390.00 or the amount of US$1,560.00
with interest, 500,000.00 damages, and attorneys fees of 10%
of the recoverable amount.
Petitioners, on the other hand, stated and argued in their
Position Paper16 and Reply17 that respondent filed a labor
complaint even before the company-designated physician, Dr.
Cruz, could complete his examination and treatment of
respondents condition, which thus prompted them to deny his
claim for disability benefits; that the independent physician Dr.
Vicaldo examined respondent only once on February 16, 2006,
and thus could not have arrived at a competent diagnosis of
respondents condition; that in the absence of a competent
diagnosis and substantial evidence, respondents claim for
benefits cannot stand; that respondents illness is not work-
related, and that his lifestyle caused, or was a contributing factor
to, his illness; that contrary to respondents claim, the latter has
been paid his illness allowance in full; that respondents medical
expenses are being shouldered by them; and that respondent is
not entitled to damages and attorneys fees as a result of
prematurely filing the labor case. Petitioners thus prayed that
the labor case be dismissed.
Ruling of the Labor Arbiter
On April 30, 2007, a Decision18 was rendered by the Labor
Arbiter which decreed as follows:
WHEREFORE, judgment is hereby rendered ordering
respondents to pay, jointly and severally, the complainant the
following amount[s]:
(1) US$60,000.00 or its peso equivalent at the time of payment
as disability benefit; and (2) US$6,000.00 or its peso equivalent
at the time of payment as attorneys fees.
All other claims are Dismissed for lack of merit.
SO ORDERED.19
The Labor Arbiter held essentially that respondent contracted
his illness while serving out his employment contract with
petitioners; that his illness was work-related/aggravated; that
while respondent was under the care of Dr. Cruz from September
18, 2005 until April 19, 2006, the latter could have come up with
a declaration of fitness or disability, yet he did not; that
respondents illness rendered him unfit for duty and required
bypass surgery to treat the same; and that respondents
condition constituted permanent total disability as the same is
equivalent to Impediment Grade 1 (120%) as assessed by Dr.
Vicaldo, which thus entitles respondent to the maximum
disability compensation of US$60,000.00. For lack of basis,
however, respondents claim for damages and reimbursement of
medical expenses was denied.
Ruling of the National Labor Relations Commission
Petitioners appealed to the National Labor Relations Commission
(NLRC).
On September 22, 2008, the NLRC rendered its
Decision20 granting petitioners appeal and reversing the Labor
Arbiters April 30, 2007 Decision, thus:
WHEREFORE, the appeal is GRANTED. The Labor Arbiters
Decision dated April 30, 2007 is hereby SET ASIDE.
SO ORDERED.21
Respondent moved for reconsideration, but in a November 27,
2008 Resolution,22 the motion was denied.
In reversing the Labor Arbiter, the NLRC declared that
respondents illness atherosclerosis/coronary artery disease
was not work-connected. Thus, it held:
Medical studies show that atherosclerosis is a disease affecting
arterial blood vessels. It is commonly referred to as a
"hardening" or "furring" of the arteries. It is caused by the
formation of multiple plaques within the arteries. It develops
from low-density lipoprotein cholesterol (LDL), colloquially
called "bad cholesterol". It typically begins in early adolescence
and is usually found in most major arteries, yet is asymptomatic
and not detected by most diagnostic methods during life. Some
risk factors for atherosclerosis are: advanced age, having
diabetes or impaired glucose tolerance, dysliporproteinemia or
unhealthy patterns of serum proteins carrying fats and
cholesterol, male sex, tobacco smoking, having high blood
pressure, being obese, a sedentary lifestyle, having close
relatives who have had some complication[s] of atherosclerosis,
elevated serum level of triglycerides, elevated serum insulin
levels, stress or symptoms of clinical depression and
hyperthyroidism x x x.23
Ruling of the Court of Appeals
In a Petition for Certiorari filed with the CA, respondent sought a
reversal of the NLRC Decision, arguing that the latter committed
grave abuse of discretion and gross error in declaring that his
illness was not work-related and in subsequently denying his
claims.
On April 20, 2010, the CA issued the assailed Decision containing
the following decretal portion:
WHEREFORE, the instant petition is GRANTED. The assailed
Decision dated September 22, 2008 and Resolution dated
November 27, 2008 of public respondent National Labor
Relations Commission ("NLRC"), Third Division, in NLRC LAC NO.
OFW (M) 08-000086-07, are REVERSED and SET ASIDE for
having been issued with grave abuse of discretion amounting to
lack or excess of jurisdiction. The decision dated April 30, 2007
of Labor Arbiter Donato G. Quinto, Jr. in NLRC-NCR-OFW 06-02-
00543-00 is hereby REINSTATED.
SO ORDERED.24
The CA held that respondent suffered permanent disability as a
result of Dr. Cruzs failure to make a definite assessment of his
condition within the statutory 120-day period prescribed under
the labor laws,25 or from September 18, 2005 date of
repatriation up to April 19, 2006, or date of last medical
intervention, or a total of 213 days. The CA held further that as
early as September 2005, respondent was declared unfit for duty
by a company-designated physician in Tianjin, China, and later
on, after tests were conducted, respondent was diagnosed with
coronary artery atherosclerosis and severe three-vessel
coronary artery disease; thus, respondent suffered a serious
occupational disease that prevented his further deployment as
seaman.
The CA added that respondents illness was work-related, and
can be attributed to the conditions he was working under as able
seaman; he was exposed and subjected to stress and pressures at
work which, after six months, resulted in his experiencing chest
pain, fatigue and difficulty in breathing and eventually, a
diagnosis of coronary heart disease.
The CA noted further that even during the pendency of the labor
case before the Labor Arbiter, Dr. Cruz did not render a final
assessment of respondents condition; as a result, the diagnosis
of the company-designated physician in Gangyou Hospital in
Tianjin, China that respondent was unfit for duty has not been
overturned. Thus, the CA concluded that since Dr. Cruz failed to
make a definite assessment of respondents fitness or disability
within the statutory 240-day period and even thereafter, there
can be no other conclusion than that respondent suffered
permanent total disability.
Petitioners filed a Motion for Reconsideration,26 but the CA
denied the same in its July 21, 2010 Resolution. Hence, the
present Petition.
Issues
Petitioners submit that
THE DECISION OF THE NATIONAL LABOR RELATIONS
COMMISSION (THIRD DIVISION) ORDERING THE DISMISSAL OF
THE ABOVE-CAPTIONED LABOR COMPLAINT FINDS AMPLE
SUPPORT IN THE EVIDENCE ON RECORD, IN MEDICAL
RESEARCH, IN THE PERTINENT PROVISIONS OF THE POEA
STANDARD CONTRACT, AND IN APPLICABLE JURISPRUDENCE.
THE HONORABLE COURT OF APPEALS, IN ITS QUESTIONED
DECISION PROMULGATED ON 20 APRIL 2010 AND RESOLUTION
PROMULGATED ON 21 JULY 2010, GRAVELY ERRS [sic] WHEN
IT ELECTED TO SET ASIDE AND/OR COMPLETELY IGNORE
SUCH FACTUAL AND LEGAL FINDINGS ON THE PART OF THE
NATIONAL LABOR RELATIONS COMMISSION (THIRD DIVISION)
AND WHEN IT THEREAFTER RULED TO REVERSE AND TO SET
ASIDE THE DECISION OF THE NATIONAL LABOR RELATIONS
COMMISSION (THIRD DIVISION) ORDERING THE DISMISSAL OF
THE ABOVE-CAPTIONED LABOR COMPLAINT FOR LACK OF
MERIT.27
Petitioners Arguments
Praying that the assailed CA dispositions be set aside and that a
pronouncement be made dismissing respondents labor
complaint, petitioners maintain in their Petition and Reply28 that
contrary to the CAs declarations, respondents illness is not
work-related; that respondents labor complaint was
prematurely filed, while he was still undergoing treatment for
his illness and before the company-designated physician/s could
complete treatment and make a definite assessment of his
condition; that they may not be blamed for the company-
designated physicians failure to arrive at a final assessment of
respondents condition; that it has not been shown that
respondents treatment lasted for the statutory duration of 240
days, since he filed his labor complaint even before the said
maximum 240-day treatment period could be reached and a
definite assessment of his condition could be made; and that
overall, respondent has not shown by substantial evidence that
he is entitled to his claims.
Respondents Arguments
In his Comment,29 respondent argues that the issues raised in the
Petition are factual in nature and no question of law is involved;
that his illness is compensable as it is work-connected and
constitutes an occupational disease under the POEA Contract
Standard Terms and Conditions Governing the Employment of
Filipino Seafarers on Board Ocean-Going Vessels; that Dr. Cruz
already knew of the gravity and serious nature of his condition,
yet he refused to make the required definite assessment of his
fitness or disability; and that the award of attorneys fees was
proper.
Our Ruling
The Court denies the Petition.
Compensability
Regarding the issue of compensability, it has been the Courts
consistent ruling that in disability compensation, "it is not the
injury which is compensated, but rather it is the incapacity to
work resulting in the impairment of ones earning
capacity."30 Moreover, "the list of illnesses/diseases in Section
32-A31 does not preclude other illnesses/diseases not so listed
from being compensable. The POEA-SEC cannot be presumed to
contain all the possible injuries that render a seafarer unfit for
further sea duties."32
Just the same, in several cases, cardiovascular disease, coronary
artery disease, as well as other heart ailments were held to be
compensable.33 Likewise, petitioners failed to refute
respondents allegations in his Position Paper that in the
performance of his duties as Able Seaman, he inhaled, was
exposed to, and came into direct contact with various injurious
and harmful chemicals, dust, fumes/emissions, and other irritant
agents; that he performed strenuous tasks such as lifting, pulling,
pushing and/or moving equipment and materials on board the
ship;
that he was constantly exposed to varying temperatures of
extreme hot and cold as the ship crossed ocean boundaries; that
he was exposed as well to harsh weather conditions; that in most
instances, he was required to perform overtime work; and that
the work of an Able Seaman is both physically and mentally
stressful. It does not require much imagination to realize or
conclude that these tasks could very well cause the illness that
respondent, then already 47 years old, suffered from six months
into his employment contract with petitioners. The following
pronouncement in a recent case very well applies to respondent:
x x x His constant exposure to hazards such as chemicals and the
varying temperature, like the heat in the kitchen of the vessel
and the coldness outside, coupled by stressful tasks in his
employment caused, or at least aggravated, his illness. It is
already recognized that any kind of work or labor produces
stress and strain normally resulting in wear and tear of the
human body.34
Notably, it is "a matter of judicial notice that an overseas worker,
having to ward off homesickness by reason of being physically
separated from his family for the entire duration of his contract,
bears a great degree of emotional strain while making an effort
to perform his work well. The strain is even greater in the case of
a seaman who is constantly subjected to the perils of the sea
while at work abroad and away from his family."35
Assessment by company-designated physician
The company-designated physician must arrive at a definite
assessment of the seafarers fitness to work or permanent
disability within the period of 120 or 240 days, pursuant to
Article 192 (c)(1) of the Labor Code and Rule X, Section 2 of the
AREC.36 If he fails to do so and the seafarers medical condition
remains unresolved, the latter shall be deemed totally and
permanently disabled.
Respondent was repatriated on September 18, 2005. He was
further examined by the company-designated physician Dr. Cruz
on September 21, 23 and 30, 2005; October 6, 2005; February 2,
13 and 17, 2006; March 6 and 20, 2006; and on April 19, 2006.
And beginning from the February 2, 2006 medical report,
respondent was diagnosed by Dr. Cruz with severe 3-vessel
coronary artery disease, and was scheduled for coronary artery
bypass surgery on February 24, 2006. After surgery, respondent
continued his treatment with Dr. Cruz, who on the other hand
continued to diagnose respondent with severe coronary artery
disease even on respondents last consultation on April 19, 2006.
Concededly, the period September 18, 2005 to April 19, 2006 is
less than the statutory 240-day or 8-month period.
Nonetheless, it is impossible to expect that by May 19, 2006, or
on the last day of the statutory 240-day period, respondent
would be declared fit to work when just recently or on
February 24, 2006 he underwent coronary artery bypass graft
surgery; by then, respondent would not have sufficiently
recovered. In other words, it became evident as early as April 19,
2006 that respondent was permanently and totally disabled,
unfit to return to work as seafarer and earn therefrom, given his
delicate post-operative condition; a definitive assessment by Dr.
Cruz before May 19, 2006 was unnecessary. Respondent would
to all intents and purposes still be unfit for sea-duty. Even then,
with Dr. Cruzs failure to issue a definite assessment of
respondents condition on May 19, 2006, or the last day of the
statutory 240-day period, respondent was thus deemed totally
and permanently disabled pursuant to Article 192 (c)(1) of the
Labor Code and Rule X, Section 2 of the AREC.
Premature labor complaint
Neither may it be argued by the petitioners that respondents
filing of the labor complaint on February 10, 2006 should affect
the outcome of the case. It is difficult to blame respondent for
deciding to sue, considering that he has been diagnosed by no
less than three separate physicians Drs. Dizon, Vicaldo, and
Cruz with severe three-vessel coronary artery disease which
required bypass procedure. Respondent may have been acting
under a sense of extreme urgency given the life-threatening WHEREFORE, the Petition is DENIED. The assailed April 20,
nature of his illness. The filing of the labor complaint may have 2010 Decision and July 21, 2010 Resolution of the Court of
been designed to pressure petitioners into taking action to Appeals in CA-G.R. SP No. 107330 are AFFIRMED in toto.
address his condition, or to recover expenses should he decide to
proceed with the bypass procedure on his own. Either way, the SO ORDERED.
Court cannot subscribe to the view that there was a premature
resort to litigation since respondent was still undergoing Republic of the Philippines
treatment for his illness and the company-designated physician SUPREME COURT
has not completed treatment and made a definite assessment of Baguio City
his condition.
SECOND DIVISION
Indeed, it may even be said that with Dr. Cruzs February 2, 2006
diagnosis that respondent was suffering from severe three- G.R. No. 204761 April 2, 2014
vessel coronary artery disease which required immediate bypass
graft procedure or surgery, respondent believed himself EMERITUS SECURITY AND MAINTENANCE SYSTEMS,
permanently and totally disabled which thus led him to demand INC., Petitioner,
disability benefits and thereafter file the labor case when vs.
petitioners ignored his demand.1wphi1 JANRIE C. DAILIG, Respondent.

Attorney's fees RESOLUTION

On the issue of attorney's fees, while petitioners have not been
shown to act in gross and evident bad faith in refusing to satisfy
respondent's demands, it is nonetheless true as a matter of law
and it has been held in the past that where an employee is forced
to litigate and incur expenses to protect his right and interest, he
is entitled to an award of attorney's fees equivalent to ten
percent (10%) of the total award at the time of actual payment.37
CARPIO, J.:
The Case
This petition for review1 assails the 25 May 2012 Decision2 and
11 December 2012 Resolution3 of the Court of Appeals in CA-G.R.
SP No. 111904. Affirming with modification the decision of the
National Labor Relations Commission (NLRC), the Court of
Appeals found respondent Janrie C. Dailig (respondent) illegally
dismissed by petitioner Emeritus Security and Maintenance
Systems, Inc. (petitioner) and ordered the payment of separation
pay, instead of reinstatement, and backwages.
The Facts
In August 2000, petitioner hired respondent as one of its security
guards. During his employment, respondent was assigned to
petitioner's various clients, the last of which was Panasonic in
Calamba, Laguna starting 16 December 2004.
On 10 December 2005, respondent was relieved from his post.
On 27 January 2006, respondent filed a complaint for
underpayment of wages, non-payment of legal and special
holiday pay, premium pay for rest day and underpayment of
ECOLA before the Department of Labor and Employment,
National Capital Region. The hearing officer recommended the
dismissal of the complaint since the claims were already paid.
On 16 June 2006, respondent filed a complaint for illegal
dismissal and payment of separation pay against petitioner
before the Conciliation and Mediation Center of the NLRC. On 14
July 2006, respondent filed another complaint for illegal
dismissal, underpayment of salaries and non-payment of full
backwages before the NLRC.
Respondent claimed that on various dates in December 2005 and
from January to May 2006,4 he went to petitioners office to
follow-up his next assignment. After more than six months since
his last assignment, still respondent was not given a new
assignment. Respondent argued that if an employee is on floating
status for more than six months, such employee is deemed
illegally dismissed.
Petitioner denied dismissing respondent. Petitioner admitted
that it relieved respondent from his last assignment on 10
December 2005; however, petitioner required respondent to
report to the head office within 48 hours from receipt of the
order of relief. Respondent allegedly failed to comply. Petitioner
claimed that on 27 January 2006 it sent respondent a notice to
his last known address requiring him to report to the head office
within 72 hours from receipt of the said notice. Petitioner further
alleged that it had informed respondent that he had been absent
without official leave for the month of January 2006, and that his
failure to report within 72 hours from receipt of the notice would
mean that he was no longer interested to continue his
employment.
Petitioner also claimed that there was no showing that
respondent was prevented from returning to his work and that it
had consistently manifested its willingness to reinstate him to
his former position. In addition, the fact that there was no
termination letter sent to respondent purportedly proved that
respondent was not dismissed.
On 5 December 2007, the Labor Arbiter rendered a Decision,
disposing of the case as follows:
WHEREFORE, premises considered, complainant is hereby
declared to have been illegally dismissed.1wphi1 Accordingly,
respondent is hereby ordered to reinstate complainant and to
pay him backwages from the time his compensation was
withheld by reason of his illegal dismissal until actual
reinstatement. His claim for underpayment is hereby denied for
lack of merit. The totality of complainants monetary award as
computed by the Computation and Examination Unit is hereby
adopted as integral part of this Decision.
SO ORDERED.5
The computation of the monetary award is as follows:
BACKWAGES from 12/10/05 TO 12/5/07
Basic Pay
On appeal with the Court of Appeals, petitioner argued that there
was abandonment on respondents part when he refused to
report for work despite notice. Thus, there was no illegal
dismissal to speak of.
The Ruling of the Court of Appeals
The Court of Appeals affirmed the finding of the Labor Arbiter
and the NLRC that respondent was illegally dismissed by
petitioner. However, the Court of Appeals set aside the Labor
Arbiter and the NLRCs reinstatement order. Instead, the Court of
Appeals ordered the payment of separation pay, invoking the
doctrine of strained relations between the parties.

180,381.6 The dispositive portion of the decision reads:

7,560.00/mo. x 23.86 mos. =
0
WHEREFORE, the instant petition for certiorari is DISMISSED.
13th month pay
The Decision and Resolution of the NLRC-First Division, dated
180,381.60/12 = 15,031.80 October 21, 2008 and October 19, 2009, respectively, in NLRC
Case No. RAB IV-07-23165-06-L NLRC LAC No. 03-000954-08,
SIL Pay are AFFIRMED with MODIFICATION, in that, petitioner is
ORDERED to pay private respondent Janrie C. Dailig (a)
7,560/30 x 5 days x
= 2,505.30 separation pay in the amount equivalent to one (1) month pay
23.86/12
for every year of service and (b) backwages, computed from the
TOTAL 197,918.70 6 time compensation was withheld from him when he was unjustly
terminated, up to the time of payment thereof. For this purpose,
Petitioner appealed before the NLRC, which dismissed the appeal the records of this case are hereby REMANDED to the Labor
for lack of merit. Petitioner moved for reconsideration, which the Arbiter for proper computation of said awards in view of this
NLRC denied. The NLRC, however, pointed out that the Decision. Costs against petitioner.
computation of respondents award of full backwages should be
reckoned from 10 June 2006 and not 10 December 2005. SO ORDERED.7
The Issues
The issues are (1) whether respondent was illegally dismissed by
respondent and (2) if he was, whether respondent is entitled to
separation pay, instead of reinstatement.
The Ruling of the Court
The Court affirms the finding of illegal dismissal of the Labor
Arbiter, NLRC, and Court of Appeals. However, the Court sets
aside the Court of Appeals award of separation pay in favor of
respondent, and reinstates the Labor Arbiters reinstatement
order.
On whether respondent was illegally dismissed
Petitioner admits relieving respondent from his post as security
guard on 10 December 2005. There is also no dispute that
respondent remained on floating status at the time he filed his
complaint for illegal dismissal on 16 June 2006. In other words,
respondent was on floating status from 10 December 2005 to 16
June 2006 or more than six months. Petitioners allegation of
sending respondent a notice sometime in January 2006,
requiring him to report for work, is unsubstantiated, and thus,
self-serving.
The Court agrees with the ruling of the Labor Arbiter, NLRC and
Court of Appeals that a floating status of a security guard, such as
respondent, for more than six months constitutes constructive
dismissal. In Nationwide Security and Allied Services, Inc. v.
Valderama,8 the Court held:
x x x the temporary inactivity or "floating status" of security
guards should continue only for six months. Otherwise, the
security agency concerned could be liable for constructive
dismissal. The failure of petitioner to give respondent a work
assignment beyond the reasonable six-month period makes it
liable for constructive dismissal. x x x.9
Further, the Court notes that the Labor Arbiter, NLRC, and Court
of Appeals unanimously found that respondent was illegally
dismissed by petitioner. Factual findings of quasi-judicial bodies
like the NLRC, if supported by substantial evidence, are accorded
respect and even finality by this Court, more so when they
coincide with those of the Labor Arbiter.10 Such factual findings
are given more weight when the same are affirmed by the Court
of Appeals.11 The Court finds no reason to depart from the
foregoing rule.
On whether respondent is entitled to separation pay
Article 279 of the Labor Code of the Philippines mandates the
reinstatement of an illegally dismissed employee, to wit:
Security of Tenure. - x x x An employee who is unjustly dismissed
from work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full back wages,
inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation
was withheld from him up to the time of his actual
reinstatement.
Thus, reinstatement is the general rule, while the award of
separation pay is the exception. The circumstances warranting
the grant of separation pay, in lieu of reinstatement, are laid
down by the Court in Globe-Mackay Cable and Radio Corporation
v. National Labor Relations Commission,12 thus:
Over time, the following reasons have been advanced by the
Court for denying reinstatement under the facts of the case and
the law applicable thereto; that reinstatement can no longer be
effected in view of the long passage of time (22 years of
litigation) or because of the realities of the situation; or that it
would be inimical to the employers interest; or that
reinstatement may no longer be feasible; or, that it will not serve
the best interests of the parties involved; or that the company
would be prejudiced by the workers continued employment; or
that it will not serve any prudent purpose as when supervening
facts have transpired which make execution on that score unjust
or inequitable or, to an increasing extent, due to the resultant
atmosphere of antipathy and antagonism or strained relations
or irretrievable estrangement between the employer and the
employee.
In this case, petitioner claims that it complied with the
reinstatement order of the Labor Arbiter.1wphi1 On 23 January
2008, petitioner sent respondent a notice informing him of the
Labor Arbiters decision to reinstate him. Accordingly, in
February 2008, respondent was assigned by petitioner to
Canlubang Sugar Estate, Inc. in Canlubang, Laguna, and to
various posts thereafter. At the time of the filing of the petition,
respondent was assigned by petitioner to MD Distripark Manila,
Inc. in Bian, Laguna.
Respondent admits receiving a reinstatement notice from
petitioner. Thereafter, respondent was assigned to one of
petitioner's clients. However, respondent points out that he was
not reinstated by petitioner Emeritus Security and Maintenance
Systems, Inc. but was employed by another company, Emme
Security and Maintenance Systems, Inc. (Emme). Thus, according
to respondent, he was not reinstated at all.
Petitioner counters that Emeritus and Emme are sister
companies with the same Board of Directors and officers,
arguing that Emeritus and Emme are in effect one and the same
corporation.
Considering petitioner's undisputed claim that Emeritus and
Emme are one and the same, there is no basis in respondent's
allegation that he was not reinstated to his previous
employment. Besides, respondent assails the corporate
personalities of Emeritus and Emme only in his Comment filed
before this Court. Further, respondent did not appeal the Labor
Arbiter's reinstatement order.
Contrary to the Court of Appeals' ruling, there is nothing in the
records showing any strained relations between the parties to
warrant the award of separation pay. There is neither allegation
nor proof that such animosity existed between petitioner and
respondent. In fact, petitioner complied with the Labor Arbiter's
reinstatement order.
Considering that (1) petitioner reinstated respondent in
compliance with the Labor Arbiter's decision, and (2) there is no
ground, particularly strained relations between the parties, to
justify the grant of separation pay, the Court of Appeals erred in In anticipation of the expiration on April 30, 2004 of the 2001-
ordering the payment thereof, in lieu of reinstatement. 2004 Collective Bargaining Agreement (CBA) between the
petitioner and the respondent Pilipinas Shell Petroleum
WHEREFORE, the Court DENIES the petition and REINSTATES Corporation, the parties started negotiations for a new CBA.
the 5 December 2007 Decision of the Labor Arbiter. However, After several meetings on the ground rules that would govern
the backwages should be computed from 10 June 2006 when the negotiations and on political items, the parties started their
respondent was illegally dismissed up to the time he was discussion on the economic items on July 27, 2004, their 31st
reinstated in February 2008. meeting. The union proposed a 20o/o annual across-the-board
basic salary increase for the next three years that would be
SO ORDERED. covered by the new CBA. In lieu of the annual salary increases,
the company made a counter-proposal to grant all covered
Republic of the Philippines employees a lump sum amount of 80,000.00 yearly for the
SUPREME COURT three-year period of the new CBA.2
Baguio City
The union requested the company to present its counter-
G.R. No. 170007 April 7, 2014 proposal in full detail, similar to the presentation by the union of
its economic proposal. The company explained that the lump
TABANGAO SHELL REFINERY EMPLOYEES sum amount was based on its affordability for the corporation,
ASSOCIATION, Petitioner, the then current salary levels of the members of the union
vs. relative to the industry, and the then current total pay and
PILIPINAS SHELL PETROLEUM CORPORATION, Respondent. benefits package of the employees. Not satisfied with the
companys explanation, the union asked for further justification
DECISION of the lump sum amount offered by the company. When the
company refused to acknowledge any obligation to give further
LEONARDO-DE CASTRO, J.: justification, the union rejected the companys counter-proposal
and maintained its proposal for a 20% annual increase in basic
This an appeal from the Decision1 dated August 8, 2005 of the
pay for the next three years.3
Court of Appeals in CA-G.R. SP No. 88178 dismissing the petition
for certiorari of the petitioner Tabangao Shell Refinery On the 39th meeting of the parties on August 24, 2004, the union
Employees Association. lowered its proposal to 12% annual across-the-board increase
for the next three years. For its part, the company increased its
The origins of the controversy
counter-proposal to a yearly lump sum payment of 88,000.00
for the next three years. The union requested financial data for
the manufacturing class of business in the Philippines. It also
requested justification for the companys counter-offer. In
response, the company stated that financial measures for
Tabangao were available in the refinery scorecard regularly
cascaded by the management to the employees. The company
reiterated that its counter-offer is based on its affordability for
the company, comparison with the then existing wage levels of
allied industry, and the then existing total pay and benefits
package of the employees. The company subsequently provided
the union with a copy of the companys audited financial
statements.4
However, the union remained unconvinced and asked for
additional documents to justify the companys counter-offer. The
company invited the attention of the union to the fact that
additional data, such as the refinery performance scorecard,
were available from the refinerys website and shared network
drives. The company also declared that the bases of its counter-
offer were already presented to the union and contained in the
minutes of previous meetings. The union thereafter requested
for a copy of the comparison of the salaries of its members and
those from allied industries. The company denied the request on
the ground that the requested information was entrusted to the
company under a confidential agreement. Alleging failure on the
part of the company to justify its offer, the union manifested that
the company was bargaining in bad faith.5 The company, in turn,
expressed its disagreement with the unions manifestation.6
On the parties 41st meeting held on September 2, 2004, the
company proposed the declaration of a deadlock and
recommended that the help of a third party be sought. The union
replied that they would formally answer the proposal of the
company a day after the signing of the official minutes of the
meeting. On that same day, however, the union filed a Notice of
Strike in the National Conciliation and Mediation Board (NCMB),
alleging bad faith bargaining on the part of the company. The
NCMB immediately summoned the parties for the mandatory
conciliation-mediation proceedings but the parties failed to
reach an amicable settlement.7
Assumption of Jurisdiction by the Secretary of Labor and
Employment
On September 16, 2004, during the cooling off period, the union
conducted the necessary strike vote. The members of the union,
who participated in the voting, unanimously voted for the
holding of a strike. Upon being aware of this development, the
company filed a Petition for Assumption of Jurisdiction with the
Secretary of Labor and Employment.8 The petition was filed
pursuant to the first paragraph of Article 263(g) of the Labor
Code which provides:
ART. 263. Strikes, picketing, and lockouts. x x x
xxxx
(g) When, in his opinion, there exists a labor dispute causing or
likely to cause a strike or lockout in an industry indispensable to
the national interest, the Secretary of Labor and Employment
may assume jurisdiction over the dispute and decide it or certify
the same to the Commission for compulsory arbitration. Such
assumption or certification shall have the effect of automatically
enjoining the intended or impending strike or lockout as
specified in the assumption or certification order. If one has
already taken place at the time of assumption or certification, all
striking or locked out employees shall immediately return to
work and the employer shall immediately resume operations
and readmit all workers under the same terms and conditions
prevailing before the strike or lockout. The Secretary of Labor
and Employment or the Commission may seek the assistance of
law enforcement agencies to ensure the compliance with this
provision as well as with such orders as he may issue to enforce
the same.
The companys petition for assumption of jurisdiction was
docketed as OSEC-AJ-0033-04/NCMB-RBIV-LAG-NS-09-048-04.
In an Order9 dated September 20, 2004, the then Secretary of
Labor and Employment, Patricia Sto. Tomas, granted the petition
of the company. The Secretary of Labor and Employment took
notice of the Notice of Strike filed by the union in the NCMB
which charged the company with unfair labor practice consisting
of bad faith in bargaining negotiations. The Secretary of Labor
and Employment also found that the intended strike would likely
affect the companys capacity to provide petroleum products to
the companys various clientele, including the transportation
sector, the energy sector, and the manufacturing and industrial
sectors. The Secretary of Labor and Employment further
observed that a strike by the union would certainly have a
negative impact on the price of commodities. Convinced that
such a strike would have adverse consequences on the national
economy, the Secretary of Labor and Employment ruled that the
labor dispute between the parties would cause or likely to cause
a strike in an industry indispensable to the national interest.
Thus, the Secretary of Labor and Employment assumed
jurisdiction over the dispute of the parties. The dispositive
portion of the Order dated September 20, 2004 reads:
WHEREFORE, considering the foregoing premises, this Office
hereby assumes jurisdiction over the labor dispute between the
TABANGAO SHELL REFINERY EMPLOYEES ASSOCIATION and
the PILIPINAS SHELL PETROLEUM CORPORATION, pursuant to
Article 263 (g) of the Labor Code, as amended.
Accordingly, any form of concerted action, whether actual or
intended, is hereby enjoined. Parties are directed to maintain the
status quo existing at the time of service of this Order. They are
also ordered not to commit any act that may exacerbate the
situation.
However, if at the time of service of this Order a strike has
already commenced, the employees are directed to immediately
return to work within twenty-four (24) hours from receipt
thereof. In such case[,] the employer shall, without unnecessary
delay, resume operations and readmit all workers under the
same terms and conditions prevailing before the strike.
To expedite the resolution of this dispute, the parties are
directed to submit in three [3] copies, their respective Position
Paper on the economic issues and those raised in the Notice of
Strike, docketed as NCMB-RBIV-LAG-NS-09-048-04. It must be
submitted personally to this Office within seven [7] calendar
days from receipt of this Order. Another three [3] calendar days
from receipt of the other partys position paper shall be allowed
for the personal filing or submission of their respective Comment
and Reply thereon. Service of position papers together with
annexes, affidavits and other papers accompanying the same
should be done personally. If service by registered mail cannot
be avoided, it should follow the mandate of Article 263 of the
Labor Code and shall be deemed complete upon the expiration of
five (5) calendar days from mailing. After said period[,] the
allowed time for filing of Reply shall start, after which, the case
shall be deemed submitted for resolution.
The Company is ordered to attach the following documents to its
position paper, to assist this Office in the prompt resolution of
this case:
a] Complete Audited Financial Statements for the past five [5]
years certified as to its completeness by the Chief Financial
Comptroller or Accountant, as the case may be[;]
SEC stamped COMPLETE audited Financial Statements shall
include the following:
1. Independent Auditors opinion
2. Comparative Balance Sheet
3. Comparative Income Statement
4. Comparative Cash Flows
5. Notes to the Financial Statements as required by SEC
b] Projected Financial Statements of the Company FOR THE
NEXT THREE [3] YEARS (Balance Sheets, Income Statements,
Cash Flow, and Appropriate notes to such projected [F]inancial
Statements);
c] CBA history as to all the economic issues;
d] Cost estimates of its final offer on the specific CBA issues;
e] A separate itemized summary of the Management Offer and
the Union demands with [the] following format:
[[reference
= http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurispru
dence/2014/april2014/170007.pdf]]
Description of Existing CBA Union Demands Manageme
Demands
1.
2.
The Union is directed to provide a copy of their last CBA, an
itemized summary of its CBA demands, as well as a computation
of their cost[s] that require resolution in triplicate copies using
the same format stated above.
No petition, pleading or any opposition thereto shall be acted
upon by this Office, without proof of its service to the adverse
party/parties.
In the interest of speedy labor justice, this Office will entertain no
motion for extension or postponement.
The urgency of the need to rule on this case is only in faithful
adherence to the following provision of Article 263 paragraph (i)
of the Labor Code, as follows:
"The Secretary of Labor and Employment, the Commission or the
voluntary arbitrator shall decide or resolve the dispute within
thirty (30) calendar days from the date of the assumption of
jurisdiction or the certification or submission of the dispute, as
the case may be. x x x"
The appropriate police authority is hereby deputized to enforce
this Order if it turns out that within twenty-four (24) hours from
service hereof, there appears a refusal by either or both parties
to comply herewith.10
The Secretary of Labor and Employment denied the motion for
reconsideration of the union in a Resolution dated October 6,
2004. The unions second motion for reconsideration was denied
in a Resolution dated December 13, 2004.11
Petition for certiorari in the Court of Appeals
The union thereafter filed a petition for certiorari,12 docketed as
CA-G.R. SP No. 88178, in the Court of Appeals on January 13,
2005. The union alleged in its petition that the Secretary of Labor
and Employment acted with grave abuse of discretion in grossly
misappreciating the facts and issue of the case. It contended that
the issue is the unfair labor practice of the company in the form
of bad faith bargaining and not the CBA deadlock. Anchoring its
position on item 8 of what the parties agreed upon as the ground
rules that would govern the negotiations, the union argued that,
at the time the Order dated September 20, 2004 was issued,
there was no CBA deadlock on account of the unions non-
conformity with the declaration of a deadlock, as item 8 of the
said ground rules provided that a "deadlock can only be declared
upon mutual consent of both parties." Thus, the Secretary of
Labor and Employment committed grave abuse of discretion
when she assumed jurisdiction and directed the parties to
submit position papers even on the economic issues.13
The Court of Appeals found the position of the union untenable.
It cited this Courts ruling in St. Scholasticas College v.
Torres14 that the authority of the Secretary of Labor and
Employment under Article 263(g) of the Labor Code to assume
jurisdiction over a labor dispute causing or likely to cause a
strike or lockout in an industry indispensable to national interest
includes questions and controversies arising from the said
dispute, including cases over which the Labor Arbiter has
exclusive jurisdiction. Applying St. Scholasticas College, the
Court of Appeals found that the 2004 CBA Official Minutes of the
Meetings show that the union and the company were already
discussing the economic issues when the union accused the
company of bargaining in bad faith. As such, the Secretary of
Labor and Employment had the authority to take cognizance of
the economic issues, which issues were the necessary
consequence of the alleged bad faith bargaining.15
Moreover, according to the Court of Appeals, Article 263(g) of
the Labor Code vests in the Secretary of Labor and Employment
not only the discretion to determine what industries are
indispensable to national interest but also the power to assume
jurisdiction over such industries labor disputes, including all
questions and controversies arising from the said disputes. Thus,
as the Secretary of Labor and Employment found the companys
business to be one that is indispensable to national interest, she
had authority to assume jurisdiction over all of the companys
labor disputes, including the economic issues.16
Finally, the Court of Appeals noted that the unions contention
that the Secretary of Labor and Employment cannot resolve the
economic issues because the union had not given its consent to
the declaration of a deadlock was already moot. The Court of
Appeals observed that the union filed on February 7, 2005
another Notice of Strike citing CBA deadlock as a ground and, in
an Order dated March 1, 2005, the then Acting Secretary of Labor
and Employment, Manuel Imson, granted the companys
Manifestation with Motion to Consider the Second Notice of
Strike as Subsumed to the First Notice of Strike.17
Given the above reasons, the Court of Appeals dismissed the
petition for certiorari of the union. The dispositive portion of the
Decision dated August 8, 2005 reads as follows:
UPON THE VIEW WE TAKE OF THIS CASE, THUS, the petition
must be, as it hereby is DISMISSED, for lack of merit. Costs
against petitioner.18
A detour: from the National Labor Relations Commission to the
Secretary of Labor and Employment
In the meantime, on February 2, 2005, the union filed a
complaint for unfair labor practice against the corporation in the
National Labor Relations Commission. The union alleged that the
company refused, or violated its duty, to bargain.19
The company moved for the dismissal of the complaint, believing
that all the elements of forum shopping and/or litis pendentia
were present.20
In an Order21 dated May 9, 2005, the Labor Arbiter found that the
case arose from the very same CBA negotiations which
culminated into a labor dispute when the union filed a notice of
strike for bad faith bargaining and CBA deadlock. According to
the Labor Arbiter, the issue raised by the union, refusal to
bargain, was a proper incident of the labor dispute over which
the Secretary of Labor and Employment assumed jurisdiction.
Thus, the case was forwarded for consolidation with the labor
dispute case of the parties in the Office of the Secretary of Labor
and Employment.
Decision of the Secretary of Labor and Employment
During the pendency of the unions petition for certiorari in the
Court of Appeals, the Secretary of Labor and Employment
rendered a Decision22 dated June 8, 2005 in OSEC-AJ-0033-
04/NCMB-RBIV-LAG-NS-09-048-04/NCMB-RBIV-LAG-NS-02-
004-05.
In her Decision, the Secretary of Labor and Employment held
that there was already deadlock although the ground for the first
Notice of Strike was unfair labor practice for bargaining in bad
faith. Citing Capitol Medical Center Alliance of Concerned
Employees-Unified Filipino Service Workers v.
Laguesma where it has been held that there may be a deadlock
23
not only in the strict legal sense of an impasse despite reasonable
effort at good faith bargaining but also where one of the parties
unduly refuses to comply with its duty to bargain, the Secretary
of Labor and Employment ruled that the circumstances 41 CBA
meetings showing "reasonable efforts at good faith bargaining"
without arriving at a CBA show that there was effectively a
bargaining deadlock between the parties.24
Moreover, the Secretary of Labor and Employment also passed
upon the issue of whether the company was guilty of bargaining
in bad faith:
Now, is the Company guilty of bargaining in bad faith? This Office
rules in the negative.
The duty to bargain does not compel any party to accept a
proposal, or make any concession, as recognized by Article 252
of the Labor Code, as amended. The purpose of collective
bargaining is the reaching of an agreement resulting in a contract
binding on the parties; however, the failure to reach an
agreement after negotiations continued for a reasonable period
does not establish a lack of good faith. The laws invite and
contemplate a collective bargaining contract, but they do not
compel one. The duty to bargain does not include the obligation
to reach an agreement. Thus, the Companys insistence on a
bargaining position to the point of stalemate does not establish
bad faith. The Companys offer[,] a lump sum of Php88,000 per
year, for each covered employee in lieu of a wage increase
cannot, by itself, be taken as an act of bargaining in bad faith. The
minutes of the meetings of the parties, show that they both
exerted their best efforts, to try to resolve the issues at hand.
Many of the proposed improvements or changes, were either
resolved, or deferred for further discussion. It is only on the
matter of the wage increase, that serious debates were
registered. However, the totality of conduct of the Company as
far as their bargaining stance with the Union is concerned, does
not show that it was bargaining in bad faith.25
The Secretary of Labor and Employment then proceeded to
decide on the matter of the wage increase and other economic
issues of the new CBA. For failure of the union to substantiate its
demand for wage increase as it did not file its position paper, the
Secretary of Labor and Employment looked at the financial
situation of the company, as shown by its audited financial
statements, and found it just and equitable to give a lump sum
package of 95,000.00 per year, per covered employee, for the
new CBA covering the period May 1, 2004 until April 30, 2007.
The Secretary of Labor and Employment further retained the
other benefits covered by the 2001-2004 CBA as she found the
said benefits to be sufficient and reasonable.26
Neither the union nor the company appealed the Decision dated
June 8, 2005 of the Secretary of Labor and Employment.27 Thus,
the said Decision attained finality.
The present petition
The union now comes to this Court to press its contentions. It
insists that the corporation is guilty of unfair labor practice
through bad faith bargaining. According to the union, bad faith
bargaining and a CBA deadlock cannot legally co-exist because
an impasse in negotiations can only exist on the premise that
both parties are bargaining in good faith. Besides, there could
have been no deadlock between the parties as the union had not
given its consent to it, pursuant to item 8 of the ground rules
governing the parties negotiations which required mutual
consent for a declaration of deadlock. The union also posits that
its filing of a CBA deadlock case against the company was a
separate and distinct case and not an offshoot of the companys
unfair labor practice through bargaining in bad faith. According
to the union, as there was no deadlock yet when the union filed
the unfair labor practice of bargaining in bad faith, the
subsequent deadlock case could neither be an offshoot of, nor an
incidental issue in, the unfair labor practice case. Because there
was no deadlock yet at the time of the filing of the unfair labor
practice case, the union claims that deadlock was not an
incidental issue but a non-issue. As deadlock was a non-issue
with respect to the unfair labor practice case, the Court of
Appeals misapplied St. Scholasticas College and the Secretary of
Labor and Employment committed grave abuse of discretion
when it presumed deadlock in its Order dated September 20,
2004 assuming jurisdiction over the labor dispute between the
union and the company.28
For its part, the company argues that the Court of Appeals
correctly affirmed the Order dated September 20, 2004 of the
Secretary of Labor and Employment assuming jurisdiction over
the labor dispute between the parties. The company claims that
it is engaged in an industry that is vital to the national interest,
and that the evidence on record established that there was
already a full-blown labor dispute between the company and the
union arising from the deadlock in CBA negotiations. The
company insists that the alleged bad faith on its part, which the
union claimed to have prevented any CBA deadlock, has no basis.
The company invokes the final Decision dated June 8, 2005 of the
Secretary of Labor and Employment which ruled that the
company was not guilty of bargaining in bad faith. For the
company, even if the unions first Notice of Strike was based on
unfair labor practice and not deadlock in bargaining, the
Secretary of Labor and Employments assumption of jurisdiction
over the labor dispute between the parties extended to all
questions and controversies arising from the labor dispute, that
is, including the economic issues.29
The Courts ruling
The petition fails. There are at least four reasons to support the
denial of the petition and each reason is sufficient to defeat the
unions claims.
First, the petition is barred by res judicata in the concept of
conclusiveness of judgment.
The concept of conclusiveness of judgment is explained in Nabus
v. Court of Appeals30 as follows:
The doctrine states that a fact or question which was in issue in a
former suit, and was there judicially passed on and determined
by a court of competent jurisdiction, is conclusively settled by
the judgment therein, as far as concerns the parties to that action
and persons in privity with them, and cannot be again litigated in
any future action between such parties or their privies, in the
same court or any other court of concurrent jurisdiction on
either the same or a different cause of action, while the judgment
remains unreversed or unvacated by proper authority. The only
identities thus required for the operation of the judgment as an
estoppel x x x are identity of parties and identity of issues.
It has been held that in order that a judgment in one action can
be conclusive as to a particular matter in another action between
the same parties or their privies, it is essential that the issues be
identical. If a particular point or question is in issue in the second
action, and the judgment will depend on the determination of
that particular point or question, a former judgment between the
same parties [or their privies] will be final and conclusive in the
second if that same point or question was in issue and
adjudicated in the first suit[.] x x x. (Citations omitted.)
The Decision dated June 8, 2005 of the Secretary of Labor and
Employment in the labor dispute over which he assumed
jurisdiction, OSEC-AJ-0033-04/NCMB-RBIV-LAG-NS-09-048-
04/NCMB-RBIV-LAG-NS-02-004-05, has long attained finality.
The union never denied this.
In this connection, Article 263(i) of the Labor Code is clear:
ART. 263. Strikes, picketing, and lockouts. x x x
xxxx
(i) The Secretary of Labor and Employment, the Commission or
the voluntary arbitrator shall decide or resolve the dispute
within thirty (30) calendar days from the date of the assumption
of jurisdiction or the certification or submission of the dispute, as
the case may be. The decision of the President, the Secretary of
Labor and Employment, the Commission or the voluntary
arbitrator shall be final and executory ten (10) calendar days
after receipt thereof by the parties. (Emphases supplied.)
Pursuant to Article 263(i) of the Labor Code, therefore, the
Decision dated June 8, 2005 of the Secretary of Labor and
Employment became final and executory after the lapse of the
period provided under the said provision. Moreover, neither
party further questioned the Decision dated June 8, 2005 of the
Secretary of Labor and Employment.
The Decision dated June 8, 2005 of the Secretary of Labor and
Employment already considered and ruled upon the issues being
raised by the union in this petition. In particular, the said
Decision already passed upon the issue of whether there was
already an existing deadlock between the union and the
company when the Secretary of Labor and Employment assumed
jurisdiction over their labor dispute. The said Decision also
answered the issue of whether the company was guilty of
bargaining in bad faith. As the Decision dated June 8, 2005 of the
Secretary of Labor and Employment already settled the said
issues with finality, the union cannot once again raise those
issues in this Court through this petition without violating the
principle of res judicata, particularly in the concept of
conclusiveness of judgment.
Second, a significant consequence of the finality of the Decision
dated June 8, 2005 of the Secretary of Labor and Employment is
that it rendered the controversy between the union and the
company moot.
In particular, with the finality of the Decision dated June 8, 2005,
the labor dispute, covering both the alleged bargaining in bad
faith and the deadlock, between the union and the company was
settled with finality. As the said Decision settled essentially the
same questions being raised by the union in this case, the finality
of the said Decision rendered this case moot. The union cannot
be allowed to use this case to once again unsettle the issues that
have been already settled with finality by the final and executory
Decision dated June 8, 2005 of the Secretary of Labor and
Employment.
Moreover, the issues of alleged bargaining in bad faith on the
part of the company and the deadlock in the negotiations were
both incident to the framing of a new CBA that would govern the
parties for the period 2004 to 2007. Not only had the said period
long lapsed, the final Decision dated June 8, 2005 of the Secretary
of Labor and Employment also facilitated the framing of the new
CBA, particularly on the disputed provision on annual lump sum
payment in lieu of wage increase. The dispositive portion of the
said Decision is clear and categorical:
WHEREFORE, this Office hereby orders:
1. The award of Php95,000 lump sum, per covered
employee per year, for the duration of their CBA,
effective 01 May 2004 to 30 April 2007;
2. The retention of benefits on vacation leave, sick leave,
and special leave as provided in the 2001-2004 CBA;
3. All improvements that [the] parties may have agreed
upon during the negotiations, are adopted as part of the
CBA. All other demands, not passed upon herein, are
deemed DENIED.
The parties are hereby directed, to submit a copy of the CBA
incorporating the awards granted herein, within ten (10) days
from receipt of this Decision.31
As the above directive of the Secretary of Labor and Employment
in the decretal portion of the Decision dated June 8, 2005 has
long been final and executory, the dispute on the matter of the
provision on annual wage increase contra yearly lump sum
payment is already moot.
Third, the petition is improper as it presents questions of fact. A
question of fact cannot properly be raised in a petition for review
under Rule 45 of the Rules of Court.32 This petition of the union
now before this Court is a petition for review under Rule 45 of
the Rules of Court.
The existence of bad faith is a question of fact and is
evidentiary.33 The crucial question of whether or not a party has
met his statutory duty to bargain in good faith typically turns on
the facts of the individual case, and good faith or bad faith is an
inference to be drawn from the facts.34 Thus, the issue of
whether or not there was bad faith on the part of the company
when it was bargaining with the union is a question of fact. It
requires that the reviewing court look into the evidence to find if
indeed there is proof that is substantial enough to show such bad
faith.
The issue of whether there was already deadlock between the
union and the company is likewise a question of fact. It requires
the determination of evidence to find whether there is a
"counteraction" of forces between the union and the company
and whether each of the parties exerted "reasonable effort at
good faith bargaining."35 This is so because a deadlock is defined
as follows:
A deadlock is x x x the counteraction of things producing entire
stoppage; x x x There is a deadlock when there is a complete
blocking or stoppage resulting from the action of equal and
opposed forces x x x. The word is synonymous with the word
impasse, which x x x presupposes reasonable effort at good faith
bargaining which, despite noble intentions, does not conclude in
agreement between the parties.36
Considering that the issues presented by the union are factual
issues, the unions petition is improper. As a rule, this Court
cannot properly inquire into factual matters in the exercise of its
judicial power under Rule 45 of the Rules of Court. While there
are exceptions to this rule, none of the exceptions apply in this
case.
Fourth, and finally, assuming that this Court may disregard the
conclusiveness of judgment and review the factual matters
raised by the union, the merits are still not in the unions favor.
The findings of fact of the Secretary of Labor and Employment in
the Decision dated June 8, 2005 that there already existed a
bargaining deadlock when she assumed jurisdiction over the
labor dispute between the union and the company, and that
there was no bad faith on the part of the company when it was
bargaining with the union are both supported by substantial
evidence. This Court sees no reason to reverse or overturn the
said findings.
The final and executory Decision dated June 8, 2005 of the
Secretary of Labor and Employment squarely addressed the
contention of the union that the company was guilty of
bargaining in bad faith. The said Decision correctly characterized
the nature of the duty to bargain, that is, it does not compel any
party to accept a proposal or to make any concession.37 While the
purpose of collective bargaining is the reaching of an agreement
between the employer and the employees union resulting in a
binding contract between the parties, the failure to reach an
agreement after negotiations continued for a reasonable period
does not mean lack of good faith. The laws invite and
contemplate a collective bargaining contract but do not compel
one.38 For after all, a CBA, like any contract is a product of mutual
consent and not of compulsion. As such, the duty to bargain does
not include the obligation to reach an agreement.39 In this light,
the corporations unswerving position on the matter of annual
lump sum payment in lieu of wage increase did not, by itself,
constitute bad faith even if such position caused a stalemate in
the negotiations, as correctly ruled by the Secretary of Labor and
Employment in the decision dated June 8, 2005.
As there was no bad faith on the part of the company in its
bargaining with the union, deadlock was possible and did occur.
The unions reliance on item 8 of the ground rules governing the
parties negotiations which required mutual consent for a
declaration of deadlock was reduced to irrelevance by the actual
facts. Contra factum non valet argumentum. There is no
argument against facts. And the fact is that the negotiations
between the union and the company were stalled by the
opposing offers of yearly wage increase by the union, on the one
hand, and annual lump sum payment by the company, on the
other hand. Each party found the others offer unacceptable and
neither party was willing to yield. The company suggested
seeking the assistance of a third party to settle the issue but the
union preferred the remedy of filing a notice of strike. Each party
was adamant in its position. Thus, because of the unresolved
issue on wage increase, there was actually a complete stoppage
of the ongoing negotiations between the parties and the union
filed a Notice of Strike. A mutual declaration would neither add
to nor subtract from the reality of the deadlock then existing
between the parties. Thus, the absence of the parties mutual
declaration of deadlock does not mean that there was no
deadlock. At most, it would have been simply a recognition of the
prevailing status quo between the parties.
More importantly, the union only caused confusion in the
proceedings before the Secretary of Labor and Employment
when it questioned the latters assumption of jurisdiction over
the labor dispute between the union and the company on the
ground that the "Secretary erred in assuming jurisdiction over
the CBA case when it [was] not the subject matter of the notice
of strike" because the case was "all about ULP in the form of bad
faith bargaining." For the union, the Secretary of Labor and
Employment should not have touched the issue of the CBA as
there was no CBA deadlock at that time, and should have limited
the assumption of jurisdiction to the charge of unfair labor
practice for bargaining in bad faith.40
The union is wrong.
As discussed above, there was already an actual existing
deadlock between the parties. What was lacking was the formal
recognition of the existence of such a deadlock because the union
refused a declaration of deadlock. Thus, the unions view that, at
the time the Secretary of Labor and Employment exercised her
power of assumption of jurisdiction, the issue of deadlock was
neither an incidental issue to the matter of unfair labor practice
nor an existing issue is incorrect.
More importantly, however, the unions mistaken theory that the
deadlock issue was neither incidental nor existing is based on its
premise that the case is all about the companys alleged unfair
labor practice of bargaining in bad faith, which is the ground
stated in its first Notice of Strike. In particular, the union asserts:
The evidentiary value of the Notice of Strike for ULP of BAD
FAITH BARGAINING (Annex "M" of the petition) cannot be taken
for granted. It is the very important documentary evidence that
shows what is the existing "labor dispute" between the parties.41
While the first Notice of Strike is indeed significant in the
determination of the existing labor dispute between the parties,
it is not the sole criterion. As this Court explained in Union of
Filipro Employees-Drug, Food and Allied Industries Unions-
Kilusang Mayo Uno v. Nestle Philippines, Inc.42:
The Secretary of the DOLE has been explicitly granted by Article
263(g) of the Labor Code the authority to assume jurisdiction
over a labor dispute causing or likely to cause a strike or lockout
in an industry indispensable to the national interest, and decide
the same accordingly.1wphi1 And, as a matter of necessity, it
includes questions incidental to the labor dispute; that is, issues
that are necessarily involved in the dispute itself, and not just to
that ascribed in the Notice of Strike or otherwise submitted to
him for resolution. x x x (Emphasis supplied.)
The totality of the companys Petition for Assumption of
Jurisdiction, including every allegation therein, also guided the
Secretary of Labor and Employment in the proper determination
of the labor dispute over which he or she was being asked to
assume jurisdiction.
A "labor dispute" is defined under Article 212(l) of the Labor
Code as follows:
ART. 212. Definitions. x x x
xxxx
(l) "Labor dispute" includes any controversy or matter
concerning terms or conditions of employment or the association
or representation of persons in negotiating, fixing, maintaining,
changing or arranging the terms and conditions of employment,
regardless of whether the disputants stand in the proximate
relation of employer and employee.
In this case, there was a dispute, an unresolved issue on several
matters, between the union and the company in the course of the
negotiations for a new CBA. Among the unsettled issues was the
matter of compensation. In particular, paragraphs 1 to 6 of the
statement of Antecedent Facts in the companys Petition for
Assumption of Jurisdiction43 read:
1. The Collective Bargaining Agreement (CBA) of the
Company and the Union expired on 30 April 2004.
2. Thus, as early as 13 April 2004, the Company and the
Union already met to discuss the ground rules that would
govern their upcoming negotiations. Then, on 15 April
2004, the Union submitted its proposals for the renewal
of their CBA.
3. While a total of 41 meetings were held between the
parties, several items, including the matter of
compensation, remained unresolved.
Copies of the Minutes of the 41 meetings are attached
hereto and made integral part hereof as Annexes "A" to
"A-40".
4. On 2 September 2004, the Union filed a Notice of Strike
with the NCMB, Region IV based in Calamba, Laguna
anchored on a perceived unfair labor practice consisting
of alleged bad faith bargaining on the part of the
Company.
Although there is no basis to the charge of unfair labor
practice as to give a semblance of validity to the notice of
 strike, the Company willingly and actually participated in
the conciliation and mediation conferences called by the
NCMB to settle the dispute.
A copy of the Notice of Strike is attached hereto and
made integral part hereof as Annex "B".
5. Although conciliation meetings have been conducted
by the National Conciliation and Mediation Board
(NCMB) through Conciliator Leodegario Teodoro on 09
and 13 September 2004, no settlement of the dispute has
yet been agreed upon.
6. Based on the attendant circumstances, as well as on
the actuations of the Union officers and members, it is
likely that the Union has already conducted, or is set to
conduct soon, a strike vote.44
Thus, the labor dispute between the union and the company
concerned the unresolved matters between the parties in
relation to their negotiations for a new CBA. The power of the
Secretary of Labor and Employment to assume jurisdiction over
this dispute includes and extends to all questions and
controversies arising from the said dispute, such as, but not
limited to the unions allegation of bad faith bargaining. It also
includes and extends to the various unresolved provisions of the
new CBA such as compensation, particularly the matter of annual
wage increase or yearly lump sum payment in lieu of such wage
increase, whether or not there was deadlock in the negotiations.
Indeed, nowhere does the Order dated September 20, 2004 of
the Secretary of Labor and Employment mention a CBA deadlock.
What the union viewed as constituting the inclusion of a CBA
deadlock in the assumption of jurisdiction was the inclusion of
the economic issues, particularly the companys stance of yearly
lump sum payment in lieu of annual wage increase, in the
directive for the parties to submit their respective position
papers.45 The unions Motion for Reconsideration (With Urgent
Prayer to Compel the Company to Justify Offer of Wage
[Increase] Moratorium) and Second Motion for Reconsideration
questioning the Order dated September 20, 2004 of the Secretary
of Labor and Employment actually confirm that the labor dispute
between the parties essentially and necessarily includes the
conflicting positions of the union, which advocates annual wage
increase, and of the company, which offers yearly lump sum
payment in lieu of wage increase. In fact, that is the reason
behind the unions prayer that the company be ordered to justify
its offer of wage increase moratorium.46 As there is already an
existing controversy on the matter of wage increase, the
Secretary of Labor and Employment need not wait for a deadlock
in the negotiations to take cognizance of the matter. That is the
significance of the power of the Secretary of Labor and
Employment under Article 263(g) of the Labor Code to assume
jurisdiction over a labor dispute causing or likely to cause a
strike or lockout in an industry indispensable to the national
interest. As this Court elucidated in Bagong Pagkakaisa ng
Manggagawa ng Triumph International v. Secretary of the
Department of Labor and Employment47:
Article 263(g) is both an extraordinary and a preemptive power
to address an extraordinary situation - a strike or lockout in an
industry indispensable to the national interest. This grant is not
limited to the grounds cited in the notice of strike or lockout that
may have preceded the strike or lockout; nor is it limited to the Republic of the Philippines
incidents of the strike or lockout that in the meanwhile may have SUPREME COURT
taken place. As the term "assume jurisdiction" connotes, the Baguio City
intent of the law is to give the Labor Secretary full authority to
resolve all matters within the dispute that gave rise to or which SECOND DIVISION
arose out of the strike or lockout; it includes and extends to all
questions and controversies arising from or related to the G.R. No. 207983 April 7, 2014
dispute, including cases over which the labor arbiter has
exclusive jurisdiction. (Citation omitted.) WENPHIL CORPORATION, Petitioner,
vs.
Everything considered, therefore, the Secretary of Labor and ALMER R. ABING and ANABELLE M. TUAZON, Respondents.
Employment committed no abuse of discretion when she
assumed jurisdiction over the labor dispute of the union and the DECISION
company.
BRION, J.:
WHEREFORE, the petition is hereby DENIED.
We resolve this petition for review on certiorari1 under Rule 45
SO ORDERED. of the Rules of Court, challenging the August 31, 2012
decision2 and the June 20, 2013 resolution3 (assailed CA rulings)
of the Court of Appeals (CA) in CA-G.R. SP No. 117366.

These assailed CA rulings annulled and set aside the March 26,
2010 Decision4 and September 15, 20105resolution (NLRC
rulings) of the National Labor Relations Commission (NLRC) in
NLRC CA No. 02-8233-01 (Rl-08).

The NLRC rulings, in turn, fully affirmed the November 16, 2007
Order6 of the Labor Arbiter (LA) in NLRC-NCR Case Nos. 30-03-
00993-00 and 30-03-01020-00. The LAs order found that an
illegal dismissal took place. Thus, the LA directed petitioner
Wenphil Corporation (Wenphil) to pay respondents Almer Abing
and Anabelle Tuazon (respondents) their backwages for the
period from February 15, 2002 to November 8, 2002, pursuant
to the rule that an order of reinstatement is immediately
executory even pending appeal.7
Factual Antecedents
This case stemmed from a complaint for illegal dismissal filed by
the respondents against Wenphil, docketed as NLRC NCR Case
No. 30-03-00993-00.
On December 8, 2000, LA Geobel A. Bartolabac ruled8 that the
respondents had been illegally dismissed by Wenphil. According
to the LA, the allegation of serious misconduct against the
respondents had no factual and legal basis.9 Consequently, LA
Bartolabac ordered Wenphil to immediately reinstate the
respondents to their respective positions or to equivalent ones,
whether actuall or in the payroll. Also, the LA ordered Wenphil to
pay the respondents their backwages from February 3, 2000
until the date of their actual reinstatement.10
Because of the unfavorable LA decision, Wenphil appealed to the
NLRC on April 16, 200111. In the meantime, the respondents
moved for the immediate execution of the LAs December 8,
2000 decision.12
On October 29, 2001, Wenphil and the respondents entered into
a compromise agreement13 before LA Bartolabac. They agreed to
the respondents payroll reinstatement while Wenphils appeal
with the NLRC was ongoing. Wenphil also agreed to pay the
accumulated salaries of the respondents for the payroll period
from April 5, 2001 until October 15, 2001.14 As for the remaining
payroll period starting October 16, 2001, Wenphil committed
itself to credit the respective salaries of the respondents to their
ATM payroll accounts until such time that the questioned
decision of LA Bartolabac is either modified, amended or
reversed by the Honorable National Labor Relations
Commission.15
On January 30, 2002, the NLRC issued a resolution16 affirming LA
Bartolabacs decision with modifications. Instead of ordering the
respondents reinstatement, the NLRC directed Wenphil to pay
the respondents their respective separation pay at the rate of
one (1) month salary for every year of service. Also, the NLRC
found that while the respondents had been illegally dismissed,
they had not been illegally suspended. Thus, the period from
February 3 to February 28, 2000 during which the respondents
were on preventive suspension was excluded by the NLRC in
the computation of the respondents backwages.17
Subsequently, Wenphil moved for the reconsideration18 of the
NLRCs January 30, 2002 resolution, but the NLRC denied the
motion in another resolution dated September 24, 2002.19
Wenphil thereafter went up to the CA via a petition for certiorari
to question the NLRCs January 30, 2002 and September 24,
2002 resolutions.20 On August 27, 2003, the CA rendered its
decision21 reversing the NLRCs finding that the respondents had
been illegally dismissed. According to the CA, there was enough
evidence to show that the respondents had been guilty of serious
misconduct; thus, their dismissal was for a valid cause.22 The
respondents moved for the reconsideration of the CAs
decision.23 In a resolution24 dated February 23, 2004, the CA
denied the respondents motion.
On appeal to the Supreme Court (SC) via Rule 45 (docketed as
G.R. No. 16244725 and dated December 27, 2006), the SC denied
the respondents petition for review on certiorari26 and affirmed
the CAs August 27, 2003 decision and February 23, 2004
resolution. The respondents did not file any motion for
reconsideration to question the SCs decision; thus, the decision
became final and executory on February 15, 2007.27
The Labor Arbitration Rulings
Sometime after the SCs decision in G.R. No. 162447 became final
and executory, the respondents filed with LA Bartolabac a
motion for computation and issuance of writ of execution.28 The
respondents asserted in this motion that although the CAs ruling
on the absence of illegal dismissal (as affirmed by the SC) was
adverse to them, under the law and settled jurisprudence, they
were still entitled to backwages from the time of their dismissal
until the NLRCs decision finding them to be illegally dismissed
was reversed with finality.29
LA Bartolabac granted the respondents motion and, in an order
dated November 16, 2007,30 directed Wenphil to pay each
complainant their salaries on reinstatement covering the period
from February 15, 2002 (the date Wenphil last paid the
respondents respective salaries) to November 8, 2002 (since the
NLRCs decision finding the respondents illegally dismissed
became final and executory on February 28, 2002).
Both parties appealed to the NLRC to question LA Bartolabacs
November 16, 2007 order.31 Wenphil argued that the
respondents were no longer entitled to payment of backwages in
view of the compromise agreement they executed on October 29,
2001. According to Wenphil, the compromise agreement
provided that Wenphils obligation to pay the respondents
backwages should cease as soon as LA Bartolabacs decision was
"modified, amended or reversed" by the NLRC. Since the NLRC
modified the LAs ruling by ordering the payment of separation
pay in lieu of reinstatement, then the respondents, under the
terms of the compromise agreement, were entitled to backwages
only up to the finality of the NLRC decision.32
The respondents questioned in their appeal the determined
period for the computation of their backwages; they posited that
the period for payment should end, not on November 8, 2002,
but on February 14, 2007, since the SCs decision which upheld
the CAs ruling became final and executory on February 15,
2007.33
The NLRC denied the parties respective appeals in its decision
dated March 26, 201034 and affirmed in toto the LAs order. Both
parties moved for the reconsideration of the NLRCs decision but
the NLRC denied their respective motions in the resolution of
September 15, 2010.35
The CAs Ruling
In its decision dated August 31, 2012,36 the CA reversed the
NLRC rulings and prescribed a different computation period.
The CA ruled that the NLRC committed grave abuse of discretion
when it affirmed the LAs computed period which was from
February 15, 2002 to November 8, 2002. In arriving at this
conclusion, the CA cited the case of Pfizer v. Velasco37 where this
Court ruled that even if the order of reinstatement of the Labor
Arbiter is reversed on appeal, it is obligatory on the part of the
employer to reinstate and pay the dismissed employees wages
during the period of appeal until reversal by the higher
court.38 The CA construed this "higher court" to be the CA, not
the SC.
The CA reasoned out that it was a "higher court" than the NLRC
when it reversed the NLRCs rulings; thus, the period for
computation should end when it promulgated its decision
reversing that of the NLRC, and not on the date when the SC
affirmed its decision.
The CA likewise held that the compromise agreement did not
contain any waiver of rights for any award the respondents
might have received when the NLRC changed or modified the
LAs award.39
The Petition
In its petition for review with this Court, Wenphil maintained
that the respondents were no longer entitled to payment of
backwages in view of the modification of the LAs ruling by the
NLRC pursuant with their October 29, 2001 compromise
agreement.
Wenphil argued that the CA utterly disregarded the terms of the
parties compromise agreement whose terms were very clear;
the agreement reads:
3. That for the payroll period from October 16-31 and thereafter,
their [respondents] salaries (net of withholding tax, SSS,
Philhealth and Pag-ibig) shall be credited every 10th and 25th of
the succeeding months through their respective ATM employees
account until such time that the questioned decision of the
Honorable Labor Arbiter Geobel Bartolabac is modified,
amended or reversed by the Honorable Labor Relations
Commission.40 [emphasis ours]
It was Wenphils assertion that since the NLRCs decision partly
changed the decision of LA Bartolabac by ordering payment of
separation pay in lieu of reinstatement, the NLRC decision was a
"modification" that should operate to remove Wenphils
obligation to pay the respondents backwages for the period of
the CAs reversal of the NLRCs illegal dismissal
ruling.41 According to Wenphil, the words of the compromise
agreement left no room for interpretation as to the parties
intentions;42 as a valid agreement between the parties, it must be
given effect and respected by the court.
Wenphil also contended that the CAs cited Pfizer case cannot
apply to the present case since there was no compromise
agreement in Pfizer where the dismissed employee waived her
entitlement to backwages.43
Finally, Wenphil claimed that the reliefs of reinstatement and
backwages are only available to illegally dismissed employees. A
ruling that the respondents were still entitled to reinstatement
pay notwithstanding the validity of their dismissal, would
amount to the courts tolerance of an unjust and equitable
situation.44
The Courts Ruling
We resolve to DENY the petition. An order of reinstatement is
immediately executory even pending appeal. The employer has
the obligation to reinstate and pay the wages of the dismissed
employee during the period of appeal until reversal by the higher
court.
Under Article 223 of the Labor Code, "the decision of the Labor
Arbiter reinstating a dismissed or separated employee, insofar as
the reinstatement aspect is concerned, shall immediately be
executory, even pending appeal. The employee shall either be
admitted back to work under the same terms and conditions
prevailing prior to his dismissal or separation, or at the option of
the employer, merely reinstated in the payroll. The posting of a
bond by the employer shall not stay the execution for
reinstatement."
The Court discussed reason behind this legal policy in Aris v.
NLRC,45 where it explained:
In authorizing execution pending appeal of the reinstatement
aspect of a decision of the Labor Arbiter reinstating a dismissed
or separated employee, the law itself has laid down a
compassionate policy which, once more, vivifies and enhances
the provisions of the 1987 Constitution on labor and the
working-man. These provisions are the quintessence of the
aspirations of the workingman for recognition of his role in the
social and economic life of the nation, for the protection of his
rights, and the promotion of his welfare These duties and
responsibilities of the State are imposed not so much to express
sympathy for the workingman as to forcefully and meaningfully
underscore labor as a primary social and economic force, which
the Constitution also expressly affirms with equal intensity.
Labor is an indispensable partner for the nation's progress and
stability. [emphasis ours]
Since the decision is immediately executory, it is the duty of the
employer to comply with the order of reinstatement, which can
be done either actually or through payroll reinstatement. As
provided under Article 223 of the Labor Code, this immediately
executory nature of an order of reinstatement is not affected by
the existence of an ongoing appeal. The employer has the duty to
reinstate the employee in the interim period until a reversal is
decreed by a higher court or tribunal.
In the case of payroll reinstatement, even if the employers
appeal turns the tide in its favor, the reinstated employee has no
duty to return or reimburse the salary he received during the
period that the lower court or tribunals governing decision was
for the employees illegal dismissal.
Otherwise, the situation would run counter to the immediately
executory nature of an order of reinstatement. The case of Garcia
v. Philippine Airlines46 is enlightening on this point:
Even outside the theoretical trappings of the discussion and into
the mundane realities of human experience, the "refund
doctrine" easily demonstrates how a favorable decision by the
Labor Arbiter could harm, more than help, a dismissed
employee. The employee, to make both ends meet, would
necessarily have to use up the salaries received during the
pendency of the appeal, only to end up having to refund the sum
in case of a final unfavorable decision. It is mirage of a stop-gap
leading the employee to a risky cliff of insolvency.
Advisably, the sum is better left unspent. It becomes more logical
and practical for the employee to refuse payroll reinstatement
and simply find work elsewhere in the interim, if any is
available.1wphi1 Notably, the option of payroll reinstatement
belongs to the employer, even if the employee is able and raring
to return to work.
We see the situation discussed above to be present in the case
before us as Wenphil observed the mandate of Article 223 to
immediately comply with the order of reinstatement by the LA.
On October 29, 2001, while Wenphils appeal with the NLRC was
pending, it entered into a compromise agreement with the
respondents. In this agreement, Wenphil committed to reinstate
the respondents in its payroll. However, the commitment came
with a condition: Wenphil stipulated that its obligation to pay the
wages due to the respondents would cease if the decision of the
LA would be "modified, amended or reversed" by the NLRC.47
Thus, when the NLRC rendered its decision on the appeal
affirming the LAs finding that the respondents were illegally
dismissed, but modifying the award of reinstatement to payment
of separation pay, Wenphil stopped paying the respondents
wages.
The reinstatement salaries due to the respondents were, by their
nature, payment of unworked backwages. These were salaries
due to the respondents because they had been prevented from
working despite the LA and the NLRC findings that they had been
illegally dismissed.
We point out that reinstatement and backwages are two
separate reliefs available to an illegally dismissed employee. The
normal consequences of a finding that an employee has been
illegally dismissed are: first, that the employee becomes entitled
to reinstatement to his former position without loss of seniority
rights; and second, the payment of backwages covers the period
running from his illegal dismissal up to his actual
reinstatement.48 These two reliefs are not inconsistent with one
another and the labor arbiter can award both simultaneously.
Moreover, the relief of separation pay may be granted in lieu of
reinstatement but it cannot be a substitute for the payment of
backwages. In instances where reinstatement is no longer
feasible because of strained relations between the employee and
the employer, separation pay should be granted. In effect, an
illegally dismissed employee should be entitled to either
reinstatement if viable, or separation pay if reinstatement is no
longer be viable, plus backwages in either instance.49 The
rationale for such policy of distinction was vividly explained in
Santos v. NLRC under these terms:50
Though the grant of reinstatement commonly carries with it an
award of backwages, the inappropriateness or non-availability of
one does not carry with it the inappropriateness or non-
availability of the other. Separation pay was awarded in favor of
petitioner Lydia Santos because the NLRC found that her
reinstatement was no longer feasible or appropriate. As the term
suggests, separation pay is the amount that an employee receives
at the time of his severance from the service and, as correctly
noted by the Solicitor General in his Comment, is designed to
provide the employee with "the wherewithal during the period
that he is looking for another employment." In the instant case,
the grant of separation pay was a substitute for immediate and
continued re-employment with the private respondent Bank. The
grant of separation pay did not redress the injury that is
intended to be relieved by the second remedy of backwages, that
is, the loss of earnings that would have accrued to the dismissed
employee during the period between dismissal and
reinstatement. Put a little differently, payment of backwages is a
form of relief that restores the income that was lost by reason of
unlawful dismissal; separation pay, in contrast, is oriented
towards the immediate future, the transitional period the
dismissed employee must undergo before locating a replacement
job. It was grievous error amounting to grave abuse of discretion
on the part of the NLRC to have considered an award of
separation pay as equivalent to the aggregate relief constituted
by reinstatement plus payment of backwages under Article 280
of the Labor Code. The grant of separation pay was a proper
substitute only for reinstatement; it could not be an adequate
substitute both for reinstatement and for backwages. In effect,
the NLRC in its assailed decision failed to give to petitioner the
full relief to which she was entitled under the statute. [emphasis
ours]
Apparently, when the NLRC changed the LAs decision
(specifically, the order to award separation pay in lieu of
reinstatement), Wenphil read this to mean to be the
"modification" envisioned in the compromise agreement,
Wenphil likewise effectively concluded that separation pay and
backwages are the same or are interchangeable reliefs. This
conclusion can be deduced from Wenphils insistence not to pay
the respondents remaining backwages under its erroneous
reasoning that this was the effect of the NLRCs order to Wenphil
to pay separation pay in lieu of reinstatement.
We emphasize that the basis for the payment of backwages is
different from that of the award of separation pay. Separation
pay is granted where reinstatement is no longer advisable
because of strained relations between the employee and the
employer. Backwages represent compensation that should have
been earned but were not collected because of the unjust
dismissal. The basis for computing separation pay is usually the
length of the employees past service, while that for backwages is
the actual period when the employee was unlawfully prevented
from working.51
Had Wenphil really wanted to put a stop to the running of the
period for the payment of the respondents backwages, then it
should have immediately complied with the NLRCs order to
award the employees their separation pay in lieu of
reinstatement. This action would have immediately severed the
employer-employee relationship. However, the records are
bereft of any evidence that Wenphil actually paid the
respondents separation pay. Thus, the employer-employee
relationship between Wenphil and the respondents never ceased
and the employment status remained pending and uncertain
until the CA actually rendered its decision that the respondents
had not been illegally dismissed. In the context of the parties
agreement, it was only at this point that the payment of
backwages should have stopped.
A compromise agreement should not be contrary to law, morals,
good customs and public policy.
While it is true that a compromise agreement is binding between
the parties and becomes the law between them,52 it is also a rule
that to be valid, a compromise agreement must not be contrary
to law, morals, good customs and public policy.53
In the present case, the parties compromise agreement simply
provided that Wenphils obligation to pay the respondents
backwages shall end the moment the NLRC modifies, amends or
reverses the illegal dismissal decision of LA Bartolabac. On its
face, there is nothing invalid with such stipulation. Indeed, had
the NLRC reversed the LA, the obligation to pay backwages
would have stopped. The NLRC, however, did not decree a
reversal of the finding of illegal dismissal. In fact, it affirmed the
illegal dismissal conclusion, confining itself merely to a
modification of the consequences of the illegal dismissal from
reinstatement to the payment of separation pay.
This "modification" of course we cannot accept; the option under
the legal policy is solely limited to a ruling that the respondents
had not been illegally dismissed. Otherwise, we would be
violating the Labor Codes policy entitling illegally dismissed
employees to their right to backwages even during the period of
appeal. As we held in the case of Garcia v. Philippine Airlines:54
The Court reaffirms the prevailing principle that even if the
order of reinstatement of the Labor Arbiter is reversed on
appeal, it is obligatory on the part of the employer to reinstate
and pay the wages of the dismissed employee during the period
of appeal until reversal by the higher court. It settles the view
that the Labor Arbiter's order of reinstatement is immediately
executory and the employer has to either re-admit them to work
under the same terms and conditions prevailing prior to their
dismissal, or to reinstate them in the payroll, and that failing to
exercise the options in the alternative, employer must pay the
employees salaries. [emphasis ours]
This ruling embodies a principle and policy of the law that
cannot be watered down by any lesser agreement except
perhaps when backwages are already earned entitlements that
the employee chooses to surrender for a valuable consideration
(and even then, the consideration must at least be equitable).
This legal policy emphasizes, too, the rule that separation pay
cannot be a substitute for backwages but only for reinstatement.
The award of separation pay is not inconsistent with the
payment of backwages. Thus, until a higher courts or tribunals
reversal of the finding that an employee had been illegally
dismissed, the employee would be entitled to receive his
reinstatement salary or backwages during the period of appeal
until such reversal. This is in line with the Labor Codes policy
that an order of reinstatement, which can either be actual or
through the payroll, is immediately executory and is not affected
by the period of appeal.
Period for Computation of Backwages
The records show that the inconsistency between the labor
arbitration rulings and the CAs ruling was on the period for the
computation of such backwages and not on whether the
respondents were still entitled to such backwages during the
period of appeal until the reversal of the finding of illegal
dismissal.
According to the LA, whose ruling the NLRC affirmed, the period
for computation should be from February 15, 2002 until
November 8, 2002 since the NLRCs decision which affirmed the
LAs finding of illegal dismissal became final and executory on
November 8, 2002. The LA started the counting of the period on
February 15, 2002 since that was the day when Wenphil last
paid the respondents backwages.
On the other hand, the CA, in setting aside the NLRCs rulings,
relied on the case of Pfizer v. Velasco where we ruled that the
backwages of the dismissed employee should be granted during
the period of appeal until reversal by a higher court. Since the
first CA decision which found that the respondents had not been
illegally dismissed was promulgated on August 27, 2003, then
the reversal by the higher court was effectively made on August
27, 2003.
As against this view, the respondents argued that the period for
payment of their backwages should end on February 14, 2007
since the SC decision in G.R. No. 162447 which affirmed the CAs
findings that the respondents had not been legally dismissed
became final and executory on February 15, 2007.
Among these views, the commanding one is the rule in Pfizer,
which merely echoes the rulings we made in the cases of
Roquero v. Philippine Airlines55 and Garcia v. Philippine
Airlines56 that the period for computing the backwages due to
the respondents during the period of appeal should end on the
date that a higher court reversed the labor arbitration ruling of
illegal dismissal. In this case, the higher court which first
reversed the NLRCs ruling was not the SC but rather the CA. In
this light, the CA was correct when it found that that the period
of computation should end on August 27, 2003. The date when
the SCs decision became final and executory need not matter as
the rule in Roquero, Garcia and Pfizer merely referred to the date
of reversal, not the date of the ultimate finality of such reversal.
As a last minor detail, we do not agree with the CA that the date
of computation should start on February 15, 2002. Rather, it
should be on February 16, 2002. The respondents themselves
admitted in their motion for computation and issuance of writ of
execution that the last date when they were paid their
backwages was on February 15, 2002. To start the computation
on the same date would result to a duplication of wages for this
day; thus, computation should start on the following date -
February 16, 2002.
WHEREFORE, in light of these considerations, we hereby DENY
the petition. The Court of Appeals' decision dated August 31,
2012 and resolution dated June 20, 2013, which annulled and set
aside the March 26, 2010 decision and September 15, 2010 Republic of the Philippines
resolution of the NLRC, are hereby AFFIRMED with SUPREME COURT
MODIFICATION. The period for the computation of backwages of Baguio City
respondents Almer R. Abing and Anabelle M. Tuazon should be
from February 16, 2002 until August 27, 2003, when the Court of SECOND DIVISION
Appeals promulgated its decision reversing the NLRC' s finding
of illegal dismissal. No costs. G.R. No. 181719 April 21, 2014

SO ORDERED. EUGENE S. ARABIT, EDGARDO C. SADSAD, LOWELL C.

FUNTANOZ, GERARDO F. PUNZALAN, FREDDIE M. MENDOZA,
EMILIO B. BELEN, VIOLETA C. DIUMANO and MB FINANCE
EMPLOYEES ASSOCIATION FFW CHAPTER (FEDERATION OF
FREE WORKERS), Petitioners,
vs.
JARDINE PACIFIC FINANCE, INC. (FORMERLY MB
FINANCE), Respondent.

DECISION

BRION, J.:

We resolve in this petition for review on certiorari1 the challenge

to the March 23, 2007 decision2 and the February 11, 2008
resolution3 of the Court of Appeals (CA) in CA G.R. SP No. 91952.
These assailed CA rulings annulled and set aside the December 1,
2004 decision4 and the July 21, 2005 resolution5 of the National
Labor Relations Commission (NLRC) in NLRC NCR CA No.
029753-01 (NLRC NCR Case No. 06-06112-99). The NLRC
rulings, in turn, fully affirmed the September 29, 2000
decision6 of Labor Arbiter (LA) Jovencio LL Mayor, Jr. The LA's
decision ordered the petitioners Eugene S. Arabit, Edgardo C.
Sadsad, Lowell C. Funtanoz, Gerardo F. Punzalan, Freddie M.
Mendoza, Emilio B. Belen and Violeta C. Diumanos reinstatement
to their former positions without loss of seniority rights and the
payment of full backwages, computed from the time of their
dismissal on May 30, 1999.
Factual Antecedents
Petitioners were former regular employees of respondent
Jardine Pacific Finance, Inc. (formerly MB Finance) (Jardine). The
petitioners were also officers and members of MB Finance
Employees Association-FFW Chapter (the Union), a legitimate
labor union and the sole exclusive bargaining agent of the
employees of Jardine. The table below shows the petitioners
previously occupied positions, as well as their total length of
service with Jardine before their dismissal from employment.
On the claim of financial losses, Jardine decided to reorganize
and implement a redundancy program among its employees. The
petitioners were among those affected by the redundancy
program. Jardine thereafter hired contractual employees to
undertake the functions these employees used to perform.
The Union filed a notice of strike with the National Conciliation
and Mediation Board (NCMB), questioning the termination of
employment of the petitioners who were also union officers. The
Union alleged unfair labor practice on the part of Jardine, as well
as discrimination in the dismissal of its officers and members.
Negotiations ensued between the Union and Jardine under the
auspices of the NCMB, and both parties eventually reached an
amicable settlement. In the settlement, the petitioners accepted
their redundancy pay without prejudice to their right to question
the legality of their dismissal with the NLRC. Jardine paid the
petitioners a separation package composed of their severance
pay, plus their grossed up transportation allowance.7
On June 1, 1999, the petitioners and the Union filed a complaint
against Jardine with the NLRC for illegal dismissal and unfair
labor practice.
The Labor Arbitration Rulings
Before the LA, the parties decided to limit the issues to two,
namely: (a) whether the separation of the petitioners was valid
or not; and (b) whether Jardine committed an unfair labor
practice against the Union.
The petitioners alleged before the LA that their dismissal was
illegal and was tainted with bad faith as their positions were not
superfluous. They argued that if their positions had really been
redundant, then Jardine should have not hired contractual
workers to replace them.8
The petitioners also argued that Jardine was guilty of unfair
labor practice for contracting out services that the petitioners
previously held. Unfair labor practice took place under Article
248 of the Labor Code as the petitioners were union officers.9
The petitioners likewise claimed that Jardines act of hiring
contractual employees as replacements was a restraint on the
Unions right to self-organization. The petitioners also pointed
out that they were Union officers and panel members in the
scheduled collective bargaining agreement (CBA) negotiations
between Jardine and the Union. The petitioners particularly
found the company action objectionable as their employment
was terminated when their CBA negotiations were about to
commence.10
Jardine argued in its defense that the company had been
incurring substantial business losses from 1996 to 1998.
According to Jardine, its audited financial statements reflect that
for 1996, it suffered a net loss of 5,538,960.00; for 1997,11 a net
loss in the amount of 57,274,018.00;12 and a net loss of
95,529,527.00 for 1998.13
Because of these serious business losses, Jardine asserted that it
had to lay-off some of its employees and reorganize its ranks to
eliminate positions that were in excess of what its business
required.14
Jardine, however, admitted that it hired contractual employees to
replace petitioners in their previous posts. Jardine reasoned out
that no bad faith took place since the hiring of contractual
employees was a valid exercise of its management
prerogative.15 Jardine argued that the distinction between
redundancy and retrenchment is not material; an employer
resorts to retrenchment or redundancy for the same reason,
namely the economics of business.16 Since Jardine successfully
established that it incurred serious business losses, then
termination of employment of the petitioners was valid for all
intents and purposes.17
In reply to the petitioners allegation of unfair labor practice,
Jardine argued that had it intended to commit union busting,
then it should not have merely dismissed the seven petitioners; it
should have also dismissed other employees who were union
officers and members.18 According to Jardine, the termination of
the petitioners services did not interfere with the Union and its
remaining members right to self-organization since Jardine
continuously dealt with the Union and recognized it as the sole
and exclusive bargaining representative of its rank-and-file
employees.19
The LA ruled in the petitioners favor. In its decision20 dated
September 29, 2000, the LA held that the hiring of contractual
employees to replace the petitioners directly contradicts the
concept of redundancy which involves the trimming down of the
workforce because a task is being carried out by too many
people.21 The LA explained that the companys action was a
circumvention of the right of the petitioners to security of
tenure.22
The LA further held that it was not enough for Jardine to simply
focus on its losses. According to the LA, it was error for Jardine to
simply lump together the seven petitioners as employees whose
positions have become redundant without explaining why their
respective positions became superfluous in relation to the other
positions and employees of the company.23
On the petitioners allegation of unfair labor practice, the LA held
that not enough evidence was presented to prove the claim
against Jardine.
Both parties appealed the LAs decision to the NLRC. In its
decision24 dated December 1, 2004, the NLRC dismissed the
appeals and affirmed the LAs decision in its entirety.25
Jardine moved for the reconsideration of the NLRCs decision,
which motion the NLRC also denied in its resolution26of July 21,
2005. Jardine thereafter sought recourse with the CA via a
petition for certiorari under Rule 65.27
The CAs Ruling
In its decision28 dated March 23, 2007, the CA reversed the LAs
and the NLRCs rulings, and granted Jardines petition for
certiorari.
The CA found that Jardines act of hiring contractual employees
in replacement of the petitioners does not run counter to the
argument that their positions are already
superfluous. According to the CA, the hiring of contractual
29
employees is a management prerogative that Jardine has the
right to exercise.30 In the absence of any showing of malice or
arbitrariness on the part of Jardine in implementing its
redundancy program, the courts must not interfere with the
companys exercise of a bona fide management decision.31 The
CA cited for this purpose the case of De Ocampo v. National
Labor Relations Commission32 which explains:
The reduction of the number of workers in a company made
necessary by the introduction of the services of Gemac
Machineries in the maintenance and repair of its industrial
machinery is justified. There can be no question as to the right of
the company to contract the services of Gemac Machineries to
replace the services rendered by the terminated mechanics with
a view to effecting more economic and efficient methods of
production.
In the same case, We ruled that "(t)he characterization of
(petitioners) services as no longer necessary or sustainable, and
therefore properly terminable, was an exercise of business
judgment on the part of (private respondent) company. The
wisdom or soundness of such characterization or decision was
not subject to discretionary review on the part of the Labor
Arbiter nor of the NLRC so long, of course, as violation of law or
merely arbitrary and malicious action is not shown" (ibid, p.
673).
In contracting the services of Gemac Machineries, as part of the
company's cost-saving program, the services rendered by the
mechanics became redundant and superfluous, and therefore
properly terminable. The company merely exercised its business
judgment or management prerogative. And in the absence of any
proof that the management abused its discretion or acted in a
malicious or arbitrary manner, the court will not interfere with
the exercise of such prerogative.33
The CA further held that Jardine successfully established that for
the years 1996 to 1998, the company incurred serious
losses.34 The appellate court also observed that the reduction in
the number of workers, made necessary by the introduction of
the services of an independent contractor, is justified when
undertaken to implement more economic and efficient methods
of production.35
These justifications led to the CAs ruling which annulled and set
aside the December 1, 2004 decision and the July 21, 2005
resolution of the NLRC and to its own ruling that the petitioners
had not been illegally dismissed.
The CA denied the petitioners subsequent motion for
reconsideration. The petitioners are now before this Court on a
petition for review on certiorari under Rule 45 of the Rules of
Court.
The Petition
In their petition, the petitioners maintain that the CA gravely
abused its discretion and that its ruling is not in conformity with
the law and jurisprudence.
The petitioners argue that there is a difference between financial
loss and decline of earnings. They posit that what Jardine
actually experienced was a decline in capital and not substantial
financial losses for the years 1996 to 1998.36
The petitioners also assert that Jardine did not take any remedial
measure before it implemented its redundancy program. It
simply hastily terminated the petitioners from the service.37 In
support of this argument, the petitioners cited the case of Golden
Thread Knitting Industries, Inc. v. NLRC38 where the Court laid
down guidelines to be considered in selecting employees who
would be dismissed from the service in case of
redundancy.39 The petitioners contend that the records show
that Jardine did not lay down any basis or criteria in choosing the
petitioners for inclusion in the program.40
According to the petitioners, they are all regular employees
whose years of service range from three (3) to twenty (20) years.
Since Jardine immediately terminated their services without
evaluating their performance in relation with those of the other
employees and without considering other relevant factors, then
Jardines decision was arbitrary and in disregard of the
guidelines set by this Court in Golden Thread.41
Finally, the petitioners also reiterate the findings of the LA and of
the NLRC that Jardines act of hiring contractual employees as
their replacements is contrary to Jardines claim that there was
redundancy.42 They also contend that the hiring of new
employees negates Jardines argument that it was suffering from
substantial losses.43 Based on these premises, the petitioners
posit that the CA erred in annulling and setting aside the NLRCs
decision, and pray instead for its reinstatement.
The Courts Ruling
We resolve to GRANT the petition.
Procedural consideration: the nature
of a Rule 45 petition
We emphasize at the outset that the current petition was
brought under Rule 45 of the Rules of Court. As a rule, only
questions of law may be raised on appeal under this
remedy.44 This is in contrast with a petition for certiorari
brought under Rule 65 where the review centers on the
jurisdictional errors the lower court or tribunal may have
committed.45
We thus limit our review to errors of law which the CA might
have committed. A question of law arises when there is doubt as
to what the law is on a certain state of facts, while there is a
question of fact when the doubt arises as to the truth or falsity of
the alleged facts. For a question to be one of law, the same must
not involve an examination of the probative value of the evidence
presented by the litigants or any of them.46
"In ruling for legal correctness, we have to view the CA decision
in the same context that the petition for certiorari it ruled upon
was presented to it; we have to examine the CA decision from the
prism of whether it correctly determined the presence or
absence of grave abuse of discretion in the NLRC decision before
it, not on the basis of whether the NLRC decision on the merits of
the case was correct. In other words, we have to be keenly aware
that the CA undertook a Rule 65 review, not a review on appeal,
of the NLRC decision challenged before it. This is the approach
that should be basic in a Rule 45 review of a CA ruling in a labor
case. In question form, the question to ask is: Did the CA
correctly determine whether the NLRC committed grave abuse of
discretion in ruling on the case?"47
In this context, the primary question we confront is: did the CA
correctly rule that the NLRC committed grave abuse of discretion
when it found that Jardine validly terminated the petitioners
employment because of redundancy?
Redundancy in contrast with retrenchment
Jardine, in its petition for certiorari with the CA, posited that the
distinction between redundancy and retrenchment is not
material.48 It contended that employers resort to these causes of
dismissal for purely economic considerations.49Jardine further
argued that the immateriality of the distinction between these
two just causes for dismissal is shown by the fact that
redundancy and retrenchment are found and lumped together in
just one single provision of the Labor Code (Article 283 thereof).
We cannot accept Jardines shallow understanding of the
concepts of redundancy and retrenchment in determining the
validity of the severance of an employer-employee relationship.
The fact that they are found together in just one provision does
not necessarily give rise to the conclusion that the difference
between them is immaterial. This Court has already ruled before
that retrenchment and redundancy are two different concepts;
they are not synonymous; thus, they should not be used
interchangeably.50 The clear distinction between these two
concepts was discussed in Andrada, et al., v. NLRC,51 citing the
case of Sebuguero v. NLRC,52 where this Court clarified:
Redundancy exists where the services of an employee are in
excess of what is reasonably demanded by the actual
requirements of the enterprise. A position is redundant where it
is superfluous, and superfluity of a position or positions may be
the outcome of a number of factors, such as over hiring of
workers, decreased volume of business, or dropping of a
particular product line or service activity previously
manufactured or undertaken by the enterprise.
Retrenchment, on the other hand, is used interchangeably with
the term "lay-off." It is the termination of employment initiated
by the employer through no fault of the employees and without
prejudice to the latter, resorted to by management during
periods of business recession, industrial depression, or seasonal
fluctuations, or during lulls occasioned by lack of orders,
shortage of materials, conversion of the plant for a new
production program or the introduction of new methods or more
efficient machinery, or of automation. Simply put, it is an act of
the employer of dismissing employees because of losses in the
operation of a business, lack of work, and considerable reduction
on the volume of his business, a right consistently recognized
and affirmed by this Court.
These rulings appropriately clarify that redundancy does not
need to be always triggered by a decline in the business.
Primarily, employers resort to redundancy when the functions of
an employee have already become superfluous or in excess of
what the business requires. Thus, even if a business is doing well,
an employer can still validly dismiss an employee from the
service due to redundancy if that employees position has
already become in excess of what the employers enterprise
requires.
From this perspective, it is illogical for Jardine to terminate the
petitioners employment and replace them with contractual
employees. The replacement effectively belies Jardines claim
that the petitioners positions were abolished due to superfluity.
Redundancy could have been justified if the functions of the
petitioners were transferred to other existing employees of the
company.
To dismiss the petitioners and hire new contractual employees
as replacements necessarily give rise to the sound conclusion
that the petitioners services have not really become in excess of
what Jardines business requires. To replace the petitioners who
were all regular employees with contractual ones would amount
to a violation of their right to security of tenure. For this, we
affirm the NLRCs ruling, citing the LAs decision, when it ruled:
In the case at bench, respondents did not dispute that after
laying-off complainants herein, they engaged the services of an
agency to perform the tasks use (sic) to be done by
complainants. This is [in direct] contradiction to the concept of
redundancy which precisely requires the trimming down of the
[workforce] because a task is being carried out by just too many
people. The subsequent contracting out to an agency the
functions or duties that used to be the domain of individual
complainants herein is a circumvention of their constitutional
rights to security of tenure, and therefore illegal.53
Guidelines in implementing redundancy
We recognize that management has the prerogative to
characterize an employees services as no longer necessary or
sustainable, and therefore properly terminable.54
The CA also correctly cited De Ocampo, et al., v. NLRC55 when it
discussed that Jardines decision to hire contractual employees
as replacements is a management prerogative which the
company has the right to undertake to implement a more
economic and efficient operation of its business.56
In De Ocampo, this Court held that, in the absence of proof that
the management abused its discretion or acted in a malicious or
arbitrary manner in replacing dismissed employees with
contractual ones, judicial intervention should not be made in the
companys exercise of its management prerogative.57
The employers exercise of its management prerogative,
however, is not an unbridled right that cannot be subjected to
this Courts scrutiny. The exercise of management prerogative is
subject to the caveat that it should not performed in violation of
any law and that it is not tainted by any arbitrary or malicious
motive on the part of the employer.58
This Court, in several cases, sufficiently explained that the
employer must follow certain guidelines to dismiss employees
due to redundancy. These guidelines aim to ensure that the
dismissal is not implemented arbitrarily and is not tainted with
bad faith against the dismissed employees.
In Golden Thread Knitting Industries, Inc. v. NLRC,59 this Court
laid down the principle that the employer must use fair and
reasonable criteria in the selection of employees who will be
dismissed from employment due to redundancy. Such fair and
reasonable criteria may include the following, but are not limited
to: (a) less preferred status (e.g. temporary employee); (b)
efficiency; and (c) seniority. The presence of these criteria used
by the employer shows good faith on its part and is evidence that
the implementation of redundancy was painstakingly done by
the employer in order to properly justify the termination from
the service of its employees.60
As the petitioners pointed out, the records are bereft of
indications that Jardine employed clear criteria when it decided
who among its employees, who held similar positions as the
petitioners, should be removed from their posts because of
redundancy. Jardine never bothered to explain how and why the
petitioners were the ones dismissed. Jardines acts became more
suspect given that the petitioners were all union officers and
some of them were panel members in the scheduled CBA
negotiations between Jardine and the Union.
Aside from the guidelines for the selection of employees who will
be terminated, the Court, in Asian Alcohol Corp. v. NLRC,61 also
laid down guidelines for redundancy to be characterized as
validly undertaken by the employer. The Court ruled:
For the implementation of a redundancy program to be valid, the
employer must comply with the following requisites: (1) written
notice served on both the employees and the Department of
Labor and Employment at least one month prior to the intended
date of retrenchment; (2) payment of separation pay equivalent
to at least one month pay or at least one month pay for every
year of service, whichever is higher; (3) good faith in abolishing
the redundant positions; and (4) fair and reasonable criteria in
ascertaining what positions are to be declared redundant and
accordingly abolished.62
Admittedly, Jardine complied with guidelines 1 and 2 of the
guidelines in Asian Alcohol. Jardine informed the Department of
Labor and Employment of the petitioners separation from the
service due to redundancy on April 30, 1999, one month before
their terminations effectivity. Also, the petitioners were given
their individual separation packages, composed of their
severance pay, plus their grossed up transportation allowance.
Guidelines 3 and 4 of Asian Alcohol, however, are different
matters. These last two guidelines are interrelated to ensure
good faith in abolishing redundant positions; the employer must
clearly show that it used fair and reasonable criteria in
ascertaining what positions are to be declared redundant.
In this cited case, the employer took pains to discuss and
elaborate on the reasons why the position of the private
respondent was the one chosen by the employer to be abolished.
We quote the Courts ruling:
In 1992, the lease contract, which also provided for a right of
way leading to the site of the wells, was terminated. Also, the
water from the wells had become salty due to extensive prawn
farming nearby and could no longer be used by Asian Alcohol for
its purpose.1awp++i1 The wells had to be closed and needless to
say, the services of Carias, Martinez and Sendon had to be
terminated on the twin grounds of redundancy and
retrenchment.
xxxx
Private respondent Amacio was among the ten (10) mechanics
who manned the machine shop at the plant site. At their current
production level, the new management found that it was more
cost efficient to maintain only nine (9) mechanics. In choosing
whom to separate among the ten (10) mechanics, the
management examined employment records and reports to
determine the least efficient among them. It was private
respondent Amacio who appeared the least efficient because of
his poor health condition.63
Jardine never undertook what the employer in Asian Alcohol
did.1wphi1 Jardine was never able to explain in any of its
pleadings why the petitioners positions were redundant. It
never even attempted to discuss the attendant facts and
circumstances that led to the conclusion that the petitioners
positions had become superfluous and unnecessary to Jardines
business requirements. Thus, we can only speculate on what
actually happened.
As the LA correctly found, Jardine lumped together the seven
petitioners into one group whose positions had become
redundant. This move was despite the fact that not all of them
occupied the same positions and performed the same
functions.64 Under the circumstances of the case, Jardines move
was thus illegal. We affirm the LAs ruling that fair play and good
faith require that where one employee will be chosen over the
others, the employer must be able to clearly explain the merit of
the choice it has taken.65
To sum up, based on the guidelines set by the Court in the cases
of Golden Thread and Asian Alcohol, we find that at two levels,
Jardine failed to set the required fair and reasonable criteria in
the termination of the petitioners employment, leading to the
conclusion that the termination from the service was arbitrary
and in bad faith.
The first level, based on Asian Alcohol, is broader as the case
recognized distinctions on a per position basis. At this level,
Jardine failed to explain why among all of the existing positions
in its organization, Jardine chose the petitioners posts as the
ones which have already become redundant and
terminable.1wphi1
The second level, derived from Golden Thread, is more specific.
Here the distinction narrows down to the particular employees
occupying the same positions which were already declared to be
redundant. At this level, Jardines lapse is shown by its failure to
explain why among all of its employees whose positions were
determined to be redundant, the petitioners were the ones
selected to be dismissed from the service.
Notably, the LA and the NLRC also arrived at the same conclusion
that the redundancy program was not valid because Jardine
hired contractual employees as replacements, thus, contradicting
underlying reasons of redundancy. The CA significantly chose to
disregard these coherent labor findings without fully justifying
its move. At the very least, this was an indicator that something
was wrong somewhere in these dismissals. It was clear legal
error for the CA to recognize grave abuse of discretion when
none occurred.
WHEREFORE, we hereby GRANT the petition. We REVERSE the
decision dated March 23, 2007 and the resolution dated
February 11, 2008 of the Court of Appeals in CA G.R. SP No.
91952, and uphold the decision dated December 1, 2004 and the
resolution dated July 21, 2005 of the National Labor Relations
Commission which affirmed in its entirety the September 29,
2000 decision of the Labor Arbiter.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 169247 June 2, 2014
MA. CONSOLACION M. NAHAS, doing business under the
name and style PERSONNEL EMPLOYMENT AND TECHNICAL
RECRUITMENT AGENCY, Petitioner,
vs.
JUANITA L. OLARTE, Respondent.
DECISION
DEL CASTILLO, J.:
"A party will not be allowed to make a mockery of justice by
taking inconsistent positions which, if allowed, would result in
brazen deception."1
Assailed in this Petition for Review on Certiorari is the April 29,
2005 Decision2 of the Court of Appeals (CA) in CA-G.R. SP No.
79028 which denied the Petition for Certiorari filed therewith
and affirmed the February 28, 2003 Decision3 and June 30, 2003
Resolution4 of the National Labor Relations Commission (NLRC)
in NLRC CA No. 032482-02. The NLRC dismissed the appeal from
the Labor Arbiter's March 20, 2002 Decision5 in NLRC-NCR OFW
Case No. (L) 01-07-1411-00 which held Personnel Employment
and Technical Recruitment Agency (PETRA), Royal Dream
International Agency (Royal Dream) and petitioner Ma.
Consolacion M. Nahas (Nahas) jointly and severally liable for the
unpaid salaries, compensation for the unexpired portion of
employment contract, moral and exemplary damages and
attorneys fees of respondent Juanita L. Olarte (Olarte).
Factual Antecedents
On August 27, 1999, Olarte was deployed as a domestic helper to
Hail, Saudi Arabia for a contract term of two years. Per her
employment contract,6 she was to serve her employer, Fahad
Abdulaziz Mohammed Al-Mijary (Fahad) for a basic monthly
salary of US$200.00. Fajads information sheet, on the other
hand, provides that there are two adults and three children living
in his household and that no disabled or sick person is to be put
under Olartes care.
Upon arriving in Fahads home, Olarte was surprised that there
were four children with one suffering from serious disability.
This notwithstanding, Olarte served Fahads family diligently.
However, she was not paid her salaries. It was only in December
1999 that she was given US$200.00 which was the only pay she
received for the whole duration that she worked for Fahad.
In the succeeding months, Olarte started feeling intense pain in
her legs. Since she was not given immediate medical attention,
her condition became critical such that in February 2000 she had
to be operated on due to water retention in her leg bones. She
was later diagnosed to be suffering from ostro-arthritis. Because
of her condition, Olarte requested Fahad to just allow her go
home to the Philippines. But her pleas fell on deaf ears. At that
point, Fahad was already frequently maltreating her since she
could no longer accomplish all the household chores due to her
illness.
Olarte finally saw an opportunity to escape from the abusive
hands of her employer when she was allowed to go to Riyadh,
Saudi Arabia on June 16, 2000 and there sought refuge at the
Philippine Embassy. Notwithstanding her worsening condition,
she could not be repatriated immediately because her passport
was being withheld by Fahad and had to stay for a while in the
office of the Overseas Workers Welfare Administration (OWWA).
When at last she was able to return to the Philippines on August
21, 2000, Olarte had to be brought home from the airport by an
emergency ambulance.
Several months later, Olarte filed a Complaint7 for illegal
dismissal, damages, attorneys fees and refund of placement fees
against her foreign employer Fahad and Nahas/PETRA/Royal
Dream.
Ruling of the Labor Arbiter
In her pleadings,8 Olarte alleged that she went to the office of
PETRA/Royal Dream at Room 401, Gochangco Building, T.M.
Kalaw, Ermita, Manila to apply for work abroad as a domestic
helper. She was met and interviewed by Nahas, the manager and
owner of the said agencies, who instructed her to sign what
appeared to be a contract of employment for work as a domestic
helper. Subsequently and upon completion of all the necessary
papers, she was deployed to Hail, Saudi Arabia in August 1999
and there experienced her horrible ordeal. As the ones
responsible for her deployment abroad, Olarte sought that
Nahas, PETRA and Royal Dream be held jointly and severally
liablewith her foreign employer for all her claims.
In the Position Paper9 she filed for PETRA, Nahas acknowledged
that she is the President/Manager of the said agency.
Nevertheless, she denied having a hand in Olartes deployment
abroad. While she admitted that Olarte indeed went to PETRAs
office as a walk-in applicant sometime in May 1999, the latter
allegedly withdrew her application on the pretext that she would
just go home to the province. To support this, Nahas purportedly
attached to the said pleading the alleged withdrawal request of
Olarte as Annex "A." However, the said Annex "A" turned out to
be a filled-up bio-data form of Olarte bearing the letterhead of
Royal Dream,10the local agency which according to Nahas was
the one responsible for Olartes deployment.
In a Decision11 dated March 20,2002, the Labor Arbiter ruled that
PETRA/Royal Dream/Nahas failed to discharge the burden of
proving that Olartes termination and repatriation were for just
cause; and also rejected their claim against liability after giving
weight to the fact that Nahas admitted to have interviewed
Olarte but failed to substantiate the claim that the latter
withdrew her application. The dispositive portion of the said
Decision reads:
WHEREFORE, prescinding from the foregoing considerations,
respondents Petra Agency/Royal [Dream] International
Services/Consolacion "Marla" Nahas are hereby jointly and
severally ordered to pay the complainant her unpaid salaries for
eight (8) months in the amount of US$1,600.00; three (3) months
salary of the unexpired portion of the contract in the amount [of]
US$600.00; moral damages in the amount of 100,000.00 and
exemplary damages amounting to 50,000.00 and attorneys fees
equivalent to ten (10%) percent of the total monetary awards.
SO ORDERED.12
Nahas appealed to the NLRC.
Ruling of the National Labor Relations Commission
In her Memorandum of Appeal,13 Nahas recanted her earlier
admission that Olarte went to PETRA as a walk-in applicant
sometime in May 1999, claiming that the same was a mistake.
She asserted that Olarte could not have possibly applied with
PETRA during that time as the latter was issued a license by the
POEA only on July 16, 1999. Moreover, Fahad was not one of
PETRAs accredited foreign employers.
To further avoid personal liability, Nahas denied involvement in
Olartes deployment. She made a new allegation, though, i.e., that
if at all, her only involvement was that she interviewed Olarte
when she was still connected with Royal Dream as a mere
employee. Even with this participation, she averred that she
could not be made liable for Olartes claims because she was
neither the owner nor an officer of Royal Dream. Lastly, while
Nahas was quick in passing the buck to Royal Dream she
nevertheless stressed that no summons was served upon the
latter. Thus, the Labor Arbiters Decision is not binding on it.
The NLRC, however, was not persuaded and disposed of the case
in its Decision14 of February 28, 2003 as follows:
The facts of this case are never disputed by herein appellants,
and as such they are now the law of the case. Records will
disclose, as admitted by the herein parties that it was with
respondent PETRA that complainant applied for overseas
employment as domestic helper. It was respondent Nahas herself
who interviewed complainant and in all probability furnished
her all the requisite[s] for her deployment. All along she (Nahas)
represented [to be the owner of] and [was connected] with both
PETRA and Royal Dream to facilitate her deployment. In fact
complainant was successfully deployed by Royal Dream as
represented to by Nahas. Obviously, complainants overseas
employment was made possible by respondent[]s agencies, thru
the efforts of [respondent] Nahas.
While it was claimed by PETRA that the application of
complainant was withdrawn, no evidence on [record] appear to
support it.
The same holds true with appellants[] claim that respondent
Nahas was no longer connected with respondent Royal Dream
when complainant was deployed abroad.
The fact that complainant was finally deployed thru the
intercession of [respondent] Nahas with the aid of both
respondent agencies, convinces us, as the Labor Arbiter ruled,
that both agencies, indeed did so in recognition of the formers
authority.
Suffice it to [state] therefore that We find no cogent reason to
deviate from the findings of the Labor Arbiter a quo, and finding
the same in order, [affirm] it en toto.
WHEREFORE, the instant appeal should be, as it is hereby
dismissed for lack of merit.
SO ORDERED.15
Nahas filed a Motion for Reconsideration16 which was denied in a
Resolution17 dated June 30, 2003.Hence, the recourse to the CA
via a Petition for Certiorari.
Ruling of the Court of Appeals
Nahas advanced the same arguments she raised before the labor
tribunals, but failed to convince the CA as in its Decision18 dated
April 29, 2005 it ruled in this wise:
Private respondent Olarte unequivocally declared at the [outset]
that it was Nahas who interviewed her and facilitated her
application for work abroad as a domestic helper by instructing
the former to sign the Contract of Employment. Nahas, in her
Position Paper, her Reply to Olartes Position Paper and her
Rejoinder, admitted to having interviewed Olarte for her
application to work abroad. Though she quickly added that she
did so only because Olarte applied with PETRA first and that the
latter eventually withdrew the same, Nahas subsequently
recanted this and instead admitted that her agency PETRA was
only granted a license by the POEA on 16 July1999 or after Olarte
accomplished and filed her application form with ROYAL on 18
May 1999. In the same vein, Nahas likewise admitted being
connected with ROYAL before and that she was the one who met
and entertained Olarte when the latter applied with ROYAL.
While Nahas claim[s] that she is neither the proprietress nor one
of the officers of ROYAL at that time, her role or position with
ROYAL was undeniably significant considering that she took
charge [of] interviewing Olarte and eventually made her sign the
Contract of Employment. Clearly, Nahas exercised discretion in
determining who among the applicants of ROYAL should be
accepted and deployed. It is also worthy to point out that the
accomplished bio-data of Olarte with the letterhead of ROYAL
referred to earlier was attached by no less than Nahas herself in
her earlier pleading before the Labor Arbiter supposedly to show
that Olarte withdrew her application with PETRA. It would be
uncanny for Nahas to have in her possession and custody such
document, if indeed she was but a mere staff of ROYAL or that
she is no longer connected in any way with ROYAL, unless there
remains an intimate relationship between her and ROYALor that
she once held an important position in the same.
With the foregoing, We find nothing capricious or whimsical with
the NLRCs finding and thus affirm Nahas liability in accordance
with Section 64 of the Omnibus Rules and Regulations
Implementing the Migrant Workers and Overseas Filipinos Act
of1995 (RA 8024), to wit:
Section 64. Solidary Liability The liability of the
principal/employer and the recruitment placement agency on
any and all claims under this Rule shall be [joint] and solidary. x
x x.
If the recruitment/placement agency is a juridical being, the
corporate officers and directors and partners as the case may be,
shall themselves be jointly and solidarily liable with the
corporation or partnership for the aforesaid claims and damages.
xxxx
WHEREFORE, the instant petition is DENIED and the assailed
Decision of the NLRC dated 28 February2003 and its Resolution
of 30 June 2003 are hereby AFFIRMED.
SO ORDERED.19
The Motion for Reconsideration20 thereto having been denied in
the CA Resolution21 dated July 8, 2005, Nahas now comes to this
Court via the present Petition for Review on Certiorari.
The Parties Arguments
Nahas insists that it is Royal Dream which is solely responsible
for Olartes deployment and thus should be the one to answer for
her claims. Be that as it may, she contends that Royal Dream was
not served with summons; hence, the proceedings in this case is
not binding upon it. Nahas also refutes the CAs conclusion that
since she interviewed and caused Olarte to sign an employment
contract, she held an important position in Royal Dream. She
maintains that she is a mere employee of Royal Dream and that
interviewing and entertaining applicants per se do not establish
that she is a corporate officer, director or partner in said
company who could be held solidarily liable. Lastly, she avers
that Olartes Complaint is bereft of allegations of attendant
circumstances which warrant the grant of moral and exemplary
damages.
On the other hand, Olarte asserts that the argument that PETRA
is different from Royal Dream is clearly an attempt on the part of
Nahas, PETRA and Royal Dream to evade liability. She stresses
that it was Nahas, for and in behalf of PETRA/Royal Dream, who
performed the acts of recruitment which led to her deployment
abroad; hence, all of them should be held jointly and solidarily
liable with their foreign principal.
Our Ruling
The Petition has no merit.
The Court is not a trier of facts; factual findings of the labor
tribunals when affirmed by the CA are generally accorded not
only respect, but even finality, and are binding on this Court.
It must be stressed, at the outset, that the resolution of the issue
of whether Nahas acted for and in behalf of PETRA and/or Royal
Dream in deploying Olarte abroad is a question of fact. "Well-
settled is the rule that this Court is not a trier of facts and this
doctrine applies with greater force in labor cases. Questions of
fact are for the labor tribunals to resolve. Only errors of law are
generally reviewed in petitions for review on certiorari
criticizing decisions of the CA."22 Also "[s]ettled is the rule that
the findings of the [Labor Arbiter], when affirmed by the NLRC
and the CA, are binding on the Supreme Court, unless patently
erroneous."23 In this case, the Labor Arbiter, the NLRC, and the
CA are one in their factual conclusion that Nahas, acting for and
in behalf of PETRA and Royal Dream, interviewed Olarte, caused
her to sign an employment contract, and facilitated and made
possible her deployment abroad. The Court is, therefore, not
duty-bound to inquire into the accuracy of this factual finding,
particularly in this case where there is no showing that it was
arbitrary and bereft of any rational basis.24
Nahas inconsistent positions militate against her case; her claim
of lack of service of summonsupon Royal Dream is likewise
untenable.
The Court notes that in her quest to evade liability, Nahas
introduced several conflicting assertions. Before the Labor
Arbiter, she admitted that Olarte indeed applied with PETRA and
was interviewed by her but later withdrew the application.
While Nahas intended to support this position with a document
showing that Olarte requested for the withdrawal of her
application, the same was, however, never submitted. What was
instead unwittingly attached to her Position Paper was Olartes
accomplished bio-data bearing the letterhead of Royal Dream.
This did not escape the Labor Arbiters attention such that her
March 20, 2002 Decision states:
x x x While [PETRA/Nahas] admits that complainant was a
[walk]-in applicant, respondent [PETRA] Agencys claim
that[Olarte] subsequently withdrew her application has not been
satisfactorily established by concrete evidence. x x x [I]t is
incumbent upon the party who asserts a fact [to prove the same].
More significantly, respondent Consolacion "Marla" Nahas never
denied [Olartes claim] that it was [Nahas] who interviewed her.
It is basic that mere [allegation]is neither equivalent to proof nor
evidence.25
Later in her Memorandum of Appeal with the NLRC, Nahas
repudiated her earlier admission and averred that Olarte did not
at all apply with PETRA. While still maintaining that she
interviewed Olarte, she now claimed to have done so when she
was still connected with Royal Dream as a mere
employee.1wphi1
It is quite obvious that Nahas started singing a different song, so
to speak, after the Labor Arbiter did not buy her claim that Olarte
withdrew her application with PETRA due to her utter failure to
support the same. And with her still seeming inability to produce
the alleged withdrawal request before the NLRC, the most
convenient way out is for her to claim that Olarte did not at all
apply with PETRA. While Nahas attempted to bolster this new
allegation by averring that PETRA was issued a license only on
July16, 1999 thereby making it impossible for Olarte to apply in
May 1999, the same, however, hardly convinces. Aside from the
lack of any evidence showing the date of the POEAs issuance of
license to PETRA, the fact that it was yet to be issued a license
does not preclude the possibility that it was already accepting
applicants on behalf of Royal Dream which at that time already
possesses the required license. This explains why the
accomplished bio-data of Olarte dated May 18, 1999 bears the
letterhead of Royal Dream and also why the pertinent documents
from POEA and OWWA26 reflect the said agency as Olartes local
agency.
Neither does the unsupported averment of Nahas before the
NLRC that she was previously connected with Royal Dream as a
former employee help her cause. For one, she could have easily
submitted a certificate of employment from Royal Dream
showing that she was a mere employee of the latter during the
time material to this case. But she failed to do so. It must be
stressed "that he who alleges must prove."27
Clearly, Nahas vacillating from one story to another and not
being able to support them is nothing but a mere ruse to evade
the lawful claims of Olarte. This cannot be tolerated. It has been
held that "[a] party will not be allowed to make a mockery of
justice by taking inconsistent positions which, if allowed, would
result in brazen deception."28Inconsistent and unsupported as
they are, the labor tribunals and the CA correctly rejected the
contentions of Nahas.
Anent the assertion that Royal Dream was not served with
summons, it must be stressed that Olarte had categorically
declared at the outset that it was in the office of PETRA/Royal
Dream at Room 401, Gochangco Building, T.M. Kalaw, Ermita,
Manila where she applied for work as domestic helper, was
interviewed, and made to sign an employment contract. This was
effectively corroborated by Nahas herself when she admitted
before the Labor Arbiter that Olarte was a walk-in applicant in
the said office. When finally deployed, the local agency appearing
in Olartes papers was Royal Dream. Hence, when Olarte was
repatriated and later filed a Complaint, she lodged it against
Nahas and PETRA/Royal Dream and summons was served upon
them at Room 401, Gochangco Building, T.M., Kalaw, Ermita,
Manila.29 Besides, to concede to this claim of Nahas would in
effect allow her, PETRA and Royal Dream to hide behind the
cloak of corporate fiction in order to evade the rightful claims of
Olarte. It bears emphasizing that "the statutorily granted
privilege of a corporate veil may be used only for legitimate
purposes."30 "[T]he corporate vehicle cannot be used as a shield
to protect fraud or justify wrong,"31 which clearly in this case is
what Nahas, PETRA and Royal Dream are attempting to achieve
but which the Court cannot allow.
The propriety of the grant of moral and exemplary damages in
favor of Olarte is being raised for the first time with this Court.
Notably, Nahas did not question before the NLRC and the CA the
Labor Arbiters grant of moral and exemplary damages in favor
of Olarte; hence, the Court need not belabor upon the same.
"[P]oints of law, theories, issues, and arguments not adequately
brought to the attention of the lower court (or in this case, the
appropriate quasi-judicial administrative body) need not be
considered by the reviewing court as they cannot be raised for
the first time on appeal x x x because this would be offensive to
the basic rules of fair play, justice and due process."32
As a final note, it is worth stating that recruitment agencies, as
part of their bounden duty to protect the welfare of the Filipino
workers sent abroad from whom they take their profit,33 should
in conscience not add to the misery of maltreated and abused
Filipino workers by denying them the reparation to which they
are entitled. Instead, they must "faithfully comply with their
government prescribed responsibilities"34 and be the first to
ensure the welfare of the very people upon whose patronage
their industry thrives.35
WHEREFORE, the Petition is DENIED. The assailed Decision
dated April 29, 2005 and Resolution dated July 8, 2005 of the
Court of Appeals in CAG.R. SP No. 79028 are AFFIRMED.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 196276 June 4, 2014
TAKATA (PHILIPPINES) CORPORATION, Petitioner,
vs.
BUREAU OF LABOR RELATIONS and SAMAHANG LAKAS
MANGGAGAWA NG TAKATA (SALAMAT),Respondents.
DECISION
PERALTA, J.:
Before us is a petition for review on certiorari filed by petitioner
TAKATA Philippines Corporation assailing the Decision1 dated
December 22, 2010 and the Resolution2 dated March 28, 2011 of
the Court of Appeals in CA-G.R. SP No. 112406.
On July 7, 2009, petitioner filed with the Department of Labor
and Employment (DOLE) Regional Office a Petition3for
Cancellation of the Certificate of Union Registration of
Respondent Samahang Lakas Manggagawa ng Takata
(SALAMA1) on the ground that the latter is guilty of
misrepresentation, false statement and fraud with respect to the
number of those who participated in the organizational meeting,
the adoption and ratification of its Constitution and By-Laws, and
in the election of its officers. It contended that in the May 1, 2009
organizational meeting of respondent, only 68 attendees signed
the attendance sheet, and which number comprised only 17% of
the total number of the 396 regular rank- and-file employees
which respondent sought to represent, and hence, respondent
failed to comply with the 20% minimum membership
requirement. Petitioner insisted that the document "Pangalan ng
mga Kasapi ng Unyon" bore no signatures of the alleged 119
union members; and that employees were not given sufficient
information on the documents they signed; that the document
"Sama-Samang Pahayag ng Pagsapi" was not submitted at the
time of the filing of respondent's application for union
registration; that the 119 union members were actually only
117; and, that the total number of petitioner's employees as of
May 1, 2009 was 470, and not 396 as respondent claimed.4
Respondent denied the charge and claimed that the 119 union
members were more than the 20% requirement for union
registration. The document "Sama-Samang Pahayag ng Pagsapi
sa Unyon" which it presented in its petition for certification
election5 supported their claim of 119 members. Respondent
also contended that petitioner was estopped from assailing its
legal personality as it agreed to a certification election and
actively participated in the pre-election conference of the
certification election proceedings.6 Respondent argued that the
union members were informed of the contents of the documents
they signed and that the 68 attendees to the organizational
meeting constituted more than 50% of the total union
membership, hence, a quo rumexisted for the conduct of the said
meeting.7
On August 27, 2009, DOLE Regional Director, Atty. Ricardo S.
Martinez, Sr., issued a Decision8 granting the petition for
cancellation of respondent's certificate of registration, the
dispositive portion of which reads:
WHEREFORE, from the foregoing considerations, the petition is
hereby GRANTED. Accordingly, the respondent Union Certificate
of Registration No. RO400A-2009-05-01-UR-LAG, dated May 19,
2009 is hereby REVOCKED (sic) and /or CANCELLED pursuant to
paragraph (a) & (b), Section 3, Rule XIV of Department Order No.
40-03 and the Samahang Lakas ng Manggagawa ng TAKATA
(SALAMAT) is hereby delisted from the roll of legitimate labor
organization of this office.9
In revoking respondent's certificate of registration, the Regional
Director found that the 68 employees who attended the
organizational meeting was obviously less than 20% of the total
number of 396 regular rank-and-file employees which
respondent sought to represent, hence, short of the union
registration requirement; that the attendance sheet which
contained the signatures and names of the union members
totalling to 68 contradicted the list of names stated in the
document denominated as "Pangalan ng mga Kasaping Unyon."
The document "Sama-Samang Pahayag ng Pagsapi" was not
attached to the application for registration as it was only
submitted in the petition for certification election filed by
respondent at a later date. The Regional Director also found that
the proceedings in the cancellation of registration and
certification elections are two different and entirely separate and
independent proceedings which were not dependent on each
other.
Dissatisfied, respondent, through Bukluran ng Manggagawang
Pilipino (BMP) Paralegal Officer, Domingo P. Mole, filed a Notice
and Memorandum of Appeal10 with the Bureau of Labor
Relations (BLR). However, on September 28,2009, respondent,
through its counsels, Attys.
Napoleon C. Banzuela, Jr. and Jehn Louie W. Velandrez, filed an
Appeal Memorandum with Formal Entry of Appearance11 to the
Office of the DOLE Secretary, which the latter eventually referred
to the BLR. Petitioner filed an Opposition to the
Appeals12 praying for their dismissal on the ground of forum
shopping as respondent filed two separate appeals in two
separate venues; and for failing to avail of the correct remedy
within the period; and that the certificate of registration was
tainted with fraud, misrepresentation and falsification.
In its Answer,13 respondent claimed that there was no forum
shopping as BMP's Paralegal Officer was no longer authorized to
file an appeal on behalf of respondent as the latter's link with
BMP was already terminated and only the Union President was
authorized to file the appeal; and that it complied with
Department Order No. 40-03.
On December 9, 2009, after considering respondent's Appeal
Memorandum with Formal Entry of Appearance and petitioner's
Answer, the BLR rendered its Decision14 reversing the Order of
the Regional Director, the decretal portion of which reads:
WHEREFORE, the appeal is hereby GRANTED. The Decision of
Regional Director Ricardo S. Martinez, Sr., dated 27 August 2009,
is hereby REVERSEDand SET ASIDE.
Accordingly, Samahang Lakas Manggagawa ng TAKATA
(SALAMAT) shall remain in the roster of labor organizations.15
In reversing, the BLR found that petitioner failed to prove that
respondent deliberately and maliciously misrepresented the
number of rank-and-file employees. It pointed out petitioner's
basis for the alleged noncompliance with the minimum
membership requirement for registration was the attendance of
68 members to the May 1, 2009 organizational meeting
supposedly comprising only 17% of the total 396 regular rank-
and-file employees. However, the BLR found that the list of
employees who participated in the organizational meeting was a
separate and distinct requirement from the list of the names of
members comprising at least 20% of the employees in the
bargaining unit; and that there was no requirement for
signatures opposite the names of the union members; and there
was no evidence showing that the employees assailed their
inclusion in the list of union members.
Petitioner filed a motion for reconsideration, which was denied
by the BLR in a Resolution16 dated January 8, 2010.
Undaunted, petitioner went to the CA via a petition for certiorari
under Rule 65.
After the submission of the parties' respective pleadings, the case
was submitted for decision.
On December 22, 2010, the CA rendered its assailed decision
which denied the petition and affirmed the decision of the BLR.
Petitioner's motion for reconsideration was denied in a
Resolution dated March 29, 2011.
Hence this petition for review filed by petitioner raising the
following issues, to wit:
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE
AND SERIOUS ERROR IN AFFIRMING THE DECISION OF PUBLIC
RESPONDENT BLR AND NOT FINDING ANY VIOLATION BY
SAMAHANG LAKAS MANGGAGAWA SA TAKATA (SALAMAT) OF
THE RULE ON FORUM SHOPPING IN THE FILING OF TWO
VERIFIED APPEALS FOR AND ITS BEHALF. BOTH OF THE
APPEALS SHOULD HAVE BEEN DISMISSED OUTRIGHT BY
PUBLIC RESPONDENT BLR, ON GROUND OF FORUM SHOPPING.
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN
FINDING THAT THE APPLICATION FOR REGISTRATION OF
SAMAHANG LAKAS MANGGAGAWA SA TAKATA (SALAMAT)
WAS COMPLIANT WITH THE LAW. CONSIDERING THE
CIRCUMSTANCES OBTAINING IN THE REGISTRATION OF
SALAMAT, IT IS CLEAR THAT THE SAME IS TAINTED WITH
FRAUD, MISREPRESENTATION AND FALSIFICATION. SALAMAT
DID NOT POSSESS THE REQUIREDNUMBER OF MEMBERS AT
THE TIME OF FILING OF ITS APPLICATION FOR REGISTRATION,
HENCE, IT SHOULD BE HELD GUILTY OF MISREPRESENTATION,
AND FALSE STATEMENTS AND FRAUD IN CONNECTION
THEREWITH.17
Anent the first issue, petitioner contends that respondent had
filed two separate appeals with two different representations at
two different venues, in violation of the rule on multiplicity of
suits and forum shopping, and instead of dismissing both
appeals, the appeal erroneously filed before the Labor Secretary
was the one held validly filed, entertained and even granted; that
it is not within the discretion of BLR to choose which between
the two appeals should be entertained, as it is the fact of the
filing of the two appeals that is being prohibited and not who
among the representatives therein possessed the authority.
We are not persuaded.
We find no error committed by the CA in finding that respondent
committed no forum shopping. As the CA correctly concluded, to
wit:
It is undisputed that BMP Paralegal Officer Domingo P. Mole was
no longer authorized to file an appeal on behalf of union
SALAMAT and that BMP was duly informed that its services was
already terminated. SALAMAT even submitted before the BLR its
"Resolusyon Blg. 01-2009" terminating the services of BMP and
revoking the representation of Mr. Domingo Mole in any of the
pending cases being handled by him on behalf of the union. So,
considering that BMP Paralegal Officer Domingo P. Mole was no
longer authorized to file an appeal when it filed the Notice and
Memorandum of Appeal to DOLE Regional Office No. IV-A, the
same can no longer be treated as an appeal filed by union
SALAMAT. Hence, there is no forum shopping to speak of in this
case as only the Appeal Memorandum with Formal Entry of
Appearance filed by Atty. Napoleon C. Banzuela, Jr. and Atty. Jehn
Louie W. Velandrez is sanctioned by SALAMAT.18
Since Mole's appeal filed with the BLR was not specifically
authorized by respondent, such appeal is considered to have not
been filed at all. It has been held that "if a complaint is filed for
and in behalf of the plaintiff who is not authorized to do so, the
complaint is not deemed filed.
An unauthorized complaint does not produce any legal effect."19
Respondent through its authorized representative filed its
Appeal Memorandum with Formal Entry of Appearance before
the Labor Secretary, and not with the BLR. As the appeal
emanated from the petition for cancellation of certificate of
registration filed with the Regional Office, the decision canceling
the registration is appealable to the BLR, and not with the Labor
Secretary. However, since the Labor Secretary motu propio
referred the appeal with the BLR, the latter can now act on it.
Considering that Mole's appeal with the BLR was not deemed
filed, respondents appeal, through Banzuela and Associates,
which the Labor Secretary referred to the BLR was the only
existing appeal with the BLR for resolution. There is, therefore,
no merit to petitioner's claim that BLR chose the appeal of
Banzuela and Associates over Mole's appeal.
The case of Abbott Laboratories Philippines, Inc. v. Abbott
Laboratories Employees Union20 cited by petitioner is not at all
applicable in this case as the issue therein is the authority of the
Labor Secretary to review the decision of the Bureau of Labor
Relations rendered in the exercise of its appellate jurisdiction
over decision of the Regional Director in cases involving
cancellations of certificate of registration of labor unions. We
found no grave abuse of discretion committed by the Secretary of
Labor in not acting on therein petitioner's appeal. The decision of
the Bureau of Labor Relations on cases brought before it on
appeal from the Regional Director are final and executory. Hence,
the remedy of the aggrieved party is to seasonably avail of the
special civil action of certiorari under Rule 65 and the Rules of
Court. In this case, after the Labor Secretary motu propio
referred respondent's appeal filed with it to the BLR which
rendered its decision reversing the Regional Director, petitioner
went directly to the CA via a petition for certiorari under Rule 65.
As to the second issue, petitioner seeks the cancellation of
respondent's registration on grounds offraud and
misrepresentation bearing on the minimum requirement of the
law as to its membership, considering the big disparity in
numbers, between the organizational meeting and the list of
members, and so misleading the BLR that it obtained the
minimum required number of employees for purposes of
organization and registration.
We find no merit in the arguments.
Art. 234 of the Labor Code provides:
ART. 234. Requirements of Registration. - A federation, national
union or industry or trade union center or an independent union
shall acquire legal personality and shall be entitled to the rights
and privileges granted by law to legitimate labor organizations
upon issuance of the certificate of registration based on the
following requirements:
(a) Fifty pesos (50.00)registration fee;
 (b) The names of its officers, their addresses, the
principal address of the labor organization, the minutes
of the organizational meetings and the list of the workers
who participated in such meetings;
(c) In case the applicant is an independent union, the
names of all its members comprising at least twenty
percent (20%) of all the employees in the bargaining unit
where it seeks to operate;
(d) If the applicant union has been in existence for one or
more years, copies of its annual financial reports; and
(e) Four copies of the constitution and by-laws of the
applicant union, minutes of its adoption or ratification,
and the list of the members who participated in it."
And after the issuance of the certificate of registration, the labor
organization's registration could be assailed directly through
cancellation of registration proceedings in accordance with
Articles 238 and 239 of the Labor Code. And the cancellation of
union certificate of registration and the grounds thereof are as
follows:
ART. 238. Cancellation of Registration. - The certificate of
registration of any legitimate labor organization, whether
national or local, may be cancelled by the Bureau, after due
hearing, only on the grounds specified in Article 239 hereof.
ART. 239. Grounds for Cancellation of Union Registration. - The
following may constitute grounds for cancellation of union
registration:
(a) Misrepresentation, false statement or fraud in
connection with the adoption or ratification of the
constitution and by-laws or amendments thereto, the
minutes of ratification, and the list of members who took
part in the ratification;
(b) Misrepresentation, false statements or fraud in
connection with the election of officers, minutes of the
election of officers, and the list of voters;
(c) Voluntary dissolution by the members.
Petitioner's charge that respondent committed
misrepresentation and fraud in securing its certificate of
registration is a serious charge and must be carefully evaluated.
Allegations thereof should be compounded with supporting
circumstances and evidence.21 We find no evidence on record to
support petitioner's accusation.
Petitioner's allegation of misrepresentation and fraud is based
on its claim that during the organizational meeting on May 1,
2009, only 68 employees attended, while respondent claimed
that it has 119 members as shown in the document denominated
as "Pangalan ng mga Kasapi ng Unyon;" hence, respondent
misrepresented on the 20% requirement of the law as to its
membership.
We do not agree.
It does not appear in Article 234 (b) of the Labor Code that the
attendees in the organizational meeting must comprise 20% of
the employees in the bargaining unit. In fact, even the
Implementing Rules and Regulations of the Labor Code does not
so provide. It is only under Article 234 (c) that requires the
names of all its members comprising at least twenty percent
(20%) of all the employees in the bargaining unit where it seeks
to operate. Clearly, the 20% minimum requirement pertains to
the employees membership in the union and not to the list of
workers who participated in the organizational meeting. Indeed,
Article 234 (b) and (c) provide for separate requirements, which
must be submitted for the union's registration, and which
respondent did submit. Here, the total number of employees in
the bargaining unit was 396, and 20% of which was about 79.
Respondent submitted a document entitled "Pangalan ng Mga
Kasapi ng Unyon" showing the names of 119 employees as union
members, thus respondent sufficiently complied even beyond
the 20% minimum membership requirement. Respondent also
submitted the attendance sheet of the organizational meeting
which contained the names and signatures of the 68 union
members who attended the meeting. Considering that there are
119 union members which are more than 20% of all the
employees of the bargaining unit, and since the law does not
provide for the required number of members to attend the
organizational meeting, the 68 attendees which comprised at
least the majority of the 119 union members would already
constitute a quorum for the meeting to proceed and to validly
ratify the Constitution and By-laws of the union. There is,
therefore, no basis for petitioner to contend that grounds exist
for the cancellation of respondent's union registration. For fraud
and misrepresentation to be grounds for cancellation of union
registration under Article 239 of the Labor Code, the nature of
the fraud and misrepresentation must be grave and compelling
enough to vitiate the consent of a majority of union members.22
Petitioner's claim that the alleged union members signed
documents without adequate information is not persuasive. The
one who alleges a fact has the burden of proving it and a mere
allegation is not evidence.23 In fact, we note that not one of those
listed in the document denominated as "Pangalan ng Mga
Kasaping Unyon" had come forward to deny their membership
with respondent. Notably, it had not been rebutted that the same
union members had signed the document entitled "Sama-
Samang Pahayag ng Pagsapi," thus, strengtheningtheir desire to
be members of the respondent union.
Petitioner claims that in the list of members, there was an
employee whose name appeared twice and another employee
who was merely a project employee. Such could not be
considered a misrepresentation in the absence of showing that
respondent deliberately did so for the purpose of increasing
their union membership. In fact, even if those two names were
not included in the list of union members, there would still be
117 members which was still more than 20% of the 396 rank-
and-file employees.
As to petitioner's argument that the total number of its
employees as of May 1, 2009 was 470, and not396 as respondent
claimed, still the 117 union members comprised more than the
20% membership requirement for respondent's registration.
In Mariwasa Siam Ceramics v. Secretary of the Department of
Labor and Employment,24 we said:
For the purpose of de-certifying a union such as respondent, it
must be shown that there was misrepresentation, false
statement or fraud in connection with the adoption or WHEREFORE, premises considered, the petition for review is
ratification of the constitution and by-laws or amendments DENIED. The Decision dated December 22, 2010 and the
thereto, the minutes of ratification; or, in connection with the Resolution dated March 28, 2011 of the Court of Appeals, in CA-
election of officers, the minutes of the election of officers, the list G.R. SP No. 112406, are AFFIRMED.
of voters, or failure to submit these documents together with the
list of the newly elected-appointed officers and their postal SO ORDERED.
addresses to the BLR.
Republic of the Philippines
The bare fact that two signatures appeared twice on the list of SUPREME COURT
those who participated in the organizational meeting would not, Manila
to our mind, provide a valid reason to cancel respondents
certificate of registration. The cancellation of a unions THIRD DIVISION
registration doubtless has an impairing dimension on the right of
labor to self-organization. For fraud and misrepresentation to be G.R. No. 193421 June 4, 2014
grounds for cancellation of union registration under the Labor
Code, the nature of the fraud and misrepresentation must be MCMER CORPORATION, INC., MACARIO D. ROQUE, JR. and
grave and compelling enough to vitiate the consent of a majority CECILIA R. ALVESTIR, Petitioners,
of union members.1wphi1 vs.
NATIONAL LABOR RELATIONS COMMISSION and FELICIANO
In this case, we agree with the BLR and the CA that respondent C. LIBUNAO, JR., Respondent.
could not have possibly committed misrepresentation, fraud, or
false statements. The alleged failure of respondent to indicate DECISION
with mathematical precision the total number of employees in
the bargaining unit is of no moment, especially as it was able to PERALTA, J.:
comply with the 20% minimum membership requirement. Even
if the total number of rank-and-file employees of petitioner is Before the Court is a petition for review on certiorari under Rule
528, while respondent declared that it should only be 455, it still 45 of the Rules of Court seeking to reverse and set aside the
cannot be denied that the latter would have more than complied Decision1 dated May 19, 2010 and the Resolution2 dated August
with the registration requirement.25 17, 2010, respectively, of the Court of Appeals (CA) in CA-G.R. SP
No. 112237.

The facts, as shown in the records, are the following:

Private respondent was employed by petitioner McMer
Corporation, Inc. (McMer) on August 5, 1999 as Legal Assistant
and was eventually promoted as Head of Legal Department, and
concurrently, as Officer-in-Charge of petitioner McMer' s Legal
and Administrative Department, effective on January 3,
2000,3 with a monthly salary of 10,500.00 as basic pay plus
3,500.00 as living and representation allowance, plus the sum
of 5,000.00 which is not reflected on the payroll.4
According to private respondent, for quite some time, he and
petitioners, specifically Macario D. Roque, Jr. (Roque) and Cecilia
R. Alvestir (Alvestir), McMers General Manager and President,
respectively, have been on a cold war brought often by the
disagreement in the design and implementation of company
policies and procedures.5However, the subsisting rift between
him and petitioners heightened on July 10, 2007 when petitioner
McMer started verbally and maliciously imputing against Ms.
Ginalita C. Guiao, Department Head III, Logistics Department, and
another officer of the Logistics Department, Ms. Marissa A.
Rebulado, Department Head I, certain unfounded score of
inefficient performance of duty.6
At around noon on July 20, 2007, petitioner Roque gave an
immediate summon upon private respondent to proceed to his
office to discuss administrative matters, including but not limited
to the alleged absence and tardiness of private respondent.7
Private respondent, sensing some unusual development in the
attitude of petitioner Roque, instead of responding to the
summon, went to petitioner Alvestirs office, and informed her of
petitioner Roques disposition and his fear of a perceived danger
to his person. He then requested for petitioner Alvestir to go to
petitioner Roques office instead, of which petitioner Alvestir
conceded. Moments later, petitioner Roque, at the height of
anger, confronted private respondent and commanded him to
proceed to his office. At this juncture, private respondent was too
scared to confront Roque as the latter may inflict physical harm
on him.
As a consequence of the foregoing, private respondent elected to
discontinue work that afternoon and immediately proceeded to
the Valenzuela Police Headquarters to report on the incident in
the police blotter. Private respondent did not report for work
from July 21, 2007 up to July 30, 2007. Because of this, petitioner
McMer, through petitioner Alvestir, issued a
Memorandum dated July 30, 2007 directing private respondent
8
to explain within five (5) days why no disciplinary action should
be imposed upon him for being in absence without official leave
(AWOL).
In response, private respondent sent a letter9 dated August 6,
2007 explaining the reason why he refused to report for work
during the aforesaid period.
On August 6, 2007, private respondent Feliciano C. Libunao, Jr.
filed a complaint for unfair labor practices, constructive illegal
dismissal, nonpayment of 13th month pay and separation pay,
moral and exemplary damages, as well as attorneys fees, against
petitioners McMer Corporation, Inc., Roque, and Alvestir.
In response, petitioners sent a letter10 dated August 9, 2007
acknowledging private respondents letter dated August 6, 2007
and informing the latter that his letter is being judiciously
considered by management.
On August 18, 2007, a conciliary meeting was held inside
petitioners premises to discuss the possibility of an amicable
settlement. In the end, however, private respondent was
informed verbally by petitioner Alvestir that on account of
strained relationship brought about by the institution of a labor
case against petitioners, the latter is inclined to dismiss him from
office. Private respondent was, likewise, offered a separation pay
in the sum of 55,000.00.
In its Decision11 dated March 12, 2008, Labor Arbiter Eduardo G.
Magno ruled that there was no constructive dismissal in the
instant case since:
x x x. It is very apparent that complainant voluntarily stopped
reporting for work on perceived danger from harm by Mr.
Roque. However, it is more of a figment of his imagination and
not supported by any concrete evidence or established facts.12
Nevertheless, private respondent was granted a proportionate
13th month pay of 10,834.00based on his actual monthly income
of 19,500.00, the pertinent portion of the Decision reads:
WHEREFORE, Respondent corporation McMer Corporation, Inc.
is hereby ordered to pay complainant the amount of 84,000.00
as his separation pay and 10,834.00 as his proportionate 13th
month pay.
SO ORDERED.13
Private respondent filed his Appeal dated April 1, 2008, while
petitioners filed their Memorandum of Appeal dated April 10,
2008. After the parties submitted their respective replies to the
aforementioned appeals, public respondent NLRC, in its assailed
Decision14 dated August 14, 2009, reversed the findings of the
Labor Arbiter and modified the relief granted to private
respondent, to wit:
WHEREFORE, premises considered, the assailed Decision dated
March 12, 2008, is modified as Respondents/Appellants are
hereby ordered:
To pay Complainant-Appellee Feliciano C. Libunao, Jr. full
backwages based on his basic monthly pay of 10,500.00, plus
13th month pay, living & representation allowance, and
particular amount computed from the time his wages were
withheld from him in August 2007 up to the date We issued this
Decision in the total amount of 359,141.25.
To pay Complainants separation pay of one months salary for
every year of service in lieu of reinstatement in the amount of
105,000.00.
To pay Complainant Feliciano C. Libunao, Jr. moral, exemplary
and nominal damages in the total amount of 90,000.00.
SO ORDERED.15
Respondents filed their Motion for Reconsideration dated
September 2, 2009. The same was, however, denied by the NLRC
in its assailed Resolution16 dated November 5, 2009.
Aggrieved by the foregoing, petitioners filed a Petition for
Certiorari with prayer for injunctive relief with the CA, assailing
the Decision and Resolution of the NLRC. The CA did not,
however, find basis to reverse the aforementioned judgments of
the NLRC, the dispositive portion of its Decision17 dated May 19,
2010 reads:
WHEREFORE, premises considered, the Petition is DENIED for
lack of merit. Costs against petitioners.
SO ORDERED.18
Despite petitioners Motion for Reconsideration dated May 19,
2010, the CA found no compelling reason to modify or reverse its
earlier Decision, the dispositive portion of its Resolution19 dated
August 17, 2010 states:
WHEREFORE, premises considered, the Motion for
Reconsideration is DENIED for lack of merit.
SO ORDERED.20
Hence, this petition for review on certiorari under Rule 45 of the
Rules of Civil Procedure, with the following assigned errors:
1. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN
DECIDING THAT THE HONORABLE COMMISSION DID NOT
COMMIT GRAVE ABUSE OF DISCRETION IN FINDING THAT
THERE WAS CONSTRUCTIVE DISMISSAL; [AND]
2. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN
DECIDING THAT THE HONORABLE COMMISSION DID NOT
COMMIT GRAVE ABUSE OF DISCRETION IN ITS MONETARY
AWARD IN FAVOR OF PRIVATE RESPONDENT.21
The sole issue raised before the Court is whether or not the CA
seriously erred in sustaining the NRLCs finding that private
respondent was constructively dismissed, and entitled to full
backwages, separation pay in lieu of reinstatement, and moral,
exemplary and nominal damages.
We find no basis to reverse the ruling of the CA.
At the onset, we concur with petitioners view that while a
petition filed under Rule 45 of the Revised Rules of Court deals
only with matters involving questions of law, the same is not
absolute, as in the instant case wherein a conflict of factual
findings exists among the Labor Arbiter, the NLRC, and the CA.
Particularly, the Labor Arbiter found facts supporting the
conclusion that there is no constructive dismissal, while the
NLRC and the CA found none. Under this situation and consistent
with prevailing jurisprudence, the conflicting factual findings
below are not binding on us, and we retain the authority to pass
on the evidence presented and draw conclusions therefrom.
As plainly held in Uniwide Sales Warehouse Club v. NLRC,22 the
Court may scrutinize and assess the evidence once again should
there be a conflict of factual perceptions between the Labor
Arbiter and the CA, to wit:
It is a well-settled rule that the jurisdiction of the Supreme Court
in petitions for review on certiorari under Rule 45 of the Rules of
Court is limited to reviewing errors of law, not of fact. The Court
is not a trier of facts. In the exercise of its power of review, the
findings of fact of the CA are conclusive and binding and
consequently, it is not the Courts function to analyze or weigh
evidence all over again.
The foregoing rule, however, is not absolute. The Court, in Dusit
Hotel Nikko v. National Union of Workers in Hotel, Restaurant
and Allied Industries (NUWHRAIN), held that the factual findings
of the NLRC as affirmed by the CA, are accorded high respect and
finality unless the factual findings and conclusions of the LA
clash with those of the NLRC and the CA in which case the Court
will have to review the records and the arguments of the parties
to resolve the factual issues and render substantial justice to the
parties.
The present case is clouded by conflict of factual perceptions.
Consequently, the Court is constrained to review the factual
findings of the CA which contravene the findings of facts of the
LA.23
Now to the main issue of the instant case.
Petitioners aver that there is no clear, positive and convincing
evidence to prove that private respondent was constructively
dismissed from office24 given that the only evidence presented
were merely the Valenzuela police blotter25 dated July 20, 2006
as well as the Affidavit26 executed by Ginalita Guiao, dated
September 5, 2007.
In a plethora of cases, we have defined constructive dismissal as
a cessation of work because continued employment is rendered
impossible, unreasonable or unlikely; when there is a demotion
in rank or diminution in pay or both; or when a clear
discrimination, insensibility, or disdain by an employer becomes
unbearable to the employee.27
The test of constructive dismissal is whether a reasonable
person in the employees position would have felt compelled to
give up his position under the circumstances.28 It is an act
amounting to dismissal but made to appear as if it were
not.29 Constructive dismissal is, therefore, a dismissal in
disguise.30 As such, the law recognizes and resolves this situation
in favor of employees in order to protect their rights and
interests from the coercive acts of the employer.31 In fact, the
employee who is constructively dismissed may be allowed to
keep on coming to work.32
After a careful consideration of the evidence and records at hand,
we uphold the factual and legal findings of the CA that there was
constructive dismissal because of the following acts committed
by petitioners against private respondent, to wit:
1. About noon of July 20, 2007, petitioner Roque went to
private respondents office at the height of his anger with
threat to inflict physical harm, shouted a command for
private respondent to proceed to petitioners office;
2. Private respondent was approached sarcastically with
commanding voice by petitioner Roque even in front of
some officers and rank-and file employees and newly-
hired employees; and
 3. Private respondents professional ethic or moral belief
was compromised due to certain business practices33 of
petitioner McMer that were never exposed due to the
employees fear of reprisal, as shown in private
respondents Position Paper.34
We disagree with petitioners view that the Affidavit executed by
Guiao is insufficient to depict the hostile working environment
petitioner McMer maintains. It bears stressing that Guiao has
actual knowledge of facts derived from her personal observation
of what transpired on July 20, 2007, an excerpt of which reads:
2. Sometime on July 20, 2007, I was inside the
administration building of the aforesaid company (HRD
and Legal Department office) having a conversation with
its President, Ms. Cecilia R. Alvestir.
3. In the course of our discussion we were interrupted by
Feliciano Libunao, Jr. as he transmitted some words to
the President for the latter to inform the owner of the
company, Mr. Macario D. Roque, Jr. that he cannot
proceed on the latters summon to proceed to his office
understandably on account of existing fear that they
would come to a possible severe disagreement.
4. Ms. Alvestir then moved to the office of the owner in
compliance to the given request, but after few seconds,
Mr. Macario Roque followed by Ms. Alvestir proceeded to
the aforesaid office where I remained sitting and where
Feliciano Libunao, Jr. holds his office.
5. His face apparently fuming with anger associated with
clear provocation, Mr. Roque accosted Mr. Libunao and
shouted at him to immediately proceed to his office.
6. On the intervention of Ms. Alvestir, his younger
brother, Mr. Macario Roque was forced to return to his
office with that standing order for Mr.Libunao to follow
him, while Mr. Libunao was caught in the state of shock,
public humiliation and embarrassment in the presence of
employees and applicants.
7. Understandably to avoid a possible collision with Mr.
Roque, who is known within the company yard as a
violent person especially during the height of
uncontrolled anger, Mr. Libunao decided to immediately
leave the office without seeing anymore Mr. Roque.
x x x.35
As correctly observed by the CA, the sworn statement of Guiao is
not only relevant and material evidence, the same is likewise
reliable and competent given that Guiao was physically present
at petitioner Alvestirs office when the incident happened, and
has therefore personal knowledge of what transpired therein.
Further, we find her description of petitioner Roques disposition
adequate to support a conclusion that private respondent was
caught in the state of humiliation and embarrassment in the
presence of his co-employees as a result thereof.
Time and again, we have upheld that the substantiality of the
evidence depends on its quantitative as well as its qualitative
aspects,36 as in the present case where the affidavits on which
the decision was mainly anchored were corroborated by any
other documentary evidence such as the police blotter.
It must be remembered that although police blotters are of little
probative value, they are nevertheless admitted and considered
in the absence of competent evidence to refute the facts stated
therein.37 Entries in police records made by a police officer in the
performance of the duty especially enjoined by law are prima
facie evidence of the fact therein stated, and their probative
value may be either substantiated or nullified by other
competent evidence.38
In Macalinao v. Ong,39 we held that the prima facie nature of the
police report ensures that if it remains unexplained or
uncontradicted, it will be sufficient to establish the facts posited
therein, to wit:
In this case, the police blotter was identified and formally offered
as evidence and the person who made the entries thereon was
likewise presented in court. On the other hand, aside from a
blanket allegation that the driver of the other vehicle was the one
at fault, respondents did not present any evidence to back up
their charge and show that the conclusion of the police
investigator was false. Given the paucity of details in the report,
the investigators observation could have been easily refuted and
overturned by respondents through the simple expedient of
supplying the missing facts and showing to the satisfaction of the
court that the Isuzu truck was blameless in the incident. Ong was
driving the truck while the two other truck helpers also survived
the accident. Any or all of them could have given their testimony
to shed light on what actually transpired, yet not one of them
was presented to substantiate the claim that Ong was not
negligent.
Since respondents failed to refute the contents of the police
blotter, the statement therein that the Isuzu truck hit the private
jeepney and not the other way around is deemed established.
The prima facie nature of the police report ensures that if it
remains unexplained or uncontradicted, it will be sufficient to
establish the facts posited therein.40
We are persuaded by the CAs reasoning that as regards police
blotters, the same are admitted and considered in the absence of
competent evidence to refute the facts stated therein. Well-
entrenched is the rule that the quantum of evidence required to
establish a fact in quasi-judicial bodies is substantial
evidence.41 Substantial evidence is such amount of relevant
evidence which a reasonable mind might accept as adequate to
support a conclusion, even if other equally reasonable minds
might opine otherwise.42
In any event, we note that the sarcastic approach on private
respondent was not the basis for the NLRC and the CA to
conclude that there was constructive dismissal in the instant
case. Neither was the allegation that all of private respondents
staff were removed one by one until finally only private
respondent was left alone to handle managerial and clerical
duties.
Indeed, the CAs Decision was not decided only on what
transpired on July 20, 2007. Various factors were considered in
determining the working environment of petitioner McMer, to
determine whether or not private respondent was in a position
wherein he would have felt compelled to give up his position
under the circumstances because continued employment was
just impossible, unreasonable or unlikely.
As may gleaned from the records, what transpired on July 20,
2007 was not merely an isolated outburst on the part of
petitioner Roque. The latters behaviour towards his employees
shows a clear insensibility rendering the working condition of
private respondent unbearable.1wphi1 Private respondent had
reason to dawdle and refuse to comply with the summon of
petitioner Roque out of severe fear that he will be physically
harmed. In fact, the same was clearly manifested by his
immediate reaction to the situation by going to the Valenzuela
Police to report the incident.
Moreover, after a judicious scrutiny of the records, we find that
private respondent has exhibited a strong opposition to some
company practices resulting in a severe marginal distance
between him and petitioners Roque and Alvestir at the
workplace. This, together with the harassment and intimidation
displayed by petitioner Roque to his employees, became so
unbearable for private respondent to continue his employment
with petitioner McMer. The fact that none of the employees
complained or brought this to the attention of the appropriate
authority does not validate petitioners actions. For private
respondent, retaining the employment despite his despair was a
matter of principle. Private respondent reasoned that it was
difficult for him to look for another employment, considering
that at the time he filed his Position Paper, he was already 58
years old. His eventual decision to leave petitioners due to the
agonizing situation at the workplace cannot, therefore, be
discounted.
The NLRC and the CA, therefore, correctly appreciated the
foregoing events as badges of constructive dismissal, since
private respondent could not have given up a job he has engaged
in for eight years unless it has become so unbearable for him to
stay therein. Indeed, private respondent felt compelled to give up
his employment.
As far as private respondent is concerned, how the working place
is being run has caused inordinate strain on his professional
work and moral principles, even stretching to desecration of
dignity in the workplace. The allegation that all of private
respondents staff were removed one by one until finally only the
latter was left alone performing managerial and clerical duties is
merely part of the greater scheme brought forth by the
insensibility of petitioners in dealing with the employees.
In Siemens Philippines, Inc. v. Domingo,43 we have declared that
"an employee who is forced to surrender his position through
the employer's unfair or unreasonable acts is deemed to have
been illegally terminated and such termination is deemed to be
involuntary."44 Constructive dismissal does not always involve
forthright dismissal or diminution in rank, compensation, benefit
and privileges. There may be constructive dismissal if an act of
clear discrimination, insensibility or disdain by an employer
becomes so unbearable on the part of the employee that it could
foreclose any choice by him except to forego his continued
employment.45
We ought to remind petitioners regarding the doctrine we laid
down in Aguilar v. Burger Machine Holdings Corporation,46 to
wit
The test of constructive dismissal is whether a reasonable
person in the employees position would have felt compelled to
give up his position under the circumstances. Based on the
factual considerations in the instant case, we hold that the hostile
and unreasonable working conditions of petitioner justified the
finding of the Labor Arbiter and the NLRC that petitioner was
constructively dismissed. Petitioners performance may not have
been exceptional as he ranked 14th in the quality food service
control survey for the 1st quarter of 2002. But he was certainly
not grossly inefficient as Burger Machine pictured him to be. In
fact, he received several citations and was able to comply with
the directive to reduce his shortages for the month of November
2001. From all indications, there is really no ground to dismiss
petitioner for gross inefficiency. And, as Burger Machine saw it,
the only way to get rid of the latter was to constructively dismiss
him.47
No employee should be subjected to constant harassment,
ridicule and inhumane treatment on the basis of management
prerogative or even for poor performance at work. While we
concur with petitioners that raising ones voice in the workplace
as a result of displeasure in the performance of an employee is
not illegal per se, the right to impose disciplinary sanctions upon
an employee for just and valid cause is not without limit. The
means does not justify the end; thus, the same should be in
accordance with the norms of due process.
In view of the foregoing, we find that the evidence on record is
consistent with the ruling of the NLRC, as affirmed by the CA,
that private respondent was constructively dismissed.
Accordingly, we rule that the award of full backwages, separation
pay in lieu of reinstatement, moral, exemplary and nominal
damages is in order pursuant to Section 279 of the Labor Code,
which explicitly states that an employee who is unjustly
dismissed from work shall be entitled to reinstatement without
loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or
their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual
reinstatement.
As early as Santos v. NLRC,48 the Supreme Court already
explained the underlying basis for the foregoing provision, to wit
x x x. These twin remedies reinstatement and payment of
backwages make the dismissed employee whole who can then
look forward to continued employment. Thus, do these two
remedies give meaning and substance to the constitutional right
of labor to security of tenure. The two forms of relief are distinct
and separate, one from the other. Though the grant of
reinstatement commonly carries with it an award of backwages,
the inappropriateness or non-availability of one does not carry
with it the inappropriateness or non-availability of the other. x x
x49
In the present case, considering that reinstatement is no longer
feasible due to the strained relations between petitioners and
private respondent, we find that the payment of separation pay in a wanton, fraudulent, reckless, oppressive or malevolent
of one months salary for every year of service is just and manners."52
reasonable as an alternative of reinstatement. Over and again,
this Court has recognized that strained relations between the WHEREFORE, the petition is DENIED. The Decision dated May
employer and employee is an exception to the rule requiring 19, 2010 and the Resolution dated August 17, 2010, respectively,
actual reinstatement for illegally dismissed employees for the of the Court of Appeals, are hereby AFFIRMED IN TOTO.
practical reason that the already existing antagonism will only
fester and deteriorate, and will only worsen with possible SO ORDERED.
adverse effects on the parties if we shall compel reinstatement;
thus, the use of a viable substitute that protects the interests of Republic of the Philippines
both parties while ensuring that the law is respected.50 SUPREME COURT
Manila
Further, it cannot be gainsaid that private respondent was
unjustly treated in the workplace, and, consequently, bore SECOND DIVISION
wounded feelings and suffered mental anguish during his tenure
with petitioner McMer until he was constructively dismissed G.R. No. 177592 June 9, 2014
from service. Thus, we uphold the grant of moral, exemplary and
nominal damages in the aggregate amount of 90,000.00 in favor AVELINO S. ALILIN, TEODORO CALESA, CHARLIE HINDANG,
of private respondent due to the wanton, oppressive and EUTIQUIO GINDANG, ALLAN SUNGAHID, MAXIMO LEE, JOSE
malevolent manner by which private respondent was illegally G. MORA TO, REX GABILAN, AND EUGEMA L.
and constructively terminated, in accordance with Philippine LAURENTE, Petitioners,
Aeolus Automotive United Corporation v. National Labor vs.
Relations Commission,51 which emphatically held that PETRON CORPORATION, Respondent.

In determining entitlement to moral and exemplary damages, we DECISION

restate the bases therefor. In moral damages, it suffices to prove
that the claimant has suffered anxiety, sleepless nights, DEL CASTILLO, J.:
besmirched reputation and social humiliation by reason of the
A contractor is presumed to be a labor-only contractor, unless it
act complained of. Exemplary damages, on the other hand, are
proves that it has the substantial capital, investment, tools and
granted in addition to, inter alia, moral damages "by way of
the like. However, where the principal is the one claiming that
example or correction for the public good" if the employer "acted
the contractor is a legitimate contractor, the burden of proving
the supposed status of the contractor rests on the principal.1
This Petition for Review on Certiorari2 assails the
Decision3 dated May 10, 2006 of the Court of Appeals (CA) in CA-
G.R. SP No. 01291 which granted the Petition for Certiorari filed
therewith, reversed and set aside the February 18, 2005
Decision4 and August 24, 2005 Resolution5 of the National Labor
Relations Commission (NLRC) in NLRC Case No. V-000481-2003
and dismissed the Complaint for illegal dismissal filed by
petitioners Avelino Alilin (Alilin), Teodoro Calesa (Calesa),
Charlie Hindang (Hindang), Eutiquio Gindang (Gindang), Allan
Sungahid (Sungahid), Maximo Lee (Lee), Jose G. Morato
(Morato), Rex Gabilan (Gabilan) and Eugema L. Laurente
(Laurente) against respondent Petron Corporation (Petron). Also
assailed in this Petition is the CA Resolution6 dated March 30,
2007 which denied petitioners Motion for Reconsideration7 and
Supplemental Motion for Reconsideration.8
Factual Antecedents
Petron is a domestic corporation engaged in the oil business. It
owns several bulk plants in the country for receiving, storing and
distributing its petroleum products.
In 1968, Romualdo D. Gindang Contractor, which was owned and
operated by Romualdo D. Gindang (Romualdo), started
recruiting laborers for fielding to Petrons Mandaue Bulk Plant.
When Romualdo died in1989, his son Romeo D. Gindang
(Romeo), through Romeo D. Gindang Services(RDG), took over
the business and continued to provide manpower services to
Petron. Petitioners were among those recruited by Romualdo D.
Gindang Contractor and RDG to work in the premises of the said
bulk plant, with the corresponding dates of hiring and work
duties, to wit:
On June 1, 2000, Petron and RDG entered into a Contract for
Services9 for the period from June 1, 2000 to May 31, 2002,
whereby RDG undertook to provide Petron with janitorial,
maintenance, tanker receiving, packaging and other utility
services in its Mandaue Bulk Plant. This contract was extended
on July 31, 2002 and further extended until September 30, 2002.
Upon expiration thereof, no further renewal of the service
contract was done.
Proceedings before the Labor Arbiter
Alleging that they were barred fromcontinuing their services on
October 16, 2002, petitioners Alilin, Calesa, Hindang, Gindang,
Sungahid, Lee, Morato and Gabilan filed a Complaint10 for illegal
dismissal, underpayment of wages, damages and attorneys fees
against Petron and RDG on November 12, 2002. Petitioner
Laurente filed another Complaint11 for illegal dismissal,
underpayment of wages, non-payment of overtime pay, holiday
pay, premium pay for holiday, rest day, 13th month pay, service
incentive leave pay, allowances, separation pay, retirement
benefits, damages and attorneys fees against Petron and RDG.
The said complaints were later consolidated.
Petitioners did not deny that RDG hired them and paid their
salaries. They, however, claimed that the latter is a labor-only
contractor, which merely acted as an agent of Petron, their true
employer. They asseverated that their jobs, which are directly
related to Petrons business, entailed them to work inside the
premises of Petron using the required equipment and tools
furnished by it and that they were subject to Petrons
supervision. Claiming to be regular employees, petitioners thus
asserted that their dismissal allegedly in view of the expiration of
the service contract between Petron and RDG is illegal.
RDG corroborated petitioners claim that they are regular
employees of Petron. It alleged that Petron directly supervised
their activities; they performed jobs necessary and desirable to
Petrons business; Petron provided petitioners with supplies,
tools and equipment used in their jobs; and that petitioners
workplace since the start of their employment was at Petrons
bulk plant in Mandaue City. RDG denied liability over petitioners
claim of illegal dismissal and further argued that Petron cannot
capitalize on the service contract to escape liability.
Petron, on the other hand, maintained that RDG is an
independent contractor and the real employer of the petitioners.
It was RDG which hired and selected petitioners, paid their
salaries and wages, and directly supervised their work. Attesting
to these were two former employees of RDG and Petrons
Mandaue Terminal Superintendent whose joint affidavit12 and
affidavit,13 respectively, were submitted by Petron. Anent its
allegation that RDG is an independent contractor, Petron
presented the following documents: (1) RDGs Certificate of
Registration issued by the Department of Labor and Employment
(DOLE) on December 27, 2000;14 (2) RDGs Certificate of
Registration of Business Name issued by the Department of
Trade and Industry (DTI) on August 18, 2000;15 (3) Contractors
Pre-Qualification Statement;16 (4) Conflict of Interest Statement
signed by Romeo Gindang as manager of RDG;17 (5) RDGs
Audited Financial Statements for the years 199818 199919 and
2000;20 (6) RDGs Mayors Permit for the years 200021 and
2001;22 (7) RDGs Certificate of Accreditation issued by DTI in
October 1991;23 (8) performance bond24and insurance
policy25 posted to insure against liabilities; (9) Social Security
System (SSS) Online Inquiry System Employee Contributions and
Employee Static Information;26 and, (10) Romeos
affidavit27 stating that he had paid the salaries of his employees
assigned to Petron for the period of November 4, 2001 to
December 31, 2001. Petron argued that with the expiration of
the service contract it entered with RDG, petitioners term of
employment has concomitantly ended. And not being the
employer, Petron cannot be held liable for petitioners claim of
illegal dismissal.
In a Decision28 dated June 12, 2003,the Labor Arbiter ruled that
petitioners are regular employees of Petron. It found that their
jobs were directly related to Petrons business operations; they
worked under the supervision of Petrons foreman and
supervisor; and they were using Petrons tools and equipment in
the performance of their works. The Labor Arbiter also found
that Petron merely utilized RDG in its attempt to hide the
existence of employee-employer relationship between it and
petitioners and avoid liability under labor laws. And there being
no showing that petitioners dismissal was for just or authorized
cause, the Labor Arbiter declared them to have been illegally
dismissed. Petron was thus held solidarily liable with Romeo for
the payment of petitioners separation pay (in lieu of
reinstatement due to strained relations with Petron) fixed at one
month pay for every year of service and backwages computed on
the basis of the last salary rate at the time of dismissal. The
dispositive portion of the Decision reads: WHEREFORE, premises
considered, judgment is hereby rendered ordering the
respondents Petron Corporation and Romeo Gindang to pay the
complainants as follows:
1. Teodoro Calesa P 136,890.00
not convinced. In its Decision30 of February 18, 2005, the NLRC
ruled that petitioners are Petrons regular employees because
they are performing job assignments which are germane to its
main business. Thus:
WHEREFORE, premises considered, the Decision of the Labor
Arbiter is hereby affirmed. It is understood that the grant of
backwages shall be until finality of the Decision.

2. Eutiquio Gindang P 202,800.00 The appeal of respondent Petron Corporation is hereby

3. Charlie T. Gindang P 91,260.00 DISMISSED for lack of merit.

4. Allan P. Sungahid P 91,260.00 SO ORDERED.31

5. Jose Gerry Morato P 76,050.00
The NLRC also denied Petrons Motion for Reconsideration in its
6. Avelino A. Alilin P 95,680.00 Resolution32 of August 24, 2005.
7. Rex S. Gabilan P 106,470.00
Proceedings before the Court of Appeals
8. Maximo S. Lee P 91,260.00
Petron filed a Petition for Certiorari with prayer for the issuance
9. Eugema Minao Laurente P 150,800.00
of a temporary restraining order or writ of injunction before the
Total award 1,042,470.00 CA. The said court resolved to grant the injunction.33 Hence, a
Writ of Preliminary Injunction34 to restrain the implementation
The other claims are dismissed for lack of merit. of the February 18, 2005 Decision and August 24, 2005
Resolution of the NLRC was issued on March 3, 2006.
SO ORDERED.29
In a Decision35 dated May 10, 2006, the CA found no employer-
Proceedings before the National Labor Relations Commission employee relationship between the parties. According to it, the
records of the case do not show that petitioners were directly
Petron continued to insist that there is no employer-employee hired, selected or employed by Petron; that their wages and
relationship between it and petitioners. The NLRC, however, was other wage related benefits were paid by the said company; and
that Petron controlled the manner by which they carried out
their tasks. On the other hand, RDG was shown to be responsible
for paying petitioners wages. In fact, SSS records show that RDG
is their employer and actually the one remitting their
contributions thereto. Also, two former employees of RDG who
were likewise assigned in the Mandaue Bulk Plant confirmed by
way of a joint affidavit that it was Romeo and his brother
Alejandre Gindang who supervised their work, not Petrons
foreman or supervisor. This was even corroborated by the
Terminal Superintendent of the Mandaue Bulk Plant.
The CA also found RDG to be an independent labor contractor
with sufficient capitalization and investment as shown by its
financial statement for year-end 2000. In addition, the works for
which RDG was contracted to provide were menial which were
neither directly related nor sensitive and critical to Petrons
principal business. The CA disposed of the case as follows:
WHEREFORE, the Petition is GRANTED. The February 18, 2005
Decision and the August 24, 2005 Resolution of the Fourth
Division of the National Labor Relations Commission in NLRC
Case No. V-000481-2003, entitled "Teodoro Calesa et al. vs.
Petron Corporation and R.D. Gindang Services", having been
rendered with grave abuse of discretion amounting to excess of
jurisdiction, are hereby REVERSED and SET ASIDE and a NEW
ONE is entered DISMISSING private respondents complaint
against petitioner. It is so ordered.36
Petitioners filed a Motion for Reconsideration37 insisting that
Petron illegally dismissed them; that RDG is a labor-only
contractor; and that they performed jobs which are sensitive to
Petrons business operations. To support these, they attached to
their Supplemental Motion for Reconsideration38 Affidavits39 of
former employees of Petron attesting to the fact that their jobs
were critical to Petrons business operations and that they were
carried out under the control of a Petron employee.
Petitioners motions were, however, denied by the CA in a
Resolution40 dated March 30, 2007.
Hence, this Petition.
Issue
The primary issue to be resolved in this case is whether RDG is a
legitimate job contractor. Upon such finding hinges the
determination of whether an employer-employee relationship
exists between the parties as to make Petron liable for
petitioners dismissal.
Our Ruling
The Petition is impressed with merit. The conflicting findings of
the Labor Arbiter and the NLRC on one hand, and of the CA on
the other, constrains the Court to review the factual issues
involved in this case.
As a general rule, the Court does not review errors that raise
factual questions.41 Nonetheless, while it is true that the
determination of whether an employer-employee relationship
existed between the parties basically involves a question of fact,
the conflicting findings of the Labor Arbiter and the NLRC on one
hand, and of the CA on the other, constrains the Court to review
and reevaluate such factual findings.42
Labor-only contracting, distinguished
subcontractor for the performance of any of the following:
from permissible job contracting.
The prevailing rule on labor-only contracting at the time Petron
and RDG entered into the Contract for Services in June 2000 is
DOLE Department Order No. 10, series of 1997,43 the pertinent
provision of which reads:
Section 4. x x x
xxxx
(f) "Labor-only contracting" prohibited under this Rule is an
arrangement where the contractor or subcontractor merely
recruits, supplies or places workers to perform a job, work or
service for a principal and the following elements are present:
(i) The contractor or subcontractor does not have
substantial capital or investment to actually perform the
job, work or service under its own account and
responsibility; and
(ii) The employees recruited, supplied or placed by such
contractor or subcontractor are performing activities
which are directly related to the main business of the
principal.
xxxx
Section 6. Permissible contracting or subcontracting. - Subject to
the conditions set forth in Section 3 (d) and (e) and Section 5
hereof, the principal may engage the services of a contractor or
(a) Works or services temporarily or occasionally needed
to meet abnormal increase in the demand of products or
services, provided that the normal production capacity or
regular workforce of the principal cannot reasonably
cope with such demands;
(b) Works or services temporarily or occasionally needed
by the principal for undertakings requiring expert or
highly technical personnel to improve the management
or operations of an enterprise;
(c) Services temporarily needed for the introduction or
promotion of new products, only for the duration of the
introductory or promotional period;
(d) Works or services not directly related or not integral
to the main business or operation of the principal,
including casual work, janitorial, security, landscaping,
and messengerial services, and work not related to
manufacturing processes in manufacturing
establishments;
(e) Services involving the public display of
manufacturers products which do not involve the act of
selling or issuance of receipts or invoices;
(f) Specialized works involving the use of some
particular, unusual or peculiar skills, expertise, tools or
equipment the performance of which is beyond the
 competence of the regular workforce or production
capacity of the principal; and
(g) Unless a reliever system is in place among the regular
workforce, substitute services for absent regular
employees, provided that the period of service shall be
coextensive with the period of absence and the same is
made clear to the substitute employee at the time of
engagement. The phrase "absent regular employees"
includes those who are serving suspensions or other
disciplinary measures not amounting to termination of
employment meted out by the principal, but excludes
those on strike where all the formal requisites for the
legality of the strike have been prima facie complied with
based on the records filed with the National Conciliation
and Mediation Board.
"Permissible job contracting or subcontracting refers to an
arrangement whereby a principal agrees to farm out with a
contractor or subcontractor the performance of a specific job,
work, or service within a definite or predetermined period,
regardless of whether such job, work or, service is to be
performed or completed within or outside the premises of the
principal. Under this arrangement, the following conditions must
be met: (a) the contractor carries on a distinct and independent
business and undertakes the contract work on his account under
his own responsibility according to his own manner and method,
free from the control and direction of his employer or principal
in all matters connected with the performance of his work except
as to the results thereof; (b) the contractor has substantial
capital or investment; and (c) the agreement between the
principal and contractor or subcontractor assures the
contractual employees entitlement to all labor and occupational
safety and health standards, free exercise of the right to self-
organization, security of tenure, and social welfare
benefits."44 Labor-only contracting, on the other hand, is a
prohibited act, defined as "supplying workers to an employer
who does not have substantial capital or investment in the form
of tools, equipment, machineries, work premises, among others,
and the workers recruited and placed by such person are
performing activities which are directly related to the principal
business of such employer."45 "[I]n distinguishing between
prohibited labor-only contracting and permissible job
contracting, the totality of the facts and the surrounding
circumstances of the case shall be considered."46 Generally, the
contractor is presumed to be a labor-only contractor, unless such
contractor overcomes the burden of proving that it has the
substantial capital, investment, tools and the like. However,
where the principal is the one claiming that the contractor is a
legitimate contractor, as in the present case, said principal has
the burden of proving that supposed status.47 It is thus
incumbent upon Petron, and not upon petitioners as Petron
insists,48 to prove that RDG is an independent contractor.
Petron failed to discharge the burden of
proving that RDG is a legitimate
contractor. Hence, the presumption that
RDG is a labor-only contractor stands.
Here, the audited financial statements and other financial
documents of RDG for the years 1999 to 2001 establish that it
does have sufficient working capital to meet the requirements of
its service contract. In fact, the financial evaluation conducted by
Petron of RDGs financial statements for years 1998-2000
showed RDG to have a maximum financial capability of Php4.807
Million as of December 1998,49 and Php1.611 Million as of
December 2000.50 Petron was able to establish RDGs sufficient
capitalization when it entered into the service contract in 2000.
The Court stresses though that this determination of RDGs
status as an independent contractor is only with respect to its
financial capability for the period covered by the financial and
other documents presented. In other words, the evidence
adduced merely proves that RDG was financially qualified as a
legitimate contractor but only with respect to its last service
contract with Petron in the year 2000.
As may be recalled, petitioners have rendered work for Petron
for a long period of time even before the service contract was
executed in 2000. The respective dates on which petitioners
claim to have started working for Petron, as well as the fact that
they have rendered continuous service to it until October 16,
2002, when they were prevented from entering the premises of
Petrons Mandaue Bulk Plant, were not at all disputed by Petron.
In fact, Petron even recognized that some of the petitioners were
initially fielded by Romualdo Gindang, the father of Romeo,
through RDGs precursor, Romualdo D.Gindang Contractor, while
the others were provided by Romeo himself when he took over
the business of his father in 1989.1wphi1 Hence, while Petron
was able to establish that RDG was financially capable as a
legitimate contractor at the time of the execution of the service
contract in 2000, it nevertheless failed to establish the financial
capability of RDG at the time when petitioners actually started to
work for Petron in 1968, 1979, 1981, 1987, 1990,1992 and 1993.
Sections 8 and 9,Rule VIII, Book III51 of the implementing rules of
the Labor Code, in force since 1976 and prior to DOLE
Department Order No. 10, series of 1997,52 provide that for job
contracting to be permissible, one of the conditions that has to be
met is that the contractor must have substantial capital or
investment. Petron having failed to show that this condition was
met by RDG, it can be concluded, on this score alone, that RDG is
a mere labor-only contractor. Otherwise stated, the presumption
that RDG is a labor-only contractor stands due to the failure of
Petron to discharge the burden of proving the contrary.
The Court also finds, as will be discussed below, that the works
performed by petitioners were directly related to Petrons
business, another factor which negates Petrons claim that RDG
is an independent contractor.
Petrons power of control over
petitioners exists in this case.
"[A] finding that a contractor is a labor-only contractor is
equivalent to declaring that there is an employer-employee
relationship between the principal and the employees of the
supposed contractor."53 In this case, the employer employee
relationship between Petron and petitioners becomes all the
more apparent due to the presence of the power of control on
the part of the former over the latter.
It was held in Orozco v. The Fifth Division of the Hon. Court of
Appeals54 that:
This Court has constantly adhered to the "four-fold test" to
determine whether there exists an employer-employee
relationship between the parties. The four elements of an
employment relationship are: (a) the selection and engagement
of the employee; (b) the payment of wages; (c) the power of
dismissal; and (d) the power to control the employees conduct.
Of these four elements, it is the power to control which is the
most crucial and most determinative factor, so important, in fact,
that, the other elements may even be disregarded." (Emphasis
supplied)
Hence, the facts that petitioners were hired by Romeo or his
father and that their salaries were paid by them do not detract
from the conclusion that there exists an employer-employee
relationship between the parties due to Petrons power of
control over the petitioners. One manifestation of the power of
control is the power to transfer employees from one work
assignment to another.55 Here, Petron could order petitioners to
do work outside of their regular "maintenance/utility" job. Also,
petitioners were required to report for work everyday at the
bulk plant, observe an 8:00 a.m. to 5:00 p.m. daily work schedule,
and wear proper uniform and safety helmets as prescribed by
the safety and security measures being implemented within the
bulk plant. All these imply control. In an industry where safety is
of paramount concern, control and supervision over sensitive
operations, such as those performed by the petitioners, are
inevitable if not at all necessary. Indeed, Petron deals with
commodities that are highly volatile and flammable which, if
mishandled or not properly attended to, may cause serious
injuries and damage to property and the environment. Naturally,
supervision by Petron is essential in every aspect of its product
handling in order not to compromise the integrity, quality and
safety of the products that it distributes to the consuming public.
Petitioners already attained regular
status as employees of Petron.
Petitioners were given various work assignments such as tanker
receiving, barge loading, sounding, gauging, warehousing,
mixing, painting, carpentry, driving, gasul filling and other utility
works. Petron refers to these work assignments as menial works
which could be performed by any able-bodied individual. The
Court finds, however, that while the jobs performed by
petitioners may be menial and mechanical, they are nevertheless
necessary and related to Petrons business operations. If not for
these tasks, Petrons products will not reach the consumers in
their proper state. Indeed, petitioners roles were vital inasmuch
as they involve the preparation of the products that Petron will
distribute to its consumers.
Furthermore, while it may be true that any able-bodied
individual can perform the tasks assigned to petitioners, the
Court notes the undisputed fact that for many years, it was the
same able-bodied individuals (petitioners) who performed the
tasks for Petron. The engagement of petitioners for the same
works for a long period of time is a strong indication that such
works were indeed necessary to Petrons business. In view of
these, and considering further that petitioners length of service
entitles them to become regular employees under the Labor
Code, petitioners are deemed by law to have already attained the
status as Petrons regular employees. As such, Petron could not
terminate their services on the pretext that the service contract
it entered with RDG has already lapsed. For one, and as
previously discussed, such regular status had already attached to
them even before the execution of the service contract in 2000.
For another, the same does not constitute a just or authorized
cause for a valid dismissal of regular employees.
In sum, the Court finds that RDG is a labor-only contractor. As
such, it is considered merely as an agent of Petron. Consequently,
the employer-employee relationship which the Court finds to
exist in this case is between petitioners as employees and Petron
as their employer. Petron therefore, being the principal
employer and RDG, being the labor-only contractor, are
solidarily liable for petitioners' illegal dismissal and monetary
claims.56
WHEREFORE, the Petition is GRANTED. The May 10, 2006
Decision and March 30, 2007 Resolution of the Court of Appeals
in CA-G.R. SP No. 01291 are REVERSED and SET ASIDE. The
February 18, 2005 Decision and August 24, 2005 Resolution of
the National Labor Relations Commission in NLRC Case No. V-
000481-2003 are hereby REINSTATED and AFFIRMED.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 202996 June 18, 2014
MARLO A. DEOFERIO, Petitioner,
vs.
INTEL TECHNOLOGY PHILIPPINES, INC. and/or MIKE
WENTLING, Respondents.
DECISION
BRION, J.:
We resolve the petition for review on certiorari1 filed by
petitioner Marlo A. Deoferio to challenge the February 24, 2012
decision2 and the August 2, 2012 resolution3 of the Court of
Appeals (CA) in CA-G.R. SP No. 115708.
The Factual Antecedents
On February 1, 1996, respondent Intel Technology Philippines,
Inc. (Intel)employed Deoferio as a product quality and reliability
engineer with a monthly salary of 9,000.00. In July2001, Intel
assigned him to the United States as a validation engineer for an
agreed period of two years and with a monthly salary of
US$3,000.00. On January 27, 2002, Deoferio was repatriated to
the Philippines after being confined at Providence St. Vincent
Medical Center for major depression with psychosis.4 In the
Philippines, he worked as a product engineer with a monthly
salary of 23,000.00.5
Deoferio underwent a series of medical and psychiatric
treatment at Intels expense after his confinement in the United
States. In 2002, Dr. Elizabeth Rondain of Makati Medical Center
diagnosed him to be suffering from mood disorder, major
depression, and auditory hallucination.6 He was also referred to
Dr. Norieta Balderrama, Intels forensic psychologist, and to a
certain Dr. Cynthia Leynes who both confirmed his mental
condition.7 On August 8, 2005, Dr. Paul Lee, a consultant
psychiatrist of the Philippine General Hospital, concluded that
Deoferio was suffering from schizophrenia. After several
consultations, Dr. Lee issued a psychiatric report dated January
17,2006 concluding and stating that Deoferios psychotic
symptoms are not curable within a period of six months and
"will negatively affect his work and social relation with his co-
worker[s]."8 Pursuant to these findings, Intel issued Deoferio a
notice of termination on March 10, 2006.9
Deoferio responded to his termination of employment by filing a
complaint for illegal dismissal with prayer for money claims
against respondents Intel and Mike Wentling (respondents). He
denied that he ever had mental illness and insisted that he
satisfactorily performed his duties as a product engineer. He
argued that Intel violated his statutory right to procedural due
process when it summarily issued a notice of termination. He
further claimed that he was entitled to a salary differential
equivalent to the pre-terminated period of his assignment in the
United States minus the base pay that he had already received.
Deoferio also prayed for backwages, separation pay, moral and
exemplary damages, as well as attorneys fees.10
In defense, the respondents argued that Deoferios dismissal was
based on Dr. Lees certification that: (1) his schizophrenia was
not curable within a period of six months even with proper
medical treatment; and (2) his continued employment would be
prejudicial to his and to the other employees health.11 The
respondents also insisted that Deoferios presence at Intels
premises would pose an actual harm to his co-employees as
shown by his previous acts. On May 8, 2003, Deoferio emailed an
Intel employee with this message: "All souls day back to work
Monday WW45.1." On January 18, 2005, he cut the mouse cables,
stepped on the keyboards, and disarranged the desks of his co-
employees.12 The respondents also highlighted that Deoferio
incurred numerous absences from work due to his mental
condition, specifically, from January 31, 2002 until February 28,
2002,13 from August 2002 until September 2002,14 and from May
2003 until July 2003.15 Deoferio also took an administrative
leave with pay from January 2005 until December 2005.16
The respondents further asserted that the twin-notice
requirement in dismissals does not apply to terminations under
Article 284 of the Labor Code.17 They emphasized that the Labor
Codes implementing rules (IRR) only requires a competent
public health authoritys certification to effectively terminate the
services of an employee.18They insisted that Deoferios
separation and retirement payments for 247,517.35 were offset
by his company car loan which amounted to 448,132.43.19 He
was likewise not entitled to moral and exemplary damages, as
well as attorneys fees, because the respondents faithfully relied
on Dr. Lees certification that he was not fit to work as a product
engineer.20
The Labor Arbitration Ruling
In a decision21 dated March 6, 2008,the Labor Arbiter (LA) ruled
that Deoferio had been validly dismissed. The LA gave weight to
Dr. Lees certification that Deoferio had been suffering from
schizophrenia and was not fit for employment. The evidence on
record shows that Deoferios continued employment at Intel
would pose a threat to the health of his co-employees. The LA
further held that the Labor Code and its IRR do not require the
employer to comply with the twin-notice requirement in
dismissals due to disease. The LA also found unmeritorious
Deoferios money claims against Intel.22
On appeal by Deoferio, the National Labor Relations Commission
(NLRC) wholly affirmed the LAs ruling.23 The NLRC also
denied24 Deoferios motion for reconsideration,25 prompting him
to seek relief from the CA through a petition for certiorari under
Rule 65 of the Rules of Court.
The CAs Ruling
On February 24, 2012, the CA affirmed the NLRC decision. It
agreed with the lower tribunals findings that Deoferio was
suffering from schizophrenia and that his continued employment
at Intel would be prejudicial to his health and to those of his co-
employees. It ruled that the only procedural requirement under
the IRR is the certification by a competent public health
authority on the non-curability of the disease within a period of
six months even with proper medical treatment. It also
concurred with the lower tribunals that Intel was justified in not
paying Deoferio separation pay as required by Article 284 of the
Labor Code because this obligation had already been offset by
the matured car loan that Deoferio owed Intel.26
Deoferio filed the present petition after the CA denied his motion
for reconsideration.27
The Petition
In the present petition before the Court, Deoferio argues that the
uniform finding that he was suffering from schizophrenia is
belied by his subsequent employment at Maxim Philippines
Operating Corp. and Philips Semiconductors Corp., which both
offered him higher compensations. He also asserts that the Labor
Code does not exempt the employer from complying with the
twin-notice requirement in terminations due to disease.28
The Respondents Position
In their Comment,29 the respondents posit that the petition
raises purely questions of fact which a petition for review on
certiorari does not allow. They submit that Deoferios arguments
have been fully passed upon and found unmeritorious by the
lower tribunals and by the CA. They additionally argue that
Deoferios subsequent employment in other corporations is
irrelevant in determining the validity of his dismissal; the law
merely requires the non-curability of the disease within a period
of six months even with proper medical treatment.
The respondents also maintain that Deoferios claim for salary
differential is already barred by prescription under Article 291 of
the Labor Code.30 Even assuming that the claim for salary
differential has been timely filed, the respondents assert that the
parties expressly agreed in the International Assignment
Relocation Agreement that "the assignment length is only an
estimate and not a guarantee of employment for any particular
length of time."31Moreover, his assignment in the United States
was merely temporary and did not change his salary base, an
amount which he already received.
The Issues
This case presents to us the following issues:
(1) Whether Deoferio was suffering from schizophrenia
and whether his continued employment was prejudicial
to his health, as well as to the health of his co-employees;
(2) Whether the twin-notice requirement in dismissals
applies to terminations due to disease; and
As part of the second issue, the following issues are raised:
(a) Whether Deoferio is entitled to nominal damages for
violation of his right to statutory procedural due process;
and
(b) Whether the respondents are solidarily liable to
Deoferio for nominal damages.
(3) Whether Deoferio is entitled to salary differential,
backwages, separation pay, moral and exemplary
damages, as well as attorneys fees.
The Courts Ruling
We find the petition partly meritorious.
Intel had an authorized cause to dismiss Deoferio from
employment
Concomitant to the employers right to freely select and engage
an employee is the employers right to discharge the employee
for just and/or authorized causes. To validly effect terminations
of employment, the discharge must be for a valid cause in the
manner required by law. The purpose of these two-pronged
qualifications is to protect the working class from the employers
arbitrary and unreasonable exercise of its right to dismiss. Thus,
in termination cases, the law places the burden of proof upon the
employer to show by substantial evidence that the termination
was for a lawful cause and in the manner required by law.
In concrete terms, these qualifications embody the due process
requirement in labor cases - substantive and procedural due
process. Substantive due process means that the termination
must be based on just and/or authorized causes of dismissal. On
the other hand, procedural due process requires the employer to
effect the dismissal in a manner specified in the Labor Code and
its IRR.32
The present case involves termination due to disease an
authorized cause for dismissal under Article 284 of the Labor
Code. As substantive requirements, the Labor Code and its
IRR33 require the presence of the following elements:
(1) An employer has been found to be suffering from any
disease.
(2) His continued employment is prohibited by law or
prejudicial to his health, as well as to the health of his co-
employees.
(3) A competent public health authority certifies that the
disease is of such nature or at such a stage that it cannot
be cured within a period of six months even with proper
medical treatment. With respect to the first and second
elements, the Court liberally construed the phrase
"prejudicial to his health as well as to the health of his co-
employees" to mean "prejudicial to his health or to the
health of his co-employees." We did not limit the scope of
this phrase to contagious diseases for the reason that this
phrase is preceded by the phrase "any disease" under
Article 284 of the Labor Code, to wit:
Art. 284. Disease as ground for termination. An employer may
terminate the services of an employee who has been found to be
suffering from any disease and whose continued employment is
prohibited by law or is prejudicial to his health as well as to the
health of his co-employees: Provided, That he is paid separation
pay equivalent to at least one (1) month salary or to one-half
(1/2) month salary for every year of service, whichever is
greater, a fraction of at least six (6) months being considered as
one (1) whole year. [underscores, italics and emphases ours]
Consistent with this construction, we applied this provision in
resolving illegal dismissal cases due to non-contagious diseases
such as stroke, heart attack, osteoarthritis, and eye cataract,
among others. In Baby Bus, Inc. v. Minister of Labor,34 we upheld
the labor arbitrations finding that Jacinto Mangalinos continued
employment after he suffered several strokes would be
prejudicial to his health. In Duterte v. Kingswood Trading Co.,
Inc.,35 we recognized the applicability of Article 284 of the Labor
Code to heart attacks. In that case, we held that the employer-
companys failure to present a certification from a public health
authority rendered Roque Dutertes termination due to a heart
attack illegal. We also applied this provision in Sy v. Court of
Appeals36 to determine whether Jaime Sahot was illegally
dismissed dueto various ailments such as presleyopia,
hypertensive retinopathy, osteoarthritis, and heart enlargement,
among others. In Manly Express, Inc. v. Payong, Jr.,37 we ruled
that the employer-companys non-presentment of a certification
from a public health authority with respect to Romualdo Payong
Jr.s eye cataract was fatal to its defense.
The third element substantiates the contention that the
employee has indeed been suffering from a disease that: (1) is
prejudicial to his health as well as to the health of his co-
employees; and (2) cannot be cured within a period of six
months even with proper medical treatment. Without the
medical certificate, there can be no authorized cause for the
employees dismissal. The absence of this element thus renders
the dismissal void and illegal.
Simply stated, this requirement is not merely a procedural
requirement, but a substantive one.1wphi1 The certification
from a competent public health authority is precisely the
substantial evidence required by law to prove the existence of
the disease itself, its non-curability within a period of six months
even with proper medical treatment, and the prejudice that it
would cause to the health of the sick employee and to those of
his co-employees.
In the current case, we agree with the CA that Dr. Lees
psychiatric report substantially proves that Deoferio was
suffering from schizophrenia, that his disease was not curable
within a period of six months even with proper medical
treatment, and that his continued employment would be
prejudicial to his mental health. This conclusion is further
substantiated by the unusual and bizarre acts that Deoferio
committed while at Intels employ.
The twin-notice requirement applies
to terminations under Article 284 of
the Labor Code
The Labor Code and its IRR are silent on the procedural due
process required in terminations due to disease. Despite the
seeming gap in the law, Section 2, Rule 1, Book VI of the IRR
expressly states that the employee should be afforded
procedural due process in all cases of dismissals.38
In Sy v. Court of Appeals39 and Manly Express, Inc. v. Payong,
Jr.,40 promulgated in 2003 and 2005, respectively, the Court
finally pronounced the rule that the employer must furnish the
employee two written notices in terminations due to disease,
namely: (1) the notice to apprise the employee of the ground for
which his dismissal is sought; and (2) the notice informing the
employee of his dismissal, to be issued after the employee has
been given reasonable opportunity to answer and to be heard on
his defense. These rulings reinforce the State policy of protecting
the workers from being terminated without cause and without
affording them the opportunity to explain their side of the
controversy.
From these perspectives, the CA erred in not finding that the
NLRC gravely abused its discretion when it ruled that the twin-
notice requirement does not apply to Article 284 of the Labor
Code. This conclusion is totally devoid of any legal basis; its
ruling is wholly unsupported by law and jurisprudence. In other
words, the NLRCs unprecedented, whimsical and arbitrary
ruling, which the CA erroneously affirmed, amounted to a
jurisdictional error.
Deoferio is entitled to nominal
damages for violation of his right to
statutory procedural due process
Intels violation of Deoferios right to statutory procedural due
process warrants the payment of indemnity in the form of
nominal damages. In Jaka Food Processing Corp. v. Pacot,41 we
distinguished between terminations based on Article 282 of the
Labor Code42 and dismissals under Article 283 of the Labor
Code.43 We then pegged the nominal damages at 30,000.00 if
the dismissal is based on a just cause but the employer failed to
comply with the twin-notice requirement. On the other hand, we
fixed the nominal damages at 50,000.00 if the dismissal is due
to an authorized cause under Article 283 of the Labor Code but
the employer failed to comply with the notice requirement. The IRR. We also note that Deoferios separation pay equivalent to
reason is that dismissals for just cause imply that the employee one-half month salary for every year of service45 was validly
has committed a violation against the employer, while offset by his matured car loan. Under Article 1278 of the Civil
terminations under Article 283 of the Labor Code are initiated by Code, in relation to Article 1706 of the Civil Code46 and Article
the employer in the exercise of his management prerogative. 113(c) of the Labor Code,47 compensation shall take place when
two persons are creditors and debtors of each other in their own
With respect to Article 284 of the Labor Code, terminations due right. We likewise consider the fact that Intel exhibited real
to disease do not entail any wrongdoing on the part of the concern to Deoferio when it financed his medical expenses for
employee. It also does not purely involve the employers willful more than four years. Furthermore, prior to his termination,
and voluntary exercise of management prerogative a function Intel liberally allowed Deoferio to take lengthy leave of absences
associated with the employer's inherent right to control and to allow him to attend to his medical needs.
effectively manage its enterprise.44 Rather, terminations due to
disease are occasioned by matters generally beyond the worker Wentling is not personally liable for
and the employer's control. the satisfaction of nominal damages
in favor of Deoferio
In fixing the amount of nominal damages whose determination is
addressed to our sound discretion, the Court should take into Intel shall be solely liable to Deoferio for the satisfaction of
account several factors surrounding the case, such as: (1) the nominal damages. Wentling, as a corporate officer, cannot be
employers financial, medical, and/or moral assistance to the sick held liable for acts done in his official capacity because a
employee; (2) the flexibility and leeway that the employer corporation, by legal fiction, has a personality separate and
allowed the sick employee in performing his duties while distinct from its officers, stockholders, and members. There is
attending to his medical needs; (3) the employers grant of other also no ground for piercing the veil of corporate fiction because
termination benefits in favor of the employee; and (4) whether Wentling acted in good faith and merely relied on Dr. Lees
there was a bona fide attempt on the part of the employer to psychiatric report in carrying out the dismissal.48
comply with the twin-notice requirement as opposed to giving
no notice at all. Deoferio is not entitled to salary
differential, backwages, separation
We award Deoferio the sum of 30,000.00 as nominal damages pay, moral and exemplary damages,
for violation of his statutory right to procedural due process. In as well as attorney's fees
so ruling, we take into account Intels faithful compliance with
Article 284 of the Labor Code and Section 8, Rule 1, Book 6 of the
Deoferio's claim for salary differential is already barred by Republic of the Philippines
prescription. Under Article 291 of the Labor Code, all money SUPREME COURT
claims arising from employer-employee relations shall be filed Manila
within three years from the time the cause of action accrued. In
the current case, more than four years have elapsed from the SECOND DIVISION
pre-termination of his assignment to the United States until the
filing of his complaint against the respondents. We thus see no G.R. No. 195190 July 28, 2014
point in further discussing this matter. His claim for backwages,
separation pay, moral and exemplary damages, as well as ROYALE HOMES MARKETING CORPORATION, Petitioner,
attorney's fees must also necessarily fail as a consequence of our vs.
finding that his dismissal was for an authorized cause and that FIDEL P. ALCANTARA [deceased], substituted by his
the respondents acted in good faith when they terminated his heirs, Respondent.
services.
DECISION
WHEREFORE, premises considered, we partially grant the
petition; the assailed February 24, 2012 decision and the August DEL CASTILLO, J.:
2, 2012 resolution of the Court of Appeals stand but respondent
Intel Technology Philippines, Inc. is ordered to pay petitioner Not every form of control that a hiring party imposes on the
Marlo A. Deoferio nominal damages in the amount of 30,000.00. hired party is indicative of employee-employer relationship.
We totally deny the petition with respect to respondent Mike Rules and regulations that merely serve as guidelines towards
Wending. the achievement of a mutually desired result without dictating
the means and methods of accomplishing it do not establish
SO ORDERED. employer-employee relationship.1

This Petition for Review on Certiorari2 assails the June 23, 2010
Decision3 of the Court of Appeals (CA) in CA-G.R. SP No. 109998
which (i) reversed and set aside the February 23, 2009
Decision4 of the National Labor Relations Commission (NLRC),
(ii) ordered petitioner Royale Homes Marketing Corporation
(Royale Homes) to pay respondent Fidel P. Alcantara (Alcantara)
backwages and separation pay, and (iii) remanded the case to
the Labor Arbiter for the proper determination and computation
of said monetary awards.
Also assailed in this Petition isthe January 18, 2011
Resolution5 of the CA denying Royale Homes Motion for
Reconsideration,6 as well as its Supplemental7 thereto.
Factual Antecedents
In 1994, Royale Homes, a corporation engaged in marketing real
estates, appointed Alcantara asits Marketing Director for a fixed
period of one year. His work consisted mainly of marketing
Royale Homes realestate inventories on an exclusive basis.
Royale Homes reappointed him for several consecutive years,
the last of which covered the period January 1 to December 31,
2003 where he held the position of Division 5 Vice-President-
Sales.8
Proceedings before the Labor Arbiter
On December 17, 2003, Alcantara filed a Complaint for Illegal
Dismissal9 against Royale Homes and its President Matilde
Robles, Executive Vice-President for Administration and Finance
Ma. Melinda Bernardino, and Executive Vice- President for Sales
Carmina Sotto. Alcantara alleged that he is a regular employee of
Royale Homes since he is performing tasks that are necessary
and desirable to its business; that in 2003 the company gave him
1.2 million for the services he rendered to it; that in the first
week of November 2003, however, the executive officers of
Royale Homes told him that they were wondering why he still
had the gall to come to office and sit at his table;10 and that the
actsof the executive officers of Royale Homes amounted to his
dismissal from work without any valid or just cause and in gross
disregard of the proper procedure for dismissing employees.
Thus, he alsoimpleaded the corporate officers who, he averred,
effected his dismissal in bad faith and in an oppressive manner.
Alcantara prayed to be reinstated tohis former position without
loss of seniority rights and other privileges, as well as to be paid
backwages, moral and exemplary damages, and attorneys fees.
He further sought that the ownership of the Mitsubishi
Adventure with Plate No. WHD-945 be transferred to his name.
Royale Homes, on the other hand, vehemently denied that
Alcantara is its employee. It argued that the appointment paper
of Alcantara isclear that it engaged his services as an
independent sales contractorfor a fixed term of one year only. He
never received any salary, 13th month pay, overtime pay or
holiday pay from Royale Homes as hewas paid purely on
commission basis. In addition, Royale Homes had no control on
how Alcantara would accomplish his tasks and responsibilities as
he was free to solicit sales at any time and by any manner which
he may deem appropriateand necessary. He is even free to
recruit his own sales personnel to assist him in pursuance of his
sales target.
According to Royale Homes, Alcantara decided to leave the
company after his wife, who was once connectedwith it as a sales
agent, had formed a brokerage company that directly competed
with its business, and even recruited some of its sales agents.
Although this was against the exclusivity clause of the contract,
Royale Homes still offered to accept Alcantaras wife back so she
could continue to engage in real estate brokerage, albeit
exclusively for Royale Homes. In a special management
committee meeting on October 8,2003, however, Alcantara
announced publicly and openly that he would leave the company
by the end of October 2003 and that he would no longer finish
the unexpired term of his contract. He has decided to join his
wifeand pursue their own brokerage business. Royale Homes
accepted Alcantaras decision. It then threw a despedidaparty in
his honor and, subsequently, appointed a new independent
contractor. Two months after herelinquished his post, however,
Alcantara appeared in Royale Homes and submitted a letter
claiming that he was illegally dismissed.
Ruling of the Labor Arbiter
On September 7, 2005,the Labor Arbiter rendered a
Decision11 holding that Alcantara is an employee of Royale
Homes with a fixed-term employment period from January 1 to
December 31, 2003 and that the pre-termination of his contract
was against the law.Hence, Alcantara is entitled to an amount
which he may have earned on the average for the unexpired
portion of the contract. With regard to the impleaded corporate
officers, the Labor Arbiter absolved them from any liability.
The dispositive portion of the Labor Arbiters Decision reads:
WHEREFORE, premises considered, judgment is hereby
rendered ordering the respondent Royale Homes Marketing
Corp. to pay the complainant the total amount of TWO HUNDRED
SEVENTY SEVEN THOUSAND PESOS (277,000.00) representing
his compensation/commission for the unexpired term of his
contract.
All other claims are dismissed for lack of merit.
SO ORDERED.12
Both parties appealed the Labor Arbiters Decision to the NLRC.
Royale Homes claimed that the Labor Arbiter grievously erred
inruling that there exists an employer-employee relationship
between the parties. It insisted that the contract between them
expressly statesthat Alcantara is an independent contractor and
not an ordinary employee. Ithad no control over the means and
methods by which he performed his work. RoyaleHomes
likewise assailed the award of 277,000.00 for lack of basis as it
did not pre-terminate the contract. It was Alcantara who chose
not to finish the contract.
Alcantara, for his part, argued that the Labor Arbiter erred in
ruling that his employment was for a fixed-term and that he is
not entitled to backwages, reinstatement, unpaid commissions,
and damages.
Ruling of the National LaborRelations Commission
On February 23, 2009, the NLRC rendered its Decision,13 ruling
that Alcantara is not an employee but a mere independent
contractor of Royale Homes. It based its ruling mainly on the
contract which does not require Alcantara to observe regular
working hours. He was also free to adopt the selling methods he
deemed most effective and can even recruit sales agents to assist
him in marketing the inventories of Royale Homes. The NLRC
also considered the fact that Alcantara was not receiving
monthly salary, but was being paid on commission basis as
stipulated in the contract. Being an independent contractor, the
NLRC concluded that Alcantaras Complaint iscognizable by the
regular courts.
The falloof the NLRC Decision reads:
WHEREFORE, premises considered, the Decision of Labor
Arbiter Dolores Peralta-Beley dated September 5, 2005 is
REVERSED and SET ASIDE and a NEW ONE rendered dismissing
the complaint for lack of jurisdiction.
SO ORDERED.14
Alcantara moved for reconsideration.15 In a Resolution16 dated
May 29, 2009, however, the NLRC denied his motion.
Alcantara thus filed a Petition for Certiorari17 with the CA
imputing grave abuse of discretion on the partof the NLRC in
ruling that he is not an employee of Royale Homes and that it is
the regular courts which have jurisdiction over the issue of
whether the pre-termination of the contract is valid.
Ruling of the Court of Appeals
On June 23, 2010, the CA promulgated its Decision18 granting
Alcantaras Petition and reversing the NLRCs Decision. Applying
the four-fold and economic reality tests, it held thatAlcantara is
an employee of Royale Homes. Royale Homes exercised some
degree of control over Alcantara since his job, as observed by the
CA, is subject to company rules, regulations, and periodic
evaluations. He was also bound by the company code of ethics.
Moreover, the exclusivity clause of the contract has made
Alcantara economically dependent on Royale Homes, supporting
the theory that he is anemployee of said company.
The CA further held that Alcantaras termination from
employment was without any valid or just cause, and it was
carried out in violation of his right to procedural due process.
Thus, the CA ruled that he isentitled to backwages and
separation pay, in lieu of reinstatement. Considering,however,
that the CA was not satisfied with the proofadduced to establish
the amount of Alcantaras annual salary, it remanded the caseto
the Labor Arbiter to determine the same and the monetary
award he is entitled to. With regard to the corporate officers, the
CA absolved them from any liability for want of clear proof that
they assented to the patently unlawful acts or that they are guilty
of bad faith orgross negligence. Thus:
WHEREFORE, in view of the foregoing, the instant PETITION is
GRANTED. The assailed decision of the National Labor Relations
Commission in NLRC NCR CASE NO. 00-12-14311-03 NLRC CA
NO. 046104-05 dated February 23, 2009 as well as the
Resolution dated May 29, 2009 are hereby SET ASIDE and a new
one is entered ordering the respondent company to pay
petitioner backwages which shall be computed from the time of
his illegal termination in October 2003 up to the finality of this
decision, plus separation pay equivalent to one month salary for
every year of service. This case is REMANDED to the Labor
Arbiter for the proper determination and computation of back
wages, separation pay and other monetary benefits that
petitioner is entitled to.
SO ORDERED.19
Royale Homes filed a Motion for Reconsideration20 and a
Supplemental Motion for Reconsideration.21 In a
Resolution dated January 18, 2011, however, the CA denied
22
said motions.
Issues
Hence, this Petition where Royale Homes submits before this
Court the following issues for resolution:
A.
WHETHER THE COURT OF APPEALS HAS DECIDED THE
INSTANT CASE NOT IN ACCORD WITH LAW AND
APPLICABLE DECISIONS OF THE SUPREME COURT
WHEN IT REVERSED THE RULING OF THE NLRC
DISMISSING THE COMPLAINT OF RESPONDENT FOR
LACK OF JURISDICTION AND CONSEQUENTLY, IN
FINDING THAT RESPONDENT WAS ILLEGALLY
DISMISSED[.]
B.
WHETHER THE COURT OF APPEALS COMMITTED A
SERIOUS ERROR OF LAW IN DISREGARDING THE EN
BANCRULING OF THIS HONORABLE COURT IN THE
CASEOF TONGKO VS. MANULIFE, AND IN BRUSHING
ASIDE THE APPLICABLE RULINGS OF SONZA VS. ABS
CBN AND CONSULTA V. CA[.]
C.
WHETHER THE COURT OF APPEALS COMMITTED A
SERIOUS ERROR OF LAW IN DENYING THE MOTION FOR
RECONSIDERATION OF PETITIONER AND IN REFUSING
TO CORRECT ITSELF[.]23
Royale Homes contends that its contract with Alcantara is clear
and unambiguous it engaged his services as an independent
contractor. This can be readily seen from the contract stating
that no employer-employee relationship exists between the
parties; that Alcantara was free to solicit sales at any time and by
any manner he may deem appropriate; that he may recruit sales
personnel to assist him in marketing Royale Homes inventories;
and, thathis remunerations are dependent on his sales
performance.
Royale Homes likewise argues that the CA grievously erred in
ruling that it exercised control over Alcantara based on a shallow
ground that his performance is subject to company rules and
regulations, code of ethics, periodic evaluation, and exclusivity
clause of contract. RoyaleHomes maintains that it is expected to
exercise some degree of control over its independent
contractors,but that does not automatically result in the
existence ofemployer-employee relationship. For control to be
consideredas a proof tending to establish employer-employee
relationship, the same mustpertain to the means and method of
performing the work; not on the relationship of the independent
contractors among themselves or their persons or their source of
living.
Royale Homes further asserts that it neither hired nor wielded
the power to dismiss Alcantara. It was Alcantara who openly and
publicly declared that he was pre-terminating his fixed-term
contract.
The pivotal issue to be resolved in this case is whether Alcantara
was an independent contractor or anemployee of Royale Homes.
Our Ruling
The Petition is impressed with merit.
The determination of whether a party who renders services to
another is an employee or an independent contractor involves an
evaluation of factual matters which, ordinarily, is not within the
province of this Court. In view of the conflicting findings of the
tribunals below, however, this Court is constrained to go over
the factual matters involved in this case.24
The juridical relationship of the parties based on their written
contract
The primary evidence of the nature of the parties relationship in
this case is the written contract that they signed and executed in
pursuanceof their mutual agreement. While the existence of
employer-employee relationship is a matter of law, the
characterization made by the parties in their contract as to the
nature of their juridical relationship cannot be simply ignored,
particularly in this case where the parties written
contractunequivocally states their intention at the time they
entered into it. In Tongko v. The Manufacturers LifeInsurance Co.
(Phils.), Inc.,25 it was held that:
To be sure, the Agreements legal characterization of the nature
of the relationship cannot be conclusive and binding on the
courts; x x x the characterization of the juridical relationship the
Agreement embodied is a matter of law that is for the courts to
determine. At the same time, though, the characterization the
parties gave to their relationship in the Agreement cannot simply
be brushed aside because it embodiestheir intent at the time
they entered the Agreement, and they were governed by this
understanding throughout their relationship. At the very least,
the provision on the absence of employer- employee relationship
between the parties can be an aid in considering the Agreement
and its implementation, and in appreciating the other evidence
on record.26
In this case, the contract,27 duly signed and not disputed by the
parties, conspicuously provides that "no employer-employee
relationship exists between" Royale Homes and Alcantara, as
well as his sales agents. It is clear that they did not want to be
bound by employer-employee relationship atthe time ofthe
signing of the contract. Thus:
January 24, 2003
MR. FIDEL P. ALCANTARA
13 Rancho I
Marikina City
Dear Mr. Alcantara,
This will confirm yourappointment as Division 5 VICE[-
]PRESIDENTSALES of ROYALE HOMES MARKETING
CORPORATION effective January 1, 2003 to December 31, 2003.
Your appointment entails marketing our real estate inventories
on an EXCLUSIVE BASIS under such price, terms and condition to
be provided to you from time to time.
As such, you can solicit sales at any time and by any manner
which you deem appropriate and necessary to market our real
estate inventories subject to rules, regulations and code of ethics
promulgated by the company. Further, you are free to recruit
sales personnel/agents to assist you in marketing of our
inventories provided that your personnel/agents shall first
attend the required seminars and briefing to be conducted by us
from time to time for the purpose of familiarizing them of terms
and conditionsof sale, the natureof property sold, etc.,
attendance of which shall be a condition precedent for their
accreditation by us.
That as such Division 5 VICE[-]PRESIDENT-SALES you shall be
entitled to:
1. Commission override of 0.5% for all option sales
beginning January 1, 2003 booked by your sales agents.
2. Budget allocation depending on your divisions sale
performance as per our budget guidelines.
3. Sales incentive and other forms of company support
which may be granted from time to time. It is understood,
however, that no employer-employee relationship exists
between us, that of your sales personnel/agents, and that
you shall hold our company x x x, its officers and
directors, free and harmless from any and all claims of
liability and damages arising from and/or incident to the
marketing of our real estate inventories.
We reserve, however, our right to terminate this agreement in
case of violation of any company rules and regulations, policies
and code of ethics upon notice for justifiable reason.
Your performance shall be subject toperiodic evaluation based
on factors which shall be determined by the management.
If you are amenable to the foregoing terms and conditions,
please indicate your conformity by signing on the space provided
below and return [to] us a duplicate copy of this letter, duly
accomplished, to constitute as our agreement on the
matter.(Emphasis ours)
Since "the terms of the contract are clear and leave no doubt
upon the intention of the contracting parties, the literal meaning
of itsstipulations should control."28 No construction is even
needed asthey already expressly state their intention. Also, this
Court adopts the observation of the NLRC that it is rather strange
on the part of Alcantara, an educated man and a veteran sales
broker who claimed to be receiving 1.2 million as his annual
salary, not to have contested the portion of the contract
expressly indicating that he is not an employee of Royale Homes
if their true intention were otherwise.
The juridical relationship of the parties based on Control Test
In determining the existence of an employer-employee
relationship, this Court has generally relied on the four-fold test,
to wit: (1) the selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal; and (4) the
employers power to control the employee with respect to the
means and methods by which the work is to be
accomplished.29 Among the four, the most determinative factor
in ascertaining the existence of employeremployee relationship
is the "right of control test".30 "It is deemed to be such an
important factor that the other requisites may even be
disregarded."31 This holds true where the issues to be resolved
iswhether a person who performs work for another is the latters
employee or is an independent contractor,32 as in this case. For
where the person for whom the services are performed reserves
the right to control not only the end to beachieved, but also the
means by which such end is reached, employer-employee
relationship is deemed to exist.33
In concluding that Alcantara is an employee of RoyaleHomes, the
CA ratiocinated that since the performance of his tasks is subject
to company rules, regulations, code of ethics, and periodic
evaluation, the element of control is present.
The Court disagrees.
Not every form of control is indicative of employer-employee
relationship.1wphi1 A person who performs work for another
and is subjected to its rules, regulations, and code of ethics does
not necessarily become an employee.34 As long as the level of
control does not interfere with the means and methods of
accomplishing the assigned tasks, the rules imposed by the
hiring party on the hired party do not amount to the labor law
concept of control that is indicative of employer-employee
relationship. In Insular Life Assurance Co., Ltd. v. National Labor
Relations Commission35 it was pronounced that:
Logically, the line should be drawn between rules that merely
serve as guidelines towards the achievement of the mutually
desired result without dictating the means or methods to be
employed in attaining it, and those that control or fix the
methodology and bind or restrict the party hired to the use of
such means. The first, which aim only to promote the result,
create no employeremployee relationship unlike the second,
which address both the result and the means used to achieve it. x
x x36
In this case, the Court agrees with Royale Homes that the rules,
regulations, code of ethics, and periodic evaluation alluded to
byAlcantara do not involve control over the means and methods
by which he was to performhis job. Understandably, Royale
Homes has to fix the price, impose requirements on prospective
buyers, and lay down the terms and conditionsof the sale,
including the mode of payment, which the independent
contractors must follow. It is also necessary for Royale Homes to
allocateits inventories among its independent contractors,
determine who has priority in selling the same, grant
commission or allowance based on predetermined criteria, and
regularly monitor the result of their marketing and sales efforts.
But tothe mind of this Court, these do not pertain to the means
and methods of how Alcantara was to perform and accomplish
his task of soliciting sales. They do not dictate upon him the
details of how he would solicit sales or the manner as to how he
would transact business with prospective clients. In Tongko, this
Court held that guidelines or rules and regulations that do
notpertain to the means or methodsto be employed in attaining
the result are not indicative of control as understood inlabor law.
Thus:
From jurisprudence, an important lesson that the first Insular
Lifecase teaches us is that a commitment to abide by the rules
and regulations of an insurance company does not ipso
factomake the insurance agent an employee. Neither do
guidelines somehow restrictive of the insurance agents conduct
necessarily indicate "control" as this term is defined in
jurisprudence. Guidelines indicative of labor law "control," as the
first Insular Lifecase tells us, should not merely relate to the
mutually desirable result intended by the contractual
relationship; they must have the nature of dictating the means or
methods to beemployed in attaining the result, or of fixing the
methodology and of binding or restricting the party hired to the
use of these means.In fact, results-wise, the principal can impose
production quotas and can determine how many agents, with
specific territories, ought to be employed to achieve the
companys objectives. These are management policy decisions
that the labor law element of control cannot reach. Our ruling in
these respects in the first Insular Lifecase was practically
reiterated in Carungcong. Thus, as will be shown more fully
below, Manulifes codes of conduct, all of which do not intrude
into the insurance agents means and manner of conducting their
sales and only control them as to the desired results and
Insurance Code norms, cannot be used as basis for a finding that
the labor law concept of control existed between Manulife and
Tongko.37 (Emphases in the original)
As the party claiming the existence of employer-employee
relationship, it behoved upon Alcantara to prove the elements
thereof, particularly Royale Homes power of control over the
means and methods of accomplishing the work.38 He, however,
failed to cite specificrules, regulations or codes of ethics that
supposedly imposed control on his means and methods of
soliciting sales and dealing with prospective clients. On the other
hand, this case is replete with instances that negate the element
of control and the existence of employer-employee relationship.
Notably, Alcantara was not required to observe definite working
hours.39 Except for soliciting sales, RoyaleHomes did not assign
other tasks to him. He had full control over the means and
methods of accomplishing his tasks as he can "solicit sales at any
time and by any manner which [he may] deem appropriate and
necessary." He performed his tasks on his own account free from
the control and direction of Royale Homes in all matters
connected therewith, except as to the results thereof.40
Neither does the repeated hiring of Alcantara prove the existence
of employer-employee relationship.41 As discussed above, the
absence of control over the means and methodsdisproves
employer-employee relationship. The continuous rehiring of
Alcantara simply signifies the renewal of his contract with
Royale Homes, and highlights his satisfactory services
warranting the renewal of such contract. Nor does the exclusivity
clause of contract establish the existence of the labor law concept
of control. In Consulta v. Court of Appeals,42 it was held that
exclusivity of contract does not necessarily result in employer-
employee relationship, viz:
x x x However, the fact that the appointment required Consulta experienced and professional broker, would have complained
to solicit business exclusively for Pamana did not mean that that he was being denied statutorily mandated benefits. But for
Pamana exercised control over the means and methods of nine consecutive years, he kept mum about it, signifying that he
Consultas work as the term control is understood in labor has agreed, consented, and accepted the fact that he is not
jurisprudence. Neither did it make Consulta an employee of entitled tothose employee benefits because he is an independent
Pamana. Pamana did not prohibit Consulta from engaging in any contractor.
other business, or from being connected with any other
company, for aslong as the business [of the] company did not This Court is, therefore,convinced that Alcantara is not an
compete with Pamanas business.43 employee of Royale Homes, but a mere independent contractor.
The NLRC is, therefore, correct in concluding that the Labor
The same scenario obtains in this case. Alcantara was not Arbiter has no jurisdiction over the case and that the same is
prohibited from engaging in any other business as long as he cognizable by the regular courts.
does not sell projects of Royale Homes competitors. He can
engage in selling various other products or engage in unrelated WHEREFORE, the instant Petition is hereby GRANTED. The June
businesses. 23, 2010 Decision of the Court of Appeals in CA-G.R. SP No.
109998 is REVERSED and SET ASIDE. The February 23, 2009
Payment of Wages Decision of the National Labor Relations Commission is
REINSTATED and AFFIRMED. SO ORDERED.
The element of payment of wages is also absent in thiscase. As
provided in the contract, Alcantaras remunerations consist only
of commission override of 0.5%, budget allocation, sales
incentive and other forms of company support. There is no proof
that he received fixed monthly salary. No payslip or payroll was
ever presented and there is no proof that Royale Homes
deducted from his supposed salary withholding tax or that it
registered him with the Social Security System, Philippine Health
Insurance Corporation, or Pag-Ibig Fund. In fact, his Complaint
merely states a ballpark figure of his alleged salary of
100,000.00, more or less. All of these indicate an independent
contractual relationship.44 Besides, if Alcantara indeed
consideredhimself an employee of Royale Homes, then he, an
 Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 171212 August 4, 2014
INDOPHIL TEXTILE MILLS, INC., Petitioner,
vs.
ENGR. SALVADOR ADVIENTO, Respondents.
DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari under Rule
45 of the Revised Rules of Court which seeks to review, reverse
and set-aside the Decision1 of the Court of Appeals (CA), dated
May 30, 2005, and its Resolution2dated January 10, 2006 in the
case entitled Jndophil Textile Mills, Inc. v. Hon. Rolando R.
Velasco and Engr. Salvador Adviento, docketed as CA-G.R. SP No.
83099.
The facts are not disputed.
Petitioner Indophil Textile Mills, Inc. is a domestic corporation
engaged in the business of manufacturing thread for
weaving.3 On August 21, 1990, petitioner hired respondent Engr.
Salvador Adviento as Civil Engineer to maintain its facilities in
Lambakin, Marilao, Bulacan.4 On August 7, 2002, respondent
consulted a physician due to recurring weakness and
dizziness.5 Few days later, he was diagnosed with Chronic Poly
Sinusitis, and thereafter, with moderate, severe and persistent
Allergic Rhinitis.6 Accordingly, respondent was advised by his
doctor to totally avoid house dust mite and textile dust as it will
transmute into health problems.7
Distressed, respondent filed a complaint against petitioner with
the National Labor Relations Commission (NLRC), San Fernando,
Pampanga, for alleged illegal dismissal and for the payment of
backwages, separation pay, actual damages and attorneys fees.
The said case, docketed as NLRC Case No. RAB-III-05-5834-03, is
still pending resolution with the NLRC at the time the instant
petition was filed.8
Subsequently, respondent filed another Complaint9 with the
Regional Trial Court (RTC) of Aparri, Cagayan, alleging that he
contracted such occupational disease by reason of the gross
negligence of petitioner to provide him with a safe, healthy and
workable environment.
In his Complaint, respondent alleged that as part of his job
description, he conductsregular maintenance check on
petitioners facilities including its dye house area, which is very
hot and emits foul chemical odor with no adequate safety
measures introduced by petitioner.10 According to respondent,
the air washer dampers and all roof exhaust vests are blown into
open air, carrying dust thereto.11 Concerned, respondent
recommended to management to place roof insulation to
minimize, if not, eradicate the health hazards attendant in the
work place.12 However, said recommendation was turned down
by management due to high cost.13 Respondent further suggested
to petitioners management that the engineering office be
relocated because ofits dent prone location, such that even if the
door of the office is sealed, accumulated dust creeps in outside
the office.14 This was further aggravated by the installation of
new filters fronting the office.15 However, no action was taken by
management.16 According to respondent, these healthhazards
have been the persistent complaints of most, if not all, workers of
petitioner.17 Nevertheless, said complaints fell on deaf ears as
petitioner callously ignored the health problems of its workers
and even tended to be apathetic to their plight, including
respondent.18
Respondent averred that, being the only breadwinner in the
family, he made several attempts to apply for a new job, but to
his dismay and frustration, employers who knew ofhis present
health condition discriminated against him and turned down his
application.19 By reason thereof, respondent suffered intense
moral suffering, mental anguish, serious anxiety and wounded
feelings, praying for the recovery of the following: (1) Five
Million Pesos (5,000,000.00) asmoral damages; (2) Two Million
Pesos (2,000,000.00) as exemplary damages; and (3) Seven
Million Three Thousand and Eight Pesos (7,003,008.00) as
compensatory damages.20 Claiming to be a pauper litigant,
respondent was not required to pay any filing fee.21
In reply, petitioner filed a Motion to Dismiss22 on the ground
that: (1) the RTC has no jurisdiction over the subject matter of
the complaint because the same falls under the original and
exclusive jurisdiction of the Labor Arbiter (LA) under Article
217(a)(4) of the Labor Code; and (2) there is another action
pending with the Regional Arbitration Branch III of the NLRC in
San Fernando City, Pampanga, involving the same parties for the
same cause.
On December 29, 2003, the RTC issued a Resolution23 denying
the aforesaid Motion and sustaining its jurisdiction over the
instant case. It held that petitioners alleged failure to provide its
employees with a safe, healthy and workable environment is an
act of negligence, a case of quasi-delict. As such, it is not within
the jurisdiction of the LA under Article 217 of the Labor Code. On
the matter of dismissal based on lis pendencia, the RTC ruled
that the complaint before the NLRC has a different cause of
action which is for illegal dismissal and prayer for backwages,
actual damages, attorneys fees and separation pay due to illegal
dismissal while in the present case, the cause of action is for
quasi-delict.24 The falloof the Resolution is quoted below:
WHEREFORE, finding the motion to dismiss to be without merit,
the Court deniesthe motion to dismiss.
SO ORDERED.25
On February 9, 2004, petitioner filed a motion for
reconsideration thereto, which was likewise denied in an Order
issued on even date.
Expectedly, petitioner then filed a Petition for Certiorariwith the
CA on the ground that the RTC committed grave abuse of
discretion amounting to lack or excess of jurisdiction in
upholding that it has jurisdiction over the subject matter of the
complaint despite the broad and clear terms of Article 217 of the
Labor Code, as amended.26
After the submission by the parties of their respective
Memoranda, the CA rendered a Decision27 dated May 30, 2005
dismissing petitioners Petition for lack of merit, the dispositive
portion of which states:
WHEREFORE, premises considered, petition for certiorari is
hereby DISMISSEDfor lack of merit. SO ORDERED.28
From the aforesaid Decision, petitioner filed a Motion for
Reconsideration which was nevertheless denied for lack of merit
in the CAs Resolution29 dated January 10, 2006. Hence,
petitioner interposed the instant petition upon the solitary
ground that "THE HONORABLE COURT OF APPEALS HAS
DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT IN
ACCORD WITH LAW AND WITH APPLICABLE DECISIONS OF
THE HONORABLE SUPREME COURT."30 Simply, the issue
presented before us is whether or not the RTC has jurisdiction
over the subject matter of respondents complaint praying for
moral damages,exemplary damages, compensatory damages,
anchored on petitioners alleged gross negligence in failing to
provide a safe and healthy working environment for respondent.
The delineation between the jurisdiction of regular courts and
labor courts over cases involving workers and their employers
has always been a matter of dispute.31 It is up to the Courts to lay
the line after careful scrutiny of the factual milieu of each case.
Here, we find that jurisdiction rests on the regular courts.
In its attempt to overturn the assailed Decision and Resolution of
the CA, petitioner argues that respondentsclaim for damages is
anchored on the alleged gross negligence of petitioner as an
employer to provide its employees, including herein respondent,
with a safe, healthy and workable environment; hence, it arose
from an employer-employee relationship.32 The fact of
respondents employment withpetitioner as a civil engineer is a
necessary element of his cause ofaction because without the
same, respondent cannot claim to have a rightto a safe, healthy
and workable environment.33 Thus, exclusive jurisdiction over
the same should be vested in the Labor Arbiter and the NLRC
pursuant to Article 217(a)(4) of the Labor Code of the
Philippines (Labor Code), as amended.34
We are not convinced.
The jurisdiction of the LA and the NLRC is outlined in Article 217
of the Labor Code, as amended by Section 9 of Republic Act (R.A.)
No. 6715, to wit:
ART. 217. Jurisdiction of Labor Arbiters and the Commission--
(a) Except as otherwise provided under this Code the Labor
Arbiter shall have original and exclusive jurisdiction to hear and
decide, within thirty (30) calendar days after the submission of
the case by the parties for decision without extension, even in
the absence of stenographic notes, the following cases involving
all workers, whether agricultural or nonagricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those
cases that workers may file involvingwages, rates of pay,
 hours of work and other terms and conditions of
employment;
4. Claims for actual, moral, exemplary and other forms of
damages arising from employer-employee relations;
5. Cases arising from any violation of Article 264 of this
Code including questions involving the legality of strikes
and lockouts; and
6. Except claims for Employees Compensation, Social
Security, Medicare and maternity benefits, all other
claims, arising from employer-employee relations,
including those of persons in domestic or household
service,involving an amount exceeding five thousand
pesos (5,000.00) regardless of whether accompanied
with a claim for reinstatement.
x x x.35
While we have upheld the present trend to refer worker-
employer controversies to labor courts in light of the
aforequoted provision, we have also recognized that not all
claims involving employees can be resolved solely by our labor
courts, specifically when the law provides otherwise.36 For this
reason, we have formulated the "reasonable causal connection
rule," wherein if there is a reasonable causal connection between
the claim asserted and the employer-employee relations, then
the case is within the jurisdiction of the labor courts; and in the
absence thereof, it is the regular courts that have
jurisdiction.37 Such distinction is apt since it cannot be presumed
that money claims of workers which do not arise out of or in
connection with their employer-employee relationship, and
which would therefore fall within the general jurisdiction of the
regular courts of justice, were intended by the legislative
authority to be taken away from the jurisdiction of the courts
and lodged with Labor Arbiters on an exclusive basis.38
In fact, as early as Medina vs. Hon. Castro-Bartolome,39 in
negating the jurisdiction of the LA, although the parties involved
were an employer and two employees, the Court succinctly held
that:
The pivotal question to Our mind iswhether or not the Labor
Code has any relevance to the reliefs sought by the plaintiffs. For
if the Labor Code has no relevance, any discussion concerning
the statutes amending it and whether or not they have
retroactive effect is unnecessary.
It is obvious from the complaint that the plaintiffs have not
alleged any unfair labor practice. Theirs is a simple action for
damages for tortious acts allegedly committed by the defendants.
Such being the case, the governing statute is the Civil Code and
not the Labor Code. It results that the orders under revieware
based on a wrong premise.40
Similarly, we ruled in the recent case of Portillo v. Rudolf Lietz,
Inc.41 that not all disputes between an employer and his
employees fall within the jurisdiction of the labor tribunals
suchthat when the claim for damages is grounded on the
"wanton failure and refusal" without just cause of an employee
to report for duty despite repeated notices served upon him of
the disapproval of his application for leave ofabsence, the same
falls within the purview of Civil Law, to wit:
As early as Singapore Airlines Limited v. Pao, we established
that not all disputes between an employer and his employee(s)
fall within the jurisdiction of the labor tribunals. We
differentiated between abandonment per seand the manner and
consequent effects of such abandonment and ruled that the first,
is a labor case, while the second, is a civil law case.
Upon the facts and issues involved, jurisdiction over the present
controversy must be held to belong to the civil Courts. While
seemingly petitioner's claim for damages arises from employer-
employee relations, and the latest amendment to Article 217 of
the Labor Code under PD No. 1691 and BP Blg. 130 provides that
all other claimsarising from employer-employee relationship are
cognizable by Labor Arbiters [citation omitted], in essence,
petitioner's claim for damages is grounded on the "wanton
failure and refusal"without just cause of private respondent Cruz
to report for duty despite repeated notices served upon him of
the disapproval of his application for leave of absence without
pay. This, coupled with the further averment that Cruz
"maliciously and with bad faith" violated the terms and
conditions of the conversion training course agreement to the
damage of petitioner removes the present controversy from the
coverage of the Labor Code and brings it within the purview of
Civil Law.
Clearly, the complaint was anchored not on the abandonment
per seby private respondent Cruz of his jobas the latter was
not required in the Complaint to report back to workbut on
the manner and consequent effects of such abandonmentof work
translated in terms of the damages which petitioner had to
suffer. x x x.42
Indeed, jurisprudence has evolved the rule that claims for
damages under Article 217(a)(4) of the Labor Code, to be
cognizable by the LA, must have a reasonable causal connection
withany of the claims provided for in that article.43Only if there is
such a connection with the other claims can a claim for damages
be considered as arising from employer-employee relations.44
In the case at bench, we find that such connection is nil.
True, the maintenance of a safe and healthy workplace is
ordinarily a subject of labor cases. More, the acts complained of
appear to constitute matters involving employee-employer
relations since respondent used to be the Civil Engineer of
petitioner. However, it should be stressed that respondents
claim for damages is specifically grounded on petitioners gross
negligenceto provide a safe, healthy and workable environment
for its employees a case of quasi-delict. This is easily
ascertained from a plain and cursory reading of the
Complaint,45 which enumerates the acts and/or omissions of
petitioner relative to the conditions in the workplace, to wit:
1. Petitioners textile mills have excessive flying textile
dust and waste in its operations and no effort was
exerted by petitioner to minimize or totally eradicate it;
2. Petitioner failed to provide adequate and sufficient
dust suction facilities;
 3. Textile machines are cleaned with air compressors
aggravating the dusty work place;
4. Petitioner has no physician specializing in
respiratoryrelated illness considering it is a textile
company;
5. Petitioner has no device to detectthe presence or
density of dust which is airborne;
6. The chemical and color room are not equipped with
proper safety chemical nose mask; and
7. The power and boiler plant emit too much smoke with
solid particles blown to the air from the smoke stack of
the power plant emitting a brown rust color which
engulfs the entire compound.46
In addition, respondent alleged that despite his earnest efforts to
suggest to management to place roof insulation to minimize, if
not, eradicate the health hazards attendant in the workplace, the
same was not heeded.47
It is a basic tenet that jurisdiction over the subject matter is
determined upon the allegations made in the complaint,
irrespective of whether or not the plaintiff is entitled to recover
upon the claim asserted therein, which is a matter resolved only
after and as a result of a trial.48 Neither can jurisdiction of a court
bemade to depend upon the defenses made by a defendant in his
answer or motion to dismiss.49 In this case, a perusal of the
complaint would reveal that the subject matter is one of claim for
damages arising from quasi-delict, which is within the ambit of
the regular court's jurisdiction.
The pertinent provision of Article 2176 of the Civil Code which
governs quasi-delictprovides that: Whoever by act or
omissioncauses damageto another, there being fault or
negligence, is obliged to pay for the damagedone. Such fault or
negligence, if there is no pre-existing contractual relation
between the parties, is called quasi-delict.50
Thus, to sustain a claim liability under quasi-delict, the following
requisites must concur: (a) damages suffered by the plaintiff; (b)
fault or negligence of the defendant, or someother person for
whose acts he must respond; and (c) the connection of causeand
effect between the fault or negligence of the defendant and the
damages incurred by the plaintiff.51
In the case at bar, respondent alleges that due to the continued
and prolonged exposure to textile dust seriously inimical to his
health, he suffered work-contracted disease which is now
irreversible and incurable, and deprived him of job
opportunities.52 Clearly, injury and damages were allegedly
suffered by respondent, an element of quasi-delict. Secondly, the
previous contract of employment between petitioner and
respondent cannot be used to counter the element of "no pre-
existing contractual relation" since petitioners alleged gross
negligence in maintaining a hazardous work environment cannot
be considered a mere breach of such contract of employment,
but falls squarely within the elements of quasi-delictunder
Article 2176 of the Civil Code since the negligence is direct,
substantive and independent.53 Hence, we ruled in Yusen Air and
Sea Services Phils., Inc. v. Villamor54 that:
When, as here, the cause of action is based on a quasi-delictor
tort, which has no reasonable causal connection with any of the
claims provided for in Article 217, jurisdiction over the action is
with the regular courts.55
It also bears stressing that respondent is not praying for any
relief under the Labor Code of the Philippines. He neither claims
for reinstatement nor backwages or separation pay resulting
from an illegal termination. The cause of action herein pertains
to the consequence of petitioners omission which led to a work-
related disease suffered by respondent, causing harm or damage
to his person. Such cause of action is within the realm of Civil
Law, and jurisdiction over the controversy belongs to the regular
courts.56
Our ruling in Portillo, is instructive, thus:
There is no causal connection between private respondents
claim for damages and the respondent employers claim for
damages for the alleged "Goodwill Clause" violation. Portillos
claim for unpaid salaries did not have anything to do with her
alleged violation of the employment contract as, in fact, her
separation from employmentis not "rooted" in the alleged
contractual violation. She resigned from her employment. She
was not dismissed. Portillos entitlementto the unpaid salaries is
not even contested. Indeed, Lietz Inc.s argument about legal
compensation necessarily admits that it owesthe money claimed
by Portillo.57
Further, it cannot be gainsaid that the claim for damages
occurred afterthe employer-employee relationship of petitioner
and respondent has ceased. Given that respondent no longer
demands for any relief under the Labor Code as well as the rules
and regulations pertinent thereto, Article 217(a)(4) of the Labor
Code is inapplicable to the instant case, as emphatically held in
Portillo, to wit:
It is clear, therefore, that while Portillos claim for unpaid
salaries is a money claim that arises out ofor in connection with
an employeremployee relationship, Lietz Inc.s claim against
Portillo for violation of the goodwill clause is a money claim
based on an act done after the cessation of the employment
relationship. And, while the jurisdiction over Portillos claim is
vested in the labor arbiter, the jurisdiction over Lietz Inc.s claim
rests on the regular courts. Thus:
As it is, petitioner does not ask for any relief under the Labor
Code. It merely seeks to recover damages based on the parties'
contract of employment as redress for respondent's breach
thereof. Such cause of action is within the realm of Civil Law, and
jurisdiction over the controversy belongs to the regular courts.
More so must this be in the present case, what with the reality
that the stipulation refers to the post-employment relations of
the parties.58
Where the resolution of the dispute requires expertise, not in
labor management relations nor in wage structures and other
terms and conditions of employment, but rather in the
application of the general civil law, such claim falls outside the
area of competence of expertise ordinarily ascribed to the LA and Republic of the Philippines
the NLRC.59 SUPREME COURT
Manila
Guided by the aforequoted doctrines, we find no reason to
reverse the findings of the CA.1wphi1 The RTC has jurisdiction THIRD DIVISION
over the subject matter of respondent's complaint praying for
moral damages, exemplary damages, compensatory damages, G.R. No. 175689 August 13, 2014
anchored on petitioner's alleged gross negligence in failing to
provide a safe and healthy working environment for respondent. GEORGE A. ARRIOLA, Petitioner,
WHEREFORE, the petition is DENIED. The Decision of the Court vs.
of Appeals, dated May 30, 2005, and its Resolution dated January PILIPINO STAR .NGAYON, INC. and/or MIGUEL G.
10, 2006 in CA-G.R. SP No. 83099 are hereby AFFIRMED. BELMONTE, Respondents.

SO ORDERED. DECISION

LEONEN, J.:

The prescriptive period for filing an illegal dismissal complaint is

four years from the time the cause of action accrued. This four-
year prescriptive period, not the three-year period for filing
money claims under Article 291 of the Labor Code, applies to
claims for backwages and damages due to illegal dismissal.

This is a petition for review on certiorari of the Court of Appeals'

Decision1 and resolution2 in CA-G.R. SP No. 91256, affirming the
decision of the National Labor Relations Commission. The
Commission affirmed the Labor Arbiters findings that there was
no illegal dismissal in this case and that petitioner George A.
Arriola abandoned his employment with respondent Pilipino
Star Ngayon, Inc.
In July 1986, Pilipino Star Ngayon, Inc. employed George A.
Arriola as correspondent assigned in Olongapo Cityand
Zambales. Arriola had held various positions in Pilipino Star
Ngayon, Inc. before becoming a section editor and writer of its
newspaper. He wrote "Tinig ng Pamilyang OFWs" until his
column was removed from publication on November 15, 1999.
Since then, Arriola never returned for work.3
On November 15, 2002, Arriola filed a complaint4 for illegal
dismissal, non-payment of salaries/wages, moral and exemplary
damages, actual damages, attorney's fees, and full backwages
with the National Labor Relations Commission. In his position
paper,5 Arriola alleged that Pilipino Star Ngayon, Inc. "arbitrarily
dismissed"6 him on November 15, 1999. Arguing that he was a
regular employee,Arriola contended that his rights to security of
tenure and due process wereviolated when Pilipino Star Ngayon,
Inc. illegally dismissed him.7 Pilipino Star Ngayon, Inc. and
Miguel G. Belmonte denied Arriolas allegations. In their position
paper,8 they alleged that around the third week of November
1999, Arriola suddenly absented himself from work and never
returned despite Belmontes phone callsand beeper messages.
After a few months, they learned that Arriola transferred to a
rival newspaper publisher, Imbestigador, to write "Boses ng
Pamilyang OFWs."9
In his reply,10 Arriola denied that he abandoned his employment.
He maintained that Pilipino Star Ngayon, Inc. ordered him to
stop reporting for work and to claim his separation pay.To prove
his allegation, Arriola presented a statement of
account11 allegedly faxed to him by Pilipino Star Ngayon, Inc.s
accounting head. Thisstatement of account showed a
computation of his separation pay as of November 30, 1999.
Labor Arbiter Fatima Jambaro-Franco decided the case. At the
outset, she ruled that laches had set in, emphasizing that Arriola
took three years and one day to file his complaint. According to
the Labor Arbiter, this was "contrary to the immediate and
natural reaction of an aggrieved person."12 If Arriola were indeed
aggrieved, he would not have waited three years and one day to
sue Pilipino Star Ngayon, Inc.13
The Labor Arbiter found that Arriola abandoned his employment
with Pilipino Star Ngayon, Inc. to write for a rival newspaper
publisher.14 She also noted Arriolas admission that hedid not
contemplate the filing of an illegal dismissal complaint but
nevertheless filed one upon his lawyers advice.15
On Arriolas money claims, the Labor Arbiter ruled that they
have already prescribed.16 She cited Article 291 ofthe Labor
Code, which requires that all money claims arising from
employer-employee relations be filed three years from the time
the cause of action accrued. Since Arriola filed his complaint on
November 15, 2002, which was three years and one day from his
alleged illegal dismissal on November 15, 1999,17 the Labor
Arbiter ruled that his money claims were already barred.
Thus, in the decision18 dated July 16, 2003, the Labor Arbiter
dismissed Arriola's complaint for lack of merit.
On Arriolas appeal, the National Labor Relations Commission
sustained the Labor Arbiters findings and affirmed in toto the
decision dated July 16, 2003.19 The Commission likewise denied
Arriolas motion for reconsideration20 for lack of merit.21
Arriola filed a petition for certiorari with the Court of Appeals.22
The Court of Appeals noted that the petition for certiorari
questioned whether Arriola was illegally dismissed. According to
the appellate court, Arriola raised a factual issue "beyond the
province of certiorari to resolve."23 It added that the Labor
Arbiters factual findings, if affirmed by the National Labor
Relations Commission,bound the appellate court.24
Nevertheless, the Court of Appeals resolved the factual issue "in
the interest of substantial justice."25
The Court of Appeals ruled that Arriola was not illegally
dismissed. Pilipino Star Ngayon, Inc. had the management
prerogative to determine which columns to maintain in its
newspaper. Its removal of "Tinig ng Pamilyang OFWs" from
publication did not mean that it illegally dismissed Arriola. His
employment, according to the appellate court,did not depend on
the existence of the column.26
The appellate court enumerated the following factual findings
belying Arriolas claim of illegal dismissal:
a) In his complaint, Arriola alleged that he did not receive
his salary for the period covering November 1, 1999 to
November 30, 1999. This implied that he had worked for
the whole month of November 1999. However, this was
contrary to his claim that Pilipino Star Ngayon,
Inc.dismissed him on November 15, 1999.
b) Sometime in 1999, an Aurea Reyes charged Arriola
with libel. Pilipino Star Ngayon Inc.s counsel represented
Arriola in that case and filed a counter-affidavit on
November 24, 1999, nine days after Arriolas alleged
illegal dismissal.
c) Pilipino Star Ngayon, Inc. never sent Arriola any notice
of dismissal or termination.27
Similar to the ruling of the Labor Arbiter and the National Labor
Relations Commission, the Court of Appeals ruled that it was
Arriola who abandoned his employment.28 The Court of Appeals
likewise ruled that his money claims have all prescribed based
on Article 291 of the Labor Code.29
Thus, in the decision30 dated August 9, 2006, the Court of
Appeals found no grave abuse of discretion on the part of the
National Labor Relations Commission and dismissed Arriola's
petition for certiorari.
Arriola moved for reconsideration,31 but the Court of Appeals
denied the motion in its resolution32 dated November 24, 2006.
In his petition for review on certiorari,33 Arriola maintains that
he did not abandon his employment. He insists that Pilipino Star
Ngayon, Inc. illegally dismissed him when it removed his column,
"Tinig ng Pamilyang OFWs," from publication.34
On the finding that he abandoned his work in Pilipino Star
Ngayon, Inc. to write "Boses ng Pamilyang OFWs" in
Imbestigador, Arriola presents a certification35 from
Imbestigadors Managing Editor, Almar B. Danguilan, stating that
Arriola started writing for Imbestigador only on February 17,
2003. This was after he had filed his complaint for illegal
dismissal on November 15, 2002.
As to the finding that his money claims have prescribed, Arriola
argues that the three-year prescriptive period under Article 291
of the Labor Code should be counted from December 1, 1999, not
November 15, 1999. According to Arriola, Pilipino Star Ngayon,
Inc. computed his separation pay up to November 30, 1999, as
evidenced by the faxed statement of account. Consequently, he
was deprived of his salary as a regular employee beginning
December 1, 1999. His causeof action for payment of backwages
and damages accrued only on December 1, 1999.36
Arriola argues that assuming thathis cause of action accrued on
November 15, 1999, he pleads that his one-day-late filing of the
complaint be excused.
This court ordered Pilipino StarNgayon, Inc. and Belmonte to
comment on Arriolas petition for review on certiorari.37
In their comment,38 respondents argue that this court should not
entertain Arriolas petition for review on certiorari. Arriola
raised questions of fact not allowed in a Rule 45 petition. They
highlight that the Labor Arbiter, the National Labor Relations
Commission, and the Court of Appeals all found that Arriola was
not illegallydismissed and that he abandoned his employment.
These factual findings, respondents argue, bind this court.39
Respondents maintain that Arriola was not illegally dismissed.
On the contrary, it was Arriola who abandoned his employment
in Pilipino Star Ngayon, Inc. According to respondents,they
"must not be faulted if they presumed that [Arriola] was no
longer interested in [writing for Pilipino Star Ngayon,
Inc.]"40 considering that he did not report for work for more than
three years.
On Arriolas money claims, respondents argue that these have all
prescribed. According to respondents, Arriolas one-day late
filing of the complaint cannot be excused because prescription is
a matter of substantive law, not technicality.41
Arriola replied to respondents comment, reiterating his
arguments in his petition for review on certiorari.42
The issues for our resolution are the following:
I. Whether Arriolas money claims have prescribed
II. Whether Pilipino Star Ngayon,Inc. illegally dismissed
Arriola
The petition lacks merit.
I
Arriolas claims for backwages and
damages have not yet prescribed when he filed his complaint
with the National Labor Relations Commission
The Labor Arbiter, the National Labor Relations Commission, and
the Court of Appeals all ruled that Arriolas claims for unpaid
salaries, backwages, damages, and attorneys fees have
prescribed. They cited Article 291 of the Labor Code, which
requires that money claims arising from employer-employee
relations be filed within three years from the time the cause of
action accrued:
Art. 291. MONEY CLAIMS. All money claims arising from
employer-employee relations accruing during the effectivity of
this Code shall be filed within three (3) years from the time the
cause of action accrued; otherwise they shall be forever barred.
Article 291 covers claims for overtime pay,43 holiday
pay,44 service incentive leave pay,45 bonuses,46 salary
differentials,47 and illegal deductions by an employer.48 It also
covers money claims arising from seafarer contracts.49
The provision, however, does not cover "money claims"
consequent to an illegal dismissal such as backwages.It also does
not cover claims for damages due to illegal dismissal. These
claims are governed by Article 1146 of the Civil Code of the
Philippines, which provides:
Art. 1146. The following actions must be instituted within four
years:
(1) Upon injury to the rights of the plaintiff[.]
In Callanta v. Carnation Philippines, Inc.,50 Virgilio Callanta
worked as a salesperson for Carnation Philippines, Inc. beginning
in January 1974. On June 1, 1979, Carnation filed with the
Regional Office No. X of the then Ministry of Labor and
Employment an application for issuance of clearance to
terminate Callanta. The application was granted, and Callantas
employment was declared terminated effective June 1, 1979.51
On July 5, 1982, Callanta filed a complaint for illegal dismissal
with claims for backwages and damages. Inits defense, Carnation
argued that Callantas complaint was barred by prescription.52
Carnation stressed that Callanta filed his complaint three years,
one month, and five days after his termination. Since illegal
dismissal is a violation of the Labor Code, Carnation argued that
Callantas complaint was barred by Article 290 of the Labor
Code.53 Under Article 290, offenses penalized under the Code
shall prescribe in three years.54
As to Callantas claims for backwages and damages, Carnation
contended that these claims arose from employer-employee
relations. Since Callanta filed his complaint beyond the three-
year period under Article 291 of the Labor Code, his claims for
backwages and damages were forever barred.55
This court ruled that Callantas complaint for illegal dismissal
had not yet prescribed. Although illegal dismissal is a violation of
the Labor Code, it is not the "offense" contemplated in Article
290.56 Article 290 refers to illegal acts penalized under the Labor
Code, including committing any of the prohibited activities
during strikes or lockouts, unfair labor practices, and illegal
recruitment activities.57 The three-year prescriptive period
under Article 290, therefore, does not apply to complaints for
illegal dismissal.
Instead, "by way of supplement,"58 Article 1146 of the Civil Code
of the Philippines governs complaints for illegal dismissal. Under
Article 1146, an action based upon an injury to the rights of a
plaintiff must be filed within four years. This court explained:
. . . when one is arbitrarily and unjustly deprived of his job or
means of livelihood, the action instituted to contest the legality of
one's dismissal from employment constitutes, in essence, an
action predicated "upon an injury to the rights of the plaintiff," as
contemplated under Art. 1146 of the New Civil Code, which must
be brought within four [4] years.59
This four-year prescriptive period applies to claims for
backwages, not the three-year prescriptive period under Article
291 of the Labor Code. A claim for backwages, according to this
court, may be a money claim "by reason of its practical
effect."60 Legally, however, an award of backwages "is merely one
of the reliefs which anillegally dismissed employee prays the
labor arbiter and the NLRC to render inhis favor as a
consequence of the unlawful act committed by the
employer."61 Though it results "in the enrichment of the
individual [illegally dismissed], the award of backwages is not in
redress of a private right, but, rather, is in the nature of a
command upon the employer to make public reparation for his
violation of the Labor Code."62
Actions for damages due to illegal dismissal are likewise actions
"upon an injury to the rights of the plaintiff." Article 1146 of the
Civil Code of the Philippines, therefore, governs these actions.63
Callanta filed his complaint for illegal dismissal with claims for
backwages and damages three years, one month, and five days
from his termination. Thus, this court ruled that Callanta filed his
claims for backwages and damages well within the four-year
prescriptive period.64
This court applied the Callanta ruling in Texon Manufacturing v.
Millena.65 In Texon, Marilyn and Grace Millena commenced work
for Texon Manufacturing in 1990 until Texon terminated their
employment. Texon first dismissed Grace on May 31, 1994 then
dismissed Marilyn on September 8, 1995.66
On August 21, 1995, Grace filed a complaint for money claims
representing underpayment and non-payment of wages,
overtime pay, and holiday pay with the National Labor Relations
Commission. Marilyn filed her own complaint for illegal
dismissal with prayer for payment of full backwages and benefits
on September 11, 1995.67
Texon filed a motion to dismiss both complaints on the ground of
prescription.68 It argued that Grace and Marilyns causes of
action accrued from the time they began working in Texon. Their
complaints, therefore, were filed beyond the three-year
prescriptive period under Article 291 of the Labor Code.69
This court ruled that both complaints had not yet prescribed.
With respect to Graces complaint for overtime pay and holiday
pay, this court ruled that the three-year prescriptiveperiod
under Article 291 of the Labor Code applied. Since Grace filed her
claim one year, one month, and 21 days from her dismissal, her
claims were filed within the three-year prescriptive
period.70 With respect to Marilyns complaint for illegal dismissal
with claims for backwages, this court while citing Callanta as
legal basis ruled that the four-year prescriptive period under
Article 1146 of the Civil Code of the Philippines applied. Since
Marilyn filed her complaint three days from her dismissal, she
filed her complaint well within the four-year prescriptive
period.71 Applying these principles in this case, we agree that
Arriolas claims for unpaid salaries have
prescribed.1wphi1 Arriola filed his complaint three years and
one day from the time he was allegedly dismissed and deprived
of his salaries. Since a claim for unpaid salaries arises from
employer-employee relations, Article 291 of the Labor Code
applies.72 Arriolas claim for unpaid salaries was filed beyond the
three-year prescriptive period.
However, we find that Arriolas claims for backwages, damages,
and attorneys fees arising from his claim of illegal dismissal
have not yet prescribed when he filed his complaint with the
Regional Arbitration Branch for the National Capital Region ofthe
National Labor Relations Commission. As discussed, the
prescriptive period for filing an illegal dismissal complaint is four
years from the time the cause of action accrued. Since an award
of backwages is merely consequent to a declaration of illegal
dismissal, a claim for backwages likewise prescribes in four
years.
The four-year prescriptive period under Article 1146 also
applies to actions for damages due to illegal dismissal since such
actions are based on an injury to the rights of the person
dismissed. In this case, Arriola filed his complaint three years
and one day from his alleged illegal dismissal.He, therefore, filed
his claims for backwages, actual, moral and exemplary damages,
and attorneys fees well within the four-year prescriptive period.
All told, the Court of Appeals erred infinding that Arriolas claims
for damages have already prescribed when he filed his illegal
dismissal complaint.
II
Arriola abandoned his employment with
Pilipino Star Ngayon, Inc.
In general, we do not entertain questions of fact in a petition for
review on certiorari.73 We do not try facts.74 Rule 45, Section 1 of
the Rules of Court is clear that in a petition for review on
certiorari with this court, only questions of law may be raised:
Section 1. Filing of petition with Supreme Court.
A party desiring to appeal by certiorari from a judgment or final
order or resolution of the Court of Appeals, the Sandiganbayan,
the Regional Trial Court or other courts whenever authorized by
law, may file with the Supreme Court a verified petition for
review on certiorari. The petition shall raise only questions of
lawwhich must be distinctly set forth. (Emphasis supplied)
A question of fact exists "when the doubt arises as to the truth or
falsity of the alleged facts."75 On the other hand, there is a
question of law "when there is doubt as to what the law is on a
certain state of facts."76 As this court explained in Century Iron
Works, Inc. v. Baas:77
. . . For a question to be one of law, the question must not involve
an examination of the probative value of the evidence presented
by the litigants or any of them. The resolution of the issue must
rest solely on what the law provides on the given set of
circumstances. Once it is clear that the issue invites a review of
the evidence presented, the question posed is one of fact.78
This court has made exceptions to this rule. We may review
questions of fact in a petition for review on certiorari if:
(1) the findings are grounded entirely on speculations, surmises,
or conjectures; (2) the inference made is manifestly mistaken,
absurd, or impossible; (3) there isa grave abuse of discretion; (4)
the judgment is based on misappreciation of facts; (5) the
findings of fact are conflicting; (6) in making its findings, the
same are contrary to the admissions of both appellant and
appellee; (7) the findings are contrary to those of the trial court;
(8) the findings are conclusions without citation of specific
evidence on which they are based; (9) the facts set forth in the
petition as well as in the petitioners main and reply briefs are
not disputed by the respondent; and (10) the findings of fact are
premised on the supposed absence of evidence and contradicted
by the evidence on record.79
In his petition for review on certiorari, Arriola raises questions of
fact. He invites us to examine the probative value of a faxed
letter80 containing a computation of his separation pay, and a
certification81 from Imbestigadors Managing Editor, stating that
Arriola started writing for Imbestigador only on February 17,
2003. These pieces of documentary evidence allegedly prove that
Pilipino Star Ngayon, Inc. illegally dismissed Arriola and that he
did not abandon his employment.
This court has ruled that the issues of illegal dismissal82 and
abandonment of employment83 are factual issues which cannot
be raised in a petition for review on certiorari. Arriola also failed
to persuade us why we should make an exception in this case.
We agree that Pilipino Star Ngayon, Inc. did not illegally dismiss
Arriola. As the Court of Appeals ruled, "the removal of [Arriolas]
column from private respondent [Pilipino Star Ngayon, Inc.s
newspaper] is not tantamount to a termination of his
employment as his job is not dependent on the existence of the
column Tinig ng Pamilyang OFWs."84 When Pilipino Star
Ngayon, Inc. removed "Tinig ng Pamilyang OFWs" from
publication, Arriola remained as section editor. Moreover, a
newspaper publisher has the management prerogative to
determine what columns to print in its newspaper.85 As the Court
of Appeals held:
. . . it is a management prerogative of private respondent
[Pilipino Star Ngayon, Inc.] to decide on what sections should
and would appear in the newspaper publication taking into
consideration the business viability and profitability of each
section. Respondent [Pilipino Star Ngayon, Inc.] decided to
replace the "Pamilyang OFWs"section with another which it
ought would better sell to the reading public. Every business
enterprise endeavors to increase its profits. In the process, it
may adopt or devise means designed towards that goal. Even as
the law is solicitous of the welfare of the employees, it must also
protect the right of an employer to exercise what are clearly
management prerogatives. . . . The free will of management to
conduct its own business affairs to achieve its purposes cannot
be denied.86
Arriola abandoned his employment with Pilipino Star Ngayon,
Inc. Abandonment is the "clear, deliberate and unjustified refusal
of an employee to continue his employment, without any
intention of returning."87 It has two elements: first, the failure to
report for work or absence without valid or justifiable reason
and, second, a clear intention to sever employer-employee
relations exists.88 The second element is "the more determinative
factor and is manifested by overt acts from which it may be
deduced that the employee has no more intention to
work."89Assuming that Arriola started writing for Imbestigador
only on February 17, 2003, he nonetheless failed to report for
work at Pilipino Star Ngayon, Inc. after November 15, 1999 and
only filed his illegal dismissal complaint on November 15, 2002.
Hetook three years and one day to remedy his dismissal. This
shows his clear intention to sever his employment with Pilipino
Star Ngayon, Inc.
Contrary to Arriolas claim, Villar v. NLRC,90 Globe Telecom, Inc.
v. Florendo-Flores,91 and Anflo Management & Investment Corp.
v. Bolanio92 do not apply to this case. In these cases, the
dismissed workers immediately took steps to remedy their
dismissal, unlike Arriola who "slept on his rights."93 In Villar, the
workers filed their complaint within the month they were
dismissed.94 In Globe,the employee filed her complaint two
months after she had been constructively dismissed.95 In
Anflo,the employee filed his complaint one day after he had been
dismissed.96
With respect to the computation ofArriolas separation pay
allegedly faxed by Pilipino Star Ngayon, Inc.s accounting head,
we agree with the Court of Appeals that this does notprove that
Arriola was illegally dismissed:
[The faxed computation] does not conclusively show that the
salaries were withheld from petitioner Arriola starting 01
December 1999. It could not likewise be given probative value as
the said document does not bear the signature ofan
unauthorized representative of private respondent PSN[.]
[N]either does it bears (sic) the official seal of the company.
Besides, the abovementioned computation for separation pay is
not a conclusive proof of the existence of dismissal or
termination from work. It is just a mere computations (sic)
which the authenticity thereof is being assailed.97 (Citations
omitted)
Considering the foregoing, we will not disturb the Labor
Arbiters findings that Arriola was not illegally dismissed and
that he abandoned his employment. This is true especially since
the National Labor Relations Commission and the Court of
Appeals affirmed these factual findings.98
WHEREFORE, the petition is DENIED. The Court of Appeals'
decision dated August 9, 2006 and resolution dated November
24, 2006 in CA-G.R. SP No. 91256 are AFFIRMED.
SO ORDERED.
 Republic of the Philippines The deletion of the award of attorneys fees and moral and
SUPREME COURT exemplary damages is the subject of this petition.
Manila
Montinola was employed as a flightattendant of Philippine
SECOND DIVISION Airlines (PAL) since 1996.6 On January 29, 2008, Montinola and
other flight crew members were subjected to custom searches in
G.R. No. 198656 September 8, 2014 Honolulu, Hawaii, USA. Items from the airline were recovered
from the flight crew by customs officials. Nancy Graham
NANCY S. MONTINOLA, Petitioner, (Graham), US Customs and Border Protection Supervisor, sent an
vs. email to PAL regarding the search. The email7 contained a list of
PHILIPPINE AIRLINES, Respondnet. PAL flight crewmembers involved in the search:

DECISION FP CHUIDIAN, JUAN DE GUZMAN

LEONEN, J.: FS CARTAGENA, REGINALD

Illegally suspended employees, similar to illegally dismissed FS NAVA, PETER DE GUZMAN

employees, are entitled to moral damages when their suspension
was attended by bad faith or fraud, oppressive to labor, or done FS PADILLA, ANGELITO
in a manner contrary to morals, good customs, or public policy.
FA CRUZ, MARIA FA MONTINOLA, NANCY
Petitioner Nancy S. Montinola (Montinola) comes to this court
via a petition for review on certiorari under Rule 45 of the Rules FA VICTA, ROSE ANN (Emphasis supplied)
of Court. She assails the decision1 of the Court of Appeals2 dated
June 28, 2011 and its resolution3 dated September 20, 2011 in Another email8 enumerated the list of items taken from the crew
Philippine Airlines v. National Labor Relations Commission and members:
Nancy S. Montinola.4 The Court of Appeals affirmed the finding of
the National Labor Relations Commission that petitioner was Katie,
suspended illegally but deleted the award of moral and
exemplary damages and attorneys fees.5 Here is the list.
Flight Crew Blitz in gate area 10 crew. Seven of the 10 crew 12 small ice creams
members had items removed from the aircraft on their
possession. Two additional bags were found on jet-way after 2 jars salsa
blitz. No bonded items were found but crew removed food items
as listed: 2 bottles Orange Juice

18 bags Doritos 1 bottle Cranberry Juice

15 bags Banana Chips 1 bottle smoothie

5 pkg instant chocolate All items returned to Philippine Airlines.

5 bars Granola Nancy I. Graham

18 bars Kit Kat Supervisory CBPO

34 Chocolate flavored Goldilocks A-TCET Air

16 Regular Goldilocks cakes Honolulu Hi

9 1st class Bulgari Kits PAL conducted an investigation. Montinola was among those
implicated because she was mentioned in Grahams email.9 On
2 magazines February 1, 2008, PALs Cabin Services Sub-Department
required Montinola to comment on the incident.10 She gave a
6 rolls toilet paper handwritten explanation three days after, stating that she did not
take anything from the aircraft. She also committed to give her
9 cans soda full cooperation should there be any further inquiries on the
matter.11
16 bottles of water
On February 22, 2008, PALs International Cabin Crew Division
1 yogurt Manager, Jaime Roberto A. Narciso (Narciso), furnished
Montinola the emails from the Honolulu customs official.12 This
was followed by a notice of administrative charge13 which
Narciso gave Montinola on March 25, 2008. On April 12, 2008,
there was a clarificatory hearing.14The clarificatory hearing was
conducted by a panel of PALs Administrative Personnel, namely,
Senior Labor Counsel Atty. Crisanto U. Pascual (Atty. Pascual),
Narciso, Salvador Cacho, June Mangahas,Lina Mejias, Carolina
Victorino, and Ruby Manzano.15
Montinola alleged that her counselobjected during the
clarificatory hearing regarding PALs failure to specify her
participation in the alleged pilferage.16 Atty. Pascual threatened
Montinola that a request for clarification would result in a
waiver of the clarificatory hearing.17 This matter was not
reflected in the transcript of the hearing.18 Despite her counsels
objections, Montinola allowed the clarificatory hearings to
proceed because she "wanted to extend her full cooperation [in]
the investigation[s]."19
During the hearing, Montinola admitted that in Honolulu, US
customs personnel conducted a search of her person. At that
time, she had in her possession only the following food items:
cooked camote, 3-in-1 coffee packs, and Cadbury hot chocolate.20
PAL, through Senior Assistant Vice President for Cabin Services
Sub- Department Sylvia C.Hermosisima, found Montinola guilty
of 11 Violations21 of the companys Code ofDiscipline and
Government Regulation. She was meted with suspension for one
(1) year without pay.22 Montinola asked for a Relations Commission (NLRC).33 During the pendency of the
reconsideration.23 Hermosisima, however, denied her motion for
reconsideration a month after.24
Montinola brought the matter before the Labor Arbiter.25 The
Labor Arbiter26 found her suspension illegal,27 finding that PAL
never presented evidence that showed Montinola as the one
responsible for any of the illegally taken airline items.28 The
Labor Arbiter ordered Montinolas reinstatement with
backwages, inclusive of allowances and benefits amounting to
378,630.00.29
In addition, the Labor Arbiter awarded moral damagesin the
amount of 100,000.00 and exemplary damages amounting to
100,000.00 for the following reasons:30
This Office observes that the records are replete with substantial
evidence that the circumstances leading to complainants one-
year suspension without pay are characterized by arbitrariness
and bad faith on the part of respondents. The totality
ofrespondents acts clearly shows that complainant had been
treated unfairly and capriciously, for which complainant should
be awarded moral damages in the amount of One Hundred
Thousand Pesos (100,000.00) and exemplary damages also in
the amount of One Hundred Thousand Pesos (100,000.00).31
The Labor Arbiter also awarded attorneys feesto Montinola
because she was "forced to litigate and incur expenses to protect
[her] rights."32
PAL appealed the Labor Arbitersdecision to the National Labor
appeal, PAL submitted new evidence consisting of an affidavit
executed by Nancy Graham, the Customs and Border Protection
Supervisor who witnessed the January 29, 2008 search in
Honolulu.34 This affidavit enumerated the names of the flight
crew members searchedby the Honolulu customs officials.
However, the National Labor RelationsCommission observed
that "it was categorically admitted in the said declaration that
Ms. Graham did not know which items were attributable to
eachof the seven crew members whom she identified and there
was no individual inventories (sic)."35
Through the resolution36 dated June 9, 2009,the National Labor
Relations Commission37 affirmed the decision of the Labor
Arbiter. PAL appealed the Commissions decision to the Court of
Appeals through a petition for certiorari.38
The Court of Appeals affirmed the decisions of the Labor Arbiter
and National Labor Relations Commission in finding the
suspension illegal.39 However, the Court of Appeals modified the
award:
WHEREFORE, premises considered, the petition is DENIED.
Respondent NLRCs Decision in NLRC LAC No. 01000263-09
(NLRC NCR CN 08-11137-08), dated June 9, 2009, is AFFIRMED
with MODIFICATION in that the award of moral and exemplary
damages and attorneys fees to private respondent are
deleted.40 (Emphasis supplied)
The Court of Appeals deleted the moral and exemplary damages
and attorneys fees stating that:
Relevant to the award of moral damages, not every employee
who is illegally dismissed or suspended isentitled to damages.
Settled is the rule that moral damages are recoverable only
where the dismissal or suspension of the employee was attended
by bad faith or fraud, or constituted an act oppressive to labor, or
was done in a manner contrary to morals, good customs or
public policy. Bad faith does not simply mean negligence or bad
judgment. It involves a state of mind dominated by ill will or
motive. It implies a conscious and intentional design to do a
wrongful act for a dishonest purpose orsome moral obliquity.
The person claiming moral damages must prove the existence of
bad faith by clear and convincing evidence for the law always
presumes good faith.
In the case at bar, there is no showing that PAL was moved by
any ill will or motive in suspending private respondent. It is
evident that petitioner gave private respondent every
opportunity to refute the charges against her and to present her
side as part of due process.These negate the existence of bad
faith on the part of petitioner. Under the circumstances, we hold
that private respondent is not entitled to moral damages and
exemplary damages. Furthermore, the Court finds the award of
attorneys fees improper. The award of attorneys fees was
merely cited in the dispositive portion of the decision without
the RTC [sic] stating any legal or factual basis for said
award.41 (Citations omitted)
Montinola filed a partial motion for reconsideration,42 praying
that the award of moral and exemplary damages and attorneys
fees be reintegrated into the decision. PAL also filed a motion for
reconsideration,43 but its motion sought a complete reversal of
the decision.
The Court of Appeals denied both motions.44 Only Montinola
sought to continue challenging the Court of Appeals decision
through a petition for review on certiorari45 brought to this
court.
The sole issue in this case is whether Montinolas illegal
suspension entitled her to an award of moral and exemplary
damages and attorneys fees.
Montinola claims that she is entitled to moral damages because
her illegal suspension was attended by bad faith, causing her to
suffer "mental anguish, fright, serious anxiety, and moral
shock."46 Furthermore, the illegal suspension tarnished her good
standing.47 Prior to this incident and in her 12 years of service,
she was never charged administratively.48 The illegal suspension
likewise affected her family because it created "a state of
uncertainty and adversity."49
Montinola underscores that the investigation against her was
conducted in a "hasty, impetuous, harsh and unjust"50manner.
She was not properly apprised of the charges against her.51 She
requested for proper notice of the acts violative of PALs Codeof
Discipline. Instead of giving proper notice, PAL threatened that
she would be waiving her right to a clarificatory hearing if she
insisted on her request.52
Montinola likewise alleges that PAL violated its own rules by not
applying the same penalty uniformly.53 Flight Purser Juan
Chuidian III was involved in the same incident and was likewise
suspended. However, on motion for reconsideration, PAL
allowed him to retire early without serving the penalty of
suspension.54
The claim for exemplary damages isanchored on Montinolas
belief that such damages "are designed to permit the courts to
mould behaviour that has socially deleterious consequences, and
their imposition is required by public policy to suppress the
wanton acts of the offender."55 In Montinolas view, PAL
suspended her in a "wanton, oppressive, and malevolent
manner."56
Finally, Montinola argues that she is entitled to attorneys fees
because she was forced to litigate. In Article 2208, paragraph (2)
of the Civil Code, individuals forced to litigate may ask for
attorneys fees.
On the other hand, PAL argues that moral damages are only
recoverable when "the dismissal of the employee was attended
by bad faith or fraud, or constituted an act oppressive to labor, or
was done in a manner contrary to morals, good customs or
public policy."57 The company believes that Montinola failed to
present clear and convincing proof of bad faith.
PAL stands by how it investigated the alleged pilferage of the in-
flight items in the January 29, 2008 flight. Itbelieves that it
afforded due process to Montinola and the other implicated crew
members. From PALs point of view, she was given an
opportunity to explain her side and was even assisted by counsel
of her choice.58
PAL claims that since moral damages have not been proven,
exemplary damages should likewise not be awarded.59
Moreover, PAL argues that Montinola failed to provide basis for
the award of attorneys fees. Attorneys fees are only awarded
when the trial court (or in this case, the Labor Arbiter) states a
factual, legal, or equitable justification for awarding the same.60
I vestedconstitutional right that also affects an employees liberty
Montinola is entitled to moral and exemplary damages. She is
also entitled to attorneys fees.
The Labor Code provides:
Art. 279. Security of Tenure In cases of regular employment,
the employer shall not terminate the services of an employee
except for a just cause or when authorized by this Title. An
employee who is unjustly dismissed from work shall be entitled
to reinstatement without loss of seniority rights and other
privileges and to full backwages, inclusive of allowances, and to
his other benefits or their monetary equivalent computed from
the time his compensation was withheld from him up to the time
of his actual reinstatement.
Security of tenure of workers is not only statutorily protected, it
is also a constitutionally guaranteed right.61 Thus, any
deprivation of this right must be attended by due process of
law.62 This means that any disciplinary action which affects
employment must pass due process scrutiny in both its
substantive and procedural aspects.
The constitutional protection for workers elevates their work to
the status of a vested right. It is a vested right protected not only
against state action but against the arbitrary acts of the
employers as well. This court in Philippine Movie Pictures
Workers Association v. Premier Productions, Inc.63 categorically
stated that "[t]he rightof a person to his labor is deemed to be
property within the meaning of constitutional
guarantees." Moreover,
64 it is of that species of
and quality of life. Work not only contributes to defining the
individual, it also assists in determining onespurpose. Work
provides for the material basis of human dignity.
Suspension from work is prima facie a deprivation of this right.
Thus, termination and suspension from workmust be reasonable
to meet the constitutional requirement of due process of law. It
will be reasonable if it is based on just or authorized causes
enumerated in the Labor Code.65
On the other hand, articulation of procedural due process in
labor cases is found in Article 277(b) ofthe Labor Code, which
states:
(b) Subject to the constitutional right of workers to security of
tenure and their right tobe protected against dismissal except for
a just and authorized cause and without prejudice to the
requirement of notice under Article 283 of this Code, the
employer shall furnish the worker whose employment is sought
to be terminated a written notice containing a statement of the
causes for termination and shall afford the latter ample
opportunity to be heard and to defend himself with the
assistance of his representative if he so desires in accordance
with the company rules and regulations promulgated pursuant
to guidelines set by the Department of Labor and Employment.
Any decision taken bythe employer shall be without prejudice to
the right of the worker to consent the validity or legality of his
dismissal by filing a complaint with the regional branch of the
National Labor Relations Commission. The burden of proving
that the termination was for a valid or authorized cause shall rest
on the employer.
The procedure can be summarized in this manner. First, the
employer must furnish the employee with a written notice
containing the cause for termination. Second, the employer must
give the employee an opportunity to be heard. This could be
done either through a position paper or through a clarificatory
hearing.66 The employee may alsobe assisted by a representative
or counsel. Finally, the employer must give another written
noticeapprising the employee of its findings and the penalty to
be imposed against the employee, if any.67 In labor cases, these
requisites meet the constitutional requirement of procedural due
process, which "contemplates notice and opportunity to be heard
before judgment is rendered, affecting ones person or
property."68
In this case, PAL complied with procedural due process as laid
out in Article 277, paragraph (b) of the LaborCode.1wphi1PAL
issued a written notice of administrative charge, conducted a
clarificatory hearing, and rendered a written decision
suspending Montinola. However, we emphasize that the written
notice of administrative charge did not serve the purpose
required under due process. PAL did not deny her allegation that
there would be a waiver of the clarificatory hearing ifshe insisted
on a specific notice of administrative charge. With Montinola
unable to clarify the contents of the notice of administrative
charge, there were irregularities in the procedural due process
accorded to her.
Moreover, PAL denied Montinola substantial due process.
Just cause has to be supported by substantial evidence.
Substantial evidence, or "such relevant evidence as a reasonable
mind might accept as adequate to support a conclusion,"69 is the
quantum of evidence required in administrative bodies such as
the National Labor Relations Commission. It is reasonable to
expect the employer to consider substantial evidence in
disciplinary proceedings against its employees. The employers
decision will be subject to review by the LaborArbiter and
National Labor Relations Commission.
The employer has the burden of proof in showing that
disciplinary action was made for lawful cause.70 The employer
must consider and show facts adequate to support the
conclusionthat an employee deserves to be disciplined for his or
her acts or omissions.
PAL, however, merely relied on these pieces of information in
finding administrative liability against Montinola:
1) a list of offenses found in PALs Code of Discipline that
Montinola allegedly violated;
2) a list of flight crew members that were checked at the
Honolulu airport; and
 3) a list of all items confiscated from allthese flight crew
members.
The lists are not sufficient to show the participation of any of the
flight crew members,least of all Montinola. None of the evidence
presented show that the customs officials confiscated any of
these items from her. Thus, the evidence by themselves do not
show that Montinola pilfered airline items.
Together with the manner in which the investigation proceeded,
i.e., that Montinola was prevented from asking for clarification of
the charges against her, the absence of substantial evidence is so
apparent that disciplining an employee only on these bases
constitutes bad faith. Under the Labor Code, Labor Arbitersare
authorized by law to award moral and exemplary damages:
Art. 217. Jurisdiction of Labor Arbiters and the Commission. (a)
Except as otherwise provided under this Code, the Labor
Arbiters shall have original and exclusive jurisdiction to hear and
decide within thirty (30) calendar days after the submission of
the case by the parties for decision without extension, even in
the absence of stenographic notes, the following cases involving
all workers, whether agricultural or non-agricultural:
....
4. Claims for actual, moral, exemplary and other forms of
damages arising from the employer-employee relations[.]
The nature of moral damages is defined under our Civil Code.
Article 2220 states that "[w]illful injury to property may be a
legal ground for awarding moral damages if the court should find
that, under the circumstances, such damages are justlydue. The
same rule applies to breaches of contract where the
defendantacted fraudulently or in bad faith." In Primero v.
Intermediate Appellate Court,71 this court stated that damages,
as defined in the Civil Code, is recoverable in labor cases. Thus,
moral damages:
. . . cannot be justified solely upon the premise (otherwise
sufficient for redress under the Labor Code) that the employer
fired his employee without just cause or due process. Additional
facts must be pleaded and proven to warrant the grant of moral
damages under the Civil Code, these being, to repeat, that the act
of dismissal wasattended by bad faith or fraud, or was
oppressive to labor, or done ina manner contrary to morals, good
customs, or public policy;and, of course, that social humiliation,
wounded feelings, grave anxiety, etc., resulted therefrom.72
The employee is entitled to moral damages when the employer
acted a) in bad faith or fraud; b) in a manner oppressive to labor;
or c) in a manner contrary to morals, good customs, or public
policy.
Bad faith "implies a conscious and intentional design to do a
wrongful act for a dishonest purpose or moral
obliquity."73 Cathay Pacific Airways v. Spouses
Vazquez74 established that bad faith must be proven through
clear and convincing evidence.75 This is because "[b]adfaith and
fraud . . . are serious accusations that can be so conveniently and
casually invoked, and that is why they are never presumed. They
amount to mere slogans or mudslinging unless convincingly
substantiated by whoever is alleging them."76 Here, there was
clear and convincing evidence of bad faith adduced in the lower
tribunals.
PALs actions in implicating Montinola and penalizing her for no
clear reason show bad faith. PALs denial of her request to clarify
the charges against her shows its intent to do a wrongful act for
moral obliquity. If it were acting in good faith, it would have
gathered more evidence from its contact in Honolulu or from
other employees before it started pointing fingers. PAL should
not have haphazardly implicated Montinola and denied her
livelihood even for a moment.
PAL apparently granted Montinola procedural due process by
giving her a notice of administrative charge and conducting a
hearing. However, this was more apparent than real. The notice
of administrative charge did not specify the acts committed by
Montinola and how these acts violated PALs Code of Discipline.
The notice did not state which among the items confiscated by
the US customs officials were originally found in Montinolas
possession. Worse, the panel of PAL officers led by Atty. Pascual
did not entertain any query toclarify the charges against her.
There is denial of an opportunity to be heard if the employee is
not clearly apprised of the acts she committed that constituted
the cause for disciplinary action. The Omnibus Rules
Implementing the Labor Code requires that "a written notice [be]
served on the employee specifying the ground or grounds for
termination, and giving said employee reasonable opportunity
within which to explain his side."77 Reasonable opportunity has
been described as "every kind of assistance that
managementmust accord to the employees to enable them to
prepare adequately for their defense."78
When the alleged participation of the employee in the illicit act
which serves as a basis for the disciplinary action is not clear
from the notice, the opportunity to be heard will not be
reasonable. The notice fails to meet reasonable standards. It does
not have enough information to enable the employee to
adequatelyprepare a defense.
Moreover, the list of provisions in PALs Code of Discipline
allegedly violated was long and exhaustive.1wphi1 PALs notice
of administrative charge stated that it had probable cause to
administratively chargeMontinola of the following:
I. ILLEGAL ACTS Section 2/Article 20
....
As a cabin attendant you should know very well the laws, rules
and regulations of every country in which the Company operates
including the entry/exit requirements to which your cabin crew
must adhere.
II. VIOLATION OF LAW/GOVERNMENT REGULATIONS Section
6/Article 46
....
Incident is a violation of the Entry/Exit requirements in HNL
Station, as quoted:
"Note: U.S. Customs Trade Law/Sec. 301 on Intellectual Property
Right prohibits bringing of counterfeit consumer goods such as
fake bags, clothes, shoes, colognes, books, medicine, audio/video
tapes & CDs." (ref. Entry-Exit Requirements Quick Reference
GuideTranspacific)
III. ANTI-COMPANY OFFENSES Article 44/Section 5
....
As noted on the e-mail report from HNL Station dated 30 January
2008, PAL will be penalized by customs and border protection
HNL due to cabin crew took items again from the aircraft upon
arrival.
Article 26 NON-OBSERVANCE OF QUALITY STANDARDS
....
As a cabin attendant, it is yourresponsibility to strictly adhered
[sic] to the rules, regulations, prescriptions, mandates and
policies of the Company.
Article 28 INEFFICIENCY AND WASTE
....
The subject items confiscated at the holding gate area are
Company supplies and resources which must only be consumed
or utilized reasonably inflight [sic].
Article 37 ANTI-TEAMWORK OFFENSES
....
In the email report from HNL Station, Ms. Nancy Graham, CBP
Supervisor your name was specifically listed as part of the cabin
crew members who were involved in the Flight
Crew Blitz in gate area.
Article 38 INSUBORDINATIONS OR WILLFUL DISOBEDIENCE
....
Article 58 MISHANDLING/MISUSE OF COMPANY FUNDS,
PROPERTY OR RECORDS
....
The subject items confiscated at the holding gate area are
Company supplies and resources which must only be consumed
or utilized reasonably inflight [sic].
Article 59 THEFT, PILFERAGE, OR EMBEZZLEMENT
....
As noted on the e-mail reports from HNL Station both from
Station Supervisor, Ms. Keity Wells and Ms. Nancy Graham, CBP
Supervisor, The different items confiscated are taken by the
cabin crew from the aircraft upon arrival.
Article 61 UNOFFICIAL USE OF COMPANY PROPERTY AND
FACILITIES
....
IV. FAILURE ON THE JOB Article 25/Section 2
....
As a cabin attendant, you should know very well the certain laws,
rules and regulations ofevery country in which the Company
operates. Thus, adherence (sic) to these rules and regulations is a
must.79
To constitute proper notice, the facts constitutive of the
violations of these rules and not just the rules of conduct
must be clearly stated. Proper notice also requires that the
alleged participation of the employee be clearly specified.
Without these, the most fundamental requirement of a fair
hearing cannot be met.
Parenthetically, we note that the enumeration of rules violated
even included violation of "U.S. Customs Trade Law/Sec. 301 on
Intellectual Property Right." This has no bearing on the basis for
the termination or suspension of the employee. It only serves to
confuse. At worse, it is specified simply to intimidate.
Montinola was found by PAL to be guilty of allthe charges against
her. According to PAL, "[t]hese offenses call for the imposition of
the penalty of Termination, however, we are imposing upon you
the reduced penalty of One (01) year Suspension."80 It is not
clear how she could violate all the prestations in the long list of
rules she allegedly violated. There is also no clear explanation
why termination would be the proper penalty to impose. That
the penalty was downgraded, without legal explanation, to
suspension appears as a further badgeof intimidation and bad
faith on the part of the employer.
Nothing in PALs action supports the finding that Montinola
committed specific acts constituting violations of PALs Code of
Discipline.
This act of PAL is contrary tomorals, good customs, and public
policy. PAL was willing to deprive Montinola of the wages she
would have earned during her year of suspension even if there
was no substantial evidence that she was involved in the
pilferage.
Moral damages are, thus, appropriate. In Almira v. B.F. Goodrich
Philippines, this court noted that unemployment "brings untold
hardships and sorrows on those dependent on the wage-
earner."81 This is also true for the case of suspension. Suspension
istemporary unemployment. During the year of her suspension,
Montinola and her family had to survive without her usual
salary. The deprivation of economic compensation caused
mental anguish, fright, serious anxiety, besmirched reputation,
and wounded feelings. All these are grounds for an award of
moral damages under the Civil Code.82
II
Montinola is also entitled to exemplary damages.
Under Article 2229 of the Civil Code, "[e]xemplary or corrective
damages are imposed, by way of example or correction for the
public good, in addition to the moral, temperate, liquidated or
compensatory damages." As this court has stated in the past:
"Exemplary damages are designed by our civil law to permit the
courts to reshape behaviour that is socially deleterious in its
consequence by creating negative incentives or deterrents
against such behaviour."83
If the case involves a contract, Article 2332 of the Civil Code
provides that "the court may award exemplary damages if the
defendant acted in a wanton, fraudulent, reckless,oppressive or
malevolent manner." Thus, in Garcia v. NLRC,84 this court ruled
that in labor cases, the court may award exemplary damages "if
the dismissal was effected in a wanton, oppressive or malevolent
manner."85
It is socially deleterious for PAL to suspend Montinola without
just cause in the manner suffered by her.Hence, exemplary
damages are necessary to deter future employers from
committing the same acts.
III
Montinola is also entitled to attorneys fees.
Article 2208 of the Civil Code enumerates the instances when
attorneys fees can be awarded:
ART. 2208. In the absence of stipulation, attorneys fees and
expenses of litigation,other than judicialcosts, cannot be
recovered, except:
(1) When exemplary damages are awarded;
(2) When the defendants act or omission has compelled
the plaintiff to litigate with third persons or to incur
expenses to protect his interest;
(3) In criminal cases of malicious prosecution against the
plaintiff;
(4) In case of a clearly unfounded civil action or
proceeding against the plaintiff;
(5) Where the defendant acted ingross and evident bad
faith in refusing to satisfy the plaintiffs plainly valid, just
and demandable claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of household
helpers, laborers and skilled workers;
(8) In actions for indemnity under workmens
compensation and employers liability laws;
(9) In a separate civil action to recover civil liability
arising from a crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and
equitable that attorneys fees and expenses of litigation
should be recovered.
In all cases, the attorneys fees and expenses of litigation must be
reasonable. (Emphasis supplied)
This case qualifies for the first, second, and seventh reasons why
attorneys fees are awarded under the Civil Code.
First, considering thatwe have awarded exemplary damages in
this case, attorneys fees canlikewise be awarded.
Second, PALs acts and omissionscompelled Montinola to incur
expenses to protect her rights with the National Labor Relations
Commission and the judicial system. She went through four
tribunals, and she was assisted by counsel. These expenses
would have been unnecessary if PAL had sufficient basis for its
decision to discipline Montinola.
Finally, the action included recovery for wages. To bring justice
to the illegal suspension of Montinola, she asked for backwages
for her year of suspension:
PAL argued that the factual, legal, or equitable justification for
awarding attorney's fees must be stated in the Labor Arbiter's
decision. The legal justification of the Labor Arbiter is apparent
in the decision:
Complainant's claim for attorney's fees is also justified. It is
settled that where an employee was forced 'to litigate and incur
expenses to protect his rights and interest, as in the instant case,
he is entitled to an award of attorney's fees (Building Case Corp.
vs. NLRC, G.R. No. 94237, February 26, 1997). She is thus granted
attorney's fees equivalent to ten percent of the total award.86
We find no factual, legal, or equitable reason to depart from this
justification. Hence, we also affirm the award of attorney's fees
equivalent to 10% of the total award, or 57,863.00.87
We acknowledge the right of PAL to be constantly vigilant to
prevent and deter pilferage. After all, that is equally its property
which is also protected by the Constitution. However, PAL cannot
assume liability on the employee. It has to endeavor to move
through its administrative investigations more humanely and
more in consonance with the law. Its employees may only have
their work. It is their work, no matter what the classification and
how significant they may be in the eyes of their employer, that
should give them their dignity.
WHEREFORE, the petition is GRANTED. The decision of the Court
of Appeals in CA-G.R. SP No. 112552 is MODIFIED in order to
REINTEGRATE the award for moral damages of 100,000.00,
exemplary damages of 100,000.00, and attorney's fees of
57,863.00.
SO ORDERED.
 Republic of the Philippines Armando D. Serrano (Serrano) on September 24, 1994 as "close-
SUPREME COURT in" security personnel for one of JG Summit's corporate officers,
Manila Johnson Robert L. Go.2 After eight years, Serrano was re-assigned
as close-in security for Lance Gokongwei, and then to his wife,
THIRD DIVISION Mary Joyce Gokongwei.3 As close-in security, records show that
Serrano was receiving a monthly salary of 11,274.30.4
G.R. No. 198538 September 29, 2014
On August 15, 2006, Serrano was relieved by JG Summit from his
EXOCET SECURITY AND ALLIED SERVICES CORPORATION duties. For more than six months after he reported back to
and/or MA. TERESA MARCELO, Petitioner, Exocet, Serrano was without any reassignment. OnMarch 15,
vs. 2007, Serrano filed a complaint for illegal dismissal against
ARMANDO D. SERRANO, Respondent. Exocet with the National Labor Relations Commission (NLRC).5

DECISION
VELASCO, JR., J.:
Nature of the Case
This is a Petition for Review on Certiorari under Rule 45 seeking
to reverse and set aside the March 31, 2011 Decision1 and
September 7, 2011 Resolution of the Court of Appeals (CA) in CA-
G.R. SP No. 113251, which ordered petitioner to pay respondent
separation pay and backwages fqr having been illegally
dismissed from employment.
The Antecedent Facts
Petitioner Exocet Security and Allied Services Corporation
(Exocet) is engaged in the provision of security personnel to its
various clients or principals. By virtue of its contract with JG
Summit Holdings Inc. (JG Summit), Exocet assigned respondent
For its defense, Exocet denied dismissing Serrano alleging that,
after August 15, 2006, Serrano no longer reported for duty
assignment as VIP security for JG Summit, and that on September
2006, hewas demanding for VIP Security detail to another client.
However, since, at that time, Exocet did not have clients in need
of VIP security assignment, Serrano was temporarily assigned to
general security service.6 Exocet maintained that it was Serrano
who declined the assignment on the ground that he is not used to
being a regular security guard. Serrano, Exocet added, even
refused to report for immediate duty, as he was not given a VIP
security assignment.7
Considering the parties respective allegations, the Labor Arbiter
ruled that Serrano was illegally dismissed. In its June 30, 2008
Decision, the Labor Arbiter found that Serrano, while not actually
dismissed, was placed on a floating status for more than six
months and so, was deemed constructively dismissed. Thus, the
Labor Arbiter ordered Exocet to pay Serrano separation
pay,8 viz:
Since complainant prayed for separation pay in lieu of
reinstatement, he is entitled to the same, computed below as
follows:
"SEPARATION PAY: September 24, 1994 August 15, 2006 = 12
years. 300.00 x 13 x 12 years = 46,800.00"
WHEREFORE, premises considered, respondent corporation is
hereby directed to pay complainants monetary awards as
computed above.
SO ORDERED.9
Not satisfied with the award, Serrano appealed the Labor
Arbiters Decision to the NLRC. In its March 5, 2009 Resolution,
the NLRC initially affirmed the ruling of the Labor Arbiter,but
modified the monetary award to include the payment of
backwages for six months that Serrano was not given a security
assignment. The dispositive portion of the March 5, 2009
Resolution reads:
ACCORDINGLY, premises considered, the decision appealed from
is hereby modified. The respondents are hereby ordered to pay
complainant separation pay plus backwages computed from
[the] date he effectively became dismissed from service which is
after the lapse of the 6 month period up to the issuance of
thisdecision, the computation of which is attached as Annex A.
All others are hereby affirmed.10
Acting on Exocets motion for reconsideration, however, the
NLRC, in its September 2, 2009 Resolution, further modified its
earlier decision by removing the award for backwages.11 The
NLRC deviated from its earlier findings and ruled that Serrano
was notconstructively dismissed, as his termination was due to
his own fault, stubborn refusal, and deliberate failure to accept a
re-assignment.12 Nevertheless, the NLRC proceeded to affirm in
totothe decision of the Labor Arbiter on the ground that Exocet
did not interpose the appeal. The falloof the NLRCs September 2,
2009 Resolution reads:
WHEREFORE, the motion is GRANTED and the assailed decision
is RECONSIDERED and SET ASIDE. Consequently, the decision of
the Labor Arbiter is hereby upheld in toto.
SO ORDERED.13
On January 22, 2010, the NLRC issued another Resolution
denying Serranos motion for reconsideration.14 Hence, not
satisfied with the NLRCs ruling, Serrano filed a petition for
certiorari with the CA assailing the September 2, 2009
Resolution of the NLRC. Serrano insisted that he was
constructively dismissed and, thus, isentitled to reinstatement
without loss of seniority rights and to full backwages from the
time of the alleged dismissal up to the time of the finality of the
Decision.
On March 31, 2011, the appellatecourt rendered a Decision in
Serranos favor, reversing and setting aside the NLRCs
September 2, 2009 Resolution and ordering Exocet topay
Serrano separation pay and backwages.15 In so ruling, the CA
found that Serrano was constructively dismissed, as Exocet failed
to re-assign him within six months after placing him on "floating
status."16 The appellate court disposed of Serranos appeal as
follows:
WHEREFORE, the assailed Resolutions promulgated on
September 2, 2009 and January 22, 2010 issued by the NLRC LAC
No. 09-003163-08 (NLRC NCR No. 00-03-02423-07) are
REVERSED and SET ASIDE, and in lieu thereof, a new judgment is
ENTERED ordering respondent company to pay petitioner his
separation pay and backwages.
Upon finality of this decision, the Research and Computation Unit
of public respondent NLRC is DIRECTED to recompute the
monetary benefits due to petitioner in accordance with this
decision.
SO ORDERED.
Petitioner Exocets Motion for Reconsideration was denied by
the appellate court inits September 7, 2011 Resolution.17 Hence,
Exocet filed this petition.
The Issue
The sole issue for resolution is whether or not Serrano was
constructively dismissed. The Courts Ruling
The petition has merit.
The crux of the controversy lies on the consequence of the lapse
of the six-month period, during which respondent Serrano was
placed on a "floating status" and petitioner Exocet could not
assign him to a position he wants. The appellate court was of the
view that Serrano was constructively dismissed. The Court
maintains otherwise.
While there is no specific provision in the Labor Code which
governs the "floating status" or temporary "off-detail" of security
guards employed by private security agencies, this situation was
considered by this Court in several cases as a form of temporary
retrenchment or lay-off.18 The concept has been defined as that
period of time when security guards are in between assignments
or when they are madeto wait after being relieved from a
previous post until they are transferred to a new one.19 As
pointed out by the CA, it takes place when the security agencys
clients decide not to renew their contracts with the agency,
resulting in a situation where the available posts under its
existing contracts are less than the number of guards in its
roster. It also happens ininstances where contracts for security
services stipulate that the client may request the agency for the
replacement of the guards assigned to it, even for want of cause,
such that the replaced security guard may be placed on
temporary "off-detail" if there are no available posts under the
agencys existing contracts.20
As the circumstance is generally outside the control of the
security agency or the employer, the Court has ruled that when a
security guard is placed on a "floating status," he orshe does not
receive any salary or financial benefit provided by law. Pido v.
National Labor Relations Commission21 explains why:
Verily, a floating status requires the dire exigency of the
employers bona fidesuspension of operation of a business or
undertaking. In security services, thishappens when the security
agencys clients which do not renew their contracts are more
than those that do and the new ones that the agency gets. Also, in
instances when contracts for security services stipulate that the
client may request the agency for the replacement of the guards
assignedto it even for want of cause, the replaced security guard
may be placed on temporary "off-detail" if there are no available
posts under respondents existing contracts.
When a security guard is placed on a "floating status," he does
not receive any salary or financial benefit provided by law. Due
to the grim economic consequences to the employee, the
employer should bear the burden of proving that there are no
posts available to which the employee temporarily out of work
can be assigned." (emphasis supplied)
It must be emphasized, however, that although placing a security
guard on "floating status" or a temporary "off-detail" is
considered a temporary retrenchment measure, there issimilarly
no provision in the Labor Code which treats of a temporary
retrenchment or lay-off. Neither is there any provision which
provides for its requisites or its duration.22 Nevertheless, since
an employee cannot be laid-off indefinitely, the Court has applied
Article 292 (previously Article 286) of the Labor Code by
analogyto set the specific period of temporary lay-off to a
maximum of six (6) months. The said provision states:
ART. 292. When employment not deemed terminated.- The
bonafide suspension of the operation of a business or
undertaking for a period not exceeding six (6) months, or the
fulfillment by the employee of a military or civic duty shall not
terminate employment. In all such cases, the employer shall
reinstate the employee to his former position without loss of
seniority rights ifhe indicates his desire to resume his work not
later than one (1) month from the resumption of operations of
his employer or from his relief from the military or civic duty.
Thus, this Court has held, citing Sebuguero v. NLRC,23 that the
placement of the employee on a floating status should not last for
more than six months. After six months, the employee should be
recalled for work, or for a new assignment; otherwise,he is
deemed terminated.
There is no specific provision of law which treats of a temporary
retrenchment or lay-off and provides for the requisites in
effecting it or a period or duration therefor. These employees
cannot forever be temporarily laid-off. To remedy this situation
or fill the hiatus, Article 286 [now 292] may be applied but only
by analogy to set a specific period that employees may remain
temporarily laid-off or in floating status.Six months is the period
set by law that the operation of a business or undertaking may
be suspended thereby suspending the employment of the
employees concerned. The temporary lay-off wherein the
employees likewise cease to work should also not last longer
than six months. After six months, the employees should either
be recalled to work or permanently retrenched following the
requirements of the law, and that failing to comply with this
would be tantamount to dismissing the employees and the
employer would thus be liable for such dismissal.
In accordance with the aforementioned ruling, the Department of
Labor and Employment (DOLE) issued Department Order No. 14,
Series of 2001 (DO 14-01), entitled "GuidelinesGoverning the
Employment and Working Conditions of Security Guards and
Similar Personnel in the Private Security Industry," Section 6.5,
in relation to Sec. 9.3, of which states that the lack of service
assignment for a continuous period of six (6) months is an
authorized cause for the termination of the employee, who is
then entitled to a separation pay equivalent to half month pay for
every year of service, viz:
6.5 Other Mandatory Benefits. Inappropriate cases, security
guards/similar personnel are entitled to the mandatory benefits
as listed below, although the same may not beincluded in the
monthly cost distribution in the contracts, except the required
premiums form their coverage:
a. Maternity benefit as provided under SS Law;
b. Separation pay if the termination of employment is for
authorized causeas provided by law and as enumerated
below:
Half-Month Pay Per Year of Service, but in no case less
than One Month Pay if separation pay is due to:
1. Retrenchment or reduction of personnel
effected by management to prevent serious
losses;
2. Closure or cessation of operation of an
establishment not due to serious losses or
financial reverses;
3. Illness or disease not curable within a period of
6 months and continued employment is
prohibited by law or prejudicial to the employees
health or that of coemployees;
4. Lack of service assignment for a continuous
period of 6 months.
xxxx
9.3 Reserved Status A security guard or similar personnel may
be placed in a work pool or on reserved status due to lack of
service assignments after the expiration or termination of the
service contract with the principalwhere he/she or assigned or
due to temporary suspension of agency operations.
No security guard or personnel can be placed in a work pool or
on reserved status in any of the following situations: a) after
expiration of a service contract if there are other principals
where he/she can be assigned; b) as a measure to constructively
dismiss the security guard; and c) as an act of retaliation for
filing complaints against the employer on violations of labor
laws, among others.
If after the period of 6 months, the security agency/employer
cannot provide work or give assignment to the reserved security
guard, the latter can be dismissed from service and shall be
entitled to separation pay as described in subsection 6.5.
Security guards on reserved status who accept employment in
other security agencies or employers before the end of the above
six-month period may not be given separation pay. (emphasis
supplied)
In Reyes v. RP Guardians Security Agency, Inc.,24 the Court
explained the application of DO 14-01 to security agencies and
their security guards, and the procedural requirements with
which the securityagencies must comply:
Furthermore, the entitlement of the dismissed employee to
separation pay of one month for every year of service should not
be confused with Section 6.5 (4) of DOLE D.O. No. 14 which
grants a separation pay of one half month for every year service
x x x.
xxxx
The said provision contemplatesa situation where a security
guard is removed for authorized causes such as when the
security agency experiences a surplus of security guards brought
about by lack of clients.In such a case, the security agency has the
option to resort to retrenchment upon compliance with the
procedural requirements of "two-notice rule"set forth in the
Labor Code. (emphasis supplied)
Thus, to validly terminate a security guard for lack of service
assignment for a continuous period of six months under Secs. 6.5
and 9.3 of DO 14-01, the security agency must comply with the
provisions of Article 289 (previously Art. 283) of the Labor
Code,25 which mandates that a written notice should be served
on the employee on temporary off-detail or floating status andto
the DOLE one (1) month before the intended date of termination.
This is also clear in Sec. 9.2of DO 14-01 which provides:
9.2 Notice of Termination - In caseof termination of employment
due to authorized causes provided in Article 283 and 284 of the
Labor Code and in the succeeding subsection, the employer shall
serve a written notice on the security guard/personnel and the
DOLE at least one (1) month before the intended date thereof.
In every case, the Court has declaredthat the burden of proving
that there are no posts available to which the security guard may
be assigned rests on the employer. We ruled in Nationwide
Security and Allied Services Inc. v. Valderama:26
In cases involving security guards,a relief and transfer order in
itself does not sever employment relationship between a security
guard and his agency. An employee has the right to security of
tenure, but this does not give him a vested right tohis position as
would deprive the company of its prerogative to change his
assignment or transfer him where his service, as securityguard,
will be most beneficial to the client. Temporary "off-detail" or the
period of time security guards are made to wait until they are
transferred or assigned to a new post or client does not
constitute constructive dismissal, so long as such status does not
continue beyond six months.
The onus of proving that there is no post available to which the
security guard can be assigned rests on the employer x x x.
(emphasis supplied)
It cannot, therefore, be gainsaid thatthe right of security guards
to security of tenure is safeguardedby administrative issuances
and jurisprudence, in parallel with the mandate of the Labor
Code and the Constitution to protect labor and the working
people. Nonetheless, while the Court has recognized the security
guards right to security of tenure under the "floating status"
rule, the Court has similarly acknowledged the management
prerogative of security agencies to transfer security guards when
necessary in conducting its business, provided it is done in good
faith. In Megaforce Security and Allied Services, Inc. v.
Lactao,27 the Court explained:
In cases involving security guards,a relief and transfer order in
itself does not sever employment relationship between a security
guard and his agency. An employee has the right tosecurity of
tenure, but this does not give him such a vested right in his
position as would deprive the company of its prerogative to
change his assignment or transfer him where his service, as
security guard, will be most beneficial to the client. Temporary
"off-detail" or the period of time security guards are made to
wait until they are transferred or assigned to a new post or client
does not constitute constructive dismissal as their assignments
primarily depend on the contracts entered into by the security
agencies with third parties.Indeed, the Court has repeatedly
recognized that "off-detailing" is not equivalent to dismissal, so
long as such status does not continue beyond a reasonable time;
when such a "floating status" lasts for more than six months, the
employee may be considered to have beenconstructively
dismissed. (emphasis supplied)
In the controversy now before the Court, there is no question
that the security guard, Serrano, was placed on floating status
after his relief from his post as a VIP security by his
securityagencys client. Yet, there is no showing that his security
agency, petitioner Exocet, acted in bad faith when it placed
Serrano on such floating status. What is more, the present case is
not a situation where Exocet did not recall Serrano to work
within the six-month period as required by law and
jurisprudence. Exocet did, in fact, make an offer to Serrano to go
back to work. It is just that the assignmentalthough it does not
involvea demotion in rank or diminution in salary, pay, benefits
or privilegeswas not the security detail desired by Serrano.
Clearly, Serranos lack of assignment for more than six months
cannot be attributed to petitioner Exocet.1avvphi1 On the
contrary, records show that, as early as September 2006, or one
month after Serrano was relieved as a VIP security, Exocet had
already offered Serrano a position in the general security service
because there were no available clients requiring positions for
VIP security. Notably, even though the new assignment does not
involve a demotion in rank or diminution in salary, pay, or
benefits, Serrano declined the position because it was not the
post that suited his preference, as he insisted on being a VIP
Security.
In fact, even during the meeting with the Labor Arbiter, Exocet
offered a position in the general security only to be rebuffed by
Serrano.28 It was as if Serrano obliged Exocet to look for a client
in need of a VIP securitythe availability of which is obviously
not within Exocets control, and by nature, difficult to procure as
these contracts depend on the trust and confidence of the client
or principal on the security guard. As aptly found by the NLRC:
Anent the clients action, respondentagency had no recourse but
to assign complainant to a new posting. However, complainant,
having had a taste of VIP detail and perhaps the perks that come
with such kind of assignment, vaingloriously assumed that he
can only be assigned to VIP close-in posting and that he would
accept nothing less. In fact, after his relief and tardy appearance
at respondents office, he was offered reassignment albeit to
general security services which he refused. Respondents clearly
made known to him that as of the moment no VIP detail was
vacant or sought byother clients but complainant was adamant
in his refusal. Complainant even had the nerve to assert that he
just be informed if there is already a VIP detail available for him
and that he will just report for re-assignment by then.It is also
well to note that to these allegations, complainant made no
denial.29 (emphasis supplied)
To repeat for emphasis, the security guards right to security of
tenure does not give him a vested right to the position as would
deprive the company of its prerogative to change the assignment
of, or transfer the security guard to, a station where his services
would be most beneficial to the client. Indeed, an employer has
the right to transfer or assign its employees from one office or
area of operation to another, or in pursuit of its legitimate
business interest, provided there is no demotion in rank or
diminution of salary, benefits, and other privileges, and the
transfer is not motivated by discrimination or bad faith, or
effected as a form of punishment or demotion without sufficient
cause.30
Thus, it is manifestly unfair and unacceptable to immediately
declare the mere lapse of the six-month period of floating status
as a case of constructive dismissal, without lookinginto the
peculiar circumstances that resulted in the security guards
failureto assume another post. This is especially true in the
present case where the security guards own refusal to accept a
non-VIP detail was the reason that he was not given an
assignment within the six-month period. The security agency,
Exocet, should not then be held liable.
Indeed, from the facts presented,Serrano was guilty of wilful
disobedience to a lawful order of his employer in connection
with his work, which is a just cause for his termination under
Art. 288 (previously Art. 282) of the Labor Code.31 Nonetheless,
Exocet did not take Serranos wilful disobedience against him.
Hence, Exocetis considered to have waived its right to terminate
Serrano on such ground.
In this factual milieu, since respondent Serrano was not actually
or constructively dismissed from his employment by petitioner
Exocet, it is best that petitioner Exocet direct him to report for
work, if any security assignment is still available to him. If
respondent Serrano stillrefuses to be assigned to any available
guard position, he shall be deemed to have abandoned his
employment with petitioner.
If no security assignment is available for respondent, petitioner
Exocet should comply with the requirements of DO 14-01, in
relation to Art. 289 of the Labor Code, and serve a written notice
on Serrano and the DOLE one (1) month before the intended
date of termination, and pay Serrano separation pay equivalent
to half month pay for every year of his actual service.
As a final note, the Court reiterates that it stands to promote the
welfare of employees and continue to apply the mantle of
protectionism in their favor. Thus, employees, like
securityguards, should not be laid-off for an indefinite period of
time. However, We hold that a similar protection should be given
to employers who, ingood faith, have exerted efforts to comply
with the requirements of the law by offering reasonable work
and appropriate assignments during the six-month period. After
all, the constitutional policy of providing full protection to labor
is not intended to oppress or destroy management, and the
commitment of this Court to the cause of labor does not prevent
Us from sustaining the employer when it is in the right, as in this
case.32
judgment. If one is available, petitioner is ordered to notify
respondent Armando D. Serrano to report to such available
guard position within ten (10) days from notice. If respondent
fails to report for work within said time period, he shall be
deemed to have abandoned his employment with petitioner. In
such case, respondent Serrano is not entitled to any backwages,
separation pay, or similar benefits.
If no security assignment is available for respondent within a
period of thirty (30) days from finality of judgment, petitioner
Exocet should comply with the requirements of DOLE
Department Order No. 14, Series of 2001, in relation to Art. 289
of the Labor Code, and serve a written notice on respondent
Serrano and the DOLE one (1) month before the intended date of
termination; and pay Serrano separation pay equivalent to half
month pay for every year of his service.

IN VIEW OF THE FOREGOING, the instant petition is GRANTED. SO ORDERED.

The March 31, 2011 Decision and September 7, 2011 Resolution
of the Court of Appeals in CA-G.R. SP No. 113251 are hereby
REVERSEDand SET ASIDE. Moreover, the March 5, 2009 and
September 2, 2009 Resolutions of the National Labor Relations
Commission in NLRC LAC No. 09-003163-08 (NLRC NCR No. 00-
03-02423-07), as well as the June 30, 2008 Decision of the Labor
Arbiter in NLRC-NCR-00-03-02423-07, are also REVERSEDand
SET ASIDE.

Petitioner Exocet Security and Allied Services Corporation is

neither guilty of illegal dismissal nor constructive dismissal.
Petitioner is hereby ORDERED to look for a security assignment
for respondent within a period of thirty (30) days from finality of
 Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 188753 October 1, 2014
AM-PHIL FOOD CONCEPTS, INC., Petitioner,
vs.
PAOLO JESUS T. PADILLA, Respondent.
DECISION
LEONEN, J.:
This is a petition for review on certiorari 1 under Rule 45 of the
Rules of Court, praying that the February 25, 2009 decision2 of
the Court of Appeals sustaining the February 28, 2007
resolution3 of the National Labor Relations Commission, and the
July 3, 2009 resolution4 of the Court of Appeals denying
petitioner Am-Phil Food Concept, Inc. 's (Am-Phil) motion for
reconsideration, be annulled. The February 28, 2007 decision of
the National Labor Relations Commission affirmed the May 9,
2005 decision5 of Labor Arbiter Eric V. Chuanico that held that
respondent Paolo Jesus T. Padilla (Padilla) was illegally
dismissed.
Padillas position paper6 states that he was hired on April 1, 2002
as a Marketing Associate by Am-Phil, a corporation engaged in
the restaurant business.7 On September 29, 2002, Am-Phil sent
Padilla a letter confirming his regular employment.8 Sometime in
the first week of March 2004, three (3) of Am-Phils officers
(Marketing Supervisor Elaine de Jesus, Area Director Art
Latinazo, and Human Resources Officer Eunice Tugab) informed
Padilla that Am-Phil would be implementing a retrenchment
program that would be affecting three (3) of its employees,
Padilla being one of them. The retrenchment program was
allegedly on account of serious and adverse business conditions,
i.e., lack of demand in the market, stiffer competition,
devaluation of the Philippine peso, and escalating operation
costs.9
Padilla questioned Am-Phils choice to retrench him. He noted
that Am-Phil had six (6) contractual employees, while he was a
regular employee who had a good evaluation record. He pointed
out that Am-Phil was actually then still hiring new employees. He
also noted that Am-Phil's sales have not been lower relative to
the previous year.10
In response, Am-Phil's three (3) officers gave him two options:
(1) be retrenched with severance pay or (2) be transferred as a
waiter in Am-Phils restaurant, a move that entailed his
demotion.11
On March 17, 2004, Am-Phil sent Padilla a memorandum
notifying him of his retrenchment.12 Padilla was paid separation
pay in the amount of P26,245.38. On April 20, 2004, Padilla
executed a quitclaim and release in favor of Am-Phil.13
On July 28, 2004, Padilla filed the complaint14 for illegal dismissal
(with claims for backwages, damages, and attorneys fees), which
is now subject of this petition. Apart from Am-Phil, Padilla
impleaded Am-Phils officers: Luis L. Vera, Jr., Winston L. Chan,
Robert B. Epes, Richmond S. Yang, John Arthur Latinazo, and
Eunice D. Tugab.
For its defense, Am-Phil claimed that Padilla was not illegally
terminated and that it validly exercised a management
prerogative. It asserted that Padilla was hired merely as part of
an experimental marketing program. It added that in 2003, it did
suffer serious and adverse business losses and that, in the first
quarter of 2004, it was compelled to retrench employees so as to
avoid further losses. Am-Phil also underscored that Padilla
executed a quitclaim and release in its favor. With respect to its
impleaded officers, Am-Phil claimed that the complaint should be
dismissed as they have a personality distinct and separate from
Am-Phil.15
On May 9, 2005, Labor Arbiter Eric V. Chuanico (Labor Arbiter
Chuanico) rendered the decision finding that Padilla was illegally
dismissed.16 He noted that Am-Phil failed to substantiate its
claim of serious business losses and that it failed to comply with
the procedural requirement for a proper retrenchment (i.e.,
notifying the Department of Labor and Employment).17 He also
held that the quitclaim and release executed by Padilla is
contrary to law.18 Finding, however, that Padilla failed to show
bad faith on the part of Am-Phils officers, Labor Arbiter
Chuanico dismissed the complaint with respect to the latter and
held that only Am-Phil was liable to Padilla.19
The dispositive portion of Labor Arbiter Chuanicos decision
reads:
Prescinding from the forgoing, this office orders the respondent
to pay the complainant limited backwages from the time of his
dismissal up to the time of rendition of this judgment. The
computation of backwages as prepared by the NLRC
Computation Unit is herewith attached and made an integral part
of this decision. Given that the position had already been
abolished and since separation pay had already been received by
the complainant, reinstatement is no longer viable [sic] remedy
under the present situation.
As the complainant was constrained to hire the services of a
lawyer, attorneys [sic] fees are ordered paid equivalent to ten
percent of the total award thereof [sic]. Complainants [sic] claim
for damages are [sic] denied for lack of merit.
For failure of the complainant to properly substantiate that
individual respondents are guilty of bad faith or conduct towards
him (in Sunio et. al. vs. NLRC GRN L 57767 [sic] January 31,
1984) only respondent Am-Phil Food Concepts, Inc. is held
solidarily liable towards [sic] the complainant.
SO ORDERED.20
On August 15, 2005, Am-Phil filed an appeal21 with the National
Labor Relations Commission. Apart from asserting its position
that Padilla was validly retrenched, Am-Phil claimed that Labor
Arbiter Chuanico was in error in deciding the case despite the
pendency of its motion for leave to file supplemental
rejoinder.22 Through this supplemental rejoinder, Am-Phil
supposedly intended to submit its audited financial statements
for the years 2001 to 2004 and, thereby, prove that it had
suffered business losses. Am- Phil claimed that its right to due
process was violated by Labor Arbiter Chuanicos refusal to
consider its 2001 to 2004 audited financial statements.23
On February 28, 2007, the National Labor Relations Commission
issued the resolution affirming Labor Arbiter Chuanicos ruling,
albeit clarifying that Labor Arbiter Chuanico wrongly used the
word "solidarily" in describing Am-Phils liability to Padilla.24
With respect to Am-Phils claim that Labor Arbiter Chuanico
erroneously ignored its 2001 to 2004 audited financial
statements, the National Labor Relations Commission noted that
a supplemental rejoinder was not a necessary pleading in
proceedings before labor arbiters. It added that, with the
exception of the 2004 audited financial statements, all of Am-
Phils relevant audited financial statements were already
available at the time it submitted its position paper, reply, and
rejoinder, but that Am-Phil failed to annex them to these
pleadings. The National Labor Relations Commission added that,
granting that this failure was due to mere oversight, Am-Phil was
well in a position to attach them in its memorandum of appeal
but still failed to do so.25 Holding that Labor Arbiter Chuanico
could not be faulted for violating Am-Phils right to due process,
the National Labor Relations Commission emphasized that:
[O]mission by a party to rebut that which would have naturally
invited an immediate pervasive and stiff competition creates an
adverse inference that either the controverting evidence to be
presented will only prejudice its case or that the uncontroverted
evidence speaks the truth.26 (Citation omitted)
The dispositive portion of this National Labor Relations
Commission resolution reads:
WHEREFORE, the foregoing premises considered, the instant
appeal is DIMISSED for lack of merit. Accordingly, the decision
appealed from is AFFIRMED.
However, the word "solidarily" in the last sentence of the
decision should be deleted to conform with the Labor Arbiters
finding that the complainant-appellee failed to properly
substantiate that individual respondents-appellants were guilty
of bad faith or conduct towards him.
SO ORDERED.27
In the resolution28 dated April 27, 2007, the National Labor
Relations Commission denied Am-Phils motion for
reconsideration.
Am-Phil then filed with the Court of Appeals a petition for
certiorari29 under Rule 65 of the 1997 Rules of Civil Procedure.
On February 25, 2009, the Court of Appeals rendered the
assailed decision30 dismissing Am-Phils petition for certiorari
and affirming the National Labor Relations Commissions
February 28, 2007 and April 27, 2007 resolutions. The Court of
Appeals denied Am-Phil's motion for reconsideration in its July 3,
2009 resolution.
Hence, this petition.
Am-Phil insists on its position that it was denied due process and
posits that the National Labor Relations Commissions contrary
findings are founded on "illogical ratiocinations."31 It asserts that
the evidence support the conclusion that Padilla was validly
dismissed, that it was an error to ignore the quitclaim and
release which Padilla had executed, and that Padillas
retrenchment was a valid exercise of management prerogative.32
For resolution is the issue of whether respondent Paolo Jesus T.
Padila was dismissed through a valid retrenchment implemented
by petitioner Am- Phil Food Concepts, Inc. Related to this, we
must likewise resolve the underlying issue of whether it was
proper for Labor Arbiter Eric V. Chuanico to have ruled that
Padilla was illegally dismissed despite Am- Phils pending motion
for leave to file supplemental rejoinder.
Am-Phils right to due process was not violated
Am-Phil faults Labor Arbiter Chuanico for not having allowed its
motion for leave to file supplemental rejoinder that included its
2001 to 2004 audited financial statements as annexes. These
statements supposedly show that Am-Phil suffered serious
business losses. Thus, it claims that its right to due process was
violated.
Am-Phils motion for leave to file supplemental rejoinder,33 dated
May 20, 2005,34 was filed on May 31, 2005,35 well after Labor
Arbiter Chuanico promulgated his May 9, 2005 decision.
Common sense dictates that as the motion for leave to file
supplemental rejoinder was filed after the rendition of the
decision, the decision could not have possibly taken into
consideration the motion. Giving consideration to a motion filed
after the promulgation of the decision is not only unreasonable,
it is impossible. It follows that it is completely absurd to fault
Labor Arbiter Chuanico for not considering a May 31 motion in
his May 9 decision
Even if we were to ignore the curious fact that the motion was
filed after the rendition of the decision, Labor Arbiter Chuanico
was under no obligation to admit the supplemental rejoinder.
Rule V of the 2002 National Labor Relations Commission Rules of
Procedure (2002 Rules), which were in effect when Labor
Arbiter Chuanico promulgated his decision on May 9,
2005,36 provides:
SECTION 4. SUBMISSION OF POSITION PAPERS / MEMORANDA.
Without prejudice to the provisions of the last paragraph,
SECTION 2 of this Rule, the Labor Arbiter shall direct both
parties to submit simultaneously their position papers with
supporting documents and affidavits within an inextendible
period of ten (10) days from notice of termination of the
mandatory conference.
These verified position papers to be submitted shall cover only
those claims and causes of action raised in the complaint
excluding those that may have been amicably settled, and shall
be accompanied by all supporting documents including the
affidavits of their respective witnesses which shall take the place
of the latters direct testimony. The parties shall thereafter not
be allowed to allege facts, or present evidence to prove facts, not
referred to and any cause or causes of action not included in the
complaint or position papers, affidavits and other
documents.37 (Emphasis supplied)
....
SECTION 11. ISSUANCE OF AN ORDER SUBMITTING THE CASE
FOR DECISION. After the parties have submitted their position
papers and supporting documents, and upon evaluation of the
case the Labor Arbiter finds no necessity of further hearing, he
shall issue an order expressly declaring the submission of the
case for decision.38
From the provisions of the 2002 Rules, it is clear that a
supplemental rejoinder, as correctly ruled by the National Labor
Relations Commission,39 is not a pleading which a labor arbiter is
duty-bound to accept.40 Even following changes to the National
Labor Relations Commission Rules of Procedure in 2005 and
2011, a rejoinder has not been recognized as a pleading that
labor arbiters must necessarily admit. The 2005 and 2011
National Labor Relations Commission Rules of Procedure only go
so far as to recognize that a reply "may" be filed by the parties.41
Thus, Labor Arbiter Chuanico was under no obligation to grant
Am- Phils motion for leave to admit supplemental rejoinder and,
thereby, consider the supplemental rejoinders averments and
annexes. That Am- Phil had to file a motion seeking permission
to file its supplemental rejoinder (i.e., motion for leave to file) is
proof of its own recognition that the labor arbiter is under no
compulsion to accept any such pleading and that the
supplemental rejoinders admission rests on the labor arbiters
discretion.
The standard of due process in labor cases was explained by this
court in Sy v. ALC Industries, Inc.:42
Due process is satisfied when the parties are afforded fair and
reasonable opportunity to explain their respective sides of the
controversy. In Mariveles Shipyard Corp. v. CA, we held:
The requirements of due process in labor cases before a Labor
Arbiter is satisfied when the
parties are given the opportunity to submit their position papers
to which they are supposed to attach all the supporting
documents or documentary evidence that would prove their
respective claims, in the event that the Labor Arbiter determines
that no formal hearing would be conducted or that such hearing
was not necessary.43 (Emphasis in the original)
Am-Phil filed three (3) pleadings with Labor Arbiter Chuanico:
first, its position paper44 on September 9, 2004; second, its
reply45 on September 30, 2004; and third, its rejoinder46 on
October 11, 2004. It was more than six (6) months after it had
filed its rejoinder that it filed its motion for leave to admit
supplemental rejoinder on May 31, 2005.
Its three (3) pleadings having been allowed, Am-Phil had no
shortage of opportunities to plead its claims and to adduce its
evidence. It has no basis for claiming that it was not "afforded [a]
fair and reasonable opportunity to explain [its side] of the
controversy."47 The filing of its motion for leave to admit
supplemental rejoinder represents nothing more than a belated
and procedurally inutile attempt at resuscitating its case.
Retrenchment and its requirements
Article 283 of the Labor Code recognizes retrenchment as an
authorized cause for terminating employment. It states:
Art. 283. Closure of establishment and reduction of personnel.
The employer may also terminate the employment of any
employee due to the installation of labor-saving devices,
redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking
unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the
workers and the Ministry of Labor and Employment at least one
(1) month before the intended date thereof. In case of
termination due to the installation of labor-saving devices or
redundancy, the worker affected thereby shall be entitled to a
separation pay equivalent to at least his one (1) month pay or to
at least one (1) month pay for every year of service, whichever is
higher. In case of retrenchment to prevent losses and in cases of
closures or cessation of operations of establishment or
undertaking not due to serious business losses or financial
reverses, the separation pay shall be equivalent to one (1) month
pay or at least one-half (1/2) month pay for every year of
service, whichever is higher. A fraction of at least six (6) months
shall be considered one (1) whole year.
In Sebuguero v. National Labor Relations Commission,48 this
court explained the concept of retrenchment as follows:
Retrenchment . . . is used interchangeably with the term "lay-off."
It is the termination of employment initiated by the employer
through no fault of the employee's and without prejudice to the
latter, resorted to by management during periods of business
recession, industrial depression, or seasonal fluctuations, or
during lulls occasioned by lack of orders, shortage of materials,
conversion of the plant for a new production program or the
introduction of new methods or more efficient machinery, or of
automation. Simply put, it is an act of the employer of dismissing
employees because of losses in the operation of a business, lack
of work, and considerable reduction on the volume of his
business, a right consistently recognized and affirmed by this
Court.49
As correctly pointed out by Am-Phil, retrenchment entails an
exercise of management prerogative. In Andrada v. National
Labor Relations Commission,50 this court stated:
Retrenchment is an exercise of managements prerogative to
terminate the employment of its employees en masse, to either
minimize or prevent losses, or when the company is about to
close or cease operations for causes not due to business losses.51
Nevertheless, as has also been emphasized in Andrada, the
exercise of management prerogative is not absolute:
A companys exercise of its management prerogatives is not
absolute. It cannot exercise its prerogative in a cruel, repressive,
or despotic manner. We held in F.F. Marine Corp. v. NLRC:
This Court is not oblivious of the significant role played by the
corporate sector in the countrys economic and social progress.
Implicit in turn in the success of the corporate form in doing
business is the ethos of business autonomy which allows
freedom of business determination with minimal governmental
intrusion to ensure economic independence and development in
terms defined by businessmen. Yet, this vast expanse of
management choices cannot be an unbridled prerogative that
can rise above the constitutional protection to labor.
Employment is not merely a lifestyle choice to stave off boredom.
Employment to the common man is his very life and blood, which
must be protected against concocted causes to legitimize an
otherwise irregular termination of employment. Imagined or
undocumented business losses present the least propitious
scenario to justify retrenchment.52(Underscoring supplied,
citation omitted)
Thus, retrenchment has been described as "a measure of last
resort when other less drastic means have been tried and found
to be inadequate."53
Retrenchment is, therefore, not a tool to be wielded and used
nonchalantly. To justify retrenchment, it "must be due to
business losses or reverses which are serious, actual and real."54
There are substantive requirements relating to the losses or
reverses that must underlie a retrenchment. That these losses
are serious relates to their gravity and that they are actual and
real relates to their veracity and verifiability. Likewise, that a
retrenchment is anchored on serious, actual, and real losses or
reverses is to say that the retrenchment is done in good faith and
not merely as a veneer to disguise the illicit termination of
employees. Equally significant is an employers basis for
determining who among its employees shall be retrenched.
Apart from these substantive requirements are the procedural
requirements imposed by Article 283 of the Labor Code.
Thus, this court has outlined the requirements for a valid
retrenchment, each of which must be shown by clear and
convincing evidence, as follows:
(1) that the retrenchment is reasonably necessary and
likely to prevent business losses which, if already
incurred, are not merely de minimis, but substantial,
serious, actual and real, or if only expected, are
reasonably imminent as perceived objectively and in
good faith by the employer;
(2) that the employer served written notice both to the
employees and to the Department of Labor and
Employment at least one month prior to the intended
date of retrenchment;
(3) that the employer pays the retrenched employees
separation pay equivalent to one month pay or at least
month pay for every year of service, whichever is higher;
(4) that the employer exercises its prerogative to
retrench employees in good faith for the advancement of
its interest and not to defeat or circumvent the
employees right to security of tenure; and
(5) that the employer used fair and reasonable criteria in
ascertaining who would be dismissed and who would be
retained among the employees, such as status (i.e.,
whether they are temporary, casual, regular or
 managerial employees), efficiency, seniority, physical
fitness, age, and financial hardship for certain
workers.55(Citations omitted)
Am-Phil failed to establish compliance with the requisites for a
valid retrenchment
Am-Phils 2001 to 2004 audited financial statements, the sole
proof upon which Am-Phil relies on to establish its claim that it
suffered business losses, have been deemed unworthy of
consideration. These audited financial statements were mere
annexes to the motion for leave to admit supplemental rejoinder
which Labor Arbiter Chuanico validly disregarded. No credible
explanation was offered as to why these statements were not
presented when the evidence-in-chief was being considered by
the labor arbiter. It follows that there is no clear and convincing
evidence to sustain the substantive ground on which the
supposed validity of Padillas retrenchment rests.
Moreover, it is admitted that Am-Phil did not serve a written
notice to the Department of Labor and Employment one (1)
month before the intended date of Padillas retrenchment, as
required by Article 283 of the Labor Code.56
While it is true that Am-Phil gave Padilla separation pay,
compliance with none but one (1) of the many requisites for a
valid retrenchment does not absolve Am-Phil of liability.
Padillas quitclaim and release does not negate his having been
illegally dismissed
It is of no consequence that Padilla ostensibly executed a
quitclaim and release in favor of Am-Phil.1wphi1 This courts
pronouncements in F.F. Marine Corporation v. National Labor
Relations Commission,57 which similarly involved an invalid
retrenchment, are of note:
Considering that the ground for retrenchment availed of by
petitioners was not sufficiently and convincingly established, the
retrenchment is hereby declared illegal and of no effect. The
quitclaims executed by retrenched employees in favor of
petitioners were therefore not voluntarily entered into by them.
Their consent was similarly vitiated by mistake or fraud. The law
looks with disfavor upon quitclaims and releases by employees
pressured into signing by unscrupulous employers minded to
evade legal responsibilities. As a rule, deeds of release or
quitclaim cannot bar employees from demanding benefits to
which they are legally entitled or from contesting the legality of
their dismissal. The acceptance of those benefits would not
amount to estoppel. The amounts already received by the
retrenched employees as consideration for signing the
quitclaims should, however, be deducted from their respective
monetary awards.58 (Citations omitted)
In sum, the Court of Appeals committed no error in holding that
there was no grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of the National Labor Relations
Commission in affirming the May 9, 2005 decision of Labor
Arbiter Eric V. Chuanico holding that respondent Paolo Jesus T.
Padilla was illegally dismissed.
WHEREFORE, the petition for review. on certiorari is DENIED.
The February 25, 2009 decision and the July 3, 2009 resolution
of the Court of Appeals are AFFIRMED.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 195513 June 22, 2015
MARLON BED UY A, ROSARIO DUMAS* ALEX LEONOZA,
RAMILO FAJARDO, HARLAN LEONOZA, ALVIN ABUYOT,
DINDO URSABIA,** BERNIE BESONA, ROMEO ONANAD,***
ARMANDO LIPORADA,**** FRANKFER ODULIO, MARCELO
MATA, ALEX COLOCADO, JOJO PACATANG, RANDY GENODIA
and ISABINO B. ALARMA, JR., Petitioners,******
vs.
ACE PROMOTION AND MARKETING CORPORATION and
GLEN******** HERNANDEZ, Respondents.
DECISION
DEL CASTILLO, J.:
Procedural rules should be relaxed if only to serve the ends of
justice.
This Petition for Review on Certiorari1 assails the November 30,
2010 Decision2 of the Court of Appeals (CA) in CA-G.R. SP No.
111536 affirming the February 23, 2009 Decision3 and August 4,
2009 Resolution4 of the National Labor Relations Commission
(NLRC), which granted respondents appeal from the April 24,
2008 Decision5 of the Labor Arbiter and ordered the dismissal of
petitioners complaint for illegal dismissal. Likewise assailed is
the February 3, 2011 CA Resolution6 which denied petitioners
Motion for Reconsideration of the said CA Decision.
Antecedent Facts
Respondent Ace Promotion and Marketing Corporation (APMC),
with respondent Glen Hernandez as its President, is a contractor
engaged in the deployment of workers to various companies to
promote the latters products through promotional and
merchandising services. In pursuance of its business, APMC
entered into a Promotional Contract7with Delfi Marketing,
Inc.8 (Delfi) whereby the former undertook to conduct
promotional activities for the latters confectionery products. For
this purpose, APMC employed workers, including petitioners
Marlon Beduya, Rosario Dumas, Alex Leonoza, Alvin Abuyot,
Dindo Ursabia, Bernie Bosona, Romeo Onanad, Armando
Liporada, Frankfer Odulio, Marcelo Mata, Alex Colocado, Jojo
Pacatang, Randy Genodia and Isabino B. Alarma, Jr. (petitioners),
as merchandisers and assigned them to various retail outlets and
supermarkets under fixed-term employment contracts. The last
contracts of employment9 that petitioners signed were until
January 30, 2007.
In a letter10 dated December 27, 2006, Delfi notified APMC that
their Promotional Contract will expire effective January 31, 2007.
On January 29, 2007, APMC informed petitioners, among other
workers, that their last day of work would be on January 30,
2007.
Proceedings before the Labor Arbiter
Before the Labor Arbiter, three separate complaints11 for illegal
dismissal and money claims against respondents were filed by
petitioners and by other employees (complainants) w hose
employment was terminated allegedly by reason of the
expiration of APMCs contract with Delfi. The said complaints,
docketed as NLRC-NCR Case No s. 00-02-01022-07, 00-02-0185-
07 and 00-03-02756-07, were consolidated.
In their Position Paper,12 complainants alleged that: they are
regular employees of APMC, having continuously worked in
APMC since 1997; they are bona fide members of the Social
Security System (SSS) and the companys Home Development
Mutual Fund (HDMF); the expiration of the Promotional Contract
between APMC and Delfi does not automatically result in their
dismissal; and, the said Promotional Contract is still subsisting as
new workers were hired as their replacements. All of the
complainants asked for wage differentials, claiming that part of
their wages were unlawfully withheld unless they sign a waiver
and quitclaim in favor of APMC, while 18 of them additionally
prayed for recovery of unpaid ECOLA.
Respondents, on the other hand, countered that AP MC is a
legitimate job contractor that hires employees for a specific job
on a contractual basis. With respect to complainants,
respondents claimed that they were duly apprised of the
contractual nature of their employment, its duration, working
hours, basic salaries, and the basic work policies as stipulated in
their contracts of employment. And since complainants were
hired as merchandisers for Delfi, their employment
automatically ended when APMCs Promotional Contract with
Delfi expired. On the complainants allegation of continuous
employment, respondents explained that, indeed, complainants
were previously engaged as merchandisers for a client, Goya, Inc.
(Goya). But when Goyas business interest was sold to Delfi,
complainants fixed-term employment contracts also accordingly
expired. They were then rehired and reassigned to Delfi, again on
a fixed-term basis, which employment was necessarily
terminated upon the end of the term. In view of this, respondents
denied liability over complainants money claims, damages, and
attorneys fees.
In a Decision13 dated April 24, 2008, the Labor Arbiter, after
finding no credible evidence to prove that they were employed
on a contractual basis, declared complain ants to have been
illegally dismissed. He found unconvincing APMCs allegation
that complainants employment was terminated due to the
expiration of its contract with Delfi considering that it continued
to hire new employees as replacements for complainants. This,
the Labor Arbiter opined, infringed upon complainants right to
security of tenure. On the other hand, he viewed complainants
continuous employment with APMC for a considerable length of
time and the fact that they are SSS and HDMF members, as
indications of their being regular employees. Thus, he ordered
complainants reinstatement or payment of separation pay,
payment of backwages, unpaid wages, ECOLA, moral and
exemplary damages, and attorneys fees. The dispositive portion
of the Labor Arbiters Decision reads:
WHEREFORE, premises all considered, judgment is hereby
rendered finding the dismissal illegal and ordering respondents,
as follows:
1. To reinstate complainants to their former position
with full backwages to be reckoned from the date of their
dismissal up to the finality of this decision.
2. In the alternative, to pay them x x x their backwages
plus separation pay equivalent to half month salary for
every year of service if employment is no longer tenable.
3. To pay the named eighteen (18) employees x x x their
unpaid ECOLA for one (1) year.
4. To pay complainants x x x their unpaid wages for
fifteen (15) days.
5. To pay moral damages in the amount of 10,000.00
each.
6. To pay exemplary damages [in] the [amount] of
5,000.00 each.
7. To pay attorneys fees equivalent to 10% of the total
monetary award.
The computation of the monetary award as computed by the
Computation Division of this Office is attached hereto and forms
part of this decision.
SO ORDERED.14
Proceedings before the National Labor Relations Commission
Respondents filed a Memorandum of Appeal with Motion for
Reduction of Bond15 with the NLRC. They maintained that
complainants were contractual employees. As such, their
contracts of employment were terminated upon the expiration of
APMCs Promotional Contract with Delfi. Anent their motion for
reduction of appeal bond, respondents contended that the
awards granted to complainants amounting to 6,269,856.89
should be decreased considering that:
(1) eight complainants did not sign the position paper submitted
to the Labor Arbiter and therefore, the monetary awards given in
their favor should be excluded in the computation of the total
award; (2) nine complainants already withdrew their complaints
as shown by their Affidavits of Desistance;16 (3) assuming that
separation pay was correctly awarded, the computation thereof
should start from year 2003 when complainants started working
for Goya and not from year 1997 as computed by the Labor
Arbiter; and (4) the backwages should be computed only up to
January 31, 2007 or up to the expiration of the Promotional
Contract with Delfi and not until July 31, 2008. Respondents
attached a supersede as bond17 in the amount of 437,210.00
along with their appeal.
In their Opposition with Motion to Dismiss
Appeal, complainants prayed for the dismissal of respondents
18
appeal based on insufficiency of the bond posted. This thus
resulted in the non-perfection of the appeal, and consequently,
the Labor Arbiters Decision had become final and executory.
Without acting on respondents motion for reduction of bond
and the complainants opposition thereto, the NLRC rendered a
Decision19 on February 23, 2009 finding complainants to be
contractual employees hired for a specific duration. The NLRC
noted that complainants were duly informed at the
commencement of their employment that they were hired for a
definite period and for a specific project, i.e., Delfi, and that they
voluntarily agreed to these and the other terms of their
employment contracts. Hence, when the specific project or
undertaking for which they were hired cease d, their
employment also ceased. They were therefore not illegally
dismissed. In the ultimate, the NLRC reversed the Labor Arbiters
Decision and dismissed the complaints for illegal dismissal. It,
however, affirmed the awards of unpaid wages and ECOLA in
favor of complainants. Thus:
WHEREFORE, premises considered, judgment is hereby
rendered GRANTING the instant appeal. The Decision of the
Labor Arbiter dated 24 April 2008 is hereby reversed and set
aside, and a new one is issued dismissing the complaint.
Respondents-Appellants are, however, directed to cause the
immediate satisfaction of complainants-appellees unpaid wages
for fifteen (15) days and ECOLA for one (1) year.
SO ORDERED.20
In their Motion for Reconsideration,21 complainants maintained
that the
437,210.00 appeal bond is in sufficient and unreasonable in
relation to the total monetary award of 6,269,856 .89, which
should have warranted the dismissal of respondents appeal.
Complainants likewise pointed out that the NLRC gravely abused
its discretion when it did not re solve respondents motion to
reduce bond and their opposition thereto with motion to dismiss
before rendering its decision granting the appeal. Complainants
Motion for Reconsideration was, however, denied by the NLRC in
its Resolution22 dated August 4, 2009.
Proceedings before the Court of Appeals
Some of the complainants, including petitioners, filed a Petition
for Certiorari23 with the CA. They insisted that the NLRC gravely
abused its discretion in granting respondents appeal despite the
latters failure to perfect the same since the appeal bond filed
was grossly insufficient and inadequate. Consequently, the Labor
Arbiters Decision had already become final and executory.
On November 30, 2010, the CA rendered a Decision24 dismissing
the petition. It found respondents willingness and good faith in
complying with the requirements as sufficient justification to
relax the rule on posting of an appeal bond. Moreover, the CA
agreed with the NLRC in finding that complainants were not
illegally dismissed. The termination of their employment was
simply brought about by the expiration of the fixed period
stipulated in their contract s that they voluntarily signed after
the terms thereof were fully explained to them.
Complainants Motion for Reconsideration25 was denied by the
CA in its Resolution26 of February 3, 2011.
Thus, petitioners, from among all the complainants, are now
before this Court through the present Petition.
Issues
(a)
WHETHER X X X THE FILING OF APPEAL WITH MOTION
TO REDUCE APPEAL BOND WILL TOLL THE RUNNING
OF THE PERIOD TO PERFECT AN APPEAL
(b)
WHETHER X X X AN APPEAL BOND IN THE AMOUNT OF
473,210.00 IS REASONABLE IN RELATION TO [A
POSSIBLE] MONETARY AWARD OF 6,269,856.00
(c)
WHETHER X X X THE DECISION RENDERED BY THE
LABOR ARBITER IS DEEMED FINAL AND EXECUTORY AS
THE APPEAL WAS NOT PERFECTED
(d)
WHETHER X X X IT IS PROCEDURALLY CORRECT TO
PASS JUDGMENT ON A CASE WHEN THERE IS STILL A
PENDING MOTION TO BE RESOLVED27
For respondents alleged failure to comply with the jurisdictional
requirements on appeal bonds, petitioners maintain that the
NLRC did not acquire jurisdiction over respondents appeal.
Moreover, they claim that the NLRC erred in resolving the merits
of the appeal without first ruling on respondents motion to
reduce appeal bond and their opposition thereto with motion to
dismiss.
Our Ruling
The Petition has no merit.
Article 223 of the Labor Code provides:
ART. 223. Appeal. Decisions, awards, or orders of the Labor
Arbiter are final and executory unless appealed to the
Commission by any or both parties within ten (10) calendar days
from receipt of such decisions, awards, or orders.
Such appeal may be entertained only on any of the following
grounds:
(a) If there is prima facie evidence of abuse of discretion
on the part of the Labor Arbiter;
(b) If the decision, order or award was secured through
fraud or coercion, including graft and corruption;
(c) If made purely on questions of law; and
 (d) If serious errors in the finding of facts are raised
which would cause grave or irreparable damage or injury
to the appellant.
In case of a judgment involving a monetary award, an appeal by
the employer may be perfected only upon the posting of a cash
or surety bond issued by a reputable bonding company duly
accredited by the Commission in the amount equivalent to the
monetary award in the judgment appealed from.
While Sections 4(a) and 6 of Rule VI of the 2005 Revised Rules of
Procedure of the NLRC provide:
SECTION 4. REQUISITES FOR PERFECTION OF APPEAL. (a) The
Appeal shall be: 1) filed within the reglementary period as
provided in Section 1 of this Rule; 2) verified by appellant
himself in accordance with Section 4, Rule 7 of the Rules of Court,
as amended; 3) in the form of a memorandum of appeal which
shall state the grounds relied upon and the arguments in support
thereof, the relief prayed for, and with a statement of the date
the appellant received the appealed decision, resolution or
order; 4) in three (3) legibly written or printed copies; and 5)
accompanied by i) proof of payment of the required appeal fee;
ii) posting of a cash or surety bond as provided in Section 6 of
this Rule; iii) a certificate of non-forum shopping; and iv) proof of
service upon the other parties.
SECTION 6. BOND. In case the decision of the Labor Arbiter or
the Regional Director involves a monetary award, an appeal by
the employer may be perfected only upon the posting of a bond
which shall either be in the form of cash deposit or surety bond
equivalent in amount to the monetary award, exclusive of
damages and attorneys fees.
No motion to reduce bond shall be entertained except on
meritorious grounds, and only upon the posting of a bond in a
reasonable amount in relation to the monetary award.
The mere filing of a motion to reduce bond without complying
with the requisites in the preceding paragraphs shall not stop the
running of the period to perfect an appeal.
It is thus clear from the foregoing that the filing of supersede as
bond for the perfection of an appeal is mandatory and
jurisdictional and failure to comply with this requirement
renders the decision of the Labor
Arbiter final and executory.28
However, this Court, in many cases,29 has relaxed this stringent
requirement whenever justified. Thus, the rules, specifically
Section 6 of Rule VI of the 2005 Revised Rules of Procedure of
the NLRC, allows the reduction of the appeal bond subject to the
conditions that: (1) the motion to reduce the bond shall be based
on meritorious grounds; and (2) a reasonable amount in relation
to the monetary award is posted by the appellant. Otherwise, the
filing of a motion to reduce bond shall not stop the running of the
period to perfect an appeal. Still, the rule that the filing of a
motion to reduce bond shall not stop the running of the period to
perfect an appeal is not absolute.30 The Court may relax the rule
under certain exceptional circumstances which include
fundamental consideration of substantial justice, prevention of
miscarriage of justice or of unjust enrichment and special
circumstances of the case combined with its legal merits, and the
amount and the issue involved.31 Indeed, in meritorious cases,
the Court was propelled to relax the requirements relating to
appeal bonds such as when there are valid issues raised in the
appeal32 and in the absence of any valid claims against the
employer.33
In the case at bench, the Court finds that respondents motion to
reduce appeal bond was predicated on meritorious and
justifiable grounds. First, the fact that eight complainants failed
to verify or affix their signatures on the position paper filed
before the Labor Arbiter merits the exclusion of the monetary
awards adjudged to them. In Martos v. New San Jose Builders,
Inc.,34 it was held that the failure of some of the complainants
therein to verify their position paper submitted before the Labor
Arbiter brought about the dismissal of the complaint as to them
who did not verify. The Court went on to say that their
negligence and passive attitude towards the rule on verification
amounted to their refusal to further prosecute their claims.
Second, the withdrawal of seven complainants35 in this case
likewise warrants the reduction of the monetary award rendered
against respondents. Suffice it to say that the said seven
complainants are bound by the Affidavits of Desistance which
are presumed to have been freely and voluntarily executed by
them. Accordingly, they no longer participated in the subsequent
proceedings after having received their last salaries and due
benefits.
Petitioners, however, posit that the amount of the appeal bond
posted, i.e.,
437,210.00, is unreasonable and inadequate vis-a-vis the total
monetary award of 6,269,856.83. What they consider as
reasonable percentage of the total monetary award is at least
30% thereof.
In the recent case of Mcburnie v. Ganzon,36 the Court has set a
provisional percentage of 10% of the monetary award, exclusive
of damages and attorneys fees, as a reasonable amount of bond
that an appellant should post pending resolution by the NLRC of
a motion to reduce bond. It is only after the posting of this bond
that an appellants period to perfect an appeal is suspended.
Here, after deducting from the total monetary award the amount
of attorneys fees and the amounts awarded to those
complainants who did not verify their position papers and those
who had withdrawn their complaints, the total monetary award
amounts to only more than 3 million.37Hence, the appeal bond of
437,210.00 posted by respondents is in fact even more than 10%
of the said total monetary award. Thus, applying the same
parameter set in Mcburnie, the Court finds the amount of bond
posted by respondents in the present case to be reasonable.
In any event, the Court notes that in Mcburnie, it was held that
the required 10% of the monetary award as appeal bond is
merely provisional given that the NLRC still retains the authority
to exercise its full discretion to resolve a motion for the
reduction of bond and determine the final amount of bond that
should be posted by an appellant in accordance with the
standards of meritorious grounds and reasonable amount.38
In consideration of the foregoing, the Court finds no merit in
petitioners contention that the NLRC fa iled to establish its
jurisdictional authority over respondents appeal. Again, the
filing of a motion to reduce bond predicated on meritorious
grounds coupled with the posting of a reasonable amount of cash
or surety bond suffice to suspend the running of the period
within which to appeal. As discussed, respondents in this case
have substantially complied with these requirements and, on
account thereof, their appeal from the Labor Arbiters Decision
was timely filed. Clearly, the NLRC was conferred with
jurisdiction over respondents appeal thus placing the same
within the power of the said labor tribunal to review.
With respect to the NLRCs failure to initially ac t upon
respondents motion to reduce bond and petitioners opposition
thereto with motion to dismiss, suffice it to say that the same did
not divest the NLRC of its authority to resolve the appeal on its
substantive matters. After all, the NLRC is not bound by technical
rules of procedure and is allowed to be liberal in the application
of its rules in deciding labor cases.39 Further, the NLRC is
mandated to use every and all reasonable means to ascertain the
fact s in each case speedily and objectively, without regard to
technicalities of law or procedure, all in the interest of due
process.40
Coming now to the substantive matters, the Court finds that the
CA correctly affirmed the NLRC Decision which granted
respondents appeal and dismissed the illegal dismissal
complaints. As aptly found by them, petitioners were fixed-term
employees whose respective contracts of employment had
already expired. Therefore, there can be no illegal dismissal to
speak of. The following observations made by the CA were
supported by substantial evidence on record, viz:
We find and so rule that private respondents are independent
contractors, and petitioners were deployed to Delfi Foods to
render various services.1wphi1 This was admitted by
petitioners during the proceedings before the labor tribunal. The
relationship between the parties is governed by the Employment
Contract which petitioners voluntarily signed before being
deployed at Delfi Foods.
The NLRC extensively quoted the aforesaid contract which
primarily provided that petitioners employment was for a fixed
period, that is, from 1 December 2006 until 30 January 2007.
Significantly, no allegations were made that petitioners were
forced or pressure d into affixing their signatures upon the
contract. There is likewise no concrete proof that private
respondents prevailed upon petitioners, exercising moral
dominance over the latter, to accept the conditions set forth in
the said contract. Having accepted the terms thereof, petitioners
were bound by its unequivocal stipulation that their employment
was not permanent, but would expire at the end of the fixed
period.41
WHEREFORE, the Petition is DENIED. The November 30, 2010
Decision and February 3, 2011 Resolution of the Court of
Appeals in CA-G.R. SP No. 111536 are AFFIRMED.
SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
July 8, 2015
G.R. No. 187491
FAR EAST BANK AND TRUST COMPANY, Petitioners,
vs.
LILIA S. CHUA, Respondent.
DECISION
LEONEN, J.:
Respondent Lilia S. Chua (Chua) was dismissed by petitioner Far
East Bank and Trust Co. (Far East Bank) due to a finding that she
engaged in multiple kiting transactions which was a serious
violation of Far East Bank's Code of Conduct. The Labor Arbiter
ruled that there was illegal dismissal. This was reversed by the
National Labor Relations Commission. Chua participated in the
appeal proceedings before the National Labor Relations
Commission.
The Court of Appeals reversed the National Labor Relations
Commissions ruling, stating that Far East Banks appeal before
the National Labor Relations Commission was not perfected.
We are asked in this Petition to reverse the ruling of the Court of
Appeals.
Chua was employed as a bank executive by Far East Bank, rising
through the latters ranks and holding the position of Assistant
Vice President from October 1, 1997 until the termination of her
employment.1
It is not disputed that on July 1, 1999, Chuas employment was
terminated as Far East Bank found Chua to have engaged in
multiple kiting transactions,2 which are fraudulent transactions
"involv[ing the] drawing out [of] money from a bank account
that does not have sufficient funds [in order] to cover [a] check."3
Assailing Far East Banks basis for terminating her employment,
Chua filed a Complaint for illegal dismissal and monetary claims
before the Regional Arbitration Branch XII, Cotabato City of the
National Labor Relations Commission.4
In the course of the proceedings before the Regional Arbitration
Branch, the parties were ordered to submit their respective
Position Papers. Despite an extension having been given to Far
East Bank, it failed to timely file its Position Paper.5
On April 25, 2000, Executive Labor Arbiter Quintin B. Cueto III
(Executive Labor Arbiter Cueto) rendered a Decision6finding
Chua to have been illegally dismissed. The dispositive portion of
the Decision reads:
WHEREFORE, in view of the foregoing, judgment is hereby
rendered declaring the dismissal of the complainant Lilia S.
Chua by respondent FAR EAST BANK AND TRUST COMPANY
(FEBTC) ILLEGAL, thereby entitling her to reinstatement and
full backwages inclusive of allowances and other benefits
computed from the time her compensation was withheld from
her up to the time of her actual reinstatement.
Respondent FEBTC is hereby ordered to pay the backwages of
the complainant until April 25, 2000 (date of this decision) and
her other benefit [sic] as above-discussed for the interim total
of ONE MILLION ONE HUNDRED EIGHTY-ONE THOUSAND
EIGHT HUNDRED FOUR PESOS & 19/100 (P1,181,804.19).
All other additional claims of the complainant as discussed above
are still to be substantiated inorder [sic] for Us to arrive at an
accurate computation.
SO ORDERED.7
On the same date, Far East Bank filed a Motion to admit its
Position Paper. On May 15, 2000, this Motion was denied.8
On May 25, 2000, Far East Bank directly filed its Notice of Appeal
and Memorandum of Appeal before the National Labor Relations
Commission.9
On April 30, 2001, the National Labor Relations Commission
Fifth Division issued a Resolution10 reversing and setting aside
the April 25, 2000 Decision of Executive Labor Arbiter Cueto.11 It
held that Far East Banks delay of "a few days"12 in filing its
Position Paper was excusable, especially considering that it and
its counsel were based in different cities, Cotabato City and
General Santos City, respectively.13 It added that it was
successfully shown by Far East Bank that Chua "had indeed
committed irregular acts in relation to his [sic] position as
Assistant Vice President[,]"14 "acts that would constitute for [sic]
loss of trust and confidence[,]"15 thereby justifying the
termination of her employment.
Chua then filed a Motion for Reconsideration16 dated May 25,
2001, relying on the following grounds:
A
ALTHOUGH THE HONORABLE COMMISSION WAS CORRECT IN
THE ORDER OF THE PRESENTATION OF THE ISSUES IN THAT
THE 1ST WAS "WHETHER OR NOT RESPONDENTS ARE GUILTY
OF INEXCUSABLE DELAY AND NEGLECT FOR FAILURE TO
SUBMIT THEIR POSITION PAPER BEFORE THE ARBITRATION
BRANCH OF ORIGIN[,]" BECAUSE IF THE ANSWER IS IN THE
NEGATIVE, THEN THE APPEAL SHOULD BE CONFINED ONLY TO
THE APPEALED DECISION OF THE RAB XII, YET, NOT ONLY WAS
THIS ISSUE SKIPPED BY THE HONORABLE COMMISSION, BUT IN
RESOLVING THIS ISSUE, THE HONORABLE COMMISSION
DEPENDED ON THE POSITION PAPER OF APPELLANTS, WHICH
WAS THE VERY FIRST ISSUE UNDER CONSIDERATION.17
B
SINCE WHAT IS THE SUBJECT OF THE APPEAL IS THE DECISION
OF THE RAB XII, IT OUGHT TO HAVE BEEN WHAT THE
HONORABLE COMMISSION SHOULD HAVE REVIEWED AS AN
APPELLATE BODY YET NOT ONLY WAS THE DECISION OF RAB
XII SKIPPED BY THE HONORABLE COMMISSION BUT IN
DETERMINING THE FACT [sic] OF THE CASE THE HONORABLE
COMMISSION ENTIRELY DEPENDED ON THE MATTERS
PRESENTED IN THE POSITION PAPER OF RESPONDENTS, THE
ADMISSION OR THE DENIAL OF ADMISSION OF THE SAME WAS
NOT ONLY THE FIRST ISSUE BUT THE RESOLUTION OF WHICH
WAS SKIPPED BY THE HONORABLE COMMISSION.18
C FILED UNPERFECTED APPEAL OF RESPONDENTS22
EVERY MATERIAL POINT RAISED BY RESPONDENTS IN ITS
POSITION PAPER THE ADMISSION AND DENIAL OF WHICH HAS
NOT BEEN RESOLVED BY THE HONORABLE COMMISSION HAS
BEEN TOUCHED IN THE DECISION OF THE RAB XII, WHICH IS
THE CENTERPIECE OF REVIEW, AND THE POSITION PAPER OF
APPELLEE WHICH LEGALLY, FORMS PART OF THE RECORD[S]
OF THE CASE, AND THE LEAST THAT THE HONORABLE
COMMISSION COULD HAVE DONE WAS TO REVIEW BOTH THEN
COMPARE IT WITH THE FACTS AS PRESENTED BY THE
RESPONDENTS IN THEIR POSITION PAPER WITH THE
DOCUMENTS AVAILABLE ON HAND AS CONFIRMATORY
EVIDENCE, AND HAD THIS BEEN DONE, UNDOUBTEDLY, THE
CONCLUSION THAT WOULD HAVE BEEN ARRIVED AT WAS
THAT THE CASE OF APPEALLEE [sic] IS MERITORIOUS.19
In the Resolution dated December 21, 2001, the National Labor
Relations Commission denied Chuas Motion for
Reconsideration.20
Aggrieved, Chua filed a Petition21 for Certiorari under Rule 65 of
the 1997 Rules of Civil Procedure before the Court of Appeals.
Chua averred the following issue in this Petition:
ISSUE
WHETHER OR NOT PUBLIC RESPONDENT ACTED WITHOUT OR
IN EXCESS OF JURISDICTION OR WITH GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR IN EXCESS OF
JURISDICTION IN TAKING COGNIZANCE OF THE DIRECTLY
Specifically, Chua claimed that the National Labor Relations
Commission should not have entertained Far East Banks appeal
for the following reasons: first, it failed to "pay the appeal fee of
P100.00;"23 second, it failed to "post the appeal bond equivalent
to the amount of the monetary award;"24 third, it failed to "attach
a certification of non-forum shopping[;]"25 and fourth, it
"directly filed its appeal with public respondent [National Labor
Relations Commission] contrary to the requirements of Rule VI,
Section 326 of the New Rules of Procedure of the National Labor
Relations Commission."27
In its assailed June 30, 2008 Decision,28 the Court of Appeals
Twenty-third Division declared the April 30, 2001 and December
21, 2001 Resolutions of the National Labor Relations
Commission null and void and reinstated Executive Labor
Arbiter Cuetos April 25, 2000 Decision.29
Citing Rule VI, Sections 3 and 430 of the 1999 Rules of Procedure
of the National Labor Relations Commission31which were then in
effect, the Court of Appeals stated that it "is clear and
unambiguous that the memorandum on appeal must be filed
with the Regional Arbitration Branch which rendered the
decision sought to be appealed."32 As Far East Banks Notice of
Appeal and Memorandum of Appeal were both directly filed
before the National Labor Relations Commission (rather than
being filed before the Regional Arbitration Branch XII, Cotabato
City), the Court of Appeals concluded that "no appeal before
public respondent [National Labor Relations Commission] could
have been perfected."33 Thus, Executive Labor Arbiter Cuetos
April 25, 2000 Decision "has attained finality[.]"34
In its assailed March 20, 2009 Resolution,35 the Court of Appeals
denied Far East Banks Motion for Reconsideration.36
Hence, this Petition37 was filed.
For resolution is the sole issue of whether Executive Labor
Arbiter Quintin B. Cueto IIIs April 25, 2000 Decision attained
finality in light of petitioner Far East Bank and Trust Co.s direct
filing of its appeal before the National Labor Relations
Commission, rather than before the Regional Arbitration Branch
XII, Cotabato City.
I II
Petitioner admits to directly filing its Memorandum of Appeal
before the National Labor Relations Commission.38However, it
banks on what it claims was the National Labor Relations
Commissions "discretion to admit appeal[s] directly filed with it
on reasonable and meritorious grounds[.]"39 It argues thus that
"[i]n accepting the appeal memorandum which petitioner
directly filed with it, the [National Labor Relations Commission]
was guided by its own policy that, in line with the jurisprudence
set by the Supreme Court, technicalities in labor cases must yield
to substantial justice."40
Apart from this, petitioner faults respondent for raising the issue
of jurisdiction for the first time in her Rule 65 Petition before the
Court of Appeals. It asserts that because of respondents failure
to timely raise this matter while petitioners own appeal was still
pending before the National Labor Relations Commission,
estoppel set in and respondent could not belatedly repudiate the
adverse decision by only then invoking the issue of jurisdiction.41
Petitioners contentions are well-taken. A mere procedural lapse
in the venue where petitioner filed its Memorandum of Appeal is
not fatal to its cause. This is especially so in light of how
respondent estopped herself in failing to raise the issue of
jurisdiction while petitioners appeal was pending before the
National Labor Relations Commission. Respondent is bound by
her inaction and cannot belatedly invoke this issue on certiorari
before the Court of Appeals.
In a long line of cases, this court has held that "[a]lthough the
issue of jurisdiction may be raised at any stage of the
proceedings as the same is conferred by law, it is nonetheless
settled that a party may be barred from raising it on ground of
laches or estoppel."42||
The rule is stated in LaO v. Republic of the Philippines and the
Government Service Insurance System:43
While it is true that jurisdiction over the subject matter of a case
may be raised at any stage of the proceedings since it is
conferred by law, it is nevertheless settled that a party may be
barred from raising it on the ground of estoppel. After
voluntarily submitting a cause and encountering an adverse
decision on the merits, it is improper and too late for the losing
party to question the jurisdiction of the court. A party who has
invoked the jurisdiction of a court over a particular matter to
secure affirmative relief cannot be permitted to afterwards deny
that same jurisdiction to escape liability.44 (Citations omitted)
The wisdom that underlies this was explained at length in Tijam,
et al. v. Sibonghanoy, et al.:45
A party may be estopped or barred from raising a question in
different ways and for different reasons. Thus we speak of
estoppel in pais, of estopped by deed or by record, and of
estoppel by laches.
Laches, in a general sense, is failure or neglect, for an
unreasonable and unexplained length of time, to do that which,
by exercising due diligence, could or should have been done
earlier; it is negligence or omission to assert a right within a
reasonable time, warranting a presumption that the party
entitled to assert it either has abandoned it or declined to assert
it.
The doctrine of laches or of "stale demands" is based upon
grounds of public policy which requires, for the peace of society,
the discouragement of stale claims and, unlike the statute of
limitations, is not a mere question of time but is principally a
question of the inequity or unfairness of permitting a right or
claim to be enforced or asserted.
It has been held that a party cannot invoke the jurisdiction of a
court to secure affirmative relief against his opponent and, after
obtaining or failing to obtain such relief, repudiate or question
that same jurisdiction. In the case just cited, by way of explaining
the rule, it was further said that the question whether the court
had jurisdiction either of the subject matter of the action or of
the parties was not important in such cases because the party is
barred from such conduct not because the judgment or order of
the court is valid and conclusive as an adjudication, but for the
reason that such a practice cannot be tolerated obviously for
reasons of public policy.
Furthermore, it has also been held that after voluntarily
submitting a cause and encountering an adverse decision on the
merits, it is too late for the loser to question the jurisdiction or
power of the court. And in Littleton vs. Burgess, 16 Wyo. 58, the
Court said that it is not right for a party who has affirmed and
invoked the jurisdiction of a court in a particular matter to
secure an affirmative relief, to afterwards deny that same
jurisdiction to escape a penalty.
Upon this same principle is what We said in the three cases
mentioned in the resolution of the Court of Appeals of May 20,
1963 (supra) to the effect that we frown upon the
"undesirable practice" of a party submitting his case for decision
and then accepting the judgment, only if favorable, and attacking
it for lack of jurisdiction, when adverse as well as in
Pindagan etc. vs. Dans et al., G. R. L-14591, September 26, 1962;
Montelibano et al. vs. Bacolod-Murcia Milling Co., Inc., G. R. L-
15092; Young Men Labor Union etc. vs. the Court of Industrial
Relations et al., G. R. L-20307, Feb. 26, 1965, and Mejia vs. Lucas,
100 Phil. p. 277.46 (Citations omitted)
III
The rationale that animates the rule on estoppel vis--vis
jurisdiction applies with equal force to quasi-judicial agencies as
it does to courts. The public policy consideration that frowns
upon the undesirable practice of submitting a case for decision
only to subsequently decry the supposed lack of jurisdiction is as
compelling in cases concerning the National Labor Relations
Commission as it is to courts of law.
In this respect, it is of no consequence that distinctions may be
drawn between administrative agencies, on the one hand, and
judicial bodies, on the other.
Courts derive their authority from the Constitutions recognition
that they shall be the sole and exclusive investees of judicial
power. This, even as the Constitution leaves to the legislature the
authority to establish lower courts, as well as "to define,
prescribe, and apportion the jurisdiction of the various
courts[,]"47 except of this court. Article VIII, Section 1 of the 1987
Constitution provides that "[t]he judicial power shall be vested in
one Supreme Court and in such lower courts as may be
established by law."
For their part, administrative agencies are statutory constructs.
Thus, they are limited by the statutes which created them and
which spelled out their powers and functions. "It is a
fundamental rule that an administrative agency has only such
powers as are expressly granted to it by law and those that are
necessarily implied in the exercise thereof[.]"48 Administrative
agencies may exercise quasi-judicial powers, but only to the
extent warranted by administrative action. They may not
exercise judicial functions. This is illustrated in Philex Mining
Corporation v. Zaldivia, et al.,49 which distinguished between
judicial questions and "questions of fact."50 It is only the latter
questions of fact which was ruled to be within the competence
of the Director of Mines to resolve:
We see nothing in sections 61 and 73 of the Mining Law that
indicates a legislative intent to confer real judicial power upon the
Director of Mines. The very terms of section 73 of the Mining Law,
as amended by Republic Act No. 4388, in requiring that the
adverse claim must "state in full detail the nature, boundaries
and extent of the adverse claim" show that the conflicts to be
decided by reason such adverse claim refer primarily to
questions of fact. This is made even clearer by the explanatory
note to House Bill No. 2522, later to become Republic Act 4388,
that "sections 61 and 73 that refer to the overlapping of claims
are amended to expedite resolutions of mining conflicts. . . ." The
controversies to be submitted and resolved by the Director of
Mines under the sections refer therefore only to the overlapping of
claims, and administrative matters incidental thereto.
As already shown, petitioners adverse claim is not one grounded
on overlapping of claims nor is it a mining conflict arising out of
mining locations (there being only one involved) but one
originating from the alleged fiduciary or contractual relationship
between petitioner and locator Scholey and his transferees
Yrastorza and respondent Zaldivia. As such, the adverse claim is
not within the executive or administrative authority of the
mining director to resolve, but in that of the courts, as it has been
correctly held, on the basis of the doctrine stated in Espinosa vs.
Makalintal, 79 Phil. 134.51 (Emphasis supplied)
Unlike courts, the National Labor Relations Commissions
existence is not borne out of constitutional fiat. It owes its
existence to Article 213 of the Labor Code:
Art. 213. National Labor Relations Commission. There shall
be a National Labor Relations Commission which shall be
attached to the Department of Labor and Employment for
program and policy coordination only, composed of a Chairman
and fourteen (14) Members. (Emphasis in the original)
So, too, its jurisdiction (as well as those of Labor Arbiters) is
spelled out by Article 217 of the Labor Code:
Art. 217. Jurisdiction of the Labor Arbiters and the
Commission.
1. Except as otherwise provided under this Code, the
Labor Arbiters shall have original and exclusive
jurisdiction to hear and decide, within thirty (30)
calendar days after the submission of the case by the
parties for decision without extension, even in the
absence of stenographic notes, the following cases
involving all workers, whether agricultural or non-
agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement,
those cases that workers may file involving
wages, rates of pay, hours of work and other
terms and conditions of employment;
4. Claims for actual, moral, exemplary and other
forms of damages arising from the employer-
employee relations;
5. Cases arising from any violation of Article 264
of this Code, including questions involving the
legality of strikes and lockouts; and
6. Except claims for Employees Compensation,
Social Security, Medicare and maternity benefits,
all other claims arising from employer-employee
relations, including those of persons in domestic
or household service, involving an amount
exceeding five thousand pesos (P5,000.00)
regardless of whether accompanied with a claim
for reinstatement.
2. The Commission shall have exclusive appellate
jurisdiction over all cases decided by Labor Arbiters.
3. Cases arising from the interpretation or
implementation of collective bargaining agreements and
those arising from the interpretation or enforcement of
 company personnel policies shall be disposed of by the
Labor Arbiter by referring the same to the grievance
machinery and voluntary arbitration as may be provided
in said agreements. (Emphasis in the original)
Nevertheless, there is no basis for distinguishing between courts
and quasi-judicial agencies with respect to the effects of a partys
failure to timely assail errors in jurisdiction. These effects have
nothing to do with the distinction between the competencies of
courts and quasi-judicial agencies as spelled out by the
Constitution and statutes.
In a long line of cases, this court has held the rule on estoppel
vis-vis jurisdiction, as initially articulated in 1968 in Tijam to be
equally applicable to cases involving the National Labor
Relations Commission (and its related agencies).
By way of example, in Philippine Overseas Drilling and Oil
Development Corporation v. Hon. Ministry of Labor,52 this court
stated:
Petitioner is now barred by estoppel from raising the issue of
jurisdiction, regardless of its merits. In the case of Tijam vs.
Sibonghanoy, April 15, 1968, 23 SCRA 29, the Court laid down the
rule of estoppel to raise the question of jurisdiction. This rule
was reiterated in numerous cases enumerated in the decision in
the case of Solicitor General vs. Coloma promulgated on July 7,
1986. In the case of Akay Printing Press vs. Minister of Labor and
Employment, the Court ruled as follows:
When the illegal dismissal case was pending before the MOLE
Regional Director, petitioner did not raise the issue of
jurisdiction either during the hearing or in its subsequent motion
for reconsideration. Its defense was a stout denial of the
dismissal of private respondents, who were averred instead to
have abandoned their work. After the adverse decision of the
Regional Director and upon the elevation of the case on appeal to
the Ministry of Labor and Employment, still no jurisdictional
challenge was made. It was only when petitioner moved to
reconsider the MOLE decision of affirmance that it assailed the
jurisdiction of the Regional Director. But then, it was too late.
Estoppel had barred him from raising the issue, regardless of its
merits. (December 6, 1985, 140 SCRA 381, 384)53
Likewise, as stated in M. Ramirez Industries v. Secretary of Labor
and Employment:54
Moreover, petitioner is estopped from questioning the
jurisdiction of the Regional Director, having previously invoked
it by filing a motion to dismiss. As has been held:
[A] party can not invoke the jurisdiction of a court to secure
affirmative relief against his opponent and, after obtaining or
failing to obtain such relief, repudiate or question that same
jurisdiction.
In the case just cited, by way of explaining the rule, it was further
said that the question whether the court had jurisdiction either
of the subject-matter of the action or of the parties is barred
from such conduct not because the judgment or order of the
court is valid and conclusive as an adjudication, but for the
reason that such a practice can not be tolerated obviously for
reasons of public policy.
Furthermore, it has also been held that after voluntarily
submitting a cause and encountering an adverse decision on the
merits, it is too late for the loser to question the jurisdiction or
power of the court . . . And in Littleton vs. Burges, Wyo, 58, the
Court said that it is not right for a party who has affirmed and
invoked the jurisdiction of a court in a particular matter to
secure an affirmative relief, to afterwards deny that same
jurisdiction to escape a penalty.55
IV
Article 218 of the Labor Code vests in the National Labor
Relations Commission the authority to adopt procedural rules:
Art. 218. Powers of the Commission. The Commission shall
have the power and authority:
1. To promulgate rules and regulations governing the hearing
and disposition of cases before it and its regional branches, as
well as those pertaining to its internal functions and such rules
and regulations as may be necessary to carry out the purposes of
this Code[.]
It is consistent with this power that the National Labor Relations
Commission adopted the rules that are at the core of the present
controversy. Rule VI, Section 3 of the 1999 Rules of Procedure of
the National Labor Relations Commission that were in effect
when petitioner appealed from Executive Labor Arbiter Cuetos
Decision provides for the requisites that must be satisfied in
order that an appeal from a decision of a Labor Arbiter may be
perfected:
Section 3. Requisites for Perfection of Appeal. (a) The appeal
shall be filed within the reglementary period as provided in
Section 1 of this Rule; shall be under oath with proof of payment
of the required appeal fee and the posting of a cash or surety
bond as provided in Section 5 of this Rule; shall be accompanied
by a memorandum of appeal which shall state the grounds relied
upon and the arguments in support thereof; the relief prayed for;
and a statement of the date when the appellant received the
appealed decision, order or award and proof of service on the
other party of such appeal.
A mere notice of appeal without complying with the other
requisite aforestated shall not stop the running of the period for
perfecting an appeal.
(b) The appellee may file with the Regional Arbitration
Branch, Regional Office or in the POEA where the appeal
was filed, his answer or reply to appellants
memorandum of appeal, not later than ten (10) calendar
days from receipt thereof.1awp++i1 Failure on the part of
the appellee who was properly furnished with a copy of
the appeal to file his answer or reply within the said
period may be construed as a waiver on his part to file
the same.
(c) Subject to the provisions of Article 218, once the
appeal is perfected in accordance with these rules, the
Commission may limit itself to reviewing and deciding
 specific issues that were elevated on appeal. (Emphasis
in the original)
Rule VI, Section 4 of the same rules stipulates where appeals
must be filed:
Section 4. Where Filed. The appeal in five (5) legibly
typewritten copies shall be filed with the respective Regional
Arbitration Branch, the Regional Office, or the Philippine
Overseas Employment Administration where the case was heard
and decided. (Emphasis in the original)
This venue for filing appeals is unequivocal. The Court of Appeals
was thus correct in stating that it "is clear and unambiguous that
the memorandum on appeal must be filed with the Regional
Arbitration Branch which rendered the decision sought to be
appealed."56
It is not disputed that this rule was violated by petitioner. In the
present Petition, petitioner categorically admitted that it "filed
its memorandum of appeal directly with the [National Labor
Relations Commission.]"57
Thus, there is basis for positing, as respondent and the Court of
Appeals did, that "no appeal before [the National Labor Relations
Commission] could have been perfected[.]"58 The logical
consequence of this position, assuming it is correct, is that
Executive Labor Arbiter Cuetos April 25, 2000 Decision "has
attained finality[.]"59
This conclusion, however, fails to consider that the error
committed by petitioner pertains to the place for filing appeals
and not the requisites for perfecting an appeal which Rule VI,
Section 3 enumerates. The place where appeals must be filed is
governed by a distinct provision (i.e., Section 4) and is thus a
matter that is different from the requisites for perfecting appeals.
Per Section 3, only the following are necessary in order that
petitioner may perfect its appeal:
(1) Filing within the applicable reglementary period as
provided by Section 1;60
(2) That the appeal was under oath;
(3) That the appeal fee must have been paid;
(4) That the appeal bond must have been posted;
(5) A memorandum of appeal which states:
a. the grounds relied upon and the arguments in
support of the appeal;
b. the relief sought; and
c. a statement of the date when the assailed
decision was received; and
(6) Proof of service of the appeal on the adverse party.
Likewise, this conclusion presupposes that procedural rules in
labor cases must be adhered to with uncompromising exactitude.
This is misguided. The same rules which respondent and the
Court of Appeals rely on allow for the liberal application of
procedural rules. In Rule VII, Section 10, it states:
Section 10. Technical rules not binding. The rules of
procedure and evidence prevailing in courts of law and equity
shall not be controlling and the Commission shall use every and
all reasonable means to ascertain the facts in each case speedily
and objectively, without regard to technicalities of law
procedure, all in the interest of due process.
In any proceeding before the Commission, the parties may be
represented by legal counsel but it shall be the duty of the
Chairman, any Presiding commissioner or Commissioner to
exercise complete control of the proceedings at all stages.
The need for liberality in this case is underscored by how the
National Labor Relations Commission acquiesced to the filing of
an appeal directly before it. As pointed out by petitioner, not only
did the National Labor Relations Commission admit its
Memorandum of Appeal, it also "required petitioner to pay the
appeal fee and to post the required bond."61 As the agency
statutorily vested with jurisdiction over petitioners appeal,
petitioner could very easily have mistaken that the filing of its
Memorandum of Appeal was rightly made before the National
Labor Relations Commission. If at all, the provision that filing of a
Memorandum of Appeal must be made before the Regional
Arbitration Branch is merely a delegation of a function more
appropriately pertaining to the appellate body itself.
In any case, the National Labor Relations Commission could have
very easily advised petitioner if there was anything irregular
with its direct filing of a Memorandum of Appeal. Its silence on
this matter would have induced in petitioner no other
reasonable conclusion than that direct filing before the National
Labor Relations Commission was in keeping with the procedural
requirements for filing appeals.
V
Not only did the National Labor Relations Commission acquiesce
to the direct filing of an appeal before it, so did
respondent.1wphi1 The matter of the propriety of the National
Labor Relations Commission's assumption of jurisdiction was
never raised by respondent before the Commission. Even after
petitioner's appeal had been initially decided against her and she
filed her Motion for Reconsideration, respondent totally
overlooked this matter. As was evident from the recital of
grounds62 invoked in her Motion for Reconsideration,
respondent's contentions centered merely on the National Labor
Relations Commission's supposedly erroneous reliance on
petitioner's Position Paper.
The Court of Appeals thus failed to account for the crucial fact
that the issue of jurisdiction was invoked by respondent only
upon her elevation to it of the case.1wphi1 It failed to recognize
that respondent had all the opportunity to raise this issue before
the very tribunal whom she claims to have had no competence to
rule on the appeal, but that it was only after the same tribunal
ruled against her twice - first, in its initial Resolution and second,
in denying her reconsideration - that she saw it fit to assail its
jurisdiction. The Court of Appeals failed to see through
respondent's own failure to seasonably act and failed to realize
that she was guilty of estoppel by laches, taking "an
unreasonable ... length of time, to do that which, by exercising
due diligence, could or should have been done earlier[. ]"63
Respondent cannot now profit from her own inaction. She
actively participated in the proceedings and vigorously argued
her case before the National Labor Relations Commission
without the slightest indication that she found anything
objectionable to the conduct of those proceedings. It is thus but
appropriate to consider her as acceding to and bound by how the
National Labor Relations Commission was to resolve and,
ultimately did resolve, petitioner's appeal. Its findings that the
requisites of substantive and procedural due process were
satisfied in terminating respondent's employment now stand
undisturbed.
WHEREFORE, the Petition for Review on Certiorari
is GRANTED. The June 30, 2008 Decision and the March 20,
2009 Resolution of the Court of Appeals in CA-G.R. SP No. 69361-
MIN are REVERSED and SET ASIDE. The April 30, 2001
Resolution of the National Labor Relations Commission
is REINSTATED.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
July 22, 2015
G.R. No. 172980
CELSO F. PASCUAL, SR. AND SERAFIN
TERENCIO, Petitioners, v. CANIOGAN CREDIT AND
DEVELOPMENT COOPERATIVE, REPRESENTED BY ITS
CHAIRMAN OF THE BOARD, JOSE ANTONIO R. LEE, ATTY.
VENANCIO C. REYES, JR., AND NESTOR P. TINIO, Respondents.
DECISION
LEONEN, J.:
An appeal of the outright dismissal of a petition
for certiorari against an interlocutory order of a lower court
becomes moot and academic where, during its pendency,
judgment on the merits has been rendered in the main case and
has become final and executory. An intra-cooperative dispute
between two officers on one hand and the Board of Directors on
the other falls within the jurisdiction of the regular courts, not of
the Labor Arbiter.
Before this court is a Petition for Review on Certiorari 1 dated
June 23, 2006 filed under Rule 45. The Petition seeks to reverse
the Resolutions dated April 7, 20062 and May 30, 20063 of the
Court of Appeals in CA-G.R. SP No. 93621, which dismissed On December 1, 2005, the Regional Trial Court issued a
outright petitioners' Petition for Certiorari with prayer for temporary restraining order enjoining Pascual and Terencio for
issuance of a temporary restraining order and/or writ of a period of 20 days from performing the functions of their
preliminary injunction for being premature and denied its offices.11
motion for reconsideration, respectively.
On December 7, 2005, Pascual and Terencio filed a Motion to
Petitioners Celso F. Pascual, Sr. (Pascual) and Serafin Terencio Dismiss with prayer to defer all proceedings.12 They questioned
(Terencio) were appointed by the former Board of Directors of the Regional Trial Court's jurisdiction because the case allegedly
Caniogan Credit and Development Cooperative (CCDC) to act as involves a labor dispute in the guise of an injunction.
the cooperative's General Manager and Collection Manager,
respectively, from start of operations until they reach the On December 8, 2005, CCDC filed an Ex Parte Motion13 to drop
compulsory age of retirement of 65.4 Atty. Venancio Reyes, Jr. as party plaintiff and a Motion for Leave
to Intervene14 and to admit the attached complaint-in-
Despite their retirement on January 9, 1997 and on March 2003, intervention of Nestor P. Tinio as the newly appointed Acting
Pascual continued to serve as General Manager and Terencio as General Manager in place of Atty. Venancio Reyes, Jr.
Collection Manager of CCDC.5
At the hearing of the Motion to Dismiss on December 15, 2005,
On August 13, 2005, the Board of Directors of CCDC passed counsel for both parties requested that they be allowed to file
Resolution Nos. 05-08-1276 and 05-08-128,7 terminating their respective oppositions or comments on the Motions filed. It
Pascual's and Terencio's services and declaring that they should was then agreed in open court that the running of the 20-day
serve only until September 30, 2005 and October 15, 2005, period of the temporary restraining order would be interrupted
respectively. Despite the lapse of these periods given, Pascual and continued only upon resolution of the Motion to Dismiss.
and Terencio refused to vacate their positions.8 The court also declared that the Motion to Dismiss should be
considered submitted for resolution upon simultaneous filing of
On November 29, 2005, CCDC and Atty. Venancio Reyes, Jr., the the parties of their respective memoranda.15
newly appointed General Manager, filed a Complaint for
Injunction with prayer for issuance of writ of preliminary The parties filed their memoranda and their respective
injunction and/or temporary restraining order9 before the oppositions/comments to the other motions filed.
Regional Trial Court of Malolos, Bulacan. The Complaint was
raffled to Branch 12.10 On January 5, 2006, Pascual and Terencio also filed a Very Urgent
Manifestation with prayer for the immediate lifting of the
temporary restraining order,16 alleging that the continued
implementation of the order would not help CCDC but would
cause its further degradation and deterioration.
On January 10, 2006, finding that the case involves a dispute
between the Board of Directors and officers of CCDC, the
Regional Trial Court issued the Order17 referring the case and all
its records to the Clerk of Court of the Regional Trial Court of
Bulacan for re-raffle to branches specifically assigned to hear and
decide intra-corporate disputes.
Allegedly without notice to Pascual and Terencio, the case was
re-raffled to Branch 79, and an order was issued in open court
during the hearing on January 30, 2006 to the effect that pending
incidents were deemed submitted for resolution.18
However, Branch 79 issued another Order19 dated February 10,
2006 returning the case to Branch 12. It reasoned that the case is
not an intra-corporate dispute but an intra-cooperative one.
On March 3, 2006, Branch 12 of the Regional Trial Court issued
the Order20 denying the Motion to Dismiss for lack of merit
because the case involves an intra-cooperative dispute. However,
both the Ex Parte Motion to drop Atty. Venancio Reyes, Jr. as
plaintiff and the Motion for Leave to Intervene were granted.
Finally, the trial court deferred action on Pascual and Terencio's
Very Urgent Motion to lift the temporary restraining order.
Pascual and Terencio challenged the March 3, 2006 Order before
the Court of Appeals through a Petition for Certiorari 21 with
prayer for an issuance of a temporary restraining order and/or
writ of preliminary injunction and lifting of the temporary
restraining order issued against them.
The Petition was dismissed by the Court of Appeals Ninth
Division in its Resolution22 dated April 7, 2006, which held that it
was premature because: (1) petitioners did not file a motion for
reconsideration of the impugned Regional Trial Court Order; and
(2) the case involved an intra-cooperative dispute, and there was
no showing that prior recourse to the modes of settlement
required in Article 121 of Republic Act No. 693823 and Section 8
of Republic Act No. 693924 were resorted to before seeking
judicial relief and intervention.
Pascual and Terencio filed a Motion for Reconsideration, but it
was likewise denied by the Court of Appeals in its
Resolution25 dated May 30, 2006.
Hence, this Petition26 was filed, anchored on the following issues:
First, whether the Court of Appeals gravely erred in dismissing
outright petitioners Celso F. Pascual, Sr. and Serafm Terencio's
Rule 65 Petition on the ground of prematurity; and
Second, whether the case is one of illegal dismissal of an
employee which is subject to the exclusive jurisdiction of the
Labor Arbiter or of the National Labor Relations Commission, not
the trial court.
At the outset, this case had become moot and academic with the
finality of the judgment by default,27rendered on July 20, 2006 by
Branch 12 of the Regional Trial Court of Malolos, Bulacan.28 The
judgment permanently enjoined petitioners from assuming the
positions of General Manager and Collection Manager of
respondent CCDC and ordered them to pay it, jointly and
severally, the sum of P50,000.00 as attorney's fees and the costs
of suit.
Nonetheless, even on the merits, the Petition must be denied.
The general rule is that a motion for reconsideration is
indispensable before resort to the special civil action
for certiorari is made. This is to afford the court or tribunal the
opportunity to correct its error, if any.29 An omission to comply
with this procedural requirement justifies a denial of the writ
of certiorariapplied for.30
We find no exceptional circumstance31 to justify petitioners'
omission to file a motion for reconsideration. Their allegation
that the trial court was unable to resolve their many motions for
a long time is belied by the facts on record. Their Motions to
Dismiss and to lift the temporary restraining order were
submitted for resolution on January 30, 2006. On March 3, 2006,
a little over one month later, the trial court issued its impugned
order. To our mind, this period of time does not constitute undue
delay on the part of the trial court in resolving the motions.
Furthermore, contrary to petitioners' allegations, we find no
"extreme necessity and urgency" to excuse their direct resort to
a certiorari before the Court of Appeals. Hence, the Court of
Appeals correctly dismissed petitioners' Rule 65 Petition.
However, we disagree with the Court of Appeals' observation
that prior recourse to the modes of settlement under Article 121
of Republic Act No. 693832 and Section 8 of Republic Act No.
693933 should have been made before seeking judicial relief. As
pointed out by petitioners, it is clear from the Complaint filed by
respondents before the trial court that the dispute was, indeed,
referred to the Regional Office of the Cooperative Development
Authority for mediation and arbitration. However, despite its
earnest efforts, no settlement was reached between the parties,
thus prompting the Authority to issue a certificate of non-
resolution.
As regards the issue on jurisdiction, this court finds no reversible
error in the Court of Appeals' ruling that the case involves an
intra-cooperative dispute which falls within the jurisdiction of
the regular courts. There is evidently no employment
relationship between the parties.
In Tabang v. NLRC:34
[A]n "office" is created by the charter of the corporation and the
officer is elected by the directors or stockholders. On the other
hand, an "employee" usually occupies no office and generally is
employed not by action of the directors or stockholders but by
the managing officer of the corporation who also determines the
compensation to be paid to such
employee. ChanRoblesVirtualawlibrary
35
Here, petitioners were officers of respondent CCDC. They were
appointed directly by the former Board of Directors according to
the by-laws of respondent CCDC, and their salaries were likewise
set by the same Board.36 Petitioners do not refute this fact. Their
termination or removal is clearly an intra-cooperative
matter.37 It involves a dispute within the cooperative between disputes within a cooperative or between cooperatives: Provided,
two officers on one hand and the Board of Directors on the other. That if no mediation or conciliation succeeds within three (3)
months from request thereof, a certificate of non-resolution shall
Petitioners clarify that they do not take issue on the power of the be issued by the commission prior to the filing of appropriate
Board of Directors to remove them. Rather, they dispute the action before the proper courts. (Emphasis
"manner, cause[,] and legality" of their removal from their supplied)ChanRoblesVirtualawlibrary
respective offices as General Manager and Collection Besides, petitioners' participation in the mediation/conciliation
Manager.38 Even so, we hold that an officer's dismissal is a matter proceedings before the Cooperative Development Authority
that comes with the conduct and management of the affairs of a constitutes their implied acceptance that the dispute is, indeed,
cooperative and/or an intra-cooperative controversy, and that an intra-cooperative one.
nature is not altered by reason or wisdom that the Board of
Directors may have in taking such action. Accordingly, the case a WHEREFORE, the Petition is DENIED.
quo is not a labor dispute requiring the expertise of the Labor
Arbiter or of the National Labor Relations Commission. It is an SO ORDERED.
intra-cooperative dispute that is within the jurisdiction of the
Regional Trial Court, pursuant to Section 121 of Republic Act No.
6938, which expressly provides:chanRoblesvirtualLawlibrary
ARTICLE 121. Settlement of Disputes. Disputes among
members, officers, directors, and committee members, and intra-
cooperative disputes shall, as far as practicable,' be settled
amicably in accordance with the conciliation or mediation
mechanisms embodied in the by-laws of the cooperative, and in
applicable laws.

Should such a conciliation/mediation proceeding fail, the matter

shall be settled in a court of competent jurisdiction. (Emphasis
supplied)ChanRoblesVirtualawlibrary
Likewise, Section 8 of Republic Act No. 6939
provides:chanRoblesvirtualLawlibrary
SECTION 8. Mediation and Conciliation. Upon request of either
or both parties, the Authority shall mediate and conciliate
 Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 205575 July 22, 2015
VISAYAN ELECTRIC COMPANY EMPLOYEES UNION-ALU-
TUCP and CASMERO MAHILUM, Petitioners,
vs.
VISAYAN ELECTRIC COMPANY, INC. (VECO), Respondent.
DECISION
PERLAS -BERNABE, J.:
Assailed in this petition for review on certiorari 1are the
Resolutions dated September 25, 2012 2 and December 19,
2012 3 of the Court of Appeals (CA) in CA-G.R. SP No. 06329,
which dismissed the certiorari petition filed by petitioners
Visayan Electric Company Employees Union-ALU TUCP (the
Union) and Casmero Mahilum (Mahilum; collectively petitioners)
against the Decision 4 dated June 30, 2011 of the National Labor
Relations Commission (NLRC) in NLRC CC(V)-12 000003-10
(NCMB-RBVII-NS-10-12-10) for failure of their new counsel to
show cause why their certiorari petition should not be dismissed
for having been filed beyond the reglementary period.
Respondent Visayan Electric Company, Inc. (VECO) is a
corporation engaged in the supply and distribution of electricity
in Cebu City and its neighboring cities, municipalities, and
barangays.5 The Union is the exclusive bargaining agent of
VECO's rank and-file employees, and Macyi.Jttm was the Union's
president from October 2007 until his termination from
employment on October 28, 2010. 6
It was claimed that, before Mahilum was elected as union officer,
he was transferred from VECO's Public Relations Section to its
Administrative Services Section without any specific work. When
he was elected as union secretary, he was transferred to the Line
Services Department as its Customer Service Representative. 7 At
the time of his election as union president, VECO management
allegedly: (a) terminated active union members without going
through the grievance machinery procedure prescribed under
the Collective Bargaining Agreement 8 (CBA); (b) refused to
implement the profit-sharing scheme provided under the same
CBA 9 (c) took back the motorbikes issued to active union
members; and (d) revised the electricity privilege 10 granted to
VECO's employees. 11
Thus, on May 1, 2009, union members marched on the streets of
Cebu City to protest VECO's refusal to comply with the political
and economic provisions of the CBA. Mahilum and other union
officers were interviewed by the media, and they handed out a
document 12 containing their grievances against VECO, the gist of
which came out in local newspapers.13 Following said incident,
Mahilum was allegedly demoted as warehouse staff to isolate
him and restrict his movements. Other union officers were
transferred to positions that will keep them away from the
general union membership. 14
On May 8, 2009, Mahilum was issued a Notice to Explain 15 why
he should not be terminated from service due to loss of trust and
confidence, as well as in violating the Company Code of
Discipline, for causing the publication of what VECO deemed as a
libelous article. The other union officers likewise received
similar notices 16 for them to explain their actions, which they
justified 17 as merely an expression of their collective sentiments
against the treatment of VECO's management towards them.18
On May 20, 2009, the union officers we.re notified19 of the
administrative investigation to be conducted relative to the
charges against them. During the scheduled investigation, the
Union's counsel initially raised its objection to the proceedings
and insisted that the investigation should be conducted through
the grievance machinery procedure, as provided in the
CBA. 20 However, upon the agreement to proceed with the
investigation of the Union Vice President, Renato Gregorio M.
Gimenez (Gimenez), through his own counsel, Mahilum and the
other union officers likewise agreed to proceed with the
aforesaid investigation, with Gimenez's counsel representing the
Union.21
Prior to the said investigation, the Union filed on May 18, 2009, a
Notice of Strike 22 with the National Conciliation and Mediation
Board (NCMB) against VECO, which facilitated a series of
conferences that yielded a Memorandum of Agreement 23 (MOA)
signed by the parties on August 7, 2009. 24 The parties likewise
put to rest the critical issue of electricity privilege and agreed
before the NCMB on a conversion rate of said privilege to basic
pay. Moreover, the administrative investigation on the alleged
libelous publication was deferred until after the CBA
renegotiation. 25
However, even before the conclusion of the CBA
renegotiation 26 on June 28, 2010, several complaints for libel
were filed against Mahilum and the other union officers by
VECO's Executive Vice President and Chief Operating Officer
Jaime Jose Y. Aboitiz. 27 The administrative hearing on the
charges against Mahilum resumed with due notice to the latter,
but he protested the same, referring to it as "moro-mord' or
"kangaroo" and insisting that the investigation should follow the
grievance machinery procedure under the CBA. 28 Nonetheless,
VECO's management carried on with its investigation and, on the
basis of the findings thereof, issued a notice 29 terminating
Mahilum from employment on October 28, 2010. 30
On even date, the Union filed another Notice of Strike 31 with the
NCMB against VECO on the grounds of unfair labor practice,
specifically union busting - for the dismissal and/or suspension
of its union president and officers, refusal to bargain collectively,
as well as non-observance of the grievance procedure in their
CBA. 32 To avert any work stoppage that will prejudice VECO's
power distribution activity, the Secretary of Labor intervened
and issued an Order 33 dated November 10, 2010 certifying the
labor dispute to the NLRC for compulsory
arbitration.34Consequently, the strike was enjoined; Mahilum
was ordered reinstated in the payroll; and the parties were
directed to refrain from committing any act that would
exacerbate the situation.35
The NLRC Ruling
After submission of the respective position papers 36 of both
parties, the NLRC Seventh Division rendered Decision 37 on June
30, 2011 dismissing the charge of unfair labor practice against
VECO for lack of merit, and declaring Mahilum's dismissal from
employment as legal.
The NLRC found VECO to have acted within the bounds of law
when it administratively investigated the suspended or
terminated employees and union officers/members, instead of
subjecting their respective cases to the grievance machinery
procedure provided in the CBA. 38 In resolving apparently
conflicting provisions in the CBA, the NLRC applied the specific
provision found in Section 13 of Article XIV that disciplinary
actions shall be governed by the rules and regulations
promulgated by the company. Since the administrative
investigations conducted by VECO were found to have complied
with procedural due process requirements, there was no unfair
labor practice to speak of. 39
On the matter of Mahilum's dismissal and the filing of criminal
cases against the union officers, the NLRC found no substantial
evidence to prove the imputation of union busting. Similarly
unsubstantiated were the allegations of fraud and deceit in
hiring and contracting out services for functions performed by
union members, and declaring certain positions confidential and
transferring union members to other positions without prior
discussions, thereby allegedly interfering with their right to self-
organization and reducing union membership.40
The issue on VECO's alleged modification of the electricity
privilege, which the Union claimed as violative of the CBA, was
declared mooted by the MOA entered into between the parties,
with the assistance of the NCMB, providing for, inter alia,
electricity privilege conversion to basic pay. This was
subsequently incorporated in the Renegotiated CBA dated June
28, 2010. 41
Finally, the NLRC ruled that Mahilum was terminated for a just
and valid cause under Article 282 (c) of the Labor Code, i.e., fraud
or willful breach of trust by the employee of the trust reposed in
him by his employer or duly authorized representative, when he,
together with some other union officers, caused the publication
of a document which was deemed to have dishonored and
blackened the memory of former corporate officer Luis Alfonso
Y. Aboitiz, besmirched VECO's name and reputation, and exposed
he latter to public hatred, contempt, and ridicule. 42
Aggrieved, petitioners filed a motion for reconsideration 43 from
the foregoing NLRC Decision, which was denied in a
Resolution 44 dated July 29, 2011.They received said Resolution
on August 18, 2011. 45
On October 18, 2011, petitioners elevated their case to the CA on
certiorari petition, 46 docketed as CA-G.R. SP No. 06329, imputing
grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of the NLRC.
On February 29, 2012, the CA issued a Resolution 47 directing
petitioners to show cause why the certiorari petition should not
be dismissed for having been filed "one day behind the
reglementary period." 48
On March 13, 2012, Atty. Jonas V. Asis (Atty. Asis) from the Seno
Mendoza & Associates Law Offices filed in behalf of petitioners a
Manifestation/Explanation 49 claiming that "there was
unintended error/mistake in the computation of the
period," 50 and that there was no prejudice caused to V~CO by
the "unintended one-pay late filing of the petition." 51
The CA Ruling
On September 25, 2012, the CA issued the assailed September
25, 2012 Resolution 52 pointing out that on March 7, 2012,
petitioners had filed a Manifestation 53 that they had terminated
the services of Atty. Asis and the Seno Mendoza & Associates as
their counsel in this case, and have contracted the services of
Atty. Remigio D. Saladero, Jr. (Atty. Saladero) as their new
counsel. Consequently, the CA deemed as not filed the
Manifestation/Explanation filed by Atty. Asis, and dismissed the
certiorari petition for failure of Atty. Saladero to comply with the
Resolution dated February 29, 2012.
The motion for reconsideration 54 filed by Atty. Saladero
imploring the CA to consider the Manifestation/Explanation filed
by Atty. Asis despite the fact that he was no longer petitioners'
counsel of record was denied in a Resolution 55dated December
19, 2012 for lack of merit.
The Issue
Undeterred, petitioners are now before the Court maintaining
that the CA erred in dismissing the certiorari petition on account
of the one-day delay in its filing despite the serious errors
committed by the NLRC in absolving VECO from the charge of
unfair labor practice and illegal dismissal of Mahilum.
The Court's Ruling
The petition is not impressed with merit.
Under Section 4, Rule 65 of the 1997 Rules of Civil Procedure,
certiorari should be filed "not later than sixty (60) days from
notice of the judgment, order or resolution" sought to be
assailed. The provisions on reglementary periods are strictly
applied, indispensable as they are to the prevention of needless
delays, and are necessary to the orderly and speedy discharge of
judicial business. The timeliness of filing a pleading is a
jurisdictional caveat that even this Court cannot trifle with. 56
The Union admittedly/ 57 received on August 18, 2011 the
NLRC's July 29, 2011 Resolution, which denied their motion for
reconsideration of the NLRC's June 30, 2011 Decision. Therefore,
the 60-day period within which to file a petition for certiorari
ended on October 1 7, 2011. But the certiorari petition was filed
one day after, or on October 18, 2011. Thus, petitioners' failure
to file said petition within the required 60-day period rendered
the NLRC's Decision and Resolution impervious to any attack
through a Rule 65 petition for certiorari, and no court can
exercise jurisdiction to review the same. 58
Petitioners adamantly insist, however, that the "one-day delay
occasioned by an honest mistake in the computation of dates
should have been overlooked by the CA in favor of substantial
justice."59 Their former counsel, Atty. Asis, allegedly thought in
good faith that the month of August has thirty (30) days, and that
sixty (60) days from August 18, 2011 is October 18, 2011. 60
The Court is not convinced.
First, The fact that the delay in the filing of the petition for
certiorari was only one day is not a legal justification for non-
compliance with the rule requiring that it be filed not later than
sixty (60) days from notice of the assailed judgment, order or
resolution. The Court cannot subscribe to the theory that the
ends of justice would be better subserved by allowing a petition
for certiorari filed only one day late. When the law fixes sixty
(60) days, it cannot be taken to mean also sixty-one ( 61) days, as
the Court had previously declared in this wise:
[W]hen the law fixes thirty days [or sixty days as in the present
case], we cannot take it to mean also thirty-one days. If that
deadline could be stretched to thirty-one days in one case, what
would prevent its being further stretched to thirty-two days in
another case, and so on, step by step, until the original line is
forgotten or buried in the growing confusion resulting from the
alterations? That is intolerable. We cannot fix a period with the
solemnity of a statute and disregard it like a joke. If law is
founded on reason, whim and fancy should play no part in its
application. 61
Second. While it is always in the power of the Court to suspend
its own rules, or to except a particular case from its
operation,62 the liberality with which equity jurisdiction is
exercised must always be anchored on the basic consideration
that the same must be warranted by the circumstances obtaining
in the case. 63 However, there is no showing herein of any
exceptional circumstance that may rationalize a digression from
the rule on timeliness of petitions.
Moreover, petitioners failed to satisfactorily show that the
refusal of VECO to follow the grievance machinery procedure
under Section 4, Article XVII of the CBA in the suspension and
termination from employment of the other union officers and
members constituted unfair labor practice.
True, it is a fundamental doctrine in labor law that the CBA is the
law between the parties and they are obliged to comply with its
provisions. If the provisions of the CBA seem clear and
unambiguous, the literal meaning of their stipulations shall
control. However, as in this case, when general and specific
provisions of the CBA are inconsistent, the specific provision
shall be paramount to and govern the general provision.64
Section 4, Article XVII of the CBA states that "(a)ny difference of
opinion, controversy, dispute problem or complaint arising from
Company-Union or Company-Worker relations concerning the
interpretation or application of this Agreement or regarding any
matter affecting Company-Union or Company-Worker relations
shall be considered a grievance." 65 On the other hand, under
Section 13, Article XIV, "(t)he Company agrees that henceforth
there shall be a fair and uniform application of its rules and
regulations. It is understood that disciplinary actions imposed on
employee or laborer shall be governed by the rules and
regulations promulgated by the Company as well as those
provided for by existing laws on the matter. "66
The Court is in accord with the ratiocination of the NLRC that the
sweeping statement "any matter affecting Company-Union or
Company-Worker relations shall be considered a grievance"
under Section 4, Article XVII is general, as opposed to Section 13,
Article XIV of the CBA, which is specific, as it precisely refers to
"what governs employee disciplinary actions." 67 Thus, the NLRC
correctly ruled that VECO acted within the bounds of law when it
proceeded with its administrative investigation of the charges
against other union officers and members.
This is consistent with jurisprudential rulings supporting an
employer's free reign and "wide latitude of discretion to regulate
all aspects of employment, including the prerogative to instill
discipline in its employees and to impose penalties, including
dismissal, upon erring employees. This is management
prerogative, where the free will of management to conduct its
own affairs to achieve its purpose takes form. The only criterion
to guide the exercise of its management prerogative is that the
policies, rules[,] and regulations on work-related activities of the
employees must always be fair and reasonable[,] and the
corresponding penalties, when prescribed, are commensurate to
the offense involved and to the degree of the infraction." 68 The
Labor Code does not excuse employees from complying with
valid company policies and reasonable regulations for their
governance and guidance.69
Delving now into the merits of Mahilum's dismissal, the Court
holds that the two requisites for a valid dismissal from
employment have been met, namely: ( 1) it must be for a just or
authorized cause; and (2) the employee must be afforded due
process. 70
VECO anchored its termination of Mahilum on Article 282 ( c) of
the Labor Code and Articles 5.1 and 4.4 71 of VECO's Company
Code of Discipline, which read as follows:
Article 282 (c) of the Labor Code:
Art. 282. Termination by Employer. - An employer may
terminate an employment for any of the following causes:
xxxx
(c) Fraud or willful breach of trust by the employee of the trust
reposed 'in him by his employer or duly authorized
representative;
Company Code of Discipline:
Art. 5.1 Every employee shall uphold company trust and
confidence as well as the trust relationship between the
company and its customers/ suppliers.
Art. 4.4 Every employee shall willfully respect the honor or
person of his immediate superior and/or department head or
company officers.
VECO found the following "Press Release", 72 which Mahilum,
together with other union officers, caused to be published, as
libelous for dishonoring and blackening the memory of then
corporate officer Luis Alfonso Y. Aboitiz, as well as for
maliciously impeaching and besmirching the company's name
and reputation:
VECEU-ALU President, Casmero A. Mahilum, said that since 2004
up to present the new VECO Management under the
administration of the Aboitizes unceasingly attack the local
Union by continuously limit (sic) its membership and diminish
(sic) and/or abolish (sic) worker's benefits and privileges
stipulated in the CBA. x x x. Through clever use of psychological
warfare, intimidation, deception, divide and rule tactic and
taking great advantage of the weakness of the Union especially of
the leadership during that time, the [new] Management under
the late Alfonso Y. Aboitiz was able to secure a Memorandum of
Agreement (MOA) signed by the Union and Management
representatives and ratified by the General Membership that
gave Management more flexibility in dealing with labor. x x x.
xxxx
The [l]ocal Union wrote a letter to Mr. Aboitiz expressing full
support of his campaign for energy conservation x x x. But Mr.
Aboitiz was too hard and too arrogant to deal with. x x x.
x x x. We, therefore, ask the general public to understand our
plight and support our actions. We also urge everyone to oppose
any electricity rate increase filed by VECO and NAPOCOR at the
Energy Regulatory Commission (ERC). Any rate increase in the
electricity will only worsen the already burdened public and
further increase profits for the Aboitizes. The entire Union
membership are one with you in condemning such increase and
brazen connivance of VECO and NAPOCOR to justify increases in
electricity rate.
x x x x 73
The Court has consistently held that "x x x loss of trust and
confidence must be based on willful breach of the trust reposed
in the employee by his employer. Such breach is willful if it is
done intentionally, knowingly, and purposely, without justifiable
excuse, as distinguished from an act done carelessly,
thoughtlessly, heedlessly or inadvertently. Moreover, it must be
based on substantial evidence and not on the employer's whims
or caprices or suspicions[,] otherwise, the employee would
eternally remain at the mercy of the employer. x x x. And, in
order to constitute a just cause for dismissal, the act complained
of must be work-related and show that the employee concerned
is unfit to continue working for the employer.1wphi1 In
addition, loss of confidence x x x is premised on the fact that the
employee concerned holds a position of responsibility, trust, and
confidence or that the employee concerned is entrusted with
confidence with respect to delicate matters, such as handling or
care and protection of the property and assets of the employer.
The betrayal of this trust is the essence of the offense for which
an employee is penalized."74
Mahilum's attempt to rationalize his act as part of his "moral,
legal or social duty xx x to make known his legitimate
perception" 75 against VECO does not, in any way, detract from
the indubitable fact that he intentionally, knowingly, and
purposely caused the aforequoted "disparaging publication."
Neither can he hide behind the claim that the press release was
simply "an expression of a valid grievance." 76 As the NLRC aptly
pointed out, "(i)nstead of him and the rest of the union officers
bringing their sentiments and/or grievances against the
management to the proper forum, they intentionally, knowingly
and purposefully breached their employer's trust, by issuing x x
x derogatory statements and causing their publication,
apparently, to incite public condemnation against the latter." 77It
bears noting that, while petitioners harp on the refusal of VECO
to follow the grievance machinery procedure under the CBA,
they conveniently forgot that they themselves shunned the very
procedure to which they now hang by a thread.
Moreover, the Court is unmoved by Mahilum's insistence that
there was nothing in his position which called for management's
trust and confidence in him. 78 The NLRC, whose findings of facts
and conclusions are generally accorded not only great weight
and respect but even with finality, correctly held that, as
Customer Service Representative, Mahilum occupied a position
of responsibility especially in dealing with VECO's clients.79 His
duties and responsibilities included: (1) accepting pertinent
documents and processing electrical service applications; (2)
verifying authenticity of documents submitted; (3) interviewing
customer-applicant on applications, complaints, and requests;
(4) preparing job assignment of service inspectors; (5) filing all
service .orders of inspectors; ( 6) assessing and accepting bill
deposits; (7) preparing and facilitating signing of Metered
Service Contract; (8) issuing service order for meter-related
activities; (9) verifying existing account of customer-applicant
and approving account clearances; (10) accepting payment of
bills from customer applicant for account clearances; and (11)
processing payment arrangements of customers. 80
His performance was measured according to how he: (1)
handled customers' transactions; (2) made decisions in
processing customers' applications and payment arrangements;
and (3) maintained posture at all times in handling customers
transactions even with angry customers 81.
It is clear from the foregoing that Mahilum was not an ordinary
rank-and-file employee. His job entailed the observance of
proper company procedures relating to processing and
determination of electrical service applications culminating in
the . signing of service contracts, which constitutes the very
lifeblood of VECO's existence. He was further entrusted with
handling the accounts of customers and accepting payments
from them.
Not only that, it was his duty to address customer complaints
and requests. Being a front liner of VECO, with the most
consistent and direct interaction with customers, Mahilum's job
involved a high degree of responsibility requiring a substantial
amount of trust and confidence on the part of his employer, i.e.,
VECO.
However, with the derogatory statements issued by Mahilum
that were intended to incite, not just public condemnation of
VECO, but antagonism and obstruction against rate increases in
electricity that it may be allowed, by law, to fix, there can be no
dispute that VECO, indeed, had lost its trust and confidence in
Mahilum and his ability to perform his tasks with utmost
efficiency and loyalty expected of an employee entrusted to
handle customers and funds. Settled is the rule that an employer
cannot be compelled to retain an employee who is guilty of acts
inimical to the interests of the employer. A company has the right
to dismiss its employee if only as a measure of self protection. 82
Thus, Mahilum was terminated for a just and valid cause. Republic of the Philippines
Moreover, as declared by the NLRC, VECO complied with the SUPREME COURT
procedural due process requirements of furnishing Mahilum Manila
with two written notices before the termination of employment
can be effected. On May 8, 2009, 83 Mahilum was apprised of the EN BANC
particular acts for which his termination was sought; and, after
due investigation, he was given a Notice of Decision 84on October August 18, 2015
28, 2010 informing him of his dismissal from service.
G.R. No. 203355,
The fact that Mahilum served the company for a considerable
period of time will not help his cause. It is well to emphasize that LEO R. ROSALES, EDGAR SOLIS JONATHAN G. RANIOLA, LITO
the longer an employee stays in the service of the company, the FELICIANO, RAYMUNDO DIDAL, JR., NESTOR SALIN,
greater is his responsibility for knowledge and compliance with ARNULFO S. ABRIL, RUBEN FLORES, DANTE FERMA AND
the norms of conduct and the code of discipline in the MELCHOR SELGA, Petitioners, v. NEW A.N.J.H. ENTERPRISES &
company. 85 N.H. OIL MILL CORPORATION, NOEL AWAYAN, MA. FE
AWAYAN, BYRON ILAGAN, HEIDI A. ILAGAN AND AVELINO
As a final word, while it is the state's responsibility to afford AWAYAN, Respondents.
protection to labor, this policy should not be used as an
instrument to oppress management and capital. In resolving DECISION
disputes between labor and capital, fairness and justice should
always prevail. Social justice does not mandate that every VELASCO JR., J.:
dispute should be automatically decided in favor of labor. Justice
is to be granted to the deserving and dispensed in the light of the This is a Petition for Review on Certiorari under Rule 45 of the
established facts and the applicable law and doctrine. 86 Rules of Court assailing the September 5, 2012 Decision1 of the
Court of Appeals (CA) in CA-G.R. SP No. 124395, which, in turn,
WHEREFORE, the instant petition is hereby DENIED. affirmed the Resolutions of the National Labor Relations
Commission (NLRC) dated December 28, 20112 and February 28,
SO ORDERED. 20123 in NLRC-LAC Case No. 07-001796-11.

Respondent New ANJH Enterprises (New ANJH) is a sole

proprietorship owned by respondent Noel Awayan (Noel).
Petitioners are its former employees who worked as machine
operators, drivers, helpers, lead and boiler men.
Allegedly due to dwindling capital, on February 11, 2010, Noel
wrote the Director of the Department of Labor and Employment
(DOLE) Region IV-A a letter regarding New ANJH's impending
cessation of operations and the sale of its assets to respondent
NH Oil Mill Corporation (NH Oil), as well as the termination of
thirty-three (33) employees by reason thereof.4 On February 13,
2010, Noel met with the 33 affected employees, which included
petitioners, to inform them of his plan.5 On even date, he gave the
employees uniformly-worded Notices dated February 12,
20106 informing them of the cessation of operations of New
ANJH effective March 15, 2010 and the sale of its assets to a
corporation. Noel also offered the employees, including
petitioners, their separation pay.
On March 5, 2010, Noel signed a Deed of Sale selling the
equipment, machines, tools and/or other devices being used by
New ANJH Enterprises for the manufacturing and/or extraction
of coconut oil for P950,000 to NH Oil, as represented by
respondent Heidi A. Ilagan (Heidi), Noel's sister.7cralawrednad
Parenthetically, the Articles of Incorporation of NH Oil were
prepared on January 27, 2010 with Noel appearing to have more
than two-thirds (2/3) of the subscribed capital stock of the
corporation.8 The remaining shares had been subscribed by
Heidi and other members of the Awayan family.9cralawrednad
On March 8, 2010, respondents New ANJH and Noel filed before
the NLRC Sub-Regional Arbitration Branch No. IV (NLRC-SRAB-
IV), San Pablo City a "Letter Request for Intervention," which was
docketed as SRAB-IV-03-5066-10-L. The letter request
reads:cralawlawlibrary
Please be informed that the business operations of the New ANJH
Enterprises, a single Proprietorship engaged in oil extraction
situated in San Pablo City, will be permanently closed effective
15 March 2010 due to lack of capital caused by enormous
uncollected receivables/debts and the necessity for the plant to
undergo general repairs and maintenance.
x x x x
In this connection, we respectfully request that we be allowed to
effect the payment of the separation benefits to our employees
before your Office and with your kind intervention to ensure that
we are properly guided by the provisions of law in this
undertaking.10 (Emphasis supplied)
On March. 16, 2010, petitioners Lito Feliciano (Feliciano), Edgar
Solis (Solis), and Nestor Salin (Salin) received their respective
separation pays, signed the corresponding check vouchers and
executed Quitclaims and Release before Labor Arbiter
Melchisedek A. Guan (LA Guan) of NLRC SRAB-IV San Pablo
Office.11cralawrednad
On March 27, 2010, petitioner Leo Rosales (Rosales) similarly
received his separation pay from Noel and signed a Quitclaim
and Release.12 On March 29, 2010, the other petitioners, Amulfo
Abril (Abril), Raymundo Didal (Didal), Ruben Flores (Flores),
Melchor Selga (Selga), Jonathan Ranola (Ranola), and Dante
Ferma (Ferma) also received their separation benefits and
signed their respective Quitclaims and Release and check
vouchers.13cralawrednad
Following the payments thus made to petitioners and their
execution of Quitclaims and Release, LA Guan issued four (4)
Orders, to wit: three Orders all dated March 22, 2010 for
petitioners Feliciano, Solis, and Salin;14 and one Order dated
April 8, 2010 for petitioners Abril, Flores, Didal, Ferma, Rosales,
Selga and Ranola.15 In the said Orders, LA Guan declared the
"labor dispute" between New ANJH and petitioners as "dismissed
with prejudice on ground of settlement."16cralawrednad
Petitioners, however, filed a complaint for illegal dismissal,
docketed as NLRC Case No. RAB-IV-04-00649-10-L, with NLRC
Regional Arbitration Branch IV (NLRC-RAB-IV) in Calamba City.
They alleged in their complaint that while New ANJH stopped its
operations on March 15, 2010, it resumed its operations as NH
Oil using the same machineries and with the same owners and
management.17 Petitioners thus claimed that the sale of the
assets of New ANJH to NH Oil was a circumvention of their
security of tenure.
In a Decision dated April 29, 2011,18 Executive Labor Arbiter
Generoso V. Santos (ELA Santos) found that petitioners had been
illegally dismissed and ordered their reinstatement and the
payment of One Million Six Thousand Forty-Five and 87/100
Pesos (P1,006,045.87) corresponding to the petitioners' full
backwages less the amount paid to them as their respective
"separation pay." In ruling for the petitioners, ELA Santos
ratiocinated that the buyer "in the 'impending sale' undisclosed
in the notices of [petitioners] is divulged by subsequent
development to be practically the same as the seller." Hence, for
ELA Santos, it was extremely difficult to conclude that the sale
was genuine and can validly justify the termination of the
petitioners.
Respondents filed their Notice of Appeal with Appeal
Memorandum19 along with a Verified Motion to Reduce
Bond20 with the NLRC. They also posted 60% of the award
ordered by the LA, or Six Hundred Three Thousand Six Hundred
Twenty-Seven and 52/100 Pesos (P603,627.52), as their appeal
bond.21cralawrednad
Meanwhile, petitioners also filed a Memorandum of Partial
Appeal contending that ELA Santos erred in failing to award
them moral and exemplary damages.22cralawrednad
On September 24, 2011, the NLRC issued a Decision23 denying
respondents' Verified Motion to Reduce Bond for lack of merit
and so dismissing their appeal for non-perfection. In the same
Decision, the NLRC also granted petitioners' partial appeal by
modifying ELA Santos' Decision to include the award of
P20,000.00 to each petitioner as moral and exemplary
damages.24cralawrednad
Respondents filed their Motion for Reconsideration with Motion
to Admit Additional Appeal Cash Bond25cralawredwith
corresponding payment of additional cash bond.26cralawrednad
While the motion was opposed by petitioners,27 the NLRC, in its
Resolution dated December 28, 2011,28reversed its earlier
Decision and ordered the dismissal of petitioners' complaint on
the ground that it was barred by the Orders issued by LA Guan
under the doctrine of res judicata. Further, the NLRC pointed out On the issue of perfecting the appeal, the CA was correct when it
that the sale of New ANJH's assets to NH Oil Mill was in the pointed out that Rule VI of the New Rules of Procedure of the
exercise of sound management prerogative and there was no NLRC provides that a motion to reduce bond shall be entertained
proof that it was made to defeat petitioners' security of tenure. "upon the posting of a bond in a reasonable amount in relation to
the monetary award." As to what the "reasonable amount" is, the
In its Resolution dated February 28, 2012,29 the NLRC denied NLRC has wide discretion in determining the reasonableness of
petitioners' Motion for Reconsideration. Hence, petitioners filed the bond for purposes of perfecting an appeal. In Garcia v. KJ
a petition for certiorari with the CA. Commercial,31 this Court explained:cralawlawlibrary
The filing of a motion to reduce bond and compliance with the
In the assailed Decision,30 the appellate court denied the petition two conditions stop the running of the period to perfect an
for certiorari, thereby affirming the NLRC's Resolutions dated appeal. x x x
December 28, 2011 and February 28, 2012.
x x x x
In its Decision, the appellate court held that private respondents
had substantially complied with the rule requiring the posting of The NLRC has full discretion to grant or deny the motion to
an appeal bond equivalent to the total award given to the reduce bond, and it may rule on the motion beyond the 10-
employees. More importantly, so the CA held, the Orders day period within which to perfect an appeal. Obviously, at
rendered by LA Guan in NLRC Case No. SRAB IV-03-5066-10-L the time of the filing of the motion to reduce bond and posting of
were considered final and binding upon the parties and had the a bond in a reasonable amount, there is no assurance whether
force and effect of a judgment rendered by the labor arbiter. the appellant's motion is indeed based on "meritorious ground"
Thus, the appellate court declared that the petitioners' complaint and whether the bond he or she posted is of a "reasonable
for illegal dismissal was already barred by res judicata. amount." Thus, the appellant always runs the risk of failing to
perfect an appeal.
Aggrieved by the CA's Decision, petitioners are now before this
Court on a petition for review on certiorari. x x x In order to give full effect to the provisions on motion to
reduce bond, the appellant must be allowed to wait for the
We find the petition to be with merit. ruling of the NLRC on the motion even beyond the 10-day
period to perfect an appeal. If the NLRC grants the motion and
The suspension of the period to perfect the appeal upon the rules that there is indeed meritorious ground and that the
filing of a motion to reduce bond amount of the bond posted is reasonable, then the appeal is
perfected. If the NLRC denies the motion, the appellant may
still file a motion for reconsideration as provided under
Section 15, Rule VII of the Rules. If the NLRC grants the
motion for reconsideration and rules that there is indeed
meritorious ground and that the amount of the bond posted
is reasonable, then the appeal is perfected. If the NLRC denies
the motion, then the decision of the labor arbiter becomes final
and executory.
x x
In any case, the rule that the filing of a motion to reduce bond
shall not stop the running of the period to perfect an appeal is
not absolute. The Court may relax the rule. In Intertranz
Container Lines, Inc. v. Bautista, the Court held:cralawlawlibrary
"Jurisprudence tells us that in labor cases, an appeal from a
decision involving a monetary award may be perfected only
upon the posting of cash or surety bond. The Court, however, has
relaxed this requirement under certain exceptional
circumstances in order to resolve controversies on their merits.
These circumstances include: (1) fundamental consideration of
substantial justice; (2) prevention of miscarriage of justice or of
unjust enrichment; and (3) special circumstances of the case
combined with its legal merits, and the amount and the issue
involved."32 (emphasis and underscoring supplied)
In this case, the NLRC had reconsidered its original position and
declared that the 60% bond was reasonable given the merits of
the justification provided by respondents in their Motion to
Reduce Bond, as supplemented by their Motion for
Reconsideration with Motion to Admit Additional Appeal Cash
Bond. The CA affirmed the merits of the grounds cited by
respondents in their motions and the reasonableness of the bond
originally posted by respondents. This is in accord with the
guidelines established in McBurnie v. Ganzon,33 where this Court
declared that the posting of a provisional cash or surety bond
equivalent to ten percent (10%) of the monetary award subject
of the appeal is sufficient provided that there is meritorious
ground therefor, viz:cralawlawlibrary
[O]n the matter of the filing and acceptance of motions to reduce
appeal bond, as provided in Section 6, Rule VI of the 2011 NLRC
x Rules of Procedure, the Court hereby RESOLVES that henceforth,
the following guidelines shall be observed:cralawlawlibrary
(a) The filing of a motion to reduce appeal bond shall be
entertained by the NLRC subject to the following conditions: (1)
there is meritorious ground; and (2) a bond in a reasonable
amount is posted;
(b) For purposes of compliance with condition no. (2), a motion
shall be accompanied by the posting of a provisional cash or
surety bond equivalent to ten percent (10%) of the monetary
award subject of the appeal, exclusive of damages and
attorney's fees;
(c) Compliance with the foregoing conditions shall suffice to
suspend the running of the 10-day reglementary period to
perfect an appeal from the labor arbiter's decision to the NLRC;
(d) The NLRC retains its authority and duty to resolve the motion
to reduce bond and determine the final amount of bond that shall
be posted by the appellant, still in accordance with the standards
of meritorious grounds and reasonable amount; and
(e) In the event that the NLRC denies the motion to reduce
bond, or requires a bond that exceeds the amount of the
provisional bond, the appellant shall be given a fresh period
of ten (10) days from notice of the NLRC order within which
to perfect the appeal by posting the required appeal
bond.34 emphasis and underscoring added)
It is noted that the respondents have eventually posted the full
amount of the award ordered by the labor arbiter. Thus, given
the absence of grave abuse of discretion on the part of the NLRC
and the affirmation of the CA of the reasonableness of the
motions and the amount of bond posted, there is no ground for
this Court to reverse the CA's finding that the appeal had been
perfected.
Res Judicata does not bar the filing of the complaints for
illegal dismissal
On the matter of the application of the doctrine of res judicata,
however, this Court is loath to sustain the finding of the appellate
court and the NLRC. For res judicata to apply, the concurrence of
the following requisites must be verified: (1) the former
judgment is final; (2) it is rendered by a court having jurisdiction
over the subject matter and the parties; (3) it is a judgment or an
order on the merits; (4) there is-between the first and the second
actions-identity of parties, of subject matter, and of causes of
action.35cralawrednad
The petitioners dispute the existence of all of the foregoing
requisites. First, petitioners contend that LA Guan does not have
jurisdiction to issue the Orders in SRAB-IV-03-5066-10-L since,
in the first place, Noel's letter request for guidance in the
payment of separation pay is allegedly not a "labor dispute."
Article 219 (previously Article 212) of the Labor Code defines a
"labor dispute" as "any controversy or matter concerning
terms and conditions of employment or the association or
representation of persons in negotiating, fixing, maintaining,
changing or arranging the terms and conditions of employment,
regardless of whether the disputants stand in the proximate
relation of employer and employee." As separation pay concerns
a term and condition of employment, Noel's request to be guided
in the payment thereof is clearly a labor dispute under the Labor
Code.
The proper payment of separation pay further falls under the
jurisdiction of the labor arbiter pursuant to Art. 224 (previously
Art. 217) of the Labor Code, as it is mandated as a necessary
condition for the termination of employees, viz,:cralawlawlibrary
Art. 224. Jurisdiction of the Labor Arbiters and the Commission.
(a) Except as otherwise provided under this Code,the Labor
Arbiters shall have original and exclusive jurisdiction to hear and
decide, within thirty (30) calendar days after the submission of
the case by the parties for decision without extension, even in
the absence of stenographic notes, the following cases involving
all workers, whether agricultural or non
agricultural:ChanRoblesvirtualLawlibrary
1. Unfair labor practice cases;
2. Termination disputes;
xxxx
 6. Except claims for employees compensation, social
security, medicare and maternity benefits, all other
claims arising from employer-employee relations,
including those of persons in domestic or household
service, involving an amount exceeding five thousand
pesos (P5,000.00) regardless of whether accompanied
with a claim for reinstatement. (Emphasis supplied)
The invocation of the labor arbiter's jurisdiction by way of a
letter request instead of a complaint is of no moment, as it is
well-settled that the application of technical rules of procedure is
relaxed in labor cases.
The third requisite, however, is not present. The Orders
rendered by LA Guan cannot be considered as constituting a
judgment on the merits. The Orders simply manifest that
petitioners "are amenable to the computations made by the
company respecting their separation pay." Nothing more. They
do not clearly state the petitioners' right or New ANJH's
corresponding duty as a result of the termination.36cralawrednad
Similarly, the fourth requisite is- also absent. While there may be
substantial identity of the parties, there is no identity of subject
matter or cause of action. In SME Bank, Inc. v. De Guzman,37 this
Court held that the acceptance of separation pay is an issue
distinct from the legality of the dismissal of the employees. We
held:cralawlawlibrary
The conformity of the employees to the corporation's act of
considering them as terminated and their subsequent acceptance
of separation pay does not remove the taint of illegal
dismissal. Acceptance of separation pay does not bar the
employees from subsequently contesting the legality of their
dismissal, nor does it estop them from challenging the legality of
their separation from the service.38 (Emphasis supplied)
In the absence of the third and fourth requisites, the appellate
court should have proceeded to rule on the validity of
petitioners' termination.
Piercing the veil of corporate existence is justified in the
present case.
The application of the doctrine of piercing the veil of corporate
fiction is frowned upon. However, this Court will not hesitate to
disregard the corporate fiction if it is used to such an extent that
injustice, fraud, or crime is committed against another in
disregard of his rights.39cralawrednad
In this case, petitioners advance the application of the doctrine
because they were terminated from employment on the pretext
that there will be an impending permanent closure of the
business as a result of an intended sale of its assets to an
undisclosed corporation, and that there will be a change in the
management. The termination notices received by petitioners
identically read:cralawlawlibrary
Nais po naming ipaabot sa inyo na ang New ANJH Enterprises ay
ihihinto na ang operasyon dahil sa nagpasya ako bilang may-ari
na ipagbili na ang ari-arian nito sa iba kung kayat magkakaroon
ng pagpapalit sa pamumunuan nito.
Kaugnay po nito at ayon sa itinatadhana ng batas ay nais kong
ipaabot sa inyo na 30 araw matapos ninyong matanggap ang
pasabing ito o simula sa Marso 15, 2010 ay ititigil na ang
operasyon ng New ANJH Enterprises at sa nasabi ring petsa ay
matatapos na rin ang pagtratrabaho o "employment" ninyo sa
New ANJH Enterprises.40
Subsequent events, however, revealed that the buyer of the
assets of their employer was a corporation owned by the same
employer and members of his family. Furthermore, the business
re-opened in less than a month under the same management.
Admittedly, mere ownership by a single stockholder of all or
nearly all of the capital stock of the corporation does not by itself
justify piercing the corporate veil. Nonetheless, in this case, other
circumstances show that the buyer of the assets of petitioners'
employer is none other than his alter ego.41 We quote with
approval the observations of ELA Santos:cralawlawlibrary
Respondents did not allege that they informed complainants
neither did they state in the notices of termination that the buyer
in the "impending sale" is NH Oil Mill. Pondering on these
observations, this Office finds it too difficult to surmise that
respondents' omission was not deliberate, and so this Office
holds that Noel was not in good faith in dealing with
complainants. The information disclosed by the Certificate of
Registration and Articles of Incorporation of NH Oil Mill explains
respondents' motive. Its stockholders are members of [Noel's]
family known to complainants, and Noel is the controlling
stockholder and director. The immediate resumption of
operation after cessation of operation on March 15, 2010 further
explains it. While complainants failed to prove that the
stockholders in NH Oil Mill were those who managed
ANJH, respondents did not dispute that there was no change
in the management people, premises, tools, devices,
equipment, and machinery under NH Oil Mill. The buyer in
the "impending sale" undisclosed in the notices to
complainants is divulged by subsequent development to be
practically the same as the seller. These things are
inconsistent with good faith.
x x x x
Here, complainants' employment was terminated for the alleged
sale of assets of ANJH to NH Oil Mill that would allegedly entail
[a] change of management. The Deed of Sale dated March 5, 2010
[that] respondents presented (Annex "20", respondents position
paper) to prove the "sale," states that [for] the consideration of
Nine Hundred Fifty Thousand Pesos (Php950,000.00), Noel sold
to NH Oil Mill the equipment, machines, tool and/or other
devises being used by ANJH for manufacturing and/or extraction
of coconut oil. This Office cannot simply accept it as sufficient
proof of sale by the seller to a distinct and separate entity.
x x x x
The subscribed capital stock of Noel and Heidi [in NH Oil] are
worth Php790,000.00 and Php190,000.00, respectively, or the
total of Php980,000.00. Respondents claim that Noel was
managing ANJH and Heidi was its Secretary. The Deed of Sale
is signed by Noel and Heidi, Noel as [sellerl, and Heidi as
representative of NH Oil Mill.Respondents did not enumerate
what [were] the equipment etc. subject of the "sale," and how
they were depreciated, and what [were] the
equipment/machines owned by Avelino and rented by NH Oil
Mill and for how much? Therefrom, it is extremely difficult to
conclude by quantum of evidence acceptable to [a] reasonable
mind, [that] the "sale to a distinct entity" is genuine. And while Republic of the Philippines
the notices of termination state that there would be [a] change in SUPREME COURT
management, this Office notes that respondents do not deny Manila
that Noel and Heidi continue to manage NH Oil Mill.
Therefore, as far as complainants' employment is concerned, this FIRST DIVISION
Office pierces the veil of corporate fiction of NH Oil Mill and finds
that the purported sale thereto of the assets of ANJH is August 17, 2015
insufficient to validly terminate such employment. This Office
cannot rule otherwise without running afoul to the mandate of G.R. No. 206612
the Constitution securing to the workingman his employment,
and guaranteeing to him full protection. So this Office declares TOYOTA ALABANG, INC., Petitioner, v. EDWIN
that complainants were illegally dismissed.42 (emphasis and GAMES, Respondent.
underscoring supplied)
Clearly, the milieu of the present case compels this Court to RESOLUTION
remove NH Oil's corporate mask as it had become, and was used
as, a shield for fraud, illegality and inequity against the SERENO, C.J.:
petitioners.
Remaining at bench is the Motion for Reconsideration1 of
petitioner Toyota Alabang, Inc. We had unanimously denied2 its
WHEREFORE, the instant petition is GRANTED and the Decision
Petition for Review on Certiorari with Urgent Prayer for
dated September 5, 2012 of the Court of Appeals in CA-G.R. SP
Injunctive Relief,3 which sought the nullity of the Court of
No. 124395, affirming the Resolutions of the National Labor
Appeals (CA) Decision and Resolution.4 The CA affirmed the
Relations Commission (NLRC) dated December 28, 2011 and
Resolutions5 of the National Labor Relations Commission (NLRC)
February 28, 2012 in NLRC-LAC Case No. 07-001796-11, is
dismissing petitioner's appeal for non-perfection and for lack of
hereby REVERSED and SET ASIDE. The Decision of Executive
merit. In effect, the NLRC sustained the ruling6 of the labor
Labor Arbiter Generoso Santos in NLRC Case No. RAB-IV-04-
arbiter (LA) finding that petitioner had illegally dismissed
00649-10-L to the effect that petitioners were illegally dismissed
respondent Edwin Games (Games).
is REINSTATED.

In gist, the antecedent facts are as follows:

SO ORDERED.

Games, who worked as a foreman for petitioner, allegedly stole

its vehicle lubricants. Subsequently, it charged him with qualified
theft before the trial court. Two years thereafter, or on 24 August
2007, Games filed a Complainant for illegal dismissal,
nonpayment of benefits, and damages against petitioner. The
latter, through counsel, failed to file its Position Paper on the
date set on 15 November 2007.
Several resettings of the hearings ensued. During the 21
December 2007 hearing, petitioner manifested that it had failed
to file its Position Paper because its handling lawyer was no
longer connected with the company. Then, in the hearing of 11
January 2008, petitioner failed to appear and even reneged on
submitting its pleading. Accordingly, on 25 January 2008, the
case was declared submitted for decision.
On 5 February 2008, the LA ruled against petitioner and ordered
the latter to pay Games P535,553.07 for his separation pay, back
wages, service incentive leave pay and attorney's fees resulting
from his illegal dismissal. Petitioner no longer filed a motion for
reconsideration. As a result, the LA's ruling became final and
executory.
The LA issued a Writ of Execution, which petitioner sought to
quash. It prayed that the proceedings be reopened, explaining
that it had failed to present evidence because of its counsel's
negligence in filing the appropriate pleadings. The LA denied the
claims of petitioner. Aggrieved, the latter appealed before the
NLRC.
The appeal of petitioner was denied due course because it had
failed to show proof of its security deposit for the appeal bond
under Section 6, Rule VI of the 2005 NLRC Rules of Procedure.
According to the NLRC, the bonding company's mere declaration
in the Certification of Security Deposit that the bond was fully
secured7 was not tantamount to a faithful compliance with the
rule, because there must first be an accompanying assignment of
the employer's bank deposit.
On the merits, the NLRC dismissed the case on the basis of the
rule that no appeal may be taken from an order of execution of a
final judgment.8 For the NLRC, petitioner's failure to appeal the
LA Decision already made the ruling final and executory.
Petitioner elevated the case to the CA via a Petition for Certiorari,
but the action was dismissed. Firstly, the CA ruled that the NLRC
did not gravely abuse its discretion in denying the appeal, given
that petitioner had failed to comply faithfully with the bond
requirement. Secondly, it echoed the ruling of the NLRC that a
final judgment is no longer appealable. Thirdly, the CA found that
petitioner's own negligence had caused it to lose its right to
appeal.
Aggrieved, petitioner filed a Petition for Review on Certiorari
with Urgent Prayer for Injunctive Relief before this Court. It
disputed the finding that it did not show proof of its security
deposit for the appeal bond. It also insisted that its counsel's
gross negligence justified the reopening of the proceedings
below.
By way of a minute Resolution, this Court denied the petition
considering that the allegations, issues and arguments raised by
petitioner failed to sufficiently show that the CA had committed
any reversible error in the challenged decision and resolution as
to warrant the exercise of this Court's discretionary appellate
jurisdiction. Hence, the instant Motion for Reconsideration.
The determinative issues in this case remain the same. This
Court is tasked to review, on reconsideration, whether or not the
CA committed a reversible error in refusing to reopen the
proceedings below.
RULING OF THE COURT
To recall, the LA's decision finding that petitioner illegally
dismissed respondent was already final and executory because
of petitioner's failure to file a timely appeal. Therefore, the labor
dispute between the parties should have been considered a
closed case by then, and no longer subject to appeal. At that
point, Games should have already reaped the benefits of a
favorable judgment. Still, petitioner sought the reopening of the
case, which the tribunals a quo denied.
This Court maintains that the CA correctly refused to reopen the
proceedings below. The reopening of a case is an extraordinary
remedy,9 which, if abused, can make a complete farce of a duly
promulgated decision that has long become final and executory.
Hence, there must be good cause on the movant's part before it
can be granted.
In this case, petitioner itself was negligent in advancing its case.
As found by the appellate court, petitioner was present during
the mandatory conference hearing in which the latter was
informed by the LA of the need to file a Position Paper on 15
November 2007. However, petitioner not only reneged on the
submission of its Position Paper, but even failed to move for the
filing of the pleading at any point before the LA resolved the case
on 5 February 2008.
Moreover, petitioner had failed to exhibit diligence when it did
not attend the hearing on 11 January 2008, or any of the
proceedings thereafter, despite its manifestation that it no longer
had any legal representative. Given the instances of negligence
by petitioner itself, the Court finds that the CA justly refused to
reopen the case in the former's favor. Definitely, petitioner
cannot now be allowed to claim denial of due process when it
was petitioner who was less than vigilant of its
rights.10redarclaw
At this stage of appellate review, Justice Lucas P. Bersamin
dissents and votes to remand the case to the LA for the reception
of petitioner's evidence. He posits three reasons as
follows:LawlibraryofCRAlaw
First, he states that the NLRC gravely abused its discretion in
requiring petitioner to post an appeal bond, because this
requirement does not cover an appeal from a decision of the LA
denying a motion to quash a writ of execution.
Second, he writes that in any event, the NLRC erred in requiring
petitioner to accompany the appeal bond with proof of a security
deposit or collateral securing the bond. He bases this point on
the fact that the bonding company has already issued a
Certificate of Security Deposit declaring that the appeal bond
was fully secured by a security deposit equivalent to the
judgment award.

Third, he advances the opinion that there may be merit in the
Rule 45 petition filed by petitioner. He cites that it had a just
cause to dismiss respondent after he had allegedly stolen its
vehicle lubricants.
Before discussing these points, it is apropos to elucidate that this
Court must be faithful to the framework of resolving labor cases
on appellate review before this Court. Universal Robina Sugar
Milling Corporation v. Acibo aptly explains:11redarclaw
This Court's power of review in a Rule 45 pet1t1on is limited to
resolving matters pertaining to any perceived legal errors, which
the CA may have committed in issuing the assailed decision. In
reviewing the legal correctness of the CA's Rule 65 decision in a
labor case, we examine the CA decision in the context that it
determined, i.e., the presence or absence of grave abuse of
discretion in the NLRC decision before it and not on the
basis of whether the NLRC decision on the merits of the case
was correct. In other words, we have to be keenly aware that
the CA undertook a Rule 65 review, not a review on appeal, of the
NLRC decision challenged before it. (Emphasis supplied)
Based on the foregoing, the task at hand involves a
determination of whether or not the CA gravely erred in finding
that the NLRC did not exceed its jurisdiction in refusing to grant
petitioner's entreaty to reopen the case. In other words, as long
as the exercise of discretion below is based on well founded
factual and legal bases,12 no abuse of discretion amounting to
lack or excess of jurisdiction can be imputed, and we are then
justified to deny due course both to the Rule 45 petition and the
concomitant Motion for Reconsideration.
The tribunals below gave overwhelming justifications for their
rulings. In contrast, the first pointespoused in the dissenting
opinion has no basis. The paraphrased proposition that "an
appeal bond is not required in appeals from decisions of the LA
denying a motion to quash a writ of execution" lacks any citation
sourced from a statute or case law. Article 223 of the Labor Code
and Section 6, Rule VI of the 2011 NLRC Rules of Procedure,
uniformly state thus:LawlibraryofCRAlaw
In case the decision of the Labor Arbiter or the Regional
Director involves a monetary award, an appeal by the
employer may be perfected only upon the posting of a bond,
which shall either be in the form of cash deposit or surety bond
equivalent in amount to the monetary award, exclusive of
damages and attorney's fees. (Emphasis supplied)
Evidently, the above rules do not limit the appeal bond
requirement only to certain kinds of rulings of the LA. Rather,
these rules generally state that in case the ruling of the
LA involves a monetary award, an employer's appeal may be
perfected only upon the posting of a bond. Therefore, absent any
qualifying terms,13 so long as the decision of the LA involves a
monetary award, as in this case,14 that ruling can only be
appealed after the employer posts a bond.
Clearly, this construction is but proper considering the avowed
purpose of appeal bonds demanded by the law from employers
in labor cases. This matter was discussed by the Court
in Computer Innovations Center v. NLRC,15 to
wit:LawlibraryofCRAlaw
As earlier stated, the underlying purpose of the appeal bond is to
ensure that the employee has properties on which he or she
can execute upon in the event of a final, providential
award. The non payment or woefully insufficient payment of the
appeal bond by the employer frustrates these ends. Respondent
Cario alleges in his Comment before this Court that petitioner
Quilos and his wife have since gone abroad, and wonders aloud
whether he still would be able to collect his monetary award
considering the circumstances. Petitioners, in
their Reply and Memorandum, do not aver otherwise. Indeed,
such eventuality appears plausible considering that Quilos
himself did not personally verify the petition, and had in fact
executed a Special Power of Attorney in favor of his counsel, Atty.
Bernabe B. Alabastro, authorizing the filing of cases in his name.
ft does not necessarily follow that the absence of Quilos from this
country precludes the execution of the award due Cario.
However, if the absence of Quilos from this country proves to
render impossible the execution of judgment in favor of Cario,
then the latter's victory may sadly be rendered pyrrhic. The
appeal bond requirement precisely aims to prevent empty or
inconsequential victories by the laborer, and it is hoped that
herein petitioners' refusal to post the appropriate legal appeal
bond does not frustrate the ends of justice in this case. (Emphasis
supplied)
If we are to construe otherwise, then an aggrieved party may
simply seek the quashal of a writ of execution, instead of going
through the normal modes of appeal, to altogether avoid paying
for an appeal bond. This ruse will then circumvent the
requirement of both labor rules and jurisprudence16 to post an
appeal bond before contesting the LA's grant of monetary award.
Hence, the first point is not only incorrect, but also dangerous.
The second point likewise fails to justify the grant of petitioner's
Motion for Reconsideration. This point refers to the proper
construction of Section 6, Rule VI of the 2011 NLRC Rules of
Procedure, which demands that an appeal bond must be
accompanied by a "proof of security deposit or collateral
securing the bond."
According to the NLRC and the CA, the bonding company's mere
declaration in the Certification of Security Deposit that the bond
is fully secured17 is not tantamount to a faithful compliance with
the rule, because there must first be an accompanying
assignment of the employer's bank deposit. On the other hand,
the dissent sees this declaration as an act that satisfies Section 6,
Rule VI of the 2011 NLRC Rules of Procedure. For this reason, he
opines that the NLRC should have entertained the appeal of
petitioner.
Notwithstanding this issue, the NLRC has given a well-founded
reason for refusing to entertain petitioner's appeal, namely, no
appeal may be taken from an order of execution of a final
and executory judgment.
An appeal is not a matter of right, but is a mere statutory
privilege. It may be availed of only in the manner provided by
law and the rules.18 Thus, a party who seeks to elevate an action
must comply with the requirements of the 2011 NLRC Rules of
Procedure as regards the period, grounds, venue, fees, bonds,
and other requisites for a proper appeal before the NLRC; and in
Section 6, Rule VI, the aforesaid rules prohibit appeals from final
and executory decisions of the Labor Arbiter.
In this case, petitioner elevated to the NLRC an already final and
executory decision of the LA. To recall, after petitioner learned of
its former counsel's negligence in filing a Position Paper before
the LA, it nonetheless failed to file a motion reconsideration to
question the ruling of the LA that it illegally dismissed Games. At
that point, the Decision was already final and executory, so the
LA dutifully issued a Writ of Execution. Petitioner sought the
quashal of the writ of execution and the reopening of its case
only at that stage; and only after it was rebuffed by the LA did
petitioner appeal before the NLRC. Based on the timeline,
therefore, the LA's adverse Decision had become final and
executory even prior to petitioner's appeal before the NLRC
contesting the denial of the Motion to Quash the Writ of
Execution. Consequently, the NLRC dismissed the appeal based
on its clear prohibition under Section 5, Rule V of the 2011 NLRC
Rules of Procedure.19redarclaw
The NLRC's reasoning that no appeal may be taken from an order
of execution of a final and executory judgment is also rooted in
case law. Jurisprudence dictates that a final and executory
decision of the LA can no longer be reversed or modified.20 After
all, just as a losing party has the right to file an appeal within the
prescribed period, so does the winning party have the
correlative right to enjoy the finality of the resolution of the
case.21 On this basis, theCA did not grievously err when it
concluded that the ruling of the NLRC denying petitioner's
appeal was not baseless, arbitrary, whimsical, or
despotic.22redarclaw
Finally, as regards the third point pertaining to the advancement
of the merits23 of the case, it may no longer be properly
considered by this Court. To adjudicate on the merits of the
instant appeal would require the reopening of the whole case, a
step that all the tribunals below - the LA, the NLRC, and the CA-
have already refused to take.
As correctly ruled by the CA, the reopening of a case is, by
default, not allowed merely on the ground that the counsel has
been negligent in taking the required steps to protect the interest
of the client, such as timely filing a pleading, appearing during
hearings, and perfecting appeals.24 An exception arises only
when there is good cause and excusable negligence on the
client's part.25redarclaw
Both the explanation of the CA and the records undeniably show
no good cause or excusable negligence on the part of the client -
petitioner Toyota Alabang, Inc. given the totality of the instances
of the latter's own negligence in these proceedings, viz: (1)
despite being informed, during the mandatory conference
hearing, of the necessity to file a Position Paper, petitioner
reneged on its duty to timely submit its Position Paper to the LA
on 15 November 2007; (2) after manifesting that it no longer had
a counsel, petitioner was still absent on 11 January 2008, the
date when it could still have submitted its belated Position
Paper; (3) thereafter, it altogether absented itself from all the
proceedings before the LA; (4) at no point before the LA's
resolution of the case on 5 February 2008 did petitioner file a
Position Paper; and (5) after allowing the LA Decision to attain
finality as a result of its non-submission of an appeal or a motion
for reconsideration, petitioner belatedly sought the quasha1 of
the execution of the LA Decision granting compensation to
respondent.
Despite the overwhelming lapses mentioned above, the dissent
maintains that petitioner cannot be considered negligent by any
measure. According to the dissent, petitioner could not be faulted
for failing to file a position paper because the filing of pleadings
has been entrusted to its counsel. For the dissent, "given the
nature and extent of its business and operations, the petitioner
could not be expected to supervise and monitor all the cases it
had entrusted to its lawyer." But, this stance is baseless as can be
seen by the lack of legal citation in the dissent.
More importantly, this Court cannot give special treatment to
petitioner. In our past cases, this Court already held that the
failure of the counsel to file the required position papers before
the LA is not a ground to declare that petitioner had been
deprived of due process; and is not a cause to conclude that the
proceedings a quo had been null and void.26 In Building Care
Corporation v. Macaraeg,27 this Court thoroughly explained
that:LawlibraryofCRAlaw
It is, however, an oft-repeated ruling that the negligence and
mistakes of counsel bind the client. A departure from this rule
would bring about never-ending suits, so long as lawyers could
allege their own fault or negligence to support the client's case
and obtain remedies and reliefs already lost by the operation of
law. The only exception would be, where the lawyer's gross
negligence would result in the grave injustice of depriving his
client of the due process of law. In this case, there was no such
deprivation of due process. Respondent was able to fully present
and argue her case before the Labor Arbiter. She was accorded
the opportunity to be heard.
We have consistently held that the requirements of due process
are satisfied when the parties are given the opportunity to
submit position papers wherein they are supposed to attach all
the documents that would prove their claim in case it be decided
that no hearing should be conducted or was necessary.28Here,
petitioner, despite being given several chances to pass its
position paper, did not at all comply. Worse, petitioner also had
other instances of negligence. Consequently, this Court cannot
redo the whole proceedings of the Labor Arbiter who had
already afforded due process to the former.
Given the foregoing reasons, juxtaposed with the high threshold
for resolving appellate reviews in labor cases before this Court,
we rule for the denial of petitioner's Motion for Reconsideration.
WHEREFORE, the Petition for Review with Urgent Prayer for
Injunctive Relief filed by Toyota Alabang, Inc.
is DENIED with FINALITY. No further pleadings shall be
entertained in this case. Let an Entry of Judgment be issued in
due course.
SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
August 24, 2015
G.R. No. 200114,
SOCIAL SECURITY SYSTEM, Petitioner, v. DEBBIE
UBAA, Respondent.
DECISION
DEL CASTILLO, J.:
This Petition for Review on Certiorari1 assails: 1) the July 29,
2011 Decision2 of the Court of Appeals (CA) denying the Petition
for Certiorari in CA-G.R. SP No. 110006 and affirming the March
6, 2007 Order3 of the Regional Trial Court (RTC) of Daet,
Camarines Norte, Branch 39 in Civil Case No. 7304; and 2) the
CA's January 10, 2012 Resolution4 denying petitioner's Motion
for Reconsideration of the herein assailed Decision.
Factual Antecedents
On December 26, 2002, respondent Debbie Ubana filed a civil
case for damages against the DBP Service Corporation, petitioner
Social Security System (SSS), and the SSS Retirees
Association5 before the RTC of Daet, Camarines Norte. The case
was docketed as Civil Case No. 7304 and assigned to RTC Branch
39.
In her Complaint,6 respondent alleged that in July 1995, she
applied for employment with the petitioner. However, after
passing the examinations and accomplishing all the
requirements for employment, she was instead referred to DBP
Service Corporation for "transitory employment." She took the
pre-employment examination given by DBP Service Corporation
and passed the same. On May 20, 1996, she was told to report for
training to SSS, Naga City branch, for immediate deployment to
SSS Daet branch. On May 28, 1996, she was made to sign a six-
month Service Contract Agreement7 by DBP Service Corporation,
appointing her as clerk for assignment with SSS Daet branch
effective May 27, 1996, with a daily wage of only P171.00. She
was assigned as "Frontliner" of the SSS Members Assistance
Section until December 15, 1999. From December 16, 1999 to
May 15, 2001, she was assigned to the Membership Section as
Data Encoder. On December 16, 2001, she was transferred to the
SSS Retirees Association as Processor at the Membership Section
until her resignation on August 26, 2002. As Processor, she was
paid only P229.00 daily or P5,038.00 monthly, while a regular
SSS Processor receives a monthly salary of P18,622.00 or
P846.45 daily wage. Her May 28, 1996 Service Contract
Agreement with DBP Service Corporation was never renewed,
but she was required to work for SSS continuously under
different assignments with a maximum daily salary of only
P229.00; at the same time, she was constantly assured of being
absorbed into the SSS plantilla. Respondent claimed she was
qualified for her position as Processor, having completed
required training and passed the SSS qualifying examination for
Computer Operations Course given by the National Computer
Institute, U.P. Diliman from May 16 to June 10, 2001, yet she was
not given the proper salary. Because of the oppressive and
prejudicial treatment by SSS, she was forced to resign on August
26, 2002 as she could no longer stand being exploited, the agony
of dissatisfaction, anxiety, demoralization, and injustice. She
asserted that she dedicated six years of her precious time
faithfully serving SSS, foregoing more satisfying employment
elsewhere, yet she was merely exploited and given empty and
false promises; that defendants conspired to exploit her and
violate civil service laws and regulations and Civil Code
provisions on Human Relations, particularly Articles 19, 20, and
21.8 As a result, she suffered actual losses by way of unrealized
income, moral and exemplary damages, attorney's fees and
litigation expenses.
Respondent prayed for an award of P572,682.67 actual damages
representing the difference between the legal and proper salary
she should have received and the actual salary she received
during her six-year stint with petitioner; P300,000.00 moral
damages; exemplary damages at the discretion of the court;
P20,000.00 attorney's fees and P1,000.00 appearance fees; and
other just and equitable relief.
Petitioner and its co-defendants SSS Retirees Association and
DBP Service Corporation filed their respective motions to
dismiss, arguing that the subject matter of the case and
respondent's claims arose out of employer-employee relations,
which are beyond the RTC's jurisdiction and properly cognizable
by the National Labor Relations Commission (NLRC).
Respondent opposed the motions to dismiss, arguing that
pursuant to civil service rules and regulations, service contracts
such as her Service Contract Agreement with DBP Service
Corporation should cover only a) lump sum work or services
such as janitorial, security or consultancy services, and b) piece
work or intermittent jobs of short duration not exceeding six
months on a daily basis.9 She posited that her service contract
involved the performance of sensitive work, and not merely
janitorial, security, consultancy services, or work of intermittent
or short duration. In fact, she was made to work continuously
even after the lapse of her 6-month service contract. Citing Civil
Service Commission Memorandum Circular No. 40, respondent
contended that the performance of functions outside of the
nature provided in the appointment and receiving salary way
below that received by regular SSS employees amount to an
abuse of rights; and that her cause of action is anchored on the
provisions of the Civil Code on Human Relations.
Ruling of the Regional Trial Court
On October 1, 2003, the RTC issued an Order10 dismissing
respondent's complaint for lack of jurisdiction, stating that her
claim for damages "has a reasonable causal connection with her
employer-employee relations with the defendants"11 and "is
grounded on the alleged fraudulent and malevolent manner by
which the defendants conspired with each other in exploiting
[her], which is a clear case of unfair labor practice,"12 falling
under the jurisdiction of the Labor Arbiter of the NLRC. Thus, it
decreed:cralawlawlibrary
WHEREFORE, premises considered, the aforementioned Motion
to Dismiss the complaint of the herein plaintiff for lack of
jurisdiction is hereby GRANTED. The above-entitled complaint is
hereby DISMISSED.
SO ORDERED.13
Respondent moved for reconsideration. On March 6, 2007, the
RTC issued another Order14 granting respondent's motion for
reconsideration. The trial court held:cralawlawlibrary
Section 2(1), Art. K-B, 1987 Constitution, expressly provides that
"the civil service embraces all branches, subdivisions,
instrumentalities, and agencies of the government, including
government-owned or controlled corporation[s] with original
charters." Corporations with original charters are those which
have been created by special law[s] and not through the general
corporation law. In contrast, labor law claims against
government-owned and controlled corporations without original
charters fall within the jurisdiction of the Department of Labor
and Employment and not the Civil Service Commission. (Light
Rail Transit Authority vs. Perfecto Venus, March 24, 2006.)
Having been created under an original charter, RA No. 1161 as
amended by R.A. 8282, otherwise known as the Social Security
Act of 1997, the SSS is governed by the provision[s] of the Civil
Service Commission. However, since the SSS denied the existence
of an employer-employee relationship, and the case is one for
Damages, it is not the Civil Service Commission that has
jurisdiction to try the case, but the regular courts.
A perusal of the Complaint filed by the plaintiff against the
defendant SSS clearly shows that the case is one for Damages.
Paragraph 15 of her complaint states, thus:
xxx. Likewise, they are contrary to the Civil Code provisions on
human relations which [state], among others, that Every person,
must in the exercise of his rights and in the performance of his
duties, act with justice, give everyone his due and observe
honesty and good faith (Article 19) and that Every person who,
contrary to law, willfully or negligently [causes] damages to
another, shall indemnify the latter for the same. (Art. 20)
"Article 19 provides a rule of conduct that is consistent with an
orderly and harmonious relationship between and among men and
women It codifies the concept of what is justice and fair play so
that abuse of right by a person will be prevented. Art. 20 speaks of
general sanction for all other provisions of law which do not
especially provide their own sanction. Thus, anyone, who, whether
willfully or negligently, in the exercise of his legal right or duty,
causes damage to another, shall indemnify his or her victim for
injuries suffered thereby." (Persons and Family Relations, Sta.
Maria, Melencio, Jr. (2004) pp. 31-32.)
Wherefore, all premises considered, the Motion for
Reconsideration is hereby GRANTED. The case against defendant
Social Security System represented by its President is hereby
reinstated in the docket of active civil cases of this court.
SO ORDERED.15 [Italics in the original]
Petitioner moved for reconsideration, but the RTC stood its
ground in its June 24, 2009 Order16cralawrednad
Ruling of the Court of Appeals
In a Petition for Certiorari17 filed with the CA and docketed as
CA-G.R. SP No. 110006, petitioner sought a reversal of the RTC's
June 24, 2009 and March 6, 2007 Orders and the reinstatement
of its original October 1, 2003 Order dismissing Civil Case No.
7304, insisting that the trial court did not have jurisdiction over
respondent's claims for "unrealized salary income" and other
damages, which constitute a labor dispute cognizable only by the
labor tribunals. Moreover, it claimed that the assailed Orders of
the trial court were issued with grave abuse of discretion. It
argued that the trial court gravely erred in dismissing the case
only as against its co-defendants DBP Service Corporation and
SSS Retirees Association and maintaining the charge against it,
considering that its grounds for seeking dismissal are similar to
those raised by the two. It maintained that DBP Service
Corporation and SSS Retirees Association are legitimate
independent job contractors engaged by it to provide manpower
services since 2001, which thus makes respondent an employee
of these two entities and not of SSS; and that since it is not the
respondent's employer, then there is no cause of action against
it.
On July 29, 2011, the CA issued the assailed Decision containing
the following pronouncement:cralawlawlibrary
Hence, petitioner seeks recourse before this Court via this
Petition for Certiorarichallenging the RTC Orders. For the
resolution of this Court is the sole issue of:cralawlawlibrary
WHETHER OR NOT THE RTC HAS JURISDICTION TO HEAR AND
DECIDE CIVIL CASE NO. 7304.
The petition is devoid of merits.
The rule is that, the nature of an action and the subject matter
thereof, as well as, which court or agency of the government has
jurisdiction over the same, are determined by the material
allegations of the complaint in relation to the law involved and
the character of the reliefs prayed for, whether or not the
complainant/plaintiff is entitled to any or all of such reliefs. A
prayer or demand for relief is not part of the petition of the cause
of action; nor does it enlarge the cause of action stated or change
the legal effect of what is alleged. In determining which body has
jurisdiction over a case, the better policy is to consider not only
the status or relationship of the parties but also the nature of the
action that is the subject of their controversy.
A careful perusal of Ubana's Complaint in Civil Case No. 7304
unveils that Ubana's claim is rooted on the principle of abuse of
right laid in the New Civil Code. She was claiming damages based
on the alleged exploitation [perpetrated] by the defendants
depriving her of her rightful income. In asserting that she is
entitled to the damages claimed, [she] invoked not the provisions
of the Labor Code or any other labor laws but the provisions on
human relations under the New Civil Code. Evidently, the
determination of the respective rights of the parties herein, and
the ascertainment whether there were abuses of such rights, do
not call for the application of the labor laws but of the New Civil
Code. Aproposthereto, the resolution of the issues raised in the
instant complaint does not require the expertise acquired by
labor officials. It is the courts of general jurisdiction, which is the
RTC in this case, which has the authority to hear and decide Civil
Case No. 7304.
Not every dispute between an employer and employee involves
matters that only labor arbiters and the NLRC can resolve in the
exercise of their adjudicatory or quasi-judicial powers. Where
the claim to the principal relief sought is to be resolved not by
reference to the Labor Code or other labor relations statute or a
collective bargaining agreement but by the general civil law, the
jurisdiction over the dispute belongs to the regular courts of
justice and not to the Labor Arbiter and the NLRC. In such
situations, [resolution] of the dispute requires expertise, not in
labor management relations nor in wage structures and other
terms and conditions of employment, but rather in the
application of the general civil law. Clearly, such claims fall
outside the area of competence or expertise ordinarily ascribed
to Labor Arbiters and the NLRC and the rationale for granting
jurisdiction over such claims to these agencies disappears.
It is the character of the principal relief sought that appears
essential in this connection. Where such principal relief is to be
granted under labor legislation or a collective bargaining
agreement, the case should fall within the jurisdiction of the
Labor Arbiter and the NLRC, even though a claim for damages
might be asserted as an incident to such claim.
The pivotal question is whether the Labor Code has any
relevance to the principal relief sought in the complaint. As
pointed out earlier, Ubana did not seek refuge from the Labor
Code in asking for the award of damages. It was the
transgression of Article[s] 19 and 20 of the New Civil Code that
she was insisting in wagering this case. The primary relief sought
herein is for moral and exemplary damages for the abuse of
rights. The claims for actual damages for unrealized income are
the natural consequence for abuse of such rights.
While it is true that labor arbiters and the NLRC have jurisdiction
to award not only reliefs provided by labor laws, but also
damages governed by the Civil Code, these reliefs must still be
based on an action that has a reasonable causal connection with
the Labor Code, other labor statutes, or collective bargaining
agreements. Claims for damages under paragraph 4 of Article
217 must have a reasonable causal connection with any of the
claims provided for in the article in order to be cognizable by the
labor arbiter. Only if there is such a connection with the other
claims can the claim for damages be considered as arising from
employer-employee relations. In the present case, Ubana's claim
for damages is not related to any other claim under Article 217,
other labor statutes, or collective bargaining agreements.
All told, it is ineluctable that it is the regular courts that has [sic]
jurisdiction to hear and decide Civil Case No. 7304. In Tolosa v.
NLRC,18 the Supreme Court held that, "[i]t is not the NLRC but the
regular courts that have jurisdiction over action for damages, in
which the employer-employee relations is merely incidental, and
in which the cause of action proceeds from a different source of
obligation such as tort. Since petitioner's claim for damages is
predicated on a quasi-delict or tort that has no reasonable causal
connection with any of the claims provided for in Article 217,
other labor statutes or collective bargaining agreements,
jurisdiction over the action lies with the regular courts not with
the NLRC or the labor arbiters." The same rule applies in this
case.
WHEREFORE, premises considered, the instant petition is
DENIED and the Order dated March 6, 2007 of the Regional Trial
Court, Branch 39 of Daet, Camarines Norte in Civil Case No. 7304
is hereby AFFIRMED.

SO ORDERED.19
Petitioner filed a Motion for Reconsideration,20 but the CA denied
the same in its January 10, 2012 Resolution.21 Hence, the present
Petition.
Issue
Petitioner simply submits that the assailed CA dispositions are
contrary to law and jurisprudence.
Petitioner's Arguments
Praying that the assailed CA dispositions be set aside and that
the RTC's October 1, 2003 Order dismissing Civil Case No. 7304
be reinstated, petitioner essentially maintains in its Petition and
Reply22that respondent's claims arose from and are in fact
centered on her previous employment. It maintains that there is
a direct causal connection between respondent's claims and her
employment, which brings the subject matter within the
jurisdiction of the NLRC. Petitioner contends that respondent's
other claims are intimately intertwined with her claim of actual
damages which are cognizable by the NLRC. Moreover, petitioner
alleges that its existing manpower services agreements with DBP
Service Corporation and SSS Retirees Association are legitimate;
and that some of respondent's claims may not be entertained
since these pertain to benefits enjoyed by government
employees, not by employees contracted via legitimate
manpower service providers. Finally, petitioner avers that the
nature and character of the reliefs prayed for by the respondent
are directly within the jurisdiction not of the courts, but of the
labor tribunals.
Respondent's Arguments
In her Comment,23 respondent maintains that her case is
predicated not on labor laws but on Articles 19 and 20 of the
Civil Code for petitioner's act of exploiting her and enriching
itself at her expense by not paying her the correct salary
commensurate to the position she held within SSS. Also, since
there is no employer-employee relationship between her and
petitioner, as the latter itself admits, then her case is not
cognizable by the Civil Service Commission (CSC) either; that
since the NLRC and the CSC have no jurisdiction over her case,
then it is only the regular courts which can have jurisdiction over
her claims. She argues that the CA is correct in ruling that her
case is rooted in the principle of abuse of rights under the Civil
Code; and that the Petition did not properly raise issues of law.
Our Ruling
The Court denies the Petition.
In Home Development Mutual Fund v. Commission on Audit,24 it
was held that while they performed the work of regular
government employees, DBP Service Corporation personnel are
not government personnel, but employees of DBP Service
Corporation acting as an independent contractor. Applying the
foregoing pronouncement to the present case, it can be said that
during respondent's stint with petitioner, she never became an
SSS employee, as she remained an employee of DBP Service
Corporation and SSS Retirees Association - the two being
independent contractors with legitimate service contracts with
SSS.
Indeed, "[i]n legitimate job contracting, no employer-employee
relation exists between the principal and the job contractor's
employees. The principal is responsible to the job contractor's
employees only for the proper payment of
wages." cralawredcralawrednad
25
In her Complaint, respondent acknowledges that she is not
petitioner's employee, but that precisely she was promised that
she would be absorbed into the SSS plantilla after all her years of
service with SSS; and that as SSS Processor, she was paid only
P229.00 daily or P5,038.00 monthly, while a regular SSS
Processor receives a monthly salary of P18,622.00, or P846.45
daily wage. In its pleadings, petitioner denied the existence of an
employer-employee relationship between it and respondent; in
fact, it insists on the validity of its service agreements with DBP
Service Corporation and SSS Retirees Association - meaning that
the latter, and not SSS, are respondent's true employers. Since
both parties admit that there is no employment relation between
them, then there is no dispute cognizable by the NLRC. Thus,
respondent's case is premised on the claim that in paying her
only P229.00 daily - or P5,038.00 monthly - as against a monthly
salary of P18,622.00, or P846.45 daily wage, paid to a regular SSS
Processor at the time, petitioner exploited her, treated her
unfairly, and unjustly enriched itself at her expense.
For Article 217 of the Labor Code to apply, and in order for the
Labor Arbiter to acquire jurisdiction over a dispute, there must
be an employer-employee relation between the parties
thereto.chanrobleslaw
x x x It is well settled in law and jurisprudence that where no
employer-employee relationship exists between the parties and
no issue is involved which may be resolved by reference to the
Labor Code, other labor statutes or any collective bargaining
agreement, it is the Regional Trial Court that has jurisdiction, x x
x The action is within the realm of civil law hence jurisdiction
over the case belongs to the regular courts. While the resolution
of the issue involves the application of labor laws, reference to
the labor code was only for the determination of the solidary
liability of the petitioner to the respondent where no employer-
employee relation exists. Article 217 of the Labor Code as
amended vests upon the labor arbiters exclusive original
jurisdiction only over the
following:ChanRoblesvirtualLawlibrary
1. Unfair labor practices;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that
workers may file involving wages, rates of pay, hours of work
and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of
damages arising from employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code,
including questions involving legality of strikes and lockouts;
and

6. Except claims for Employees Compensation, Social Security,
Medicare and maternity benefits, all other claims, arising from
employer- employee relations, including those of persons in
domestic or household service, involving an amount exceeding
five thousand pesos (P5,000.00) regardless of whether
accompanied with a claim for reinstatement.
In all these cases, an employer-employee relationship is an
indispensable jurisdictional requisite x x x.26
Since there is no employer-employee relationship between the
parties herein, then there is no labor dispute cognizable by the
Labor Arbiters or the NLRC.
There being no employer-employee relation or any other definite
or direct contract between respondent and petitioner, the latter
being responsible to the former only for the proper payment of
wages, respondent is thus justified in filing a case against
petitioner, based on Articles 19 and 20 of the Civil Code, to
recover the proper salary due her as SSS Processor. At first
glance, it is indeed unfair and unjust that as, Processor who has
worked with petitioner for six long years, she was paid only
P5,038.00 monthly, or P229.00 daily, while a regular SSS
employee with the same designation and who performs identical
functions is paid a monthly salary of P18,622.00, or P846.45
daily wage. Petitioner may not hide under its service contracts to
deprive respondent of what is justly due her. As a vital
government entity charged with ensuring social security, it
should lead in setting the example by treating everyone with
justice and fairness. If it cannot guarantee the security of those
who work for it, it is doubtful that it can even discharge its
directive to promote the social security of its members in line
with the fundamental mandate to promote social justice and to
insure the well-being and economic security of the Filipino
people.
In this jurisdiction, the "long honored legal truism of 'equal pay
for equal work'" has been "impregnably institutionalized;"
"[p]ersons who work with substantially equal qualifications,
skill, effort and responsibility, under similar conditions, should
be paid similar salaries."27 "That public policy abhors inequality
and discrimination is beyond contention. Our Constitution and
laws reflect the policy against these evils. The Constitution in the
Article on Social Justice and Human Rights exhorts Congress to
'give highest priority to the enactment of measures that protect
and enhance the right of all people to human dignity, reduce
social, economic, and political inequalities.' The very broad
Article 19 of the Civil Code requires every person, 'in the exercise
of his rights and in the performance of his duties, [to] act with
justice, give everyone his due, and observe honesty and good
faith'."28cralawrednad
WHEREFORE, the Petition is DENIED. The assailed July 29, 2011
Decision and January 10, 2012 Resolution of the Court of Appeals
in CA-G.R. SP No. 110006 are AFFIRMED. The case is ordered
remanded with dispatch to the Regional Trial Court of Daet,
Camarines Norte, Branch 39, for continuation of proceedings.
SO ORDERED.
 Republic of the Philippines Petitioner ICT Marketing Services, Inc. (ICT) now known as
SUPREME COURT Sykes Marketing Services, Inc. is a duly registered domestic
Manila corporation engaged in the business of providing outsourced
customer relations management and business process
SECOND DIVISION outsourcing solutions to various clients in government and in the
financial services, insurance, telecommunications, health care,
September 9, 2015 information technology, media, energy, and hospitality
industries.
G.R. No. 202090
On February 22, 2006, petitioner hired respondent Mariphil L.
ICT MARKETING SERVICES, INC. (now known as SYKES Sales as its Customer Service Representative (CSR) or Telephone
MARKETING SERVICES, INC.), Petitioner, Service Representative (TSR), and assigned her to its Capital One
vs. account. On August 21, 2006, respondent became a regular
MARIPHIL L. SALES, Respondent. employee, and her monthly base salary was increased to
P16,350.00 and she was given monthly transportation and meal
DECISION allowances.

DEL CASTILLO, J.:
This Petition for Review on Certiorari1 assails: 1) the Januruy 10,
2012 Decision2 of the Court of Appeals (CA) in CA-G.R. SP No.
109860 nullifying and setting aside the February 16, 20093 and
May 20, 20094 Resolutions of the National Labor Relations
Commission (NLRC) in NLRC LAC CN. 07-002404- 08(7)/(8) and
reinstating with modification the April 30, 2008 Decision5 of the
Labor Arbiter in NLRC-NCR Case No. 10-11004-07; and 2) the
CA's May 28, 2012 Resolution6 denying petitioner's Motion for
Reconsideration7 of the herein Assailed Decision.
Factual Antecedents
On February 21, 2007, respondent was assigned to the
Washington Mutual account, where she was awarded with a
certificate for being the "Top Converter/Seller (Second Place)"
for the month of April 2007.8
On July 3, 2007, respondent wrote to Glen Odom (Odom)
petitioners Vice President complaining about supposed
irregularities in the handling of funds entrusted to petitioner by
Washington Mutual which were intended for distribution to
outstanding Washington Mutual CSRs and TSRs as prizes and
incentives. However, no action appears to have been taken on
her complaint.
Respondent was then transferred to the Bank of America account
on July 30, 2007. Without prior notice to respondent, petitioner
scheduled her for training from July 30 to August 6, 2007 on the
very same day of her transfer. On the third day of training
(August 1), respondent was unable to attend. When she reported
for training the next day, respondent was informed that she
could not be certified to handle calls for Bank of America due to
her failure to complete the training. From then on, respondent
was placed on "floating status" and was not given any work
assignment.
In a September 28, 2007 letter9 to petitioners Human Resource
(HR) Manager, respondent tendered her resignation from work,
effective upon receipt of the letter. Respondent wrote:
I was forced to resign due to the reason that my employment was
made on "floating status" effective August 4, 2007 and up to
present (almost two months)
I havent receive [sic] any notice from you or the HR department
to report for work despite my repeated follow-up [with] your
office thru telephone and mobile phone text messages. Hence, I
consider your inaction to my follow-up as an indirect
termination of my work with ICT.
The reason I was placed [on] floating status is that, I was absent
during the third day of my training with Bank of America, the
account to which I was transferred from Washington Mutual
(WaMu). However, my absence during such period was justified
by the fact that I was sick and I need [sic] to undergo a medical
check-up on that date.
Furthermore, I see my transfer from WaMu Account to Bank of
America and the continued floating status of my work was
prompted by the fact that I lodged a complaint against
managers/supervisors assigned in WaMu account regarding
irregularities in the handling of funds given by ICT clients which
were supposed to be distributed as prizes to TSRs assigned with
WaMu. After the filing of the said complaint, through your office,
I was transferred to another account (Bank of America) for no
apparent reason. I was not even included in the original list of
those who were supposed to be transferred because my
performance record with WaMu is satisfactory as proven by the
fact that I was even awarded with a certificate as "top converter
(seller)" for the month of April and was supposed to be included
again in the top three highest converter[s] for the month of May,
but unfortunately irregularities were committed, that is why I
filed the aforementioned complaint [with] your office.
On August 1, 2007, a few days after my transfer [to] Bank of
America, my coach, angelo [sic], informed me that I will be
having a training on that same day with Bank of America which
is really unexpected. I was not given a notice in advance about
the training. My coach informed me only three hours before the
said training. Later on during my training with Bank of America I
was [placed on floating status] indefinitely due to a single
absence even though I am a regular employee having worked in
ICT for almost two years. Another instance [of] discrimination
[sic] and bad faith on the part of ICT management is that, all my
fellow agents who were [placed on floating status] for the same
reason were all ordered to return to work except me [sic].
Moreover, ICT is continuously hiring TSRs which only shows
that there are still accounts open or work available in ICT.
However despite the availability of work, I was still on floating
status.
Based on the aforementioned facts and circumstance[s], it is very
clear that the harassment, pressure, and indefinite floating of my
employment with ICT are retaliatory acts perpetrated by the
company because of my complaint/ request for investigation on
the irregularities being committed by certain company officials.
Thus, I can no longer bear the above-mentioned abuses and
discrimination committed against me by ICT management.
Therefore, I have no option but to sever my relationship with the
company, as my continued floating status had already prejudiced
me emotionally and financially.10
Ruling of the Labor Arbiter
On October 2, 2007, respondent filed a complaint for
constructive dismissal against petitioner and Odom before the
NLRC NCR, Quezon City, docketed as NLRC-NCR Case No. 10-
11004-07.
In her Position Paper,11 Reply,12 Rejoinder,13 and
Surrejoinder,14 respondent claimed that for complaining about
the supposed irregularities in the Washington Mutual account,
petitioner discriminated against her and unduly punished her.
Although she was not included in the original list of CSRs/TSRs
for program transfer, she was transferred to another account,
and then placed on "floating status," which is tantamount to
suspending her indefinitely without due process, despite her
satisfactory performance. Respondent averred that petitioners
claim of multiple absences is not true, because not once was she
penalized therefor, assuming such charge is true. Respondent
also alleged that her one-day absence during the training for the
Bank of America program cannot justify her being placed on a
"floating status" because the "no-absence during training"
requirement cited by petitioner using her employment
contract15 and the "New Hire Training Bay"16 as bases applies
only to new hires on probationary status, and not to regularized
employees. In any case, the "New Hire Training Bay" used by
petitioner was for the Capital One program. She also pointed out
that during her indefinite suspension or "floating status,"
petitioner continued to hire new CSRs, as shown by its
newspaper advertisements during the period.17Finally, she
asserted that her resignation was not voluntary, but was forced
upon her by petitioner as a result of its unlawful acts. Thus,
respondent prayed for the recovery of backwages, separation
pay, P100,000.00 combined moral and exemplary damages, and
attorneys fees equivalent to 10 per cent (10%) of the total
award.
In its Position Paper,18 Reply,19 Rejoinder,20 and
Surrejoinder,21 petitioner prayed for the dismissal of the
complaint, arguing that respondent was transferred from the
Washington Mutual account as an exercise of management
initiative or prerogative, and due to infractions22 committed by
her, as well as attendance and punctuality issues that arose. It
claimed that respondent could not be certified for the Bank of
America account for failing to complete the training. It
maintained that respondent was placed on standby status only,
and not suspended or constructively dismissed. In fact, she was
directed to report to its HR department, but she did not do so. It
also insisted that respondent resigned voluntarily. It denied
committing any act of discrimination or any other act which
rendered respondents employment impossible, unreasonable or
unlikely. Finally, it claimed that prior notice of her transfer to the
Bank of America account was made through an electronic mail
message sent to her; and that respondent has no cause of action
since she resigned voluntarily, and thus could not have been
illegally dismissed.
On April 30, 2008, the Labor Arbiter rendered a
Decision23 finding complainant to have been constructively
dismissed and awarding separation pay, moral and exemplary
damages, and attorneys fees to respondent. The Labor Arbiter
held:
x x x Complainant was indeed constructively dismissed from her
employment and she quitted [sic] because her continued
employment thereat is rendered impossible, unreasonable or
unlikely.
Complainants resignation was sparked by her transfer of
assignment and eventual placing her [sic] by the respondent
company of [sic] a "on floating" status.
x x x [T]here was no x x x evidence x x x that complainants
transfer was due to the request of a client. Further, if
complainant was indeed remised of [sic] her duties due to her
punctuality and attendance problem of committing twelve (12)
absences alone incurred in July 2007 [sic], why was there no
disciplinary action taken against her like reprimand or
warning[?]
xxxx
And its effect, complainant is entitled to her claim of separation
pay, moral and exemplary damages of P50,000.00 pesos [sic]
including an award of attorneys fees.
WHEREFORE, premises considered, judgment is rendered
ordering the respondents to pay complainant of [sic] one month
pay per year of service as separation pay in the total amount of
P32,700.00, P50,000.00 moral and exemplary damages plus 10%
of the award as attorneys fees, hereunder computed:
I Separation Pay
2/21/06 8/4/07 = 2 yrs.
P16,350.00 x 2 yrs. = P32,700.00
II Damages P50,000.00
P82,700.00
P8,270.00
10% Attorneys Fees
P90,970.00
SO ORDERED.24
Ruling of the National Labor Relations Commission
Petitioner appealed before the NLRC arguing that the Labor
Arbiter erred in ruling that respondent was constructively
dismissed. It also argued that Odom was not personally liable as
he was merely acting in good faith and within his authority as
corporate officer.
Respondent likewise interposed an appeal25 arguing that the
award of backwages should be computed from the date of her
dismissal until finality of the Labor Arbiters Decision; and that
the proportionate share of her 13th month pay should be paid to
her as well.
On February 16, 2009, the NLRC issued a Resolution,26 declaring
as follows:
We reverse.
Upon an examination of the pleadings on file, We find that in the
past the complainant had been transferred from one program to
another without any objection on her part. Insofar as the instant
case is concerned, it appears that the complainant, aside from
having been given a warning for wrong disposition of a call, had
been absent or usually late in reporting for work, constraining
the respondent ICT to transfer her to another program/account.
Required of the complainant was for her to undergo Product
Training for the program from July 30 to August 6, 2007, and the
records indicate that she attended only two (2) days of training
on July 30 and 31, 2007, did not report on August 1, 2007 and
again reported for training on August 2, 2007. It was then that
ICTs Operations Subject Matter Expert, Ms. Suzette Lualhati,
informed the complainant that she cannot be certified for the
program because she failed to complete the number of training
days, and there was a need for her to report to Human Resources
for further instructions. As the complainant did not report to
Human Resources, and due to her derogatory record, the
respondent company could not find another program where the
complainant could be transferred.
From what has been narrated above, We come to the conclusion
that the respondent company cannot be faulted for placing the
complainant on "floating status." And there does not appear to be
any ill will or bad faith that can be attributed to the respondent.
Finally, it is well to emphasize that the complainant tendered her
resignation on October 1, 2007. There is no evidence that the
complainant has presented that would indicate that duress or
force has been exerted on her.
All told, We are of the opinion that the findings of the Labor
Arbiter are in stark contrast to the evidence on record.
WHEREFORE, in view of the foregoing, the decision appealed
from is hereby reversed and set aside. Addordingly [sic], a new
one is entered dismissing the complaint for lack of merit.
SO ORDERED.27
Respondent filed a Motion for Reconsideration,28 but in a May 20,
2009 Resolution,29 the motion was denied.
Ruling of the Court of Appeals
In a Petition for Certiorari30 filed with the CA and docketed as
CA-G.R. SP No. 109860, respondent sought a reversal of the
February 16, 2009 and May 20, 2009 Resolutions of the NLRC.
Petitioner filed its Comment,31 to which respondent interposed a
Reply.32
On January 10, 2012, the CA issued the assailed Decision
containing the following pronouncement:
This Court finds the petition meritorious.
While it is true that management has the prerogative to transfer
employees, the exercise of such right should not be motivated by
discrimination, made in bad faith, or effected as a form of
punishment or demotion without sufficient cause. When the
transfer is unreasonable, unlikely, inconvenient, impossible, or
prejudicial to the employee, it already amounts to constructive
dismissal. In constructive dismissal, the employer has the burden
of proving that the transfer and demotion of an employee are for
just and valid grounds, such as genuine business necessity.
Should the employer fail to overcome this burden of proof, the
employees transfer shall be tantamount to unlawful constructive
dismissal.
In the case at bench, private respondent corporation failed to
discharge this burden of proof considering the circumstances
surrounding the petitioners July 2007 transfer to another
account. Prior to her reassignment, petitioners annual
performance merited increase in her salary effective February
2007 and was also awarded a certificate of achievement for
performing well in April 2007. Her transfer was also abrupt as
there was no written transfer agreement informing her of the
same and its requirements unlike her previous transfer from
Capital One to Washington Mutual account. It is therefore
difficult to see the reasonableness, urgency, or genuine business
necessity to transfer petitioner to a new account. While it may be
true that petitioner has attendance and punctuality issues, her
over-all performance as a CSR/TSR cannot be said to be below
par given the annual merit increase and the certificate of
achievement awarded to her. If indeed, private respondent
corporation had trouble transferring the petitioner to another
post because of her derogatory record, the corporation could just
have dismissed her for cause.
After petitioners unjustified transfer, she was informed by
private respondent corporation that she could not be "certified"
or allowed to handle calls for the new account because of her
absence during training. She was later placed on a floating status
and was not given another post.
The Court considers placing the petitioner on a floating status as
another unjustified action of the private respondent corporation
prejudicial to petitioner as employee. In this case, except for
private respondent corporations bare assertion that petitioner
no longer reported to the human resources department as
instructed, no proof was offered to prove that petitioner
intended to sever the employer-employee relationship. Private
respondent corporation also offered no credible explanation why
it failed to provide a new assignment to petitioner. Its assertion
that it is petitioners derogatory record which made it difficult
for the corporation to transfer her to another account despite its
efforts is not sufficient to discharge the burden of proving that
there are no posts or no accounts available or willing to accept
her.
In Nationwide Security and Allied Services, Inc. vs.
Valderama,33 the Supreme Court declared that due to the grim
economic consequences to the employee of being placed on a
floating status, the employer should bear the burden of proving
that there are no posts available to which the employee
temporarily out of work can be assigned.
These acts by the private respondent corporation, of transferring
petitioner to another account without sufficient cause and
proper notice and its subsequent failure to provide a new post
for her for two months without credible explanation, constitute
unjustified actions prejudicial to the petitioner as an employee,
making it unbearable for her to continue employment.
Thus, petitioner opted to resign, albeit involuntarily. The
involuntariness of her resignation is evident in her letter which
states categorically:
"I was forced to resign due to the reason that my employment
was made on floating status effective August 4, 2007 and up to
the present (almost two months) I havent receive [sic] any
notice from you or the HR department to report for work despite
my repeated follow-up to your office thru telephone and mobile
phone text messages.1avvphi1 Hence, I consider your inaction to
my follow-up as an indirect termination of my work with ICT."
Further, petitioner immediately filed a complaint for illegal
dismissal. Resignation, it has been held, is inconsistent with the
filing of a complaint. Thus, private respondent corporations
mere assertion that petitioner voluntarily resigned without
offering convincing evidence to prove it, is not sufficient to
discharge the burden of proving such assertion. It is worthy to
note that the fact of filing a resignation letter alone does not shift
the burden of proof and it is still incumbent upon the employer
to prove that the employee voluntarily resigned.
Therefore, we believe and so hold that petitioner was
constructively dismissed from employment. Constructive
dismissal exists when the resignation on the part of the
employee was involuntary due to the harsh, hostile and
unfavorable conditions set by the employer. The test for
constructive dismissal is whether a reasonable person in the
employees position would feel compelled to give up his
employment under the prevailing circumstances. With the
decision of the private respondent corporation to transfer and to
thereafter placed [sic] her on floating status, petitioner felt that
she was being discriminated and this perception compelled her
to resign. It is clear from her resignation letter that petitioner felt
oppressed by the situation created by the private respondent
corporation, and this forced her to surrender her position.
Under Article 279 of the Labor Code, an employee who is
unjustly dismissed from work shall be entitled to reinstatement
without loss of seniority rights and other privileges and to his
full backwages, inclusive of allowances, and to his other benefits
or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual
reinstatement.
As petitioner did not pray for reinstatement but only sought
payment of money claims, the labor arbiter is correct in
awarding separation pay equivalent to one month pay for every
year of service. We also do not find any cogent reason to disturb
the award of damages and attorneys fees since we have found
bad faith on the part of the private respondent corporation to
abruptly [sic] transfer and place the petitioner on floating status.
Individual respondent Glen Odom is however, exonerated from
any liability as there was no clear finding that he acted with
malice or bad faith. Backwages and other monetary benefits
must also be included in compliance with the above-mentioned
provision of labor law which shall be reckoned from the time her
constructive dismissal took effect until the finality of this
decision.
WHEREFORE, premises considered, the Resolutions dated
February 16, 2009 and May 20, 2009 respectively, issued by the
public respondent National Labor Relations Commission (NLRC)
in NLRC CA No. 07-002404-08 are REVERSED and SET ASIDE.
The decision of the Labor Arbiter dated April 30, 2008 is
REINSTATED with MODIFICATION that the petitioner Mariphil L.
Sales, be awarded backwages and other monetary benefits from
the date of her constructive dismissal up to the finality of this
Decision.
SO ORDERED.34
Petitioner filed a Motion for Reconsideration, but the same was
denied in a May 28, 2012 Resolution. Hence, the present Petition.
In a November 11, 2013 Resolution,35 this Court resolved to give
due course to the Petition.
Issues
Petitioner submits that
A.
THE COURT OF APPEALS ERRED WHEN IT HELD THAT
RESPONDENTS TRANSFER WAS UNJUSTIFIED
NOTWITHSTANDING EVIDENCE TO SHOW THAT RESPONDENT
WAS NOT DEMOTED AND WAS EVEN GIVEN THE SAME RANK
AND PAY.
B.
THE COURT OF APPEALS ERRED WHEN IT HELD THAT
RESPONDENTS PLACEMENT UNDER FLOATING STATUS WAS
TANTAMOUNT TO CONSTRUCTIVE DISMISSAL AS THIS IS
CONTRARY TO NUMEROUS DECISIONS OF THE HONORABLE
COURT.
C.
THE COURT OF APPEALS ERRED WHEN IT REINSTATED LABOR
ARBITER MACAMS DECISION DATED 30 APRIL 2008 WHICH
DECLARED THAT RESPONDENT WAS CONSTRUCTIVELY
DISMISSED, NOTWITHSTANDING EVIDENCE THAT CLEARLY
SHOWS THAT RESPONDENT VOLUNTARILY RESIGNED.
D.
THE COURT OF APPEALS ERRED IN AWARDING RESPONDENT
SEPARATION PAY, BACKWAGES, MORAL AND EXEMPLARY
DAMAGES AND ATTORNEYS FEES.36
Petitioners Arguments
Praying that the assailed CA dispositions be set aside and that
the NLRCs February 16, 2009 and May 20, 2009 Resolutions be
reinstated instead, petitioner maintains in the Petition and
Reply37 that respondents transfer to another account was done
as a valid exercise of management prerogative, which allows it to
regulate all aspects of employment. Her transfer was done in
good faith, and without diminution in rank and salary. It
contends that respondent knew very well that any CSR/TSR may
be transferred to another program/account anytime for business
reasons; in fact, respondent herself was transferred from Capital
One to Washington Mutual, and she did not complain. Moreover,
she knew as well that "schedule adherence" or
attendance/punctuality is one of the "metrics" or standards by
which the performance of a CSR is measured, and that she failed
to comply in this regard. It claims that the decision to place her
on "floating status" instead of dismissing her was an
accommodation and should not be treated as an illegal or
unjustified act; that being on "floating status" is not tantamount
to constructive dismissal, and the failure to place or transfer
respondent to another account was due to her derogatory
record, and not petitioners bad faith or inaction. It insists that
the placing of an employee on "floating status" for up to six
months is allowed in the event of a bona fide suspension of the
operations or undertaking of a business.38 In any event,
respondents voluntary resignation prior to the expiration of the
allowable six-month "floating status" period cannot constitute
constructive dismissal, and her immediate filing of the labor case
thereafter is thus premature. Finally, petitioner posits that since
there is no illegal dismissal but rather a voluntary
relinquishment of respondents post, then there is no basis for
the pecuniary awards in her favor.
Respondents Arguments
In her Comment39 praying for dismissal of the Petition and the
corresponding affirmance of the assailed dispositions,
respondent insists that she was illegally dismissed. She reiterates
that her transfer to the Bank of America account was an undue
penalty for her complaining about supposed anomalies in the
Washington Mutual account. She avers that the documentary
evidence of her supposed unauthorized absences were
manufactured to support petitioners false allegations and
mislead this Court into believing that she was delinquent at
work.
She argues that assuming that these absences were true, then
they should have merited her dismissal for cause yet the fact is
she was not dismissed nor punished for these supposed
absences. She asserts that petitioners claim that she was
transferred on the recommendation of a client is untrue and self-
serving, and is unjustified since the client has no authority to
order or recommend her transfer. She maintains that her being
placed on "floating status" was illegal, since a) there is no
evidence to prove her alleged "attendance and punctuality
issues," and b) there was no bona fide suspension of petitioners
business or undertaking for a period not exceeding six months,
as prescribed under Article 286 of the Labor Code,40 which
would justify the suspension of her employment for up to six
months. As enunciated in the Philippine Industrial Security
Agency Corp. v. Dapiton41 case which petitioner itself cited,
Article 286 applies only when there is a bona fide suspension of
the employers operation or undertaking for a period not
exceeding six months, due to dire exigencies of the business that
compel the employer to suspend the employment of its workers.
Respondent points out that petitioner continued with its
business, and worse, it in fact continued to hire new CSRs/TSRs
during the period of respondents suspension from work. In fine,
respondent alleges that she was constructively dismissed and
forced to resign, rather than continue to subject herself to
petitioners discrimination, insensibility, harassment, and
disdain; and that for such illegal acts, she is entitled to indemnity
from petitioner.
Our Ruling
The Court denies the Petition.
Respondents Transfer
Under the doctrine of management prerogative, every employer
has the inherent right to regulate, according to his own
discretion and judgment, all aspects of employment, including
hiring, work assignments, working methods, the time, place and
manner of work, work supervision, transfer of employees, lay-off
of workers, and discipline, dismissal, and recall of employees.
The only limitations to the exercise of this prerogative are those
imposed by labor laws and the principles of equity and
substantial justice.
While the law imposes many obligations upon the employer,
nonetheless, it also protects the employers right to expect from
its employees not only good performance, adequate work, and
diligence, but also good conduct and loyalty. In fact, the Labor
Code does not excuse employees from complying with valid
company policies and reasonable regulations for their
governance and guidance.
Concerning the transfer of employees, these are the following
jurisprudential guidelines: (a) a transfer is a movement from one
position to another of equivalent rank, level or salary without
break in the service or a lateral movement from one position to
another of equivalent rank or salary; (b) the employer has the
inherent right to transfer or reassign an employee for legitimate
business purposes; (c) a transfer becomes unlawful where it is
motivated by discrimination or bad faith or is effected as a form
of punishment or is a demotion without sufficient cause; (d) the
employer must be able to show that the transfer is not
unreasonable, inconvenient, or prejudicial to the employee.42
While the prerogative to transfer respondent to another account
belonged to petitioner, it wielded the same unfairly. The
evidence suggests that at the time respondent was transferred
from the Washington Mutual account to the Bank of America
program, petitioner was hiring additional CSRs/TSRs.43 This
simply means that if it was then hiring new CSRs/TSRs, then
there should be no need to transfer respondent to the Bank of
America program; it could simply train new hires for that
program. Transferring respondent an experienced employee
who was already familiar with the Washington Mutual account,
and who even proved to be outstanding in handling the same to
another account means additional expenses for petitioner: it
would have to train respondent for the Bank of America account,
and train a new hire to take her place in the Washington Mutual
account. This does not make sense; quite the contrary, it is
impractical and entails more expense on petitioners part. If
respondent already knew her work at the Washington Mutual
account very well, then it is contrary to experience and logic to
transfer her to another account which she is not familiar with,
there to start from scratch; this could have been properly
relegated to a new hire.
There can be no truth to petitioners claim either that
respondents transfer was made upon request of the client. If she
was performing outstanding work and bringing in good business
for the client, there is no reason indeed it is beyond experience
and logic to conclude that the client would seek her transfer.
Such a claim could only be fabricated. Truly, Experience which is
the life of the law as well as logic and common sense
militates against the petitioners cause.44
Moreover, as the appellate court correctly observed, even if
respondent had attendance and punctuality issues, her overall
performance as a CSR/TSR was certainly far from mediocre; on
the contrary, she proved to be a top performer. And if it were
true that respondent suddenly became lax by way of attendance
in July 2007, it is not entirely her fault. This may be attributed to
petitioners failure to properly address her grievances relative to
the supposed irregularities in the handling of funds entrusted to
petitioner by Washington Mutual which were intended for
distribution to outstanding Washington Mutual CSRs and TSRs as
prizes and incentives. She wrote petitioner about her complaint
on July 3, 2007; however, no explanation was forthcoming from
petitioner, and it was only during these proceedings or after a
case had already been filed that petitioner belatedly and for no
other useful purpose attempted to address her concerns. This
may have caused a bit of disillusionment on the part of
respondent, which led her to miss work for a few days in July
2007. Her grievance should have been addressed by petitioner;
after all, they were serious accusations, and have a bearing on
the CSRs/TSRs overall performance in the Washington Mutual
account.
Respondents work as a CSR which is essentially that of a call
center agent is not easy. For one, she was made to work the
graveyard shift that is, from late at night or midnight until
dawn or early morning. This certainly takes a toll on anyones
physical health. Indeed, call center agents are subjected to
conditions that adversely affect their physical, mental and
emotional health; exposed to extreme stress and pressure at
work by having to address the customers needs and insure their
satisfaction, while simultaneously being conscious of the need to
insure efficiency at work by improving productivity and a high
level of service; subjected to excessive control and strict
surveillance by management; exposed to verbal abuse from
customers; suffer social alienation precisely because they work
the graveyard shift while family and friends are at rest, they are
working, and when they are at rest, family and friends are up and
about; and they work at a quick-paced environment and under
difficult circumstances owing to progressive demands and
ambitious quotas/targets set by management. To top it all, they
are not exactly well-paid for the work they have to do and the
conditions they have to endure. Respondents written query
about the prizes and incentives is not exactly baseless and
frivolous; the least petitioner could have done was to timely
address it, if it cared about its employees welfare. By failing to
address respondents concerns, petitioner exhibited an
indifference and lack of concern for its employees qualities that
are diametrically antithetical to the spirit of the labor laws,
which aim to protect the welfare of the workingman and foster
harmonious relations between capital and labor. By its actions,
petitioner betrayed the manner it treats its employees.
Thus, the only conceivable reason why petitioner transferred
respondent to another account is the fact that she openly and
bravely complained about the supposed anomalies in the
Washington Mutual account; it is not her "derogatory record" or
her "attendance and punctuality issues", which are insignificant
and thus irrelevant to her overall performance in the
Washington Mutual account. And, as earlier stated, respondents
"attendance and punctuality issues" were attributable to
petitioners indifference, inaction, and lack of sensitivity in failing
to timely address respondents complaint. It should share the
blame for respondents resultant delinquencies.
Thus, in causing respondents transfer, petitioner clearly acted in
bad faith and with discrimination, insensibility and disdain; the
transfer was effected as a form of punishment for her raising a
valid grievance related to her work.
Furthermore, said transfer was obviously unreasonable, not to
mention contrary to experience, logic, and good business sense.
This being the case, the transfer amounted to constructive
dismissal.
The managerial prerogative to transfer personnel must be
exercised without grave abuse of discretion, bearing in mind the
basic elements of justice and fair play. Having the right should
not be confused with the manner in which that right is exercised.
Thus, it cannot be used as a subterfuge by the employer to rid
himself of an undesirable worker. In particular, the employer
must be able to show that the transfer is not unreasonable,
inconvenient or prejudicial to the employee; nor does it involve a
demotion in rank or a diminution of his salaries, privileges and
other benefits. Should the employer fail to overcome this burden
of proof, the employees transfer shall be tantamount to
constructive dismissal, which has been defined as a quitting
because continued employment is rendered impossible,
unreasonable or unlikely; as an offer involving a demotion in
rank and diminution in pay.
Likewise, constructive dismissal exists when an act of clear
discrimination, insensibility or disdain by an employer has
become so unbearable to the employee leaving him with no
option but to forego with his continued employment.45(Emphasis
and underscoring supplied)
The instant case can be compared to the situation in Veterans
Security Agency, Inc. v. Gonzalvo, Jr.,46 where the employee
concerned a security guard who was brave enough to complain
about his employers failure to remit its employees Social
Security System premiums was "tossed around" and finally
placed on floating status for no valid reason. Taking the poor
employees side, this Court declared:
True, it is the inherent prerogative of an employer to transfer
and reassign its employees to meet the requirements of its
business. Be that as it may, the prerogative of the management to
transfer its employees must be exercised without grave abuse of
discretion. The exercise of the prerogative should not defeat an
employees right to security of tenure. The employers privilege
to transfer its employees to different workstations cannot be
used as a subterfuge to rid itself of an undesirable worker.
Here, riled by respondents consecutive filing of complaint
against it for nonpayment of SSS contributions, VSAI had been
tossing respondent to different stations thereafter. From his
assignment at University of Santo Tomas for almost a year, he
was assigned at the OWWA main [o]ffice in Pasig where he
served for more than three years. After three years at the OWWA
main office, he was transferred to the OWWA Pasay City parking
lot knowing that the security services will end forthwith. VSAI
even concocted the reason that he had to be assigned
somewhere because his spouse was already a lady guard
assigned at the OWWA main office. Inasmuch as respondent was
single at that time, this was obviously a mere facade to [get] rid
of respondent who was no longer in VSAIs good graces.
The only logical conclusion from the foregoing discussion is that
the VSAI constructively dismissed the respondent. This ruling is
in rhyme with the findings of the Court of Appeals and the NLRC.
Dismissal is the ultimate penalty that can be meted to an
employee. Inasmuch as petitioners failed to adduce clear and
convincing evidence to support the legality of respondents
dismissal, the latter is entitled to reinstatement and back wages
as a necessary consequence. However, reinstatement is no longer
feasible in this case because of the palpable strained relations,
thus, separation pay is awarded in lieu of reinstatement.
xxxx
Indeed, the Court ought to deny this petition lest the wheels of
justice for aggrieved workingmen grind to a halt. We ought to
abate the culture of employers bestowing security of tenure to
employees, not on the basis of the latters performance on the
job, but on their ability to toe the line set by their employer and
endure in silence the flagrant incursion of their rights, zealously
protected by our labor laws and by the Constitution, no
less.47 (Emphasis and underscoring supplied)
Respondents Floating Status
In placing respondent on "floating status," petitioner further
acted arbitrarily and unfairly, making life unbearable for her. In
so doing, it treated respondent as if she were a new hire; it
improperly disregarded her experience, status, performance, and
achievements in the company; and most importantly, respondent
was illegally deprived of her salary and other emoluments. For
her single absence during training for the Bank of America
account, she was refused certification, and as a result, she was
placed on floating status and her salary was withheld. Clearly,
this was an act of discrimination and unfairness considering that
she was not an inexperienced new hire, but a promising and
award-winning employee who was more than eager to succeed
within the company. This conclusion is not totally baseless, and
is rooted in her outstanding performance at the Washington
Mutual account and her complaint regarding the incentives,
which only proves her zeal, positive work attitude, and drive to
achieve financial success through hard work. But instead of
rewarding her, petitioner unduly punished her; instead of
inspiring her, petitioner dashed her hopes and dreams; in return
for her industry, idealism, positive outlook and fervor, petitioner
left her with a legacy of, and awful examples in, office politicking,
intrigue, and internecine schemes.
In effect, respondents transfer to the Bank of America account
was not only unreasonable, unfair, inconvenient, and prejudicial
to her; it was effectively a demotion in rank and diminution of
her salaries, privileges and other benefits. She was unfairly
treated as a new hire, and eventually her salaries, privileges and
other benefits were withheld when petitioner refused to certify
her and instead placed her on floating status. Far from being an
"accommodation" as petitioner repeatedly insists, respondent
became the victim of a series of illegal punitive measures
inflicted upon her by the former.
Besides, as correctly argued by respondent, there is no basis to
place her on "floating status" in the first place since petitioner
continued to hire new CSRs/TSRs during the period, as shown by
its paid advertisements and placements in leading newspapers
seeking to hire new CSRs/TSRs and other employees.48 True
enough, the placing of an employee on "floating status"
presupposes, among others, that there is less work than there
are employees;49 but if petitioner continued to hire new
CSRs/TSRs, then surely there is a surplus of work available for
its existing employees: there is no need at all to place respondent
on floating status. If any, respondent with her experience,
knowledge, familiarity with the workings of the company, and
achievements should be the first to be given work or posted
with new clients/accounts, and not new hires who have no
experience working for petitioner or who have no related
experience at all. Once more, experience, common sense, and
logic go against the position of petitioner.
The CA could not be more correct in its pronouncement that
placing an employee on floating status presents dire
consequences for him or her, occasioned by the withholding of
wages and benefits while he or she is not reinstated. To restate
what the appellate court cited, "[d]ue to the grim economic
consequences to the employee, the employer should bear the
burden of proving that there are no posts available to which the
employee temporarily out of work can be assigned."50 However,
petitioner has failed miserably in this regard.
Resignation
While this Court agrees with the appellate courts observation
that respondents resignation was involuntary as it became
unbearable for her to continue with her employment,
expounding on the issue at length is unnecessary.
Because she is deemed constructively dismissed from the time of
her illegal transfer, her subsequent resignation became
unnecessary and irrelevant. There was no longer any position to
relinquish at the time of her resignation.
Pecuniary Awards
With the foregoing pronouncements, an award of indemnity in
favor of respondent should be forthcoming. In case of
constructive dismissal, the employee is entitled to full
backwages, inclusive of allowances, and other benefits or their
monetary equivalent, as well as separation pay in lieu of
reinstatement. The readily determinable amounts, as computed
by the Labor Arbiter and correspondingly reviewed and
corrected by the appellate court, should be accorded finality and
deemed binding on this Court.
Settled is the rule that an employee who is unjustly dismissed
from work shall be entitled to reinstatement without loss of
seniority rights and other privileges, and to his full backwages,
inclusive of allowances and to his other benefits or their
monetary equivalent computed from the time his compensation
was withheld up to the time of actual reinstatement. If
reinstatement is not possible, however, the award of separation
pay is proper.
Backwages and reinstatement are separate and distinct reliefs
given to an illegally dismissed employee in order to alleviate the
economic damage brought about by the employees dismissal.
"Reinstatement is a restoration to a state from which one has
been removed or separated" while "the payment of backwages is
a form of relief that restores the income that was lost by reason
of the unlawful dismissal." Therefore, the award of one does not
bar the other.
In the case of Aliling v. Feliciano, citing Golden Ace Builders v.
Talde, the Court explained:
Thus, an illegally dismissed employee is entitled to two reliefs:
backwages and reinstatement. The two reliefs provided are
separate and distinct. In instances where reinstatement is no
longer feasible because of strained relations between the
employee and the employer, separation pay is granted. In effect,
an illegally dismissed employee is entitled to either
reinstatement, if viable, or separation pay if reinstatement is no
longer viable, and backwages.
The normal consequences of respondents illegal dismissal, then,
are reinstatement without loss of seniority rights, and payment
of backwages computed from the time compensation was
withheld up to the date of actual reinstatement. Where
reinstatement is no longer viable as an option, separation pay
equivalent to one (1) month salary for every year of service
should be awarded as an alternative. The payment of separation
pay is in addition to payment of backwages.51
WHEREFORE, the Petition is DENIED. The assailed January 10,
2012 Decision and May 28, 2012 Resolution of the Court of
Appeals in CA-G.R. SP No. 109860 are AFFIRMED, with
MODIFICATIONS, in that petitioner ICT Marketing Services, Inc.,
now known as Sykes Marketing Services, Inc., is ordered to PAY
respondent Mariphil L. Sales the following:
1) Backwages and all other benefits from July 30, 2007
until finality of this Decision;
2) Separation pay equivalent to one (1) month salary for
every year of service;
3) Moral and exemplary damages in the amount of
P50,000.00;
 4) Attorney's fees equivalent to ten percent (10%) of the
total monetary award; and
5) Interest of twelve per cent (12%) per annum of the
total monetary awards, computed from July 30, 2007 up
to June 30, 2013, and thereafter, six percent (6%) per
annum from July 1, 2013 until their full satisfaction.
The appropriate Computation Division of the National Labor
Relations Commission is hereby ordered to COMPUTE and
UPDATE the award as herein determined WITII DISPATCH.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
September 02, 2015
G.R. No. 199617
REY TORRECAMPO, JOVITA V. CALMA, WINTHROP MARK N.
BARBA AND LEA TAPNIO, Petitioners, v. NATIONAL LABOR
RELATIONS COMMISSION (NLRC), MATSUSHITA
ELECTRONIC PHILS. CORP., SEIICHI FUKAMI, IROKAZU
UMEDA, BARTOLOME SARANGGAYA, JAIME TIONGSON AND
SINICHI JOSONE, Respondents.
RESOLUTION
PEREZ, J.:
For resolution of the Court is the instant Petition for Review
on Certiorari1 filed by petitioners Rey Torrecampo, Jovita V.
Calma, Winthrop Mark N. Barba and Leo Q. Tapnio seeking to
reverse and set aside the Resolutions dated 12 July 20112 and 6
December 20113 of the Court of Appeals (CA) in CA-G.R. SP. No.
119590. The assailed resolutions dismissed the Petition
for Certiorari filed by petitioners for having been filed out of time
rendering the National Labor Relations Commission (NLRC)
Decision dated 5 January 2011 and its Resolution dated 7 March
2011 final and executory.
In a Resolution dated 6 December 2011, the appellate court
refused to reconsider its earlier Resolution.chanrobleslaw
The Antecedents
On 12 July 2011, the CA issued a resolution dismissing the
Petition for Certiorari filed by petitioners for failing to perfect
their petition for certiorari within the 60-day reglementary
period provided under the Revised Rules of Court. In dismissing
their petition, the appellate court found that not only did
petitioners fail to perfect their petition for certiorari on time,
they likewise attempted to mislead the appellate court as to the
date of the receipt of the assailed decision,
thus:chanRoblesvirtualLawlibrary
For one, petitioners failed to provide a cogent and compelling
reason in order for [u]s to extend liberality and exempt them
from a strict application of the rules. For another, apart from the
obvious fact that the petition was filed late, petitioners had still
the gall to state that their petition is x x x "filed within the 60-day
reglementary period." Not only that, what is worse is that
petitioners put the blame on the housemaid of their counsel on
record for the late filing of their petition alleging that "x x x the
housemaid of their counsel on record erroneously informed
them x x x" that the assailed NLRC Resolution was received on
March 27, 2011 instead of March 21,
2011. ChanRoblesVirtualawlibrary
4 ChanRoblesVirtualawlibrary
After finding that petitioners received copy of the assailed NLRC
Resolution on 21 March 2011 and not on 27 March 2011, and,
without any justifiable cause to warrant the relaxation of the
rules, the CA arrived at the inevitable conclusion that petitioners
failed to seasonably file their
appeal, viz.:chanRoblesvirtualLawlibrary
Petitioners allege that a copy of the NLRC Resolution dated
March 7, 2011 was received on March 21, 2011. Under the afore-
quoted Rule, petitioners have 60 days from March 21, 2011 or
until May 20, 2011 within which to file a petition
for certiorari. However, a perusal of the rollo of this case
shows that it was filed only on May 25, 2011 or five (5) days
after the expiration of the 60-day reglementary period
provided by the afore-quoted Rule. Undoubtedly, therefore,
the instant petition is filed out of time.5 (Emphasis
supplied)ChanRoblesVirtualawlibrary
Aggrieved by the foregoing resolution, petitioners timely
interposed a Motion for Reconsideration which was also denied
by the appellate court in a Resolution dated 6 December
2011.chanrobleslaw
Issue
Petitioners are now before this Court via this instant Petition for
Review on Certiorari praying that the CA Resolutions be reversed
and set aside on the ground that:chanRoblesvirtualLawlibrary
THE COURT OF APPEALS GRAVELY ERRED IN STRICTLY
APPLYING THE RULES OF PROCEDURE AND PLEADING
AGAINST THE PETITIONERS.ChanRoblesVirtualawlibrary
The Court's Ruling
Petitioners, in assailing the appellate court's decision, argue that
strict application of the rules in light of the extant merits of this
case is not justified under the circumstances. They argue that the
delay in assailing the NLRC Resolution was mainly attributable to
their former counsel who, for unknown reasons and without
promptly informing them, deserted their case. In justifying their
original claim that they received the NLRC resolution on 21
March 2011, the petitioners reasoned that they merely relied on
the declarations made by the housemaid of their counsel.
Petitioners plead for the liberal interpretation of the rule on
perfection of appeal so that the case. can be threshed out on the
merits, and not on technicality.
We deny the petition.
Under Section 4 of Rule 65 of the 1997 Rules of Civil
Procedure,6certiorari should be instituted within a period of 60
days from notice of the judgment, order, or resolution sought to
be assailed.7 The 60-day period is inextendible to avoid any
unreasonable delay that would violate the constitutional rights
of parties to a speedy disposition of their case.8 Rules of
procedure must be faithfully complied with and should not be
discarded with the mere expediency of claiming substantial
merit.9 As a corollary, rules prescribing the time for doing
specific acts or for taking certain proceedings are
considered absolutely indispensable to prevent needless
delays and to orderly and promptly discharge judicial business.
By their very nature, these rules are regarded as mandatory.10
It is beyond dispute that petitioners received a copy of the 7
March 2011 NLRC Resolution denying their Motion for
Reconsideration on 21 March 2011. Applying the rules set
under Section 4 of the Revised Rules of Court as amended by
A.M. No. 07-7-12-SC,11 petitioners had until 20 May 2011 within
which to file their petition for certiorari. The filing of the petition
before the CA five days later or on 25 May 2011 resulted to the
non-perfection of the appeal rendering the decision of the NLRC
final and executory.
We are not persuaded by petitioners' argument that they should
not be bounded by their counsel's negligence in not taking the
proper course of action after the issuance by the NLRC of an
adverse decision. Petitioners are not entirely blameless as they
were not vigilant in monitoring the progress of their case.
The general rule is that a client is bound by the counsel's acts,
including even mistakes in the realm of procedural technique.
The rationale for the rule is that a counsel, once retained, holds
the implied authority to do all acts necessary or, atleast,
incidental to the prosecution and management of the suit in
behalf of his client, such that any act or omission by counsel
within the scope of the authority is regarded, in the eyes of the
law, as the act or omission of the client himself. A recognized
exception to the rule is when the reckless or gross negligence of
the counsel deprives the client of due process of law. For the
exception to apply, however, the gross negligence should not be
accompanied by the client's own negligence or malice,
considering that the client has the duty to be vigilant in respect
of his interests by keeping himself up-to-date on the status of the
case. Failing in this duty, the client should suffer whatever
adverse judgment is rendered against him.12
Truly, a litigant bears the responsibility to monitor the status of
his case, for no prudent party leaves the fate of his case entirely
in the hands of his lawyer. It is the client's duty to be in contact
with his lawyer from time to time in order to be informed of the Republic of the Philippines
progress and developments of his case; hence, to merely rely on SUPREME COURT
the bare reassurances of his lawyer that everything is being Manila
taken care of is not enough.13
THIRD DIVISION
Well settled is the doctrine that appeal is not a constitutional
right, but a mere statutory privilege. Hence parties who seek to September 8, 2015
avail themselves of it must comply with the statutes and rules
allowing it.14 There is no doubt that no petition for certiorari was G.R. No. 193798
perfected by the petitioners within the 60-day period under Rule
65 of the Revised Rules of Court. Consequently, the Court of COCA-COLA BOTTLERS PHILIPPINES, INC., Petitioner,
Appeals did not commit an error in dismissing the appeal of the vs.
petitioners on account of non-perfection of the same. ILOCOS PROFESSIONAL AND TECHNICAL EMPLOYESS UNION
(IPTEU), Respondent.
WHEREFORE, premises considered, the instant petition is
hereby DENIED. The assailed Resolutions of the Court of Appeals DECISION
are hereby AFFIRMED.
PERALTA, J.:
SO ORDERED.
This petition for review on certiorari under Rule 45 of the 1997
Rules of Civil Procedure (Rules) seeks to reverse and set aside
the March 17, 2010 Decision1 and September 16, 2010
Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No.
104043, which affirmed the May 6, 2008 Resolution3 of the
Secretary of Labor and Employment (SOLE) dismissing
petitioner's appeal that assailed the Decision (On the Challenged
Voters )4 and Proclamation of the Winner,5 both dated October
22, 2007, of the Mediator-Arbiter.

Petitioner Coca-Cola Bottlers Philippines, Inc. (CCBPI) is a

domestic corporation duly organized and operating under the
Philippine laws. It is primarily engaged in the beverage business,
which includes the manufacture of carbonated soft drinks. On
the other hand, respondent Ilocos Professional and Technical
Employees Union (IPTEU) is a registered independent labor
organization with address at CCBPI Ilocos Plant in Barangay
Catuguing, San Nicolas, Ilocos Norte.
On July 9, 2007, IPTEU filed a verified Petition6 for certification
election seeking to represent a bargaining unit consisting of
approximately twenty-two (22) rank-and-file professional and
technical employees of CCBPI Ilocos Norte Plant. CCBPI prayed
for the denial and dismissal of the petition, arguing that the Sales
Logistics Coordinator and Maintenance Foreman are supervisory
employees, while the eight (8) Financial Analysts, five (5) Quality
Assurance Specialists, Maintenance Manager Secretary, Trade
Promotions and Merchandising Assistant (TPMA), Trade Asset
Controller and Maintenance Coordinator (TACMC), Sales
Information Analyst (SIA), Sales Logistics Assistant, Product
Supply Coordinator, Buyer, Inventory Planner, and Inventory
Analyst are confidential employees;7hence, ineligible for
inclusion as members of IPTEU. It also sought to cancel and
revoke the registration of IPTEU for failure to comply with the
twenty percent (20%) membership requirement based on all the
supposed employees in the bargaining unit it seeks to operate.
A preliminary hearing of the petition was scheduled and held on
July 19, 2007. The possibility of voluntary recognition or consent
election was not acceded to by CCBPI.
Convinced that the union members are rank-and-file employees
and not occupying positions that are supervisory or confidential
in nature, Mediator-Arbiter Florence Marie A. Gacad-Ulep
granted IPTEUS petition. The dispositive portion of the August
23, 2007 Decision8 ordered:
WHEREFORE, premises considered, the Petition is GRANTED.
The bargaining unit shall be all the rank-and-file Exempt
(Professional and Technical) Workers of CCBPI who are now
excluded from the existing bargaining units of the Coca-Cola
Bottlers Philippines, Inc. Ilocos Plant. The choices in the
election shall be:
ILOCOS PROFESSIONAL AND TECHNICAL
[EMPLOYEES] UNION (IPTEU)
No Union
The Labor Relations Division of this office is hereby directed to
conduct the Pre-election Conference(s) within the periods set by
law. The CCBPI is hereby ordered to submit, not later than the
date of the first pre-election conference, its Certified List of
Exempt (Professional and Technical) rankand- file workers, or in
its absence, the employee payrolls from May to June 2007. In
case Management fails or refuses to submit the same, the Unions
list shall be allowed, as provided for under the Rules.
SO ORDERED.9
On September 3, 2007, CCBPI filed an appeal before the
SOLE.10 The Mediator-Arbiter acknowledged having received the
Memorandum of Appeal but informed that, pursuant to the
Implementing Rules and Regulations of the Labor Code, as
amended, "[the] order granting the conduct of a certification
election in an unorganized establishment shall not be subject to
appeal. Any issue arising therefrom may be raised by means of
protest on the conduct and results of the certification
election."11 On September 5, 2007, CCBPI then filed an Urgent
Motion to Suspend Proceedings,12 alleging that the notice issued
by the Assistant Regional Director for the conduct of pre-election
conference is premature since the decision of the Mediator-
Arbiter is not yet final and executory and that the Mediator-
Arbiter already lost jurisdiction over the case with the filing of an
appeal. Two days after, CCBPI filed a Manifestation,13 stating that
its participation in the pre-election conference, certification
election, and other proceedings is not a waiver, withdrawal or
abandonment of the pending appeal and motion to suspend
proceedings.
In the Pre-election Conference held on September 10, 2007,
CCBPI and IPTEU mutually agreed to conduct the certification
election on September 21, 2007. On election day, only sixteen
(16) of the twenty-two (22) employees in the IPTEU list voted.
However, no votes were canvassed. CCBPI filed and registered a
Protest14 questioning the conduct and mechanics of the election
and a Challenge to Votes15 on the ground that the voters are
supervisory and confidential employees.
By agreement, the parties met on September 26, 2007 for the
opening and counting of the challenged votes. On said date,
CCBPI filed a motion for inhibition, which the Mediator-Arbiter
verbally denied on the grounds that it was not verified and
would cause undue delay on the proceedings as there are no
other Mediators-Arbiters in the Region. The parties were
informed that their agreement to have the ballots opened could
not bind the Mediator-Arbiter. Instead, they were directed to
submit additional evidence that would aid in the resolution of
the challenged votes.
On October 22, 2007, the Mediator-Arbiter denied CCBPIs
challenge to the 16 votes. She found that the voters are rank-and-
file employees holding positions that are not confidential in
nature, and who are not, or used to be, members of Ilocos
Monthlies Union (IMU) due to the reclassification of their
positions by CCBPI and have been excluded from the CBA
entered into by IMU and CCBPI from 1997 to 2005.
Consequently, the challenged votes were opened and canvassed.
After garnering 14 out of the 16 votes cast, IPTEU was
proclaimed as the sole and exclusive bargaining agent of the
rank-and-file exempt workers in CCBPI Ilocos Norte Plant.
CCBPI elevated the case to the SOLE, raising the following
grounds:
1. The Honorable public [appellee] erred in disregarding
the fact that there is already an existing bargaining
representative of the rank-andfile professional and
technical employees at the Ilocos Plant of appellant,
namely, the Ilocos Monthlies Union (IMU) [to] which the
sixteen (16) challenged voters should be members as
long as they are not disqualified by law [for] being
confidential employees.
2. The Honorable public appellee erred in denying the
challenge to the sixteen (16) actual voters, and
subsequently declaring that private appellee is the sole
 and exclusive [bargaining] agent of the rank-andfile
exempt employees.
3. The Honorable public appellee erred in disregarding
the fact that there is a pending earlier appeal filed by
appellant with the Honorable Secretary of Labor, and so
the Regional Office No. 1 of the Department of Labor and
Employment lost jurisdiction over the case including the
certification election conducted by the Election Officer.
4. The Honorable public appellee erred in disregarding
the fact that there is a pending Motion to Suspend
Proceedings filed by appellant with the Department of
Labor and Employment, Regional Office No. 1, San
Fernando City, La Union[,] due to the pendency of its
appeal with the Honorable Secretary of Labor, and the
same is not yet resolved.
5. The Honorable public appellee erred in disregarding
the fact that there is a need to suspend the conduct of
election and other proceedings to await for the final
result of the earlier appeal made by herein appellant.
6. The Honorable public appellee erred in not declaring
the certification election on September 21, 2007 null and
void.16
On May 6, 2008, the appeal of CCBPI was denied. The SOLE held
that, as shown by the certification of the IMU President and the
CBAs forged between CCBPI and IMU from 1997 to 2007, the 22
employees sought to be represented by IPTEU are not part of
IMU and are excluded from its CBA coverage; that even if the 16
challenged voters may have access to information which are
confidential from the business standpoint, the exercise of their
right to self-organization could not be defeated because their
common functions do not show that there exist a confidential
relationship within the realm of labor relations; and that the
order granting the certification election and sustaining its
validity despite the pendency of appeal and motion to suspend is
proper in view of Section 17, Rule VIII of Department Order No.
40, Series of 2003, which states that the order granting the
conduct of a certification election in an unorganized
establishment is not subject to appeal and that any issue arising
therefrom may be raised by means of protest on the conduct and
results of the certification election.
Confronted with an adverse ruling, CCBPI filed before the CA a
petition for certiorari with prayer for temporary restraining
order and writ of preliminary injunction.17 It reiterated that:
a. There is already an existing and incumbent sole and
exclusive bargaining agent in the bargaining unit which
respondent IPTEU seeks to represent, namely, the Ilocos
Monthlies Union (IMU). The bargaining unit which IPTEU
seeks to represent is rank-and-file professional and
technical employees which the incumbent union, the
IMU, presently represents.
b. Respondent IPTEU never sought to represent the
alleged rank-and-file Exempt employees because it is
clearly indicated in its petition for certification election
that it seeks to represent rank-and-file professional and
 technical employees only. Its Constitution and bylaws
includes solely and only professional and technical
employees of CCBPI-ILOCOS PLANT to its membership,
and nothing more.
c. The sixteen (16) voters are not eligible for Union
membership because they are confidential employees
occupying confidential positions.
d. The bargaining unit is organized due to the presence of
the IMU, the sole and exclusive bargaining unit of the
rank-and-file professional and technical employees at the
Ilocos Plant of petitioner, and so the appeal of the earlier
decision of the respondent Med-Arbiter dated August 23,
2007 is in order, proper, valid and should have been
given due course in accordance with Sec. 17, Rule [VIII]
of the Rules Implementing Book V of the Labor Code.
e. The earlier appeal x x x together with the motion for
suspension of the proceedings x x x filed by petitioner on
September 5, 2007 remain unresolved to date, and there
is a need to await for their final resolution before any
further action including the certification election could
validly proceed.18
On March 17, 2010, the Court of Appeals denied the petition.
CCBPI filed a motion for reconsideration,19 which was also
denied in the September 16, 2010 Resolution; hence, this
petition.
CCBPI contends that the CA Decision and Resolution are based
on misapprehension of facts relative to the proceedings before
the Mediator- Arbiter and that its pronouncement consists of
inferences which are manifestly mistaken and without
factual/legal basis. It is argued that a petition for certiorari was
filed before the CA because the orders of the SOLE and Mediator-
Arbiter were issued in patent disregard of established facts and
existing jurisprudence, thus, tainted with grave abuse of
discretion
1) In considering respondent IPTEU as the sole and exclusive
bargaining agent of the purported rank-and-file exempt
employees in the Ilocos Plant; 2) In not declaring the certification
election held on September 21, 2007 improper and void; 3) In
disregarding the fact that the Ilocos Monthlies Union (IMU) is the
existing sole bargaining agent of the rank-and-[file] professional
and technical employees at the Ilocos Plant, to which the sixteen
(16) challenged voters should be members, if allowed by law[;]
and 4) [In] ruling that the concerned employees should not be
prohibited by joining any union.20
The petition is unmeritorious.
As proven by the certification of the IMU President as well as the
CBAs executed between IMU and CCBPI, the 22 employees
sought to be represented by IPTEU are not IMU members and
are not included in the CBAs due to reclassification of their
positions. If these documents were false, the IMU should have
manifested its vigorous opposition.1wphi1 In fact, the Mediator-
Arbiter noted:
The most tenacious resistance to the granting of the Petition as
well as the holding of the CE has been Management. On the other
hand, the existing unions at CCBPI, especially the IMU of which
most of the IPTEU members were once part (until they were
considered outside the ambit of its existing bargaining unit)
never once opposed the Petition and the Certification election,
whether verbally or in written Opposition.
Between Management and IMU, it is the latter which has more to
lose, as the creation of a separate bargaining unit would reduce
the scope of IMUs bargaining unit. Yet through all these
proceedings, we take note of the substantial moral support that
has been extended to the Petitioner by the other Unions of
CCBPI, so much so that, until objected to by Management, they
were even willing to be present during the Certification Election
of 21 September 2007.21
As to whether the 16 voters sought to be excluded from the
appropriate bargaining unit are confidential employees,22 such
query is a question of fact, which is not a proper issue in a
petition for review under Rule 45 of the Rules.23 This holds more
true in the present case in view of the consistent findings of the
Mediator-Arbiter, the SOLE, and the CA.
We reiterate that:
[T]he office of a petition for review on certiorari under Rule 45 of
the Rules of Court requires that it shall raise only questions of
law. The factual findings by quasi-judicial agencies, such as the
Department of Labor and Employment, when supported by
substantial evidence, are entitled to great respect in view of their
expertise in their respective fields. Judicial review of labor cases
does not go so far as to evaluate the sufficiency of evidence on
which the labor official's findings rest. It is not our function to
assess and evaluate all over again the evidence, testimonial and
documentary, adduced by the parties to an appeal, particularly
where the findings of both the trial court (here, the DOLE
Secretary) and the appellate court on the matter coincide, as in
this case at bar. The Rule limits that function of the Court to the
review or revision of errors of law and not to a second analysis of
the evidence. x x x Thus, absent any showing of whimsical or
capricious exercise of judgment, and unless lack of any basis for
the conclusions made by the appellate court be amply
demonstrated, we may not disturb such factual findings.24
The determination of factual issues is vested in the Mediator-
Arbiter and the Department of Labor and Employment. Pursuant
to the doctrine of primary jurisdiction, the Court should refrain
from resolving such controversies unless the case falls under
recognized and well-established exceptions. The doctrine of
primary jurisdiction does not warrant a court to arrogate unto
itself the authority to resolve a controversy the jurisdiction over
which is initially lodged with an administrative body of special
competence.25
In this case, organizational charts, detailed job descriptions, and
training programs were presented by CCBPI before the
Mediator-Arbiter, the SOLE, and the CA. Despite these, the
Mediator-Arbiter ruled that employees who encounter or handle
trade secrets and financial information are not automatically
classified as confidential employees. It was admitted that the
subject employees encounter and handle financial as well as
physical production data and other information which are
considered vital and important from the business operations
standpoint. Nevertheless, it was opined that such information is
not the kind of information that is relevant to collective
bargaining negotiations and settlement of grievances as would
classify them as confidential employees. The SOLE, which the CA
affirmed, likewise held that the questioned voters do not have
access to confidential labor relations information.
We defer to the findings of fact of the Mediator-Arbiter, the SOLE,
and the CA. Certainly, access to vital labor information is the
imperative consideration. An employee must assist or act in a
confidential capacity and obtain confidential information relating
to labor relations policies. Exposure to internal business
operations of the company is not per se a ground for the
exclusion in the bargaining unit.26
The Court sees no need to belabor the effects of the unresolved
notice of appeal and motion to suspend proceedings filed by
CCBPI in September 2007. Suffice it to say that the substantial
merits of the issues raised in said pleadings are the same as what
were already brought to and passed upon by the Mediator-
Arbiter, the SOLE, and the CA.
WHEREFORE, premises considered, the petition is DENIED. The
March 17, 2010 Decision and September 16, 2010 Resolution of
the Court of Appeals in CA-G.R. SP No. 104043, which affirmed
the May 6, 2008 Resolution of the Secretary of Labor and
Employment, dismissing petitioner's appeal that assailed the
Decision (On the Challenged Voters) and Proclamation of the
Winner, both dated October 22, 2007, of the Mediator-Arbiter,
are hereby AFFIRMED.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
September 09, 2015
G.R. No. 211588
WORLD'S BEST GAS, INC., Petitioner, v. HENRY VITAL, JOINED
BY HIS WIFE FLOSERFINA VITAL, Respondents.
DECISION
PERLAS-BERNABE, J.:
Before the Court is a petition for review on certiorari1 filed by
petitioner World's Best Gas, Inc. (WBGI) assailing the
Decision2 dated September 30, 2013 and the Resolution3 dated
March 4, 2014 of the Court of Appeals (CA) in CA-G.R. SP No.
123497, which affirmed the Decision4 dated December 12, 2011
of the Regional Trial Court of Bataan, Branch 2 (RTC) in Civil
Case No. 8694 finding WBGI liable to respondent Henry Vital
(Vital) for his unpaid salaries and separation pay.
The Facts
Vital was one of the incorporators of WBGI, holding P500,000.00
worth of shares of stocks therein.5 As a separate business
venture, Vital and his wife, respondent Floserfina Vital
(respondents), sourced Liquefied Petroleum Gas (LPG) from
WBGI and distributed the same through ERJ Enterprises owned
by them.6 As of respondents' last statement of account, their
outstanding balance with WBGI for unpaid LPG amounted to
P923,843.59.7
On January 6, 1999, Vital was appointed as Internal Auditor and
Personnel Manager by WBGI's President/CEO and continued to
serve as such until his mandatory retirement on September 25,
2003.8Upon his retirement, WBGI's Board of Directors computed
Vital's retirement benefits at P82,500.00 by multiplying his
P15,000.00 monthly pay by 5.5 years, which was the number of
years he served as Internal Auditor and Personnel
Manager. WBGI also agreed to acquire Vital's P500,000.00
shares of stocks at par value.9
After offsetting the P500,000.00 due from WBGI's acquisition of
his shares of stocks against ERJ Enterprises' P923,843.59
outstanding balance to WBGI, Vital claimed that the unpaid
salaries and separation pay due him amounted to
P845,000.00 and P250,000.00, respectively, leaving a net
amount of P671,156.41 payable to him. WBGI rejected Vital's
claim and contended that after offsetting, Vital actually owed it
P369,156.19.10
On January 4, 2006, Vital filed a complaint before the National
Labor Relations Commission (NLRC) Regional Arbitration
Branch III (RAB), docketed as NLRC Case No. RAB-III-01-9671-
06, for non-payment of separation and retirement benefits,
underpayment of salaries/wages and 13thmonth pay, illegal
reduction of salary and benefits, and damages.11
For its part, WBGI averred that the Labor Arbiter (LA) had no
jurisdiction over the complaint because Vital is not an employee,
but a mere incorporator and stockholder of WBGI, hence, no
employer-employee relationship exists between them.12
The LA Ruling
In a Decision13 dated May 3, 2006, the LA found that the issues
between Vital and WBGI are intra-corporate in nature as they
arose between the relations of a stockholder and the
corporation, and not from an employee and employer
relationship.14 Thus, the LA dismissed the case for lack of
jurisdiction,15prompting Vital to file his complaint16 for payment
of unpaid salaries, separation and retirement benefits, and
damages on July 19, 2007 before the RTC, docketed as Civil Case
No. 8694.17
The RTC Ruling
In a Decision18 dated December 12, 2011, the RTC, acting as a
special commercial court, oppositely found that Vital was an
employee of WBGI and thereby, upheld his claim of P845,000.00
and P250,000.00 in unpaid salaries and separation pay.
However, the RTC offset these amounts, including the
P500,000.00 due from WBGFs acquisition of Vital's shares of
stocks, against the P923,843.59 payable to WBGI from ERJ
Enterprises, thus, awarding Vital the net amount of P671,156.41,
with legal interest from date of demand until full payment,
P50,000.00 as attorney's fees and costs of suit plus litigation
expenses.19
The RTC ratiocinated that since the positions of Internal Auditor
and Personnel Manager were not provided for in WBGI's By-
Laws, Vital was not a corporate officer but an employee entitled
to employment benefits. It also maintained that it had
jurisdiction to rule on the main intra-corporate controversy,
together with the question of damages and employment
benefits.20
Aggrieved, WBGI elevated the case to the CA on appeal.21
The CA Ruling
In a Decision22 dated September 30, 2013, the CA dismissed the
appeal, agreeing with the RTC's finding that Vital was an
employee of WGBI. While the CA observed that the RTC's award
of employment benefits to Vital was improper, as the same was
under the exclusive jurisdiction of the labor arbiters, it still ruled
on said claim, reasoning that it has the eventual authority to
review the labor courts' decision on the matter.23
WBGI filed a motion for reconsideration24 which was, however,
denied in a Resolution25 dated March 4, 2014; hence, the present
petition.
The Issue Before the Court
The main issue to be resolved is whether or not the CA erred in
ruling upon Vital's claim of P845,000.00 and P250,000.00 in
unpaid salaries and separation pay.
The Court's Ruling
The petition is partly meritorious.
At the outset, it should be pointed out that the instant case
actually involves three (3) distinct causes of action, namely, (1)
Vital's claim for P845,000.00 and P250,000.00 in unpaid salaries
and separation pay; (2) the P923,843.59 in arrearages payable to
WBGI from ERJ Enterprises, which was admitted by Vital but not
claimed by WBGI; and (3) Vital's claim of P500,000.00 due from
WBGI's acquisition of Vital's shares of stocks. All of the foregoing
were threshed out by the RTC in its December 12, 2011 Decision,
and effectively upheld by the CA on appeal.
However, the RTC's adjudication of the first cause of action was
improper since the same is one which arose from Vital and
WBGI's employer-employee relations, involving an amount
exceeding P5,000.00, hence, belonging to the jurisdiction of the
labor arbiters pursuant to Article 217 of the Labor Code:
Art. 217. Jurisdiction of the Labor Arbiters and the Commission.
(a) Except as otherwise provided under this Code, the Labor
Arbiters shall have original and exclusive jurisdiction to hear and
decide, within thirty (30) calendar days after the submission of
the case by the parties for decision without extension, even in
the absence of stenographic notes, the following cases involving
all workers, whether agricultural or non-
agricultural:chanRoblesvirtualLawlibrary
1. Unfair labor practice cases;ChanRoblesVirtualawlibrary
2. Termination disputes;ChanRoblesVirtualawlibrary
3. If accompanied with a claim for reinstatement, those cases
that workers may file involving wages, rates of pay, hours of
work and other terms and conditions of
employment;ChanRoblesVirtualawlibrary
4. Claims for actual, moral, exemplary and other forms of
damages arising from the employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code,
including questions involving the legality of strikes and lockouts;
and
6. Except claims for Employees' Compensation, Social Security,
Medicare and maternity benefits, all other claims arising from
employer-employee relations, including those of persons in
domestic or household service, involving an amount
exceeding five thousand pesos (P5,000.00) regardless of
whether accompanied with a claim for reinstatement.
xxxx
Having no subject matter jurisdiction to resolve claims arising
from employer-employee relations, the RTC's ruling on Vital's
claim of P845,000.00 and P250,000.00 in unpaid salaries and
separation pay is, thus, null and void, and therefore, cannot
perpetuate even if affirmed on appeal,26 rendering the CA's
ratiocination that it "has the eventual authority to review the
labor courts' decision on the matter"27direly infirm. As a result,
WBGI's petition is meritorious on this score. However, since the
dismissal is grounded on lack of jurisdiction, then the same
should be considered as a dismissal without prejudice.28As such,
Vital may re-file29the same claim, including those related
thereto (e.g., moral and exemplary damages, and attorney's
fees) before the proper labor tribunal.
Contrary to its lack of jurisdiction over claims arising from
employer-employee relations, the RTC has: (a) general
jurisdiction to adjudicate on the P923,843.59 in arrearages
payable to WBGI from ERJ Enterprises, which was admitted
by Vital but not claimed by WBGI;30 and (b) special
jurisdiction, as a special commercial court, to adjudicate
on Vital's claim of P500,000.00 from WBGI's acquisition of
his shares of stocks.31 Indeed, even acting as a special
commercial court, the RTC's general jurisdiction to adjudicate on
the first-mentioned claim is retained.
With the RTC's jurisdiction established over the above-
mentioned causes of action, Vital's claim of P500,000.00 due
from WBGI's acquisition of his shares of stocks should therefore
be offset against the P923,843.59 in arrearages payable to
WBGI by ERJ Enterprises owned by respondents, as prayed for
by him. Hence, no amount can be adjudicated in Vital's favor,
since it is the respondents who, after due computation, would be
left liable to WBGI in the net amount of P423,843.59. This
notwithstanding, WBGI cannot recover this latter amount in this
case since it never interposed a permissive counterclaim
therefor in its answer.32 It is well-settled that courts cannot grant Republic of the Philippines
a relief not prayed for in the pleadings or in excess of what is SUPREME COURT
being sought by the party.33WBGI may, however, opt to file a Manila
separate collection suit, including those related thereto (e.g.,
moral and exemplary damages, and attorney's fees), to FIRST DIVISION
recover such sum.
September 09, 2015
WHEREFORE, the petition is PARTLY GRANTED. The Decision
dated September 30, 2013 and the Resolution dated March 4, G.R. No. 199384
2014 of the Court of Appeals in CA-G.R. SP No. 123497 are
hereby SET ASIDE. A new one is LE SOLEIL INT'L. LOGISTICS CO., INC., AND/OR BETH UMALI,
entered:chanRoblesvirtualLawlibrary REYNANTE MALABANAN, AND EUGENIO S. YNION,
JR., Petitioners, v. VICENTE SANCHEZ, DAVID R. CONDE, AND
(a) DISMISSING respondent Henry Vital's (Vital) labor claims of NATIONAL LABOR RELATIONS COMMISSION, Respondents.
P845,000.00 and P250,000.00 in unpaid salaries and separation
pay against petitioner World's Best Gas, Inc.'s RESOLUTION
(WBGI), WITHOUT PREJUDICE as stated in this Decision; and
PEREZ, J.:
(b) RECOGNIZING WBGI's liability to Vital in the amount of
For resolution of the Court is the instant Petition for Review
P500,000.00 due from the acquisition of his shares of stocks.
on Certiorari1 filed by petitioners Le Soleil International Logistics
This amount is, however, OFFSET against the P923,843.59 in
Co., Inc. and/or Beth Umali, Reynante Malabanan and Eugenio
arrearages payable to WBGI by ERJ Enterprises owned by Vital
Ynion, Jr., seeking to reverse and set aside the Resolutions dated
and his wife, respondent Floserfma Vital, leaving a net amount of
16 September 20112 and 17 November 20113 of the Court of
P423,843.59, which WBGI may claim in a separate case as stated
Appeals (CA) in CA-G.R. SP. No. 121097. The assailed resolutions
in this Decision.
dismissed the Petition for Certiorari filed by petitioners for
having been filed out of time rendering the National Labor
SO ORDERED.
Relations Commission (NLRC) Decision dated 25 April 2011 and
its Resolution dated 14 June 2011 final and executory.

In a Resolution dated 17 November 2011, the appellate court

refused to reconsider its earlier Resolution.
The Antecedents assailed April 25, 2011 Decision of the court a quo when a
motion for reconsideration was filed, contrary to Section 3, Rule
On 16 September 2011, the CA issued a Resolution dismissing 46 of the 1997 Rules.
the Petition for Certiorari filed by petitioners for failing to perfect
their petition for certiorari within the 60-day reglementary Third, the petition does not state the date of issue of petitioners'
period provided under the Revised Rules of Court. The assailed counsel's Mandatory Continuing Legal Education (MCLE)
CA resolution reads in toto: Certificate of Compliance, as required under Bar Matter No.
Filed pursuant to Rule 65 of the 1997 Rules of Civil Procedure, 1922, dated June 3, 2008.
the instant petition for certiorari seeks the nullification and
setting aside of the April 25, 2011 Decision of the National Labor WHEREFORE, the petition is DENIED DUE COURSE and
Relations Commission in NLRC-NCR Case No. 01-00038-11 accordingly DISMISSED.4
which modified the September 6, 2010 Decision in turn rendered Aggrieved by the foregoing resolution, petitioners timely
by the Labor Arbiter in NLRC-NCR Case No. 04-04439-10, and interposed a Motion for Reconsideration which was also denied
the June 14, 2011 Resolution denying the Motion for by the appellate court in a Resolution5 dated 17 November 2011.
Reconsideration thereof.
Issues
The Court resolves to dismiss the petition outright on the
following grounds:chanRoblesvirtualLawlibrary Petitioners are now before this Court via this instant Petition for
Review on Certiorari praying that the CA Resolutions be reversed
First, the petition was filed three (3) days late on September 5, and set aside on the following grounds:
2011. Under Section 4, Rule 65 Revised Rules of the Civil I.
Procedure, as amended by AM No. 07-7-12-SC, petitions
for certiorari must be filed strictly within 60 days from notice of THE COURT OF APPEALS ERRED IN NOT EXERCISING ITS
the judgment or order denying their motion for reconsideration. EQUITY JURISDICTION AS ENUNCIATED BY JURISPRUDENCE ON
Having received a copy of June 4, 2011 Resolution denying the THE MATTER;ChanRoblesVirtualawlibrary
motion for reconsideration of the assailed April 25, 2011
II.
Decision on July 24, 2011, petitioners had up to September 2,
2011 only to file the petition for certiorari.
THE CA ERRED IN NOT FINDING THAT THE NLRC GRAVELY
ABUSED ITS DISCRETION.6
Second, the petition contains no statement of the specific
The Court's Ruling
material dates showing when petitioners received a copy of the

We deny the petition.
The general rule is that a timely appeal is the remedy to obtain
reversal or modification of the judgment on the merits. This is
true even if one of the errors to be assigned on appeal is the lack
of jurisdiction on the part of the court rendering the judgment
over the subject matter, or the exercise of power by said court is
in excess of its jurisdiction, or the making of its findings of fact or
of law set out in the decision is attended by grave abuse of
discretion. In other words, the perfection of an appeal within the
reglementary period is mandatory because the failure to perfect
the appeal within the time prescribed by the Rules of
Court unavoidably renders the judgment final as to preclude the
appellate court from acquiring the jurisdiction to review the
judgment.7
The pertinent rules on the perfection of a petition for certiorari is
set forth under Section 4 of Rule 65 of the 1997 Rules of Civil
Procedure, amended by A.M. No. 07-7-12-SC, which reads:
SEC. 4. When and where to file petition. The petition shall be filed
not later than sixty (60) days from notice of the judgment or
resolution. In case a motion for reconsideration or new trial is
timely filed, whether such motion is required or not, the sixty
(60) days period shall be counted from the notice of the denial of
the motion.
If the petition relates to an act or an omission of a municipal trial
court or of a corporation, a board, an officer or a person, it shall
be filed with the Regional Trial Court exercising jurisdiction over
the territorial area as defined by the Supreme Court. It may also
be filed with the Court of Appeals or with the Sandiganbayan,
whether or not the same is in aid of the courts appellate
jurisdiction. If the petition involves an act or an omission of a
quasi-judicial agency, unless otherwise provided by law or these
rules, the petition shall be filed with and be cognizable only by
the Court of Appeals.
In election cases involving an act or omission of a municipal or a
regional trial court, the petition shall be filed exclusively with the
Commission on Elections, in aid of its appellate jurisdiction.
Under the foregoing rules, petition for certiorari should be
instituted within a period of 60 days from notice of the judgment,
order, or resolution sought to be assailed.8 The 60-day period is
inextendible to avoid any unreasonable delay that would violate
the constitutional rights of parties to a speedy disposition of
their case.9 Rules of procedure must be faithfully complied with
and should not be discarded with the mere expediency of
claiming substantial merit.10 As a corollary, rules prescribing the
time for doing specific acts or for taking certain proceedings are
considered absolutely indispensableto prevent needless delays
and to orderly and promptly discharge judicial business. By their
very nature, these rules are regarded as mandatory.11
Applying the foregoing statutory and jurisprudential rules in the
case at bar, we agree with the disquisition of the CA that
petitioners failed to seasonably perfect their appeal rendering
the Decision of the NLRC dated 25 April 2011 and its Resolution
dated 14 June 2011, final and executory.
In this case, there is no debate that petitioners incurred in delay
in filing the petition for certiorari before the appellate court.
While petitioners concede that the filing of the appeal was three
days late, they however invoke the indulgence of the Court to
liberally apply the rules to pave the way for the resolution of the
case on the merits. A careful scrutiny of the pleadings submitted
by petitioners reveals, however, that there is no compelling
reason to except this case from the operation of the general rule
since none of the exceptions12 enunciated in the jurisprudence is
attendant herein. Certainly, liberality is not a magic word that
once invoked will automatically be considered as a mitigating
circumstance in favor of the party invoking it. There should be an
effort on the part of the party invoking liberality to advance a
reasonable or meritorious explanation for his/her failure to
comply with the rules.13
Time and again, we have stressed that procedural rules do not
exist for the convenience of the litigants; the rules were
established primarily to provide order to, and enhance the
efficiency of, our judicial system. While procedural rules are
liberally construed, the provisions on reglementary periods are
strictly applied, indispensable as they are to the prevention of
needless delays, and are necessary to the orderly and speedy
discharge of judicial business. The timeliness of filing a pleading
is a jurisdictional caveat that even this Court cannot trifle with.14
Viewed in this light, procedural rules are not to be belittled or
dismissed simply because their non-observance may have
prejudiced a party's substantive rights; like all rules, they are
required to be followed.15chanroblesvirtuallawlibrary
WHEREFORE, premises considered, the instant petition is
hereby DENIED. The assailed Resolutions of the Court of Appeals
arehereby AFFIRMED. SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
September 14, 2015
G.R. NOS. 178085 - 178086
UNIVERSITY OF THE IMMACULATE
CONCEPTION, Petitioner, v. OFFICE OF THE SECRETARY OF
LABOR AND EMPLOYMENT, ULC TEACHING AND NON-
TEACHING EMPLOYEES UNION-FFW, OFELIA DIAPUEZ, M
ELAN IE DE LA ROSA, ANGELINA ABADILLA, LELIAN CONCON,
MARY ANN DE RAMOS, ZENAIDA CANOY, ALMA
VILLACARLOS, PAULINA PALMA GIL, JOSIE BOSTON, GEMMA
GALOPE AND LEAH CRUZA, Respondents.
DECISION
JARDELEZA, J.:
These consolidated cases stem from the labor dispute between
petitioner University of the Immaculate Conception (UIC) and
respondent UIC Teaching and Non-leaching Employees Union
FFW (the "Union") dating back to 1994. On January 23, 1995, the
Secretary of Labor and Employment (the "Secretary") assumed
jurisdiction over the dispute, docketed as OS-AJ-003-95,
pursuant to his powers under Section 263(g) of the Labor
Code.1 The first consolidated case involves a question of whether
the Secretary has the authority to order the creation of a
tripartite committee to determine the amount of net incremental
proceeds of tuition fee increases; the second case concerns the
legality of the dismissal of 12 employees in connection with the
labor dispute.cralawlawlibrary
I Ann de Ramos, Alma Villacarlos, [Leah] Cruza, [Ofelia] Diapuez
The following findings of fact by the Court of Appeals are
undisputed:
UIC is a non-stock, non-profit educational institution with
campuses at Fr. Selga and Bonifacio Sts., Davao City. Private
respondent [the Union] is the certified sole bargaining agent of
UIC's rank and file employees.
On 20 June 1994, the Union filed a notice of strike on the grounds
of bargaining deadlock and unfair labor practice. On 20 July
1994, the National Conciliation and Mediation Board (NCMB)
called the parties to a conference where they agreed that an
increase be granted to the workers in the amount equivalent to:
seventy-five percent (75%) of increment on the tuition fee for
the first year, eighty percent (80%) for the second year, and
eighty percent (80%) for the third year.
On the same occasion, the UIC demanded the exclusion of
secretaries, registrars, accounting personnel and guidance
counselors from the bargaining unit, on account of their being
confidential employees. When the parties agreed to submit this
particular issue to voluntary arbitration, the arbitration panel
sustained the UIC on 08 November 1994. The Union's motion for
reconsideration thereto was denied by the arbitration panel on
08 February 1995.
Accordingly, the UIC gave the affected employees namely:
Melanie de la Rosa, Angelina Abadilla, Jovita Mamburan, Zenaida
Canoy, Gemma Galope, Paulina Palma Gil, Lelian Concon, Mary
and Josie Boston [collectively, except Jovita Mamburan, the
"Respondent Employees"] the option to choose between
keeping their positions or resigning from the Union. When they
elected to keep both their positions and their union membership,
UIC sent them notices of termination on 21 February 1995,
which led into a notice of strike filed by the Union on 10 March
1995.
In an Order dated 28 March 1995, the [Secretary] suspended the
effects of the said termination pending the determination of its
legality and ordered QIC to reinstate the respondent employees
under the same conditions prevailing prior to the labor dispute.
This Order was later modified by the [Secretary] directing the
payroll reinstatement of the respondent employees, instead of
physical reinstatement. On 15 September 1995, the UIC filed a
petition for certiorari on the said payroll reinstatement. The
Court of Appeals denied the same in its 08 October 2001
Decision and 10 January 2002 Resolution. These were affirmed
by the Supreme Court on 14 January 2005 [448 SCRA 190],
On 20 June 2006, the [Secretary] issued a Resolution ruling that
the respondent employees were illegally dismissed and directed
UIC to reinstate them (except for Jovita Mamburan who died on
18 October 2003) and to pay them backwages and other benefits.
UIC's motion for reconsideration thereto was denied by the
[Secretary] on 18 September 2006.
Meanwhile, on [20 January I995],2 the Union filed its second
notice of strike mostly on the grounds of bargaining deadlock on
the issues of computing the seventy percent (70%) incremental
proceeds and unfair labor practices. On 23 January 1995, the
[Secretary] assumed jurisdiction over the dispute, issued a
Return-to-Work Order and enjoined the parties to desist from all
acts which might exacerbate the situation.
On 08 October 1998, the [Secretary] issued an Order directing
the parties to execute a collective bargaining agreement (CBA)
embodying all items agreed upon by the parties and the salary
increases consisting of the following: lst year - 75% of increment
increase of tuition fee; 2nd year 80% of increment increase of
tuition fee; and 3rd year -80% of increment increase of tuition
fee. The [Secretary] likewise upheld the validity of the strike
declared by the Union on 20 January 1995. This Order was
challenged by UIC before the Court of Appeals and the Supreme
Court, both of which affirmed the same. The fallo of the Supreme
Court decision reads:cralawlawlibrary
WHEREFORE, the Court DENIES the petition and enjoins the
parties to comply with the directive of the Secretary of Labor and
Employment to negotiate a collective bargaining agreement in
good faith. No costs.
SO ORDERED.
On 21 April 2004, UIC and the Union signed an Agreement (21
April 2004 Agreement hereafter) before the DOLE, the second
paragraph of which provides:cralawlawlibrary
["The parties agreed that all issues in this particular case have
been settled, except the issue on whether the full settlement
clause in the CBA to be signed by the parties bars the filing
and/or continuation of alleged illegal dismissal cases which
arose in the year 1994 and which the Secretary of Labor had
ruled not to have been subsumed by the Assumption of
Jurisdiction case pending with the Office of the Secretary which
is agreed upon to be submitted for voluntary arbitration before
the Honorable Secretary of Labor.]
["Likewise in the interpretation and implementation of the full
settlement clause,]3 the parties agree that the net incremental
proceeds for the five [5] school years of the CBA (1995-1996 to
1999-2000) will be computed and compared with the actual
amount distributed to the employees for each of these five [5]
years. If the amount distributed in any of these 5 school years is
less than what is provided in the CBA, the University shall pay
the deficiency. If the amount distributed in any of these 5 school
years is more than what is provided in the CBA, the excess shall
be chargeable to the [seventy percent] 70% share of the
employees in the school year 2004-2005.chanrobleslaw
On 17 May 2004, the Union moved before the [Secretary] for the
creation of a tripartite committee to compute the net. proceeds
of the tuition fee increases for the school years 1995-2000. UIC
opposed the motion stating that the computation should be done
by the grievance machinery provided for in the CBA about to be
signed by the parties.
On 08 June 2004, the parties signed the CBA (08 June 2004 CBA
hereafter) for school years 1995-2000. On that occasion, (he
parties agreed to rescind the aforequoted paragraph of the 21
April 2004 Agreement to give way for the signing of the CBA. The
08 June 2004 CBA was submitted to the Regional Labor Office on
14 July 2004.
As mentioned earlier, on 05 July 2004, the DOLE issued an Order
granting the motion to create a tripartite committee. UIC moved
for reconsideration but the same was denied in an Order dated
19 May 2005.
On 09 December 2004, the Union submitted bargaining
proposals for school years 2005-2010, but U1C refused to
bargain on the ground that out of more than 200 rank and file
employees of the UIC, only 37 employees are members of the
Union. UIC also disclosed that it refused to sign the application to
register their 08 June 2004 CBA because it was ratified by only
47 employees.
Meanwhile, the Union named three (3) representatives to
compose the tripartite committee. UIC, on the other hand,
initially refused to name their representatives contending that
the computation was no longer called for and that the 08 June
2004 CBA was not ratified. When UIC named its three
representatives, the tripartite committee held meetings on 14
September 2005 and 18 October 2005 wherein both parties
presented their respective computations. On 18 September 2006,
the [Secretary] issued a [second] Resolution (18 September 2006
Resolution hereafter) disposing as follows:cralawlawlibrary
WHEREFORE, this Office hereby
Orders:chanRoblesvirtualLawlibrary
1. The University to distribute the total amount of PI
1,070,473.00 to the affected employees in equal lump-sum
amounts.
2. Any illegal dismissal |case] filed against the University shall
continue, without further delay.
SO ORDERED.4
chanrobleslaw
On November 20, 2006, UIC filed two separate Petitions
for Certiorari before the Court of Appeals. In the first petition,
docketed as CA-G.R. SP No. 0I396-MIN (the "Net Incremental
Proceeds Case"), UIC assailed the Secretary's order mandating
the creation of a tripartite committee for the purpose of
computing the net incremental proceeds, and the subsequent
computation and award of Php11,070,473.00 representing the
net incremental proceeds covering the school years 1995 to
2000.5In the second petition, docketed as CA-G.R. SP No. 01398-
MIN (the "Illegal Dismissal Case"), UIC assailed the Secretary's
finding that the Respondent Employees were illegally dismissed,
as well as the award of full back wages and other monetary
benefits.6 The Court of Appeals ordered the consolidation of the
two cases on December 14, 2006.7
On April 24, 2007, the Court of Appeals promulgated its Decision
denying the consolidated petitions.8 In the Net Incremental
Proceeds Case, the appellate court held that the power of the
Secretary to assume jurisdiction over labor disputes under
Article 263(g) of the Labor Code is plenary and discretionary in
nature, which necessarily involves the power to resolve
questions incidental to the labor dispute.9 The Court of Appeals
also affirmed the amount of net incremental proceeds as
computed by the tripartite committee, finding that U1C failed to
substantiate its claims for deductions.10 In the Illegal Dismissal
Case, the Court of Appeals upheld the Secretary's conclusion that
the Respondent Employees were illegally dismissed on the
ground that UIC could not validly prevent them from joining the
Union since they did not perform managerial functions. The
appellate court opined that notwithstanding the confidential
nature of Respondent Employees' position, they were not
prohibited from joining the Union; hence, their dismissal by UIC
was not legally justified.11 The Court of Appeals subsequently
denied UIC's motions for reconsideration on May 31, 2007.12
Aggrieved, UIC filed the present petition, where it essentially
raises the same arguments with respect to the Secretary's
creation of the tripartite committee, computation of net
incremental proceeds, finding of illegal dismissal, and award of
back wages.
In its comment, respondent Union counters that it was
constrained to file an urgent motion with the Office of the
Secretary for the creation of a tripartite committee because there
was no other way to solve the issue on computation of the
incremental proceeds, considering that UIC had ignored and
rejected the existence and efficacy of the CBA.13 On the issue of
the computation of the net incremental proceeds, the Union
maintains that the parties had mutually agreed on the manner of
computing the same.14 With regard to the Illegal Dismissal Case,
the Union points out that the Respondent Employees were
dismissed on the same date that the termination notices were
sent, in violation of their right to due process.15
In a separate comment filed by the Respondent Employees, they
claim that they have the right to maintain their union
membership not for the purpose of collective bargaining, but for
legal representation in dealing with the employer; thus, there is
no legal justification for their dismissal.16 They further assert
that the matter of back wages and other monetary benefits is
already barred by res judicata since the Secretary's award
merely complied with our ruling in G.R. No. 15137917 affirming
the payroll reinstatement of the Respondent Employees.18
On July 9, 2007, we issued a temporary restraining order
directing the respondents to refrain from enforcing the Court of
Appeals' April 24, 2007 Decision and May 31, 2007 Resolution.19
II
A
In LMG Chemicals Corporation v. Secretary of Labor, we already
settled the extent of the Secretary's jurisdiction under Article
263(g):cralawlawlibrary
It is well settled in our jurisprudence that the authority of the
Secretary of Labor to assume jurisdiction over a labor dispute
causing or likely to cause a strike or lockout in an industry
indispensable to national interest includes and extends to all
questions and controversies arising therefrom.. The power is
plenary and discretionary in nature to enable him to effectively
and efficiently dispose of the primary dispute.20 (Emphasis in
original.)chanrobleslaw
The powers of the Secretary in "national interest" cases are not
set by metes and bounds. Rather, the Secretary is given wide
latitude to adopt appropriate means to finally resolve the labor
dispute. The doctrine of "great breadth of discretion"21 possessed
by the Secretary dates back to our earlier rulings which
recognized the broad powers of the former Court of Industrial
Relations (CIR), which had jurisdiction over national interest
cases prior to the enactment of the Labor Code. In Philippine
Marine Radio Officers' Association v. CIR, decided in 1957, we held
that "[i]f the [CIR] is granted authority to find a solution in an
industrial dispute and such solution consists in the ordering of
employees to return back to work, it cannot be contended that
the [CIR] does not have the power or jurisdiction to carry that
solution into effect."22 Again, in FEATI University v. Bautista:
"Once the jurisdiction is acquired pursuant to the presidential
certification, the CIR may exercise its broad powers as provided
in Commonwealth Act 103. All phases of the labor dispute and
the employer-employee relationship may be threshed out before
the CIR, and the CIR may issue such order or orders as may be
necessary to make effective the exercise of its
jurisdiction."23 Judicial authorities defining the scope of the
former CIR's power in respect of national interest cases
apply mutatis mutandis in cases involving the Secretary's
assumption of jurisdiction under Article 263(g).
In the Secretary's exercise of such broad discretion, the
prevailing rule is that we will not interfere or substitute the
Secretary's judgment with our own, unless grave abuse is
cogently shown.24 And in determining whether the acts of the
Secretary constitute grave abuse of discretion, the standard we
apply is that of reasonableness.25cralawred
Here, the Secretary ordered the creation of a tripartite
committee for the purpose of resolving one of the contentious
issues in OS-AJ-003-95, i.e., the computation of the net
incremental proceeds under Republic Act No. 6728,26 as
increased by mutual agreement of the parties. It must be recalled
that the second notice of strike filed by the Union on January 20,
1995 was triggered by, among others, the bargaining deadlock
on the very issue of the correct computation of the net
incremental proceeds. The notice of strike consequently
prompted the Secretary to assume jurisdiction over the dispute.
It cannot therefore be denied that the disposition of the net
incremental proceeds issue is necessary to resolve the long-
standing dispute between UIC and the Union. Put simply, there is
a reasonable connection between the Secretary's order and the
settlement of the labor dispute. Accordingly, we conclude that it
is well within the allowable area of discretion that the Secretary
ordered the creation of the tripartite committee.
The authority to create the tripartite committee flows from the
jurisdiction conferred by Article 263(g) to the Secretary. A grant
of jurisdiction, in the absence of prohibitive legislation, implies
the necessary and usual incidental powers essential to effectuate
it27 also referred to as "incidental jurisdiction." Incidental
jurisdiction includes the power and authority of an office or
tribunal to do all things reasonably necessary for the
administration of justice within the scope of its jurisdiction, and
for the enforcement of its judgment and mandates. Incidental
jurisdiction is presumed to attach upon the conferment of
jurisdiction over the main case, unless explicitly withheld by the
legislature. In this regard, we find nothing in the Labor Code that
prohibits the Secretary from creating ad hoc committees to aid in
the resolution of labor disputes after he has assumed
jurisdiction. The primary objective of Article 263(g) is not
merely to terminate labor disputes between private parties;
rather, it is the promotion of the common good considering that
a prolonged strike or lockout in an industry indispensable to the
national interest can be inimical to the economy.28 Hence,
provided that the Secretary's orders are reasonably connected
with the objective of the law, as it is in this case, courts will not
disturb the same.
B required by Article 231 of the Labor Code, when the Secretary
UIC argues that the Secretary gravely abused his discretion
because at the time he ordered the creation of the tripartite
committee, the parties had already signed but not yet ratified
- - the final draft of the CBA, which contains grievance
mechanism provisions. UIC posits that the grievance procedure
in the signed CBA should apply insofar as the determination of
the net incremental proceeds is concerned. In support of its
contention, UIC cites University of San Agustin Employees' Union
FFW v. Court of Appeals,29 where we held that the grievance
machinery embodied in the CBA must be recognized and
enforced by the Secretary. In response, the Union asserts that
UIC itself had rejected and disregarded the execution and
efficacy of the CBA and, thus, cannot rely on the grievance
machinery contained in the same CBA.
UIC's reliance in University of San Agustin is misplaced. In said
case, there was already a valid and subsisting live-year CBA
between the parties. The CBA provided, among others, that the
economic provisions shall be for a term of three years. Towards
the end of the third year of the CBA, as the economic provisions
were about to expire, the employer and the union reached an
impasse on economic matters, ultimately resulting in a labor
dispute.30 Thus, at the time the dispute arose in University of San
Agustin, the grievance machinery was in place. The existence of
an effective CBA was an important factual consideration for the
Court's holding that the grievance machinery must be respected.
In this case, however, the facts show that the CBA had not been
ratified by the majority of all workers in the bargaining unit, as
mandated the creation of the tripartite committee. Compliance
with the ratification requirement is mandatory; otherwise, the
CBA is ineffective.31 In fact, UIC itself admits that the CBA did not
become effective for want of ratification.32 The CBA not having
been ratified, there was no enforceable grievance machinery to
speak of unlike in University of San Agustin. When the
Secretary ordered the creation of the tripartite committee, the
dispute was already almost a decade old. Certainly, the Secretary
cannot be faulted for endeavoring to settle the issue involving
the net incremental benefits once and for all.
UIC's additional argument that the matter of net incremental
proceeds is a non-issue, since it would be covered by the full
settlement clause in the CBA, deserves scant consideration. As
already discussed, the CBA including the full settlement clause
did not take effect. Furthermore, we observe that UIC is
effectively proposing that the Union waived its rights to the net
incremental proceeds when the latter subsequently agreed to
disregard the second paragraph of the agreement dated April 21,
2004. However, for a waiver to be effective, it must be certain
and unequivocal33 and cannot be presumed.34 We rule that the
mere omission of the paragraph pertaining to the manner of
computing the net incremental proceeds is insufficient to prove
the intent of the Union to abandon the rights of its members with
respect to such proceeds.
C Arbiter. Similarly, in Uichico v. National Labor Relations
Next, UIC assails the tripartite committee's computation of the
net incremental proceeds, which was affirmed by the Secretary
and the Court of Appeals. UIC is essentially asking us to review
and evaluate the probative value of the evidence presented
below. Suffice it to say that such exercise is not proper in an
appeal by certiorari. In a petition for review under Rule 45, only
questions of law may be put in issue.35 We cannot emphasize to
litigants enough that the Supreme Court is not a trier of facts.36 It
is not our function to analyze or weigh the evidence all over
again.37 Corollary to this is the doctrine that findings of fact of
labor tribunals, when affirmed by the Court of Appeals, are
accorded not only great respect but even finality.38 In this case,
the tripartite committee, the Secretary, and the Court of Appeals
were unanimous in disallowing the deductions being claimed by
UIC. We find no cogent reason to disturb the same.
In any case, the rationale for the disallowance of deductions in
the proceedings below, i.e., the amounts being claimed did not
appear in UIC's audited financial statements, is consistent with
established jurisprudence. In Asia Brewery v. TPMA,39 we
held:cralawlawlibrary
In Restaurante Las Conchas v. Llego, several employees filed a
case for illegal dismissal after the employer closed its restaurant
business. The employer sought to justify the closure through
unaudited financial statements showing the alleged losses of the
business. We ruled that such financial statements are mere self-
serving declarations and inadmissible in evidence even if the
employees did not object to their presentation before the Labor
Commission, the services of several employees were terminated
on the ground of retrenchment due to alleged serious business
losses suffered by the employer. We ruled that by submitting
unaudited financial statements, the employer failed to prove the
alleged business losses, viz:
"... It is true that administrative and quasi-judicial bodies like the
NLRC are not bound by the technical rules of procedure in the
adjudication of cases. However, this procedural rule should not
be construed as a license to disregard certain fundamental
evidentiary rules. While the rules of evidence prevailing in the
courts of law or equity are not controlling in proceedings before
the NLRC, the evidence presented before it must at least have a
modicum of admissibility for it to be given some probative value.
The Statement of Profit and Losses submitted by Crispa, Inc. to
prove its alleged losses, without the accompanying signature
of a certified public accountant or audited by an
independent auditor, are nothing but sell-serving
documents which ought to be treated as a mere scrap of
paper devoid of any probative value. For sure, this is not the
kind of sufficient and convincing evidence necessary to discharge
the burden of proof required of petitioners to establish the
alleged losses suffered by Crispa, Inc. in the years immediately
preceding 1990 that would justify the retrenchment of
respondent employees. ..." (Emphasis in original.)
While the above-cited cases involve proof necessary to establish
losses in cases of business closure or retrenchment, we see no
reason why this rule should not equally apply to the
determination of the proper level of wage award in cases where
the Secretary of Labor assumes jurisdiction in a labor dispute
pursuant to Article 263(g) of the Labor Code.40 (Citations
omitted.)chanrobleslaw
Parenthetically, we cannot agree with UIC's contention that the
computation of the net incremental proceeds did not comply
with our ruling in St. Joseph's College v. St. Joseph's College
Workers' Association.41 We note that the basic formula used by
the tripartite committee, and agreed upon by the parties, is
consistent with St. Joseph's College, including deductions for
"non-paying students like scholars," "students who did not pay,"
"increase in salaries," and "increases in related
benefits." However, some of the amounts submitted by UIC
42
were disallowed by the tripartite committee for being
inadmissible and self-serving, based as they were on unaudited
financial statements. As a result, certain items in the initial
formula no longer appeared in the final computation. Such
disallowance, however, should not be interpreted as a departure
from St. Joseph 's College; it simply means that the deduction is
effectively nil because the amounts claimed had not been
adequately proved.
III
The resolution of the Illegal Dismissal Case rests upon the
determination of whether or not a confidential employee's
refusal to vacate his or her union membership is a valid ground
for dismissal. The Secretary and the Court of Appeals believe it is
not. We reverse.
As a preliminary matter, we clarify that the issue of whether or
not the Respondent Employees are confidential employees has
long been settled and its reexamination is already barred by res
judicata. In VA Case No. XI-354-02-94 (the "Arbitration Case"),
the panel of voluntary arbitrators had already determined that
the Respondent Employees are confidential employees who must
be excluded from the bargaining unit. The panel's decision dated
November 8, 199443 and resolution of the motion for
reconsideration dated February 8, 199544 became final and
executory after we dismissed the Union's petition
for certiorari on June 21, 199545 without any further incidents.
The Arbitration Case having attained finality, the issues resolved
therein may no longer be disturbed or modified.
A
The just causes for terminating an employee, confidential or not,
are numerated in Article 282 of the Labor Code:cralawlawlibrary
Art. 282. Termination by employer. An employer may terminate
an employment for any of the following causes:
(a) Serious misconduct or willful disobedience by the employee
of the lawful orders of his employer or representative in
connection with his work;ChanRoblesVirtualawlibrary
(b) Gross and habitual neglect by the employee of his
duties;ChanRoblesVirtualawlibrary
(c) Fraud or willful breach by the employee of the trust reposed
in him by his employer or duly authorized
representative;ChanRoblesVirtualawlibrary
(d) Commission of a crime or offense by the employee against
the person of his employer or any immediate member of his
family or his duly authorized representatives; and
(e) Other causes analogous to the foregoing.
chanrobleslaw
UIC cites willful disobedience and "loss of confidence" as the
grounds for dismissing the Respondent Employees. In its
termination letters dated February 21, 1995, UIC informed the
Respondent Employees that because of their continued union
membership notwithstanding the voluntary arbitration decision,
"management no longer has any trust and confidence in you in
the delicate, sensitive and confidential position you hold."46
Generally, employers are given wide latitude in terminating the
services of employees who perform functions which by their
nature require the employer's full trust and confidence.47 It is
well established that an employer cannot be compelled to
continue in employment an employee guilty of acts inimical to
the interest of the employer and justifying loss of confidence in
him.48 It has been held that when an employee has been guilty of
breach of trust or his employer has ample reason to distrust him,
a labor tribunal cannot deny the employer the authority to
dismiss him.49 To constitute a valid ground for dismissal, it is
sufficient that there be some reasonable basis, supported by
substantial evidence, for such loss of confidence.50
Nonetheless, employers do not have unbridled authority to
dismiss employees by simply invoking Article 282(c). The loss of
confidence must be genuine and cannot be used as a subterfuge
for causes which are illegal, improper and unjust.51 "Loss of
confidence as a ground for dismissal has never been intended to
afford an occasion for abuse by the employer of its prerogative,
as it can easily be subject to abuse because of its subjective
nature.52
In Cruz v. Court of Appeals,53 we summarized the guidelines when
loss of confidence constitutes a valid ground for
dismissal:cralawlawlibrary
[T]he language of Article 282(c) of the Labor Code states that the
loss of trust and confidence must be based on willful breach of
the trust reposed in the employee by his employer. Such breach
is willful if it is done intentionally, knowingly, and purposely,
without justifiable excuse, as distinguished from an act done
carelessly, thoughtlessly, heedlessly or inadvertently. Moreover,
it must be based on substantial evidence and not on the
employer's whims or caprices or suspicions otherwise, the
employee would eternally remain at the mercy of the employer.
Loss of confidence must not be indiscriminately used as a shield
by the employer against a claim that the dismissal of an
employee was arbitrary. And, in order to constitute a just cause
for dismissal, the act complained of must be work-related and
shows that the employee concerned is unfit to continue working
for the employer. In addition, loss of confidence as a just cause
for termination of employment is premised on the fact that the
employee concerned holds a position of responsibility, trust and
confidence or that the employee concerned is entrusted with
confidence with respect to delicate matters, such as the handling
or care and protection of the property and assets of the
employer. The betrayal of this trust is the essence of the offense
for which an employee is penalized.54chanrobleslaw
In determining whether loss of confidence is a just cause for
dismissal under Article 282(c), we laid down the following
requisites in the 2008 case of Bristol Myers Squibb (Phils.), Inc. v.
Baban:55cralawlawlibrary
(a) The employee must hold a position of trust and confidence.
(b) There must be a willful ad that would justify the loss of trust
and confidence.56
chanrobleslaw
As a rule, loss of confidence may only be invoked by the
employer against an employee occupying a position of
responsibility, trust and confidence57 hence, the first requisite.
Ordinarily, this would require us to make a determination with
regard to the true nature of the Respondent Employees'
positions. But given the facts of this case, noting in particular the
final and executory decision in the Arbitration Case which
deemed Respondent Employees as confidential employees, we
only now need to determine whether confidential employees hold
positions of trust and confidence.
The leading case explaining what is a "position of trust and
confidence" is Mabeza v. NLRC,58 where we held
that:cralawlawlibrary
[L]oss of confidence should ideally apply only to cases involving
employees occupying positions of trust and confidence or to
those situations where the employee is routinely charged with
the care and custody of the employer's money or property. To
(he first class belong managerial employees, i.e., those vested
with the powers or prerogatives to lay down management
policies and/or to hire, transfer, suspend, lay-off, recall,
discharge, assign or discipline employees or effectively
recommend such managerial actions; and to the second class
belong cashiers, auditors, property custodians, etc., or those who,
in the normal and routine exercise of their functions, regularly
handle significant amounts of money or property.
...59chanrobleslaw
Bristol Myers and subsequent cases60 essentially follow the same
formula by subdividing positions of trust and confidence into
two classes: managerial employees and fiduciary rank-and-file
employees. Respondent Employees fall under the latter category.
We understand that Mabeza's failure to specifically mention the
category of "confidential employees" may cause some confusion,
at least superficially, with respect to the applicability of Article
282(c) to this specific class of employees. For the sake of
avoiding any future misperception, we rule that confidential
employees must perforce hold positions of trust and confidence.
Mabeza's silence regarding confidential employees may simply
be attributed to the fact that confidential employees do not
constitute a distinct category of employees based on the plain
text of the Labor Code. But jurisprudence recognizes the
existence of such category,61 and it has been held that
confidentiality may attach to a managerial, supervisory, or rank-
and-file position.62 As the commentator Azucena aptly
notes:cralawlawlibrary
... Confidentiality is not a matter of official rank, it is a matter of
job content and authority. It is not measured by closeness to or
distance from top management but by the significance of the
jobholder's role in the pursuit of corporate objectives and
strategy. In principle, every managerial position is confidential
one does not become a manager without having gained the
confidence of the appointing authority. But not every
confidential employee is managerial; lie may be a supervisory or
even a rank-and-file employee. Confidentiality, in other words,
cuts across the pyramid of jobs from the base to the apex, from
messengerial to managerial.63
chanrobleslaw
A confidential employee is defined as one entrusted with
confidence on delicate matters, or with the custody, handling, or
care and protection of the employer's property.64 For all intents
and purposes, the terms "confidential employee" and "employee
holding a position of trust and confidence" are synonymous.
Fundamentally, the two categories mentioned in Mabeza are
simply subcategories of the broader category of confidential
employees.
The essence of the second requisite is that the loss of confidence
must be based on a willful breach of trust founded on clearly
established facts.65 Here, it is not disputed that the Respondent
Employees refused to resign from the Union, notwithstanding
the decision in the Arbitration Case. Respondent Employees do
not claim that they were coerced into retaining their union
membership; in fact, they even insist upon their right to join the
Union. The voluntariness of Respondent Employees' refusal to
vacate their union membership which constitutes the "willful
act" is therefore unequivocally established.
We hold that the willful act of refusing to leave the Union is
sufficient basis for UIC to lose its trust and confidence on
Respondent Employees. There was just cause for dismissing the
Respondent Employees. Our conclusion follows the same
reasoning why we finally adopted the doctrine that confidential
employees should be excluded from the bargaining unit and
disqualified from joining any union:66employees should not be
placed in a position involving a potential conflict of interests.67 In
this regard, the Court of Appeals erred in holding that
Respondent Employees are allowed to join the Union.68If
Respondent Employees were allowed to retain their union
membership, UIC would not be assured of their loyalty because
of the apparent conflict between the employees' personal
interests and their duty as confidential employees. Such a result
is likely to create an atmosphere of distrust between UIC and the
confidential employees, and it would be nigh unreasonable to
compel UIC to continue in employment persons whom it no
longer trusts to handle delicate matters.

Finally, the Secretary cites Article 248 of the Labor Code to
support his conclusion that Respondent Employees were illegally
dismissed.69 Article 248(a) considers as unfair labor practice an
employer's act of interfering with, restraining or coercing
employees in the exercise of their right to self-organization.
However, it is well established that the right to self-organization
under the Labor Code does not extend to managerial70 and
confidential employees,71 while supervisory employees are not
allowed to join the rank-and-file union. In view of the limitation
imposed upon these specific classes of employees, Article 248(a)
should therefore be interpreted to cover only interference with
the right to self-organization of bona fide members of the
bargaining unit. The provision finds no application in this case
which involves confidential employees who are, by law, denied
the right to join labor unions.
B C
Although there is just cause for dismissing the Respondent
Employees, we find that UIC failed to comply with the mandatory
two-notice due process requirement. Under our labor laws, the
employer has the burden of proving that the dismissed employee
has been served two written notices: (a) one to apprise him of
the particular acts or omissions for which his dismissal is sought,
and (b) the other to inform him of the employer's decision to
dismiss him.73 The first notice must state that the employer seeks
dismissal for the act or omission charged against the employee;
otherwise, the notice does not comply with the rules.74 The
records show that UIC sent only one such written notice to
Respondent Employees on February 21, 1995, i.e., a notice of
termination effective at the close of business of the same
date.75 We do not agree with UIC's submission that the
agreement to arbitrate and the request to comply with the
arbitration decision constitute the "first notice" required by
law,76 considering that UIC was unable to establish by substantial
evidence that these categorically contain what is legally required
to appear in the first notice. In fine, we agree with the
observation of the Court of Appeals that the Respondent
Employees were hastily terminated.77
Pursuant to the doctrine laid down in Agabon v. NLRC,78 the
dismissal for just cause remains valid but UIC should be held
liable, by way of nominal damages, for non-compliance with
procedural due process. Conformably with existing
jurisprudence,79 UIC is liable to pay each of the Respondent
Employees the sum of Php30,000.00 as nominal damages.
Notwithstanding our ruling that there was just cause for
dismissal, we reject UIC's claim for reimbursement of the amount
it has paid to Respondent Employees for being contrary to
established jurisprudence. The prevailing rule is that an
employee cannot be compelled to reimburse the salaries and
wages he received during the pendency of the appeal,
notwithstanding the subsequent reversal of the order of
reinstatement.80 As we held in the case of Garcia v. Philippine
Airlines, Inc., "it is obligatory on the part of the employer to
reinstate and pay the wages of the dismissed employee during
the period of appeal until reversal by the higher court."81
Furthermore, in G.R. No. 151379, we already affirmed the
Secretary's order to reinstate the Respondent Employees in UIC's
payroll until the validity of their termination is finally resolved.
Respondents correctly point out that the back wages now being
disputed by UIC actually represent Respondent Employees'
unpaid salaries pursuant to the order of payroll reinstatement in
our previous decision. The Secretary precisely ordered the
payment of back wages because UIC had been remiss in making
payments, despite the immediately executory nature of a
reinstatement order.82
IV
On November 23, 2007, UIC filed an Omnibus Motion83 asking us
to, among others, cite Alfredo Olvida in contempt for
unauthorized practice of law. UIC alleges that Olvida, a non-
lawyer, "has been preparing, signing and filing pleadings before
this Honorable Court and even before the Court of Appeals in CA-
G.R. SP Nos. 01396-MIN and 01398-MIN."84 In a resolution dated
February 11, 2008, we ordered Olvida to file a comment on the
motion to cite him in contempt.85 Olvida submitted his comment
on April 10, 2008, in which he did not deny the allegations but
justified his acts by stating that he is the Regional Legal Assistant
of the Federation of Free Workers (FFW) and is authorized by
the Union to handle the cases.86 He also mentioned past
instances wherein he prepared and signed pleadings for local
affiliates of FFW in matters pending before the Supreme Court
and the Court of Appeals, without having been held in contempt
in those previous instances.87
Since the facts are not disputed, it is clear that Olvida willfully
engaged in the unauthorized practice of law before the Supreme
Court and the Court of Appeals in these consolidated cases.
There can be no question that one who prepares, signs, and files
pleadings in court is engaged in the practice of law.88Olvida is not
covered by the exception under Article 222(a) of the Labor
Code,89which only pertains to proceedings before the NLRC and
labor arbiters and do not extend to courts of law. Not being a
member of the Philippine Bar, Olvida had no authority to act as
the Union's counsel in the proceedings before the Court of
Appeals and, now, before us. ynder Section 3(e), Rule 71 of the
Rules of Court, the act of "[a]ssuming to be an attorney... and
acting as such without authority" constitutes indirect contempt.
Accordingly, we find Olvida guilty of indirect contempt.
We want to clarify, however, that our ruling on indirect contempt
is the exception rather than the rule. Counsel for UIC ought to
know that under the Rules of Court, a charge for indirect
contempt must be initiated through a verified petition, unless the
charge is directly made by the court against which the
contemptuous act is committed.90 In Mallari v. GSIS, we quoted
with approval Justice Regalado's comments on Section 4 of Rule
71:cralawlawlibrary
This new provision clarifies with a regulatory norm the proper
procedure for commencing contempt proceedings. While such
proceeding has been classified as a special civil action under the
former Rules, the heterogeneous practice, tolerated by the
courts, has been for any party to file a mere motion without
paying any docket or lawful fees therefor and without complying
with the requirements for initiatory pleadings, which is now
required in the second paragraph of this amended section.
Worse, and as a consequence of unregulated motions for
contempt, said incidents sometimes remain pending for
resolution although the main case has already been decided.
There are other undesirable aspects but, at any rate, the same
may now be eliminated by this amendatory procedure.
Henceforth, except for indirect contempt proceedings
initiated motu proprio by order of or a formal charge by the
offended court, all charges shall be commenced by a verified
petition with full compliance with the requirements
therefor and shall be disposed of in accordance with the
second paragraph of this section.91 (Emphasis in
original.)chanrobleslaw
One exception to the above rule is that the Supreme Court may,
incidental to its power to suspend its own rules whenever the
interest of justice requires,92 resolve an issue involving indirect
contempt when there is (a) no factual controversy to be resolved
or the case falls under the res ipsa loquitur rule and (b) only after
granting the respondent the opportunity to comment.93 We
resolve UIC's pending motion on the basis of this exception, and
only to fully dispose of all pending issues in these consolidated
cases. While we do not condone the initiation of indirect
contempt proceedings by mere motion without payment of the
proper docket fees, requiring UIC to file a verified petition for
indirect contempt will only serve to prolong the dispute between
the parties.
WHEREFORE, the petition is PARTIALLY GRANTED and the
appealed Decision dated April 24, 2007 and Resolution dated
May 31, 2007 with respect to CA-G.R. SP. No. 01398-MIN are
MODIFIED as follows: (1) petitioner's dismissal of Melanie de la
Rosa, Angelina Abadilla, Zenaida Canoy, Gemma Galope, Paulina
Palm a Gil, Lelian Concon, Mary Ann de Ramos, Alma Villacarlos,
Leah Cruza, Ofelia Diapuez and Josie Boston is hereby declared
valid for just cause and petitioner is therefore authorized to
remove the aforementioned employees from its payroll upon
finality of this decision; and (2) petitioner is ordered to pay each
of the Respondent-Employees the sum of Thirty Thousand Pesos
(Php30,000.00) as nominal damages for non-compliance with
the mandatory procedural due process requirements. The
Decision and Resolution are AFFIRMED in all other respects.
Petitioner's motion to cite Alfredo Olvida for indirect contempt is
hereby GRANTED. Alfredo Olvida is ordered to pay a FINE of
Two Thousand Pesos (Php2,000.00) for assuming to be an
attorney and acting as such without authority, with a STERN
WARNING that repetition of the same or similar offense in the
future will be dealt with more severely.
Finally, the Temporary Restraining Order issued on July 9, 2007
is hereby LIFTED effective immediately.
SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
September 16, 2015
G.R. No. 202446
EDUARDO BANDILLION, ERNESTO BAYLON, REPRESENTED
BY HIS SISTER GERTRUDES BAYLON; ALFREDO BRAGA;
BALTAZAR BUCAYAN; TERESITO CAPILLO; ROLANDO
CAYAPADO (DECEASED), REPRESENTED BY HIS WIFE
FELICITAS CAYAPADO; JONELL CLEMENTE, ROMEO
COLOCAR, CARLOS CONSULAR, WILHIM CONVOCAR, CEAZAR
CORTEZ, GODOFREDO DABLEO, REPRESENTED BY HIS WIFE
PATRICIA DABLEO; CHRISTOPHER DAGPIN, ALTER
DAYADAY, NORMAN DIAMANTE, EDUARDO ESMERALDA
(DECEASED), REPRESENTED BY HIS DAUGHTER EDNA
ESMERALDA; RICARDO GARCIA, ELEIZER HARI-ON
(DECEASED), REPRESENTED BY HIS BROTHER TITO HARI-
ON; ROBERTO HARI-ON, TITO HARI- ON, PEDRO LARA;
(DECEASED), REPRESENTED BY HIS WIFE JOCELYN LARA,
FERNANDO MADIS, JR., AQUILINO MATUS, JR., RODRIGO
ORLINA, REPRESENTED BY HIS WIFE, ROSALINDA ORLINA;
ROMEO PADERNAL (DECEASED), REPRESENTED BY HIS
WIFE CORAZON PADERNAL; JUNNY PANCHITA; (DECEASED),
REPRESENTED BY HIS WIFE LEDILLA PANCHITA, RODOLFO
PANGANTIHON, REINERIO PASOLES, ROMUALDO PASOLES,
SR., RONALDO PAYDA, IRENEO PORCAL, ROEL RAMOS,
MARCELINO SINSORO, WILFREDO SINSORO, ERNESTO
TABLASON (DECEASED), REPRESENTED BY HIS SON
JOEMARIE TABLASON; REY TABLASON, BENZON ZANTE, AND
BIENVENIDO ZANTE, Petitioners, v. LA FILIPINA UYGONGCO
CORPORATION (LFUC), Respondent.
DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari under Rule
45 of the Rules of Court seeking to annul and set aside the Court
of Appeals' Decision1 dated September 13, 2011 and
Resolution2 dated May 24, 2012 in CA-G.R. SP No. 03690, which
ordered a remand of the case to the Department of Labor and
Employment (DOLE) Regional Director for the reception of
evidence and re-computation of monetary awards therein.
The facts of the case follow.
Petitioners Eduardo Bandillion, et al. (employees) are truck
drivers and employees of respondent La Filipina Uygongco
Corporation (LFUC). They filed a complaint for violation of labor
standard laws against the latter before the DOLE Region
VI.3 Upon inspection, a finding of "no violation" was made by the
Labor Enforcement Officer, a finding that was upheld on appeal
to the DOLE-VI Regional Director, who stated the same in an
Order dated December 1, 1998.4
The employees filed an appeal with the Secretary of Labor and
Employment (DOLE Secretary). Thus, on June 4, 2003, Acting
DOLE Secretary Manuel G. Imson issued an Order overturning
the previous order of the DOLE-VI Regional Director. The
dispositive portion of the decision states:cralawlawlibrary
WHEREFORE, the Order dated December 01, 1998 is hereby SET
ASIDE and VACATED and a new one is entered finding the
appellee, Iloilo La Filipina Uygongco Corporation liable for
underpayment of wages, non-payment of holiday pay, rest day
pay, and overtime pay.
Let the case be REMANDED to the DOLE-Regional Office VI for
the appropriate computation of the workers' individual
entitlements as above-stated.
All other claims of appellants are DISMISSED for lack of merit.
SO ORDERED.5
chanrobleslaw
Upon a denial of its motion for reconsideration by DOLE
Secretary Patricia A. Sto. Tomas, LFUC filed a petition
for certiorari with the Court of Appeals. The appellate court
denied the petition, however, and affirmed the decision of the
DOLE Secretary. The motion for reconsideration filed by LFUC
was likewise denied by the court.
Thus, the case was elevated to this Court via a petition
for certiorari where it was captioned and docketed as Iloilo La
Filipina Uygongco Corporation v. Court of Appeals,6 but the same
was dismissed by this Court. LFUC's motion for reconsideration
was likewise denied with finality in a Resolution dated February
27, 2008.7 Then, Entry of Judgment was issued by this Court on
July 8, 2008.8
Consequently, as the employees filed a Motion for Execution
before the DOLE Region VI to enforce the DOLE Secretary's
Order of June 4, 2003, it was discovered that Regional Director
Carlos L. Boteros, on August 28, 2006, had already issued an
Order directing LFUC to pay the total amount of Three Million
Three Hundred Forty-Five Thousand Six Hundred Fifty-Seven
Pesos and Ninety-Four Centavos (Php3,345,657.94), or Eighty-
Eight Thousand Forty Three-Pesos and Sixty-Three Centavos
(Php88,043.63) for each of the employees in differentials on
wages, holiday pay, rest day pay and overtime pay.9 The
dispositive portion of the Order states:cralawlawlibrary
WHEREFORE, premises considered, respondent/appellee lloilo
La Filipina Uygongco Corporation is hereby ordered within ten
(10) days from receipt hereof, to pay its thirty-eight (38)
employees the total sum of THREE MILLION 111 REE HUNDRED
FORTY-FIVE THOUSAND SIX HUNDRED FIFTY SEVEN and
94/100 PESOS (P3,345,657.94) representing their differentials
on wages, holiday pay, rest day pay and overtime pay distributed
as follows:chanRoblesvirtualLawlibrary
# Name of Employees Total amount of
Benefits
1. Bandillon, Eduardo P 88,043.63
2. Baylon, Ernesto 88,043.63
3. Braga, Alfredo 88,043.63
4. Bucayan, Baltazar 88,043.63
5. Capillo, Teresito 88,043.63
6. Cayapado, Rolando 88,043.63 31. Porcal, Ireneo 88,043.63
7. Clemente, Jonell 88,043.63 32. Ramos, Roel 88,043.63
8. Colocar, Romeo 88,043.63 33. Sinsoro, Marcelino 88,043.63
9. Consula, Carlos 88,043.63 34. Sinsoro, Wilfredo 88,043.63
10. Convocar, Wilhim88,043.63 35. Tablason, Ernesto 88,043.63
88,043.63 36. Tablason, Rey 88,043.63
11. Cortez, Ceazar 88,043.63 88,043.63 37. Zante, Benzon 88,043.63
12. Dableo, Godofredo88,043.63 38. Zante, Bienvenido 88,043.63
88,043.63 Grand Total P3,345,657.9410
13. Dagpin, Christopher88,043.63 chanrobleslaw
88,043.63
14. Dayaday, Alter 88,043.63 88,043.63 The Order complies with the DOLE Secretary's Order of June 4,
15. Diamante, Norman88,043.63 2003 which called for the "appropriate computation of the
88,043.63 workers' individual entitlements."
16. Esmcralda, Eduardo88,043.63
88,043.63 The DOLE Region VI then issued a Writ of Execution11 on July 15,
17. Garcia, Ricardo 88,043.63 88,043.63 2008. The writ directed the enforcement of the Order of August
18. Hari-On,88,043.63 28, 2006 by Director Boteros for LFUC to pay the employees
Eleizar 88,043.63 Three Million Three Hundred Forty-Five Thousand Six Hundred
19. Harion, Robert 88,043.63 Fifty-Seven Pesos and Ninety-Four Centavos (Php3,345,657.94),
20. Harion, Tito 88,043.63 or Eighty-Eight Thousand Forty-Three Pesos and Sixty-Three
21. Lara, Pedro 88,043.63 Centavos (Php88,043.63) for each employee in various forms of
22. Madis, Fernando Jr. 88,043.63 unpaid wages and other pays.12
23. Matus, Aquilino Jr., 88,043.63
24. Orlina, Rodrigo 88,043.63 LFUC moved for the writ to be recalled, but the same was merely
25. Padernal, Romeo 88,043.63 "noted without action" by the DOLE-VI Regional Director, in a
26. Panchita, Junny 88,043.63 letter dated August 1, 2008.13
27. Pangantihon, Rodolfo 88,043.63
28. Pasoles, Reinerio 88,043.63 After being served with the writ, LFUC filed a
29. Pasoles, Renwaldo Sr., 88,043.63 Petition14 for certiorari and injunction dated August 15, 2008
30. Payda, Ronaldo 88,043.63 with the Court of Appeals, seeking to set aside the writ of
execution, on the grounds that: (1) the same was immediately
issued without first issuing a "compliance order" which is
provided for in Section 18 of Rule II of the Rules on the
Disposition of Labor Standard Contests; and (2) grave abuse was
committed by the Regional Director in denying LFUC's motion to
recall the writ.15 LFUC posited that the correct procedure was the
issuance of a Compliance Order prior to the issuance of a writ of
execution.16Allegedly, a computation of the money due to the
employees was all that was required by the Order of June 4, 2003
by the DOLE Secretary; hence, LFUC theorized that such
computation should have been made first, followed by the
issuance of a Compliance Order, before execution was
ordered.17 It also claimed that some of the employees have since
been dismissed; thus, they should not have been included in the
computation.18
Apparently, LFUC was not yet served with the Order dated
August 28, 2006 of the DOLE-VI Regional Director when it filed
the petition for certiorari before the Court of Appeals.
Subsequently, however, LFUC was served a copy of the Order
dated August 28, 2006. Thus, on September 30, 2008, LFUC filed
with DOLE Region VI a Motion for Reconsideration (treated as an
Appeal)19 of the Order dated August 28, 2006 of Regional
Director Boteros, wherein it called the said order a "Compliance
Order" that was allegedly issued in grave abuse of discretion for
it deprived LFUC of its right to due process since the latter was
not given the opportunity to adduce evidence to refute the
workers' allegations, specifically the latter's monetary claims.20 It
alleged that the employees were piece-rate truck drivers and,
thus, were not entitled to overtime, holiday and rest day pay as
well as wage differentials, and that some already had executed
waivers and quitclaims.21
The motion for reconsideration filed before DOLE Region VI was
denied by Regional Director Aida Estabillo in a Decision22 dated
December 15, 2008. From that decision, LFUC filed an appeal to
the DOLE Secretary via a Notice of Appeal23 and a Memorandum
of Appeals dated December 30, 2008.
Meanwhile, the petition before the Court of Appeals was duly
opposed by the employees as well as by the DOLE-VI Regional
Director, who alleged that the petition had been rendered moot
and academic by LFUC's filing of a motion for reconsideration of
the Order dated August 28, 2006.24
In an Order25 dated August 2, 2010, DOLE Undersecretary
Lourdes M. Trasmonte, acting for the DOLE Secretary, denied the
appeal of LFUC and affirmed the Order of December 15, 2008 by
the DOLE-VI Regional Director which, in turn, is also an
affirmation of the Order of August 28, 2006 by the same office.
LFUC filed a Motion for Reconsideration of the Order, but the
same was denied in a Resolution26 dated August 19, 2011, also
signed by Undersecretary Trasmonte.
On March 5, 2012, the DOLE issued an Entry of
Judgment,27 stating that the foregoing Resolution dated August
19, 2011 had become final and executory on October 7, 2011 and
thereby was recorded in the Book of Entries of Judgments.
Thereafter, the DOLE-VI Regional Director-Officer-in-Charge
(OIC) issued another Writ of Execution,28dated November 21,
2011, essentially ordering the Sheriff to proceed to LFUC's
address and require the latter's compliance with the Order of
August 28, 2006 of the said office to pay a total of Three Million
Three Hundred Forty-Five Thousand Six Hundred Fifty-Seven
Pesos and Ninety-Four Centavos (Php3,345,657.94) to its
employees-claimants.
Meanwhile, on July 8, 2011, the Court of Appeals issued a
Resolution29 denying LFUC's application for Temporary
Restraining Order (TRO) and submitting the case for decision.
On September 13, 2011, the Court of Appeals promulgated its
assailed Decision, the dispositive portion of which
states:cralawlawlibrary
WHEREFORE, premises considered, let this case be REMANDED
to the DOLE Regional Director, Region VI for the reception of
evidence for all the parties, and the re-computation of monetary
awards.
SO ORDERED.30chanrobleslaw
The Court of Appeals found that the office of the DOLE-VI
Regional Director arrived at its computations of the payment due
to the workers without any evidence from the parties, and
without considering the fact that the National Labor Relations
Commission (NLRC) has a final decision upholding as valid the
dismissal of most of the employees.31 Hence, the appellate court
held that due process was not observed and ordered the case
remanded to the DOLE-VI Regional Director for the reception of
evidence in order to properly compute the monetary claims of
the employees.32
The employees filed a motion for reconsideration of the
appellate court's decision but, in the other assailed
Resolution33 dated May 24, 2012, the same was denied.
Hence, this petition for review on certiorari filed by the
employees.
The petitioners-employees Bandillion, et al. maintain that LFUC's
petition before the Court of Appeals was rendered moot and
academic by its filing of a motion for reconsideration of the
August 28, 2006 Order before the Regional Director.34 Thus, for
the petitioners, it follows that the petition for certiorari filed by
LFUC was improper as there was another adequate remedy
available to it.35 Further, petitioners deny that LFUC was denied
due process, as it was in fact served with a subpoena duces
tecum to produce employment records.36 Petitioners also accuse
LFUC of violating the rule against forum shopping in its filing of
the petition while a motion for reconsideration was pending.37
In its Comment, respondent LFUC first presented some
procedural challenges to the petition. It reported that a number
of the employees did not sign the Special Power of Attorney for
them to be represented in this petition by their union president,
Ronaldo C. Payda.38 In addition, the employees who died were
allegedly not properly substituted.39 Lastly, LFUC alleges that the
copies of the assailed resolutions that were attached in the
petition were mere "machine copies" and not certified true
copies as required by Section 1, Rule 65, of the Rules of Court.

As to the merits of the petition, respondent LFUC contends that
its filing of a motion for reconsideration of the August 28, 2006
Order of the DOLE-VI Regional Director did not render as moot
and academic the petition for certiorari it earlier filed with the
Court of Appeals.40 There is allegedly no "identity of relief
between the motion for reconsideration and the petition
for certiorari"41 It theorizes that a motion for reconsideration is
"a mere tool (for) seeing the review of arguments and evidence"
and does not affect the petition for certiorari.42 LFUC also denies
committing forum shopping, stating that the elements oflitis
pendentia are not present and that a judgment in one case would
not amount to res judicata in the other.43
Respondent LFUC claims that it was after it filed its petition with
the Court of Appeals that it received, on September 24, 2008, the
Compliance Order (dated August 28, 2006), which it immediately
appealed to the DOLE Secretary.44 Thus, it claims that it was a
"supervening event" so that the filing of the petition did not bar
the appeal and vice-versa.45 LFUC also alleges that the employees
never before raised the issue of forum shopping and did so for
the first time only after the decision of the Court of Appeals was
adverse to them.46 Then, LFUC refutes the employees' charge
that the Court of Appeals' assailed decision was based only on
"assumptions, conjectures and suppositions," noting that it was
the compliance order of the DOLE-Region VI that was issued
without evidence of data and figures from the parties.47
The singular issue to resolve is whether or not the case decided
by the Court of Appeals in CA-G.R. SP No. 03690 has been
rendered moot by herein respondent LFUC's filing of a motion
for reconsideration (treated as an appeal) of the Order dated
August 28, 2006 of the DOLE-VI Regional Director.
First, We discuss the procedural matters.
Respondent LFUC alleges that several of the concerned
employees did not sign the Special Power of
Attorney (SPA) authorizing their union president and co-
48
petitioner, Ronaldo C. Payda, to file this petition, and to sign the
verification and certification against forum shopping for such
purpose, which allegedly rendered the said petition defective.
This contention lacks merit. According to prevailing
jurisprudence, neither the fact that Payda alone signed the
petition's verification and certification against forum shopping,
nor the fact that the SPA authorizing the filing of the petition was
not signed by all petitioners, invalidate nor render the petition
defective, as the present case is one of those instances when the
rules are interpreted more liberally in order to attain substantial
justice. We hold that Payda's lone signature and the SPA signed
by most of the petitioners already substantially comply with the
requirements for a properly and validly filed petition.
Indeed, Payda alone signed the verification and certification
against forum shopping - as the person authorized in the SPA to
do so - but instead of rendering the petition defective or invalid,
this Court, as it has previously ruled in Altres, et at. v. Empleo, et
al.49 regards the same as already in substantial compliance with
the rules. In that case, it was held that in certain instances, the
signature of even just one person out of many petitioners in the
verification and certification against forum shopping can be
deemed as enough to meet the requirements of the rules. In sum,
the Court laid down the guidelines as follows:cralawlawlibrary
For the guidance of the bench and bar, the Court restates in
capsule form the jurisprudential pronouncements already
reflected above respecting non-compliance with the
requirements on, or submission of defective, verification and
certification against forum shopping:
1) A distinction must be made between non-compliance with the
requirement on or submission of defective verification, and non-
compliance with the requirement on or submission of defective
certification against forum shopping.
2) As to verification, non-compliance therewith or a defect
therein does not necessarily render the pleading fatally
defective. The court may order its submission or correction or
act on the pleading if the attending circumstances are such that
strict compliance with the Rule may be dispensed with in order
that the ends of justice may be served thereby.
3) Verification is deemed substantially complied with when
one who has ample knowledge to swear to the truth of the
allegations in the complaint or petition signs the
verification, and when matters alleged in the petition have been
made in good faith or are true and correct.
4) As to certification against forum shopping, non-compliance
therewith or a defect therein, unlike in verification, is
generally not curable by its subsequent submission or
correction thereof, unless there is a need to relax the Rule on the
ground of "substantial compliance" or presence of "special
circumstances or compelling reasons."
5) The certification against forum shopping must be signed by
all the plaintiffs or petitioners in a case; otherwise, those who did
not sign will be dropped as parties to the case. Under
reasonable or justifiable circumstances, however, as when
all the plaintiffs or petitioners share a common
interest and invoke a common cause of action or defense,
the signature of only one of them in the
certification against forum shopping substantially
complies with the Rule.
6) Finally, the certification against forum shopping must be
executed by the party-pleader, not by his counsel. If, however, for
reasonable or justifiable reasons, the party- pleader is unable to
sign, he must execute a Special Power of Attorney designating his
counsel of record to sign on his behalf, x x x50
chanrobleslaw
In the case at bar, the subject SPA is an authorization granted by
the employees in favor of their union president Payda to, among
other things, "file the appropriate petition before the Supreme
Court relative to the Court of Appeals' Decision and Resolution
dated September 13, 2011 and May 24, 2012, respectively," and
to sign the petition's verification and certification against forum
shopping for such purpose. The said employees, who are the
SPA's principals, along with Payda himself, became the
petitioners in the petition, which is the case that is now being
resolved. Payda performed his mandate under the SPA and, for
himself and for on behalf of his principals, filed the instant
petition and alone signed the accompanying verification and
certification against forum shopping. The SPA was signed by the
great majority of the persons named as petitioners in the
case.51 We hold the same to have duly complied with the
jurisprudential guidelines on the rules on verification and
certification against forum shopping as outlined above.
While Payda alone signed, per the SPA, the petition is neither
invalid nor defective as LFUC alleges because, as for the
verification requirement, Payda signed as one who has "ample
knowledge to swear to the truth of the petition's allegations,"
being himself a petitioner and the employees' union president
who personally knows the story and facts of the case; and as for
the certification against forum shopping, Payda, as a co-
employee of his co-petitioners, "shares a common interest and
invokes a common cause of action or defense" as the rest and, as
their attorney-in-fact tasked to initiate the action, he himself has
the knowledge of whether or not he has initiated similar actions
or proceedings in different courts or agencies. Both already
satisfy the guidelines' requirements on when a lone signature of
a petitioner substantially complies with the requirements for a
valid verification and certification against forum shopping.
But more importantly, unlike other lone signatories in
jurisprudence52 whose petitions were declared improperly filed
by this Court due to lack of authority from their co-petitioners to
file such action on the latter's behalf, Payda, in the case at bar, is
armed with such an authority - the SPA signed by his co-
petitioners. It has been held that when an SPA was constituted
precisely to authorize the agent to file and prosecute suits on
behalf of the principal, then it is such agent who has actual and
personal knowledge whether he or she has initiated similar
actions or proceedings before various courts on the same issue
on the principal's behalf, thus satisfying the requirements for a
valid certification against forum shopping.53 In such a case, when
it is the agent or attomey-in-fact who initiated the action on the
principal's behalf and who signed the certification against forum
shopping, the rationale behind the rule that it must be the
"petitioner or principal party himself who should sign such
certification does not apply; the rule on the certification against
forum shopping has been properly complied with.54
We treat the instant case in this manner in part due to the
particular circumstances of the petitioners in the case at
bar. First, the petitioners are so numerous that their filing of a
single petition through a representative is in fact a commendable
act compared to the alternative of flooding this Court with a
multiplicity of suits involving the same parties, subject matter,
cause and relief. Second, as claimed by LFUC itself,55 most of the
petitioners have since been separated from LFUC's employment,
the natural consequence of which is that the employees have
now changed employment and residences, a development which,
combined with their meager monetary resources, presents
logistical difficulties to them as litigants unless they choose, as
they did, the practical and cost-effective option of appointing a
representative, in this case their union president Payda, via the
SPA, to represent them and file a petition in this case on their
behalf. The Court is not unmindful of such pragmatic nature of
petitioners' stance so that it is one more reason, in addition to
supporting jurisprudence, to allow the petition instead of
dismissing it based on the grounds raised by respondent LFUC.
We also consider LFUC's allegation that the petition was
defective because the SPA was not signed by all petitioners, or
that it was signed by some only through unauthorized
representatives, to hold no water. In the case at bar, the SPA was
signed by everyone but five (5) of the petitioners.56 According
to Altres v. Empleo, the only consequence of such an incomplete
signing is that "the non-signing petitioners (as to the certification
against forum shopping) are dropped as parties to the
case."57 However, the petition itself survives and not rendered
invalid, especially as to the petitioners who signed, who would
remain as parties therein. As for those petitioners who are not
deceased but who signed through representatives, they, too,
remain as parties, because the acts of such representatives may
be ratified by these petitioners or the representatives may
belatedly submit proof of their authority to act on the
petitioners' behalf.58 As for LFUC's allegation that the deceased
employees were not properly substituted, this Court already had
occasion to rule that the formal substitution of a deceased
worker is not necessary when his heir already had voluntarily
appeared and participated in the proceedings before the labor
tribunals.59The Court held further that the rule on substitution
by heirs is not a matter of jurisdiction, but a requirement of due
process; 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.60 In the case at bar, there is no such
denial of. due process as the heirs of the six (6) deceased
workers are considered to have voluntarily appeared before this
Court by signing the SPA authorizing the filing of this petition.
Presumably, they will likewise do the same voluntary
appearance or formal substitution in all the succeeding
proceedings of the case, including execution. This Court has
already ruled that formal substitution of parties is not necessary
when the heirs themselves voluntarily appeared, participated,
and presented evidence during the proceedings.61
Lastly, We find as false LFUC's allegation that copies of the
assailed decision and resolution of the Court of Appeals (dated
September 13, 2011 and May 24, 2012, respectively) that were
attached in the instant petition were mere "machine copies" and
not certified true copies as required by the rules. We examined
the rollo and contrary to what respondent LFUC alleges, We
found that the concerned decision and resolution were properly
and duly marked as "certified true copies" by the clerk of court of
the appellate court. In sum, the procedural requirements have
been duly complied with.
We now discuss the case's substantive aspects.
The contention of petitioners is that the petition
for certiorari and injunction filed by LFUC before the Court of
Appeals to assail the writ of execution issued by the DOLE-VI
Regional Director was rendered moot and academic by LFUC's
subsequent filing of a motion for reconsideration of the same
Regional Director's Order dated August 28, 2006. In addition,
petitioners allege that certiorari was improper as there was
another adequate remedy available to LFUC. The latter's acts,
allegedly, amount to forum shopping. Petitioners also assail the
finding that LFUC was denied due process, as the latter was,
according to petitioners, adequately required to produce its own
evidence such as employment records.
Respondent LFUC disagrees with petitioners. It contends that it
did not commit forum shopping and that the motion for
reconsideration it filed did not render as moot and academic its
petition for certiorari before the Court of Appeals. It claims that
there is no "identity of relief between the two and that the
elements of litis pendentia are not present and that a judgment in
one case would not amount to res judicata in the other.
We find for petitioners.
LFUC's petition for certiorari filed with the Court of Appeals
assailed the writ of execution dated July 15, 2008, as well as the
letter dated August 1, 2008 of the DOLE-Vl Regional Director
(which "noted without action" LFUC's Motion to Recall Writ of
Execution) and, in the process, made the following arguments
and allegations:cralawlawlibrary
1) that writ of execution was issued in grave abuse of discretion
because it was issued while there was not yet a "compliance order"
as specified in the Rules on the Disposition of Labor Standards
Cases;62
2) that the issuance of the writ amounts to a denial of LFUC's
right to due process, as the issuance was made without
hearing LFUC's side on the computation of the correct amount
due and without a compliance order; then, the DOLE-VI Regional
Director merely "noted without action" LFUC's Motion to Recall
Writ of Execution;63 and
3) that most of the petitioners who are employees-truck drivers
have been declared validly dismissed by the Labor
Arbiter.64chanrobleslaw
However, shortly after the filing of the petition with the Court of
Appeals, LFUC went to the DOLE-VI Regional Director and filed a
Motion for Reconsideration of that office's Order dated August
28, 2006. In that motion, which was treated as an appeal by the
said Regional Director, LFUC
complained:chanRoblesvirtualLawlibrary
1) that the computation contained in the August 28, 2006 order of
Three Million Three Hundred Forty Five Thousand Six Hundred
Fifty Seven Pesos and Ninety Four Centavos (Php3,345,657.94)
due to all workers, or Eighty Eight Thousand Forty Three Pesos
and Sixty Three Centavos (Php88,043.63) per worker,
was "wrong" and "characterized by grave abuse of discretion "
because LFUC was allegedly "deprived of due process" when it was
not allowed to adduce evidence to refute the employees'
claims;65
2) that the employees as piece-rate truck drivers were not entitled
to overtime, holiday and rest day pay as well as wage
differentials, and that some already had executed waivers and
quitclaims;66 and
3) that the Order of August 28, 2006 was a "Compliance
Order" that was "baseless" and "void ab initio" and which should
be vacated by the said office.67
As previously stated, the Court of Appeals granted the above
petition for certiorari of LFUC,68 a decision which is now being
assailed in this petition before Us. Meanwhile, the DOLE-VI
Regional Director denied LFUC's motion for reconsideration of
the Order dated August 28, 2006, a denial which was affirmed on
appeal by the DOLE Secretary.69
We agree with petitioners and find that respondent LFUC's filing
of a motion for reconsideration before the DOLE-VI Regional
Director rendered moot and academic its petition
for certiorari then pending with the Court of Appeals; as such,
LFUC's failure to withdraw the petition or to even notify the
appellate court of the motion for reconsideration filed before the
DOLE amounts to a violation of the rules against forum shopping.
There is no question that as a result of LFUC's pursuit of the two
simultaneous remedies, the rulings of the Court of Appeals on
the petition for certiorari and the DOLE Secretary on LFUC's
motion for reconsideration are now essentially conflicting, as the
former bars any execution and instead directs a further hearing
of certain evidence, while the latter states that such evidence had
the chance to be heard and execution should now proceed as a
matter of course. Such conflict is exactly the scenario that the
rules against forum shopping try to avert.
Forum shopping is the act of a litigant who "repetitively avails of
several judicial remedies in different courts, simultaneously or
successively, all substantially founded on the same transactions
and the same essential facts and circumstances, and all raising
substantially the same issues either pending in or already
resolved adversely by some other court to increase his chances
of obtaining a favorable decision if not in one court, then in
another.70 It is a practice currently prohibited by Section 5, Rule
7 of the Rules of Court.71 Forum shopping exists where the
elements of litis pendentia are present or where a final judgment
in one case will amount to res judicata in the other.72 We have
repeatedly maintained that forum shopping is an act of
malpractice, as the litigants who commit such trifle with the
courts and abuse their processes.73 It degrades the
administration of justice and adds to the already congested court
dockets.74 Acts of willful and deliberate forum shopping shall be
a ground for summary dismissal of the case with prejudice.75
In numerous cases, this Court has defined what constitutes litis
pendentia. The essential elements of litis pendentia are as
follows: (1) identity of parties or representation in both cases;
(2) identity of rights asserted and reliefs prayed for; (3) reliefs
founded on the same facts and the same basis; and (4) identity of
the two preceding particulars should be such that any judgment,
which may be rendered in the other action, will, regardless of
which party is successful, amount to res judicata in the action
under consideration.76
Forum shopping is considered anathema to the orderly
administration of justice due to the vexation it causes to the
courts and the parties-litigants when a person who asks
appellate courts and/or administrative entities to rule on
the same related causes and/or to grant the same or
substantially the same relief, in the process creating the
possibility of conflicting decisions by the different courts or fora
on the same issues.77 This is clearly exemplified in the case at bar
where, as one court stops execution and instead remands the
case for the "reception of evidence for all the parties .... and a re-
computation of monetary awards," another tribunal orders
execution since, according to it, reception of evidence had been
performed and consummated and the only thing left to be done
is the payment of the already computed monetary awards to the
winning parties. The two rulings are clearly inconsistent and
cannot be performed at the same time.
Therefore, it can be clearly derived from the above that LFUC and
its counsel clearly committed the abhorrent practice of forum
shopping when they availed of two remedies before two courts
or tribunals by raising the same causes and praying for
substantially the same relief, against the same opponent, thus
causing the likelihood and eventual issuance of two conflicting
rulings. It can be observed in the two cases that LFUC
concurrently pursued what it essentially pleaded as "deprivation
of due process" in not being allowed to "present its own
evidence" in two simultaneous fora. Also, its ultimate objective
behind both acts was to stop the execution of the Regional
Director's final order and have that office hear the evidence of
the parties anew and re-compute the monetary sums awarded.
Such an act should not be allowed, however. This Court has
previously and emphatically held that, along with identical or
closely identical causes of action, one of the keys to determining
whether forum shopping exists is whether the "ultimate
objective" of the party filing the actions is the same, although the
relief prayed for in the said actions were differently worded.78
In sum, the elements of litis pendentia, are present in the case at
bar sipce, in both the petition with the Court of Appeals as well
as in the motion filed with the DOLE-VI Regional Director, the
parties are inarguably the same, the causes of action and the
reliefs prayed for are essentially the same, tile factual scenarios
under which the reliefs are prayed for are the same and the
identity of these is such that a decision in one case would amount
to res judicata in the other action, the elements of res
judicata being: (1) the judgment sought to bar the new action
must be final; (2) the decision must have been rendered by a
court having jurisdiction over the subject matter and the parties;
(3) the disposition of the case must be a judgment on the merits;
and (4) there must be as between the first and second action,
identity of parties, subject matter, and causes of action.79 Truly,
in the case at bar, the disposition of the Court of Appeals in the
petition for certiorari would bar any pending resolution of the
subject motion by the DOLE-VI Regional Director, or vice-versa,
as they both delve with the same parties, the same cause of
action, and essentially the same relief; so that the two remedies
can not co-exist and only the appropriate one should remain.
As previously stated, LFUC's filing of a motion for
reconsideration with the DOLE-Vl Regional Director rendered as
moot and academic the petition for certiorari that LFUC earlier
filed with the Court of Appeals, an act which should have led to
the dismissal of the said petition. It must be noted that the
petition largely bewailed the issuance of a writ of execution by
the DOLE Region VI despite the alleged lack of a "compliance
order" issued beforehand. However, LFUC later itself
acknowledged, in the motion for reconsideration it filed with the
DOLE-VI Regional Director, that the Order dated August 28, 2006
was a "compliance order," a statement that clearly contradicts its
key argument in the petition pending with the Court of Appeals.
The said petition has been rendered moot and academic and,
thus, subject to dismissal. In addition, LFUC also had been able to
raise its concerns over due process and its alleged inability to
present its own evidence (as it raised with the appellate court) in
the more suitable forum of the DOLE Region VI office. Therefore,
the petition for certiorari before the Court of Appeals was
reduced into an empty, duplicate exercise.
Hence, with the filing of the said motion before DOLE Region VI,
the pending petition for certiorari in the appellate court served
no more valid purpose, and should have been dismissed, if not
withdrawn by the petitioner therefrom as it had become moot,
and there evidently was already a better, plain, speedier and
adequate remedy available to LFUC. The requirements for a valid
petition for certiorari were no longer being met and it was, in
fact, LFUC's obligation as written in its certification against
forum shopping filed with the appellate court to report to the
said court within five (5) days of knowing that it had filed the
same or similar remedy with the DOLE. LFUC did not comply
with such an obligation and must be penalized therefor by the
dismissal of its petition.
LFUC's acts of forum shopping are willfull and deliberate and the
penalty therefor is that both its petition with the Court of
Appeals and motion for reconsideration before the DOLE-VI
Regional Director should face dismissal or denial.80 But even if
there were no such "willfulness and deliberateness" on LFUC's
part, the penalty for forum shopping is still dismissal of one of
the actions but not necessarily of the newer one. In the case at
bar, although the motion for reconsideration with the Regional
Director came later than the petition for certiorari filed with the
Court of Appeals, We have previously held that in such a
situation, it is the earlier action - the petition for certiorari
that must be dismissed. We have ruled that the petition
for certiorari is, in fact, an act of forum shopping that must yield
to the motion for reconsideration (treated by DOLE-VI Regional
Director as an appeal) which is the appropriate and adequate
remedy.81 The Court held further that:cralawlawlibrary
Section 1, Rule 65 of the Rules of Court, clearly provides that a
petition for certiorari is available only when "there is no appeal,
or any plain, speedy and adequate remedy in the ordinary course
of law." A petition for certiorari cannot co-exist with an appeal or
any other adequate remedy. The existence and the availability of
the right to appeal are antithetical to the availment of the special
civil action for certiorari. As the Court has held, these two
remedies are "mutually exclusive."
x x x x
It has been held that "what is determinative of the propriety
of certiorari is the danger of failure of justice without the writ,
not the mere absence of all other legal remedies." The Court is
satisfied that the denial of the Petition for Certiorari by the Court
of Appeals will not result in a failure of justice, for petitioner's
rights are adequately and, in fact, more appropriately addressed
in the appeal.82chanrobleslaw
What is more, as previously discussed, the resulting rulings of
the Court of Appeals in the petition for certiorari and that of
DOLE Region VI in the motion for reconsideration are
contradictory, so that only one of them can be legally correct and
enforceable. They may not co-exist. Such conflicting rulings are
precisely what the rules against forum shopping seek to prevent.
In such a situation, We choose to uphold the ruling of DOLE
Region VI because it is issued by the proper and primary agency
to rule on the same,83 because it is the adequate remedy in the
ordinary course of law,84 because certiorari is an extraordinary
remedy that must be availed of only if there is manifest grave
abuse of discretion,85 and because declaring otherwise will
amount to rewarding LFUC's own disobedience to the rules
against forum shopping.
As for LFUC's allegation that the petitioners never before raised
the issue of forum shopping and did so for the first time only
after the adverse decision of the Court of Appeals came out, We
find the same to be without merit. Both the herein petitioners, as
well as then DOLE-VI Regional Director Aida M. Estabillo, the
respondents in the petition for certiorari before the Court of
Appeals, fded their respective comments thereto raising the
issue of mootness and forum shopping as a result of LFUC's filing
of a motion for reconsideration of the Order dated August 28,
2006 before the DOLE Region VI.86 Both comments prayed for
the immediate dismissal of the petition for certiorari on such
grounds. Hence, the allegation that the issue of forum shopping
was raised only for the first time after the adverse decision of the
appellate court is simply untrue.
We likewise examined the reasoning of the Court of Appeals in
granting LFUC's petition for certiorari and found the same to be
completely not in agreement with what is on record. Its factual
findings contradict those of the DOLE and DOLE Region VI and,
upon Our examination, We find that the latter finds greater
support from the evidence presented. It is also established that
except when there are cogent reasons, this Court will not alter,
modify or reverse the factual findings of the Secretary of Labor
(or her subordinates) because, by reason of her official position,
she is considered to have acquired expertise as her jurisdiction is
confined to specific matters.87 For the same reason, We likewise
find LFUC's contentions in the case at bar as regards the alleged
denial of its right to due process to be without merit.
First, the appellate court ruled that "no evidence was submitted
by the parties prior to the issuance of the Order dated August 28,
2006 by then (DOLE-VI) Regional Director Carlos Boteros."
However, the court only precipitately arrived at this conclusion,
while failing to note and omitting to discuss the explanations
made by the DOLE and DOLE-VI Regional Director on the issue.
For example, the Court of Appeals sustained wholesale LFUC's
allegations that it was not given the opportunity to present
evidence to refute the monetary claims of the complaining
workers; that the employees were piece-rate truck drivers so
that there was no legal basis for them to claim underpayment of
wages, non-payment of holiday pay, rest day pay and overtime
pay; and that many of the employees have executed waivers and
quitclaims which makes them no longer entitled to their claims.
However, in its Decision dated December 15, 2008,88 the DOLE-
VI Regional Director already had adequately addressed the same,
stating that LFUC had its "several opportunities to submit
evidence .... that the workers were given their minimum wage,"
during the numerous times that the case was heard in its various
stages with the DOLE Region VI all the way to the appeal to the
DOLE Secretary.89 LFUC could have presented its evidence in
those fora, at any stage of the proceedings, but it did not. Then, as
for the piece-rate workers, the Regional Director explained that
the DOLE Secretary had already ruled in her Order dated
September 18, 2003 that even piece-rate workers are still
entitled to payment of holiday pay, rest day pay and overtime
pay because they are "supervised workers" and ply their routes
"upon clear instructions," otherwise, they are subject to
disciplinary actions. This order by the DOLE Secretary was
among those that was already affirmed with finality by this Court
in the previous case of Iloilo La Filipina Uygongco Corporation v.
Court of Appeals90 and, thus, is no longer open to disputation or
revision. As for the waivers and quitclaims, the Regional Director
likewise explained that such may not be given credence as they
were executed in violation of Administrative Order No. 105,
series of 1995, which requires such waivers or quitclaims to be
executed, among others, in the presence of the Regional Director
or his duly authorized representatives. The waivers and
quitclaims were not so executed.91 Such were simply not taken
account of and disregarded without valid explanation by the
Court of Appeals.
Also, the DOLE Secretary, in her Order dated August 2, 2010
noted that a Subpoena Duces Tecum dated August 5, 2004 was in
fact served on LFUC directing it to produce copies of the payrolls
and daily time records for the years 1996 to 1998 on August 5,
2004, which LFUC did not comply with.92 In the same Order, the
DOLE Secretary stated that the DOLE-VI Regional Director wrote
LFUC on September 1, 2004 to warn the latter that computation
of the employees' wages and monetary benefits would be based
on available records absent LFUC's submission of the required
documents. LFUC, however, still did not heed the warning.
Consequently, the Order dated August 28, 2006 of DOLE-VI
Regional Director Boteros came out which LFUC assailed in its
Motion for Reconsideration of the same. Still, LFUC's motion for
reconsideration did not contain such documents. Neither did its
appeal before the DOLE Secretary after the denial of its motion
for reconsideration contain the said documents.
As for the allegation by LFUC that six (6) of the employees have
been declared validly dismissed by the Labor Arbiter, the
petitioners sufficiently explained in their Comment to the
petition for certiorari before the Court of Appeals that the Labor
Arbiter's ruling had been reversed by the appellate court itself,
which reversal was effectively upheld by the Supreme Court
when it denied with finality the appeal of LFUC.93In addition, We
see no reason how such dismissal is relevant to the case at bar,
as the money claims that were heard before the DOLE-VI
Regional Director involved unpaid wages and other pays
incurred prior to such dismissal.
The appellate court's failure to address these factual narrations
and findings of the labor tribunals put its own ruling on a
dubious footing, as it now rests on nothing but "assumptions,
conjectures and suppositions" as the petition alleges. We have no
reason to depart from the presumption that the labor officials
performed their official duties in a regular manner, absent any
evidence from respondent that this was not the case. We have
also previously recognized the Secretary of Labor's distinct
expertise in the study and settlement of labor disputes falling
under his power of compulsory arbitration and that the factual
findings of labor administrative officials, if supported by
substantial evidence, are entitled not only to great respect but
even to finality.94 Therefore, as between the bare conclusions of
the appellate court, and the findings of the labor offices, which
are supported by substantial evidence, We are inclined to uphold
the latter.
WHEREFORE, the petition is GRANTED. The Court of Appeals'
Decision dated September 13, 2011 and Resolution dated May
24, 2012 in CA-GR. SP No. 03690 are REVERSED and SET
ASIDE. The Department of Labor and Employment and DOLE
Region VI are ORDERED TO PROCEED WITH DISPATCH IN
THE ENFORCEMENT of the Writ(s) of Execution subject of this
case.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
September 23, 2015
G.R. No. 198675
ILAW BUKLOD NG MANGGAGAWA (IBM) NESTLE
PHILIPPINES, INC. CHAPTER (ICE CREAM AND CHILLED
PRODUCTS DIVISION), ITS OFFICERS, MEMBERS, BONIFACIO
T. FLORENDO, EMILIANO B. PALANAS AND GENEROSO P.
LAXAMANA, Petitioners, v. NESTLE PHILIPPINES,
INC., Respondent.
DECISION
PERALTA, J.:
Assailed in the instant petition for review on certiorari under
Rule 45 of the Rules of Court are the Resolutions1 of the Court of
Appeals (CA), dated June 30, 20112 and September 28,
2011,3 respectively, in CA-G.R. SP No. 118459. The June 30, 2011
Resolution dismissed herein petitioners' petition for review,
while the September 28, 2011 Resolution denied petitioners'
Motion for Reconsideration.
The factual and procedural antecedents of the case are as
follows:chanRoblesvirtualLawlibrary
On January 13, 1997, herein petitioner union staged a strike
against herein respondent company's Ice Cream and Chilled
Products Division, citing, as grounds, respondent's alleged
violation of the collective bargaining agreement (CBA), dismissal
of union officers and members, discrimination and other unfair 1. The COMPANY [herein respondent] shall cau6e the dismissal
labor practice (ULP) acts. of all criminal cases against dismissed employees arising out of
or as consequences of the strike that started on January 13,
As a consequence, respondent filed with the National Labor 1997.
Relations Commission (NLRC) a Petition for Injunction with
Prayer for Issuance of Temporary Restraining Order, Free Future illegal acts of the UNION [herein petitioner] shall not be
Ingress and Egress Order, and Deputization Order. covered by this agreement.

On January 20, 1997, a temporary restraining order was issued 2. The UNION shall unqualifiedly withdraw its Petition
by the NLRC. Thereafter, on February 7, 1997, the NLRC issued a for Certiorari pending with the Supreme Court.
preliminary injunction.
3. The COMPANY and the UNION shall jointly file a motion to
On February 26, 1997, respondent filed a Petition to Declare withdraw any and all actions pending with the NLRC including
Strike Illegal. the Certified Case, arising out of or as consequences of the strike
that started on Jan. 13, 1997.
Subsequently, on April 2, 1997, then Department of Labor and
Employment (DOLE) Acting Secretary, issued an Order assuming 4. As a consequence of the strike leading to the execution of this
jurisdiction over the strike and certifying the same to the NLRC. Memorandum of Agreement, the UNION shall cease and desist
from picketing any office or factory of the COMPANY as well as
On June 2, 1997, petitioner union filed a petition any government agency or office of the Courts. It shall likewise
for certiorari with this Court, questioning the above order of the remove streamers, barricades and structures that it had put
Acting DOLE Secretary. up around the COMPANY'S Aurora Plant in Quezon City upon the
execution of this Agreement and shall forever cease and desist
However, after a series of conciliation meetings and discussions from re-establishing the same.
between the parties, they agreed to resolve their differences and
came up with a compromise which was embodied in a 5. The COMPANY shall issue the corresponding Certificates of
Memorandum of Agreement (MOA) dated August 4, 1998, Past Employment to all dismissed employees.
pertinent portions of which are as follows:cralawlawlibrary
6. The COMPANY shall continue to recognize the UNION as the
x x x x certified bargaining agent of all rank-and-file daily-paid
employees of its Ice Cream and Chilled Products Division up to
the life of the existing Collective Bargaining Agreement.
7. The UNION shall immediately elect a new set of officers who
will replace its dismissed officers. The newly-elected officers
shall exclusively come from the UNION membership who are
active employees of the COMPANY. The UNION shall inform the
COMPANY of the said newly-elected officers.
8. The COMPANY shall pay dismissed employees their accrued
benefits (i.e. Unpaid wages, proportionate 13th and 14th months
pay and vacation leave (VL) commutation), if any, up to the date
of their actual work in accordance with the existing CBA and
COMPANY programs and policies and consistent with the
COMPANY'S existing guidelines. Their respective accountabilities
shall be deducted from the said accrued benefits and that the
payment of the same shall furthermore be subject to the
execution and submission to the COMPANY by the dismissed
employees of the corresponding individual releases and
quitclaims.
9. The COMPANY and the UNION agree that this Agreement shall
constitute a final resolution of all issues related to or arising
from the strike that started on January 13, 1997, including the
dismissal of a total of one-hundred thirty (132) (sic) UNION
officers and members, who are all represented by Atty.
Potenciano A. Flores, Jr., as herein provided.
x x x x4chanrobleslaw
On August 6, 1998, the parties filed a Joint Motion to Dismiss
stating that they are no longer interested in pursuing the petition
for injunction filed by respondent as a consequence of the
settlement of their dispute.
On October 12, 1998, the NLRC issued its Decision approving the
parties' compromise agreement and granting their Joint Motion
to Dismiss.
On January 25, 2010, or after a lapse of more than eleven (11)
years from the time of execution of the subject MO A, petitioners
filed with the NLRC a Motion for Writ of Execution contending
that they have not been paid the amounts they are entitled to in
accordance with the MOA.
Respondent filed its Opposition to the Motion for Writ of
Execution contending that petitioners' remedy is already barred
by prescription because, under the 2005 Revised Rules of the
NLRC, a decision or order may be executed on motion within five
(5) years from the date it becomes final and executory and that
the same decision or order may only be enforced by independent
action within a period often (10) years from the date of its
finality.
On November 18, 2010, the NLRC promulgated its Resolution
denying petitioners' application for the issuance of a writ of
execution on the ground of prescription.
Petitioners filed a Motion for Reconsideration but the NLRC, in
its Resolution dated February 14, 2011, dismissed it for lack of
merit.
Petitioners then filed a petition for certiorari with the CA
questioning the above Resolutions of the NLRC. The basic issue the defense of prescription because it is guilty of deliberately
raised before the CA was whether or not petitioners' claim for causing delay in paying petitioners' claims and that petitioners,
payment is barred by prescription. on the other hand, are entitled to protection under the law
because they had been vigilant in exercising their right as
On June 30, 2011, the CA issued the first of its questioned provided for under the subject MOA.
Resolutions dismissing petitioners' certioraripetition on the
ground that it is a wrong mode of appeal. The CA held that The Court is not persuaded.
petitioners' appeal involves a pure question of law which should
have been taken directly to this Court via a petition for review There is no dispute that the compromise agreement between
on certiorari under Rule 45 of the Rules of Court. herein petitioner union, representing its officers and members,
and respondent company was executed on August 4, 1998 and
Petitioners filed a Motion for Reconsideration, but the CA denied was subsequently approved via the NLRC Decision dated October
it in its second questioned Resolution. 12, 1998. However, considering petitioners' allegation that the
terms and conditions of the agreement have not been complied
Hence, the instant petition for review on certiorari raising the with by respondent, petitioners should have moved for the
following Assignment of Errors, to wit:cralawlawlibrary issuance of a writ of execution.

Reversible Error No. 1 It is wrong for petitioners' counsel to argue that since the NLRC
Decision approving the parties' compromise agreement was
The Court of Appeals erred in misappreciating the facts of the immediately executory, there was no need to file a motion for
case. execution. It is settled that when a compromise agreement is
given judicial approval, it becomes more than a contract binding
Reversible Error No. 2
upon the parties.6 Having been sanctioned by the court, it is
entered as a determination of a controversy and has the force
The Court of Appeals erred in sustaining that the Petitioners'
and effect of a judgment.7 It is immediately executory and not
demand to be paid has prescribed.5chanrobleslaw
appealable, except for vices of consent or forgery.8The non-
fulfillment of its terms and conditions justifies the issuance
Like petitioners' petition for certiorari filed with the CA, the main
of a writ of execution; in such an instance, execution becomes a
issue raised in the present petition is whether petitioners' claim
ministerial duty of the court.9 Stated differently, a decision on a
is already barred by prescription.
compromise agreement is final and executory.10 Such agreement
has the force of law and is conclusive between the parties.11 It
Petitioners' basic contention is that respondent cannot invoke
transcends its identity as a mere contract binding only upon the judgment only within five (5) years from the date it becomes
parties thereto, as it becomes a judgment that is subject to final and executory, x x x
execution in accordance with the Rules.12
xxx xxx xxx
In this respect, the law and the rules provide the mode and the Section 6. Execution by Independent Action. - A judgment after the
periods within which a party may enforce his right. lapse of five (5) years from the date it becomes final and
executory and before it is barred by prescription, may only be
The most relevant rule in the instant case is Section 8, Rule XI, enforced by an independent action.chanrobleslaw
2005 Revised Rules of Procedure of the NLRC which states
that:cralawlawlibrary Similarly, Section 6, Rule 39 of the Rules of Court, which can be
applied in a suppletory manner, provides:cralawlawlibrary
Section 8. Execution By Motion or By Independent Action. - A
decision or order may be executed on motion within five (5) Sec. 6. Execution by motion or by independent action. - A final and
years from the date it becomes final and executory. After the executory judgment or order may be executed on motion within
lapse of such period, the judgment shall become dormant, and five (5) years from the date of its entry. After the lapse of such
may only be enforced by an independent action within a period time, and before it is barred by the statute of limitations, a
of ten (10) years from date of its finality. judgment may be enforced by action. The revived judgment may
chanrobleslaw also be enforced by motion within five years from the date of its
entry and, thereafter, by action before it is barred by the statute
In the same manner, pertinent portions of Sections 4 (a) and 6, of limitations.
Rule III, of the NLRC Manual on Execution of Judgment, provide chanrobleslaw
as follows:cralawlawlibrary
Article 1144 of the Civil Code may, likewise be applied, as it
Section 4. Issuance of a Writ: - Execution shall issue upon an provides that an action upon a written contract must be brought
order, resolution or decision that finally disposes of the actions within ten years from the time the right of action accrues.
or proceedings and after the counsel of record and the parties
have been duly furnished with the copies of the same in It is clear from the above law and rules that a judgment may be
accordance with the NLRC Rules of Procedure, executed on motion within five years from the date of its entry or
provided:cralawlawlibrary from the date it becomes final and executory. After the lapse of
such time, and before it is barred by the statute of limitations, a
a) The Commission or Labor Arbiter shall, motu proprio or upon judgment may be enforced by action. If the prevailing party fails
motion of any interested party, issue a writ of execution on a to have the decision enforced by a mere motion after the lapse of
five years from the date of its entry (or from the date it becomes
final and executory), the said judgment is reduced to a mere right
of action in favor of the person whom it favors and must be
enforced, as are all ordinary actions, by the institution of a
complaint in a regular form.13
In the present case, the five-and ten-year periods provided by
law and the rules are more than sufficient to enable petitioners
to enforce their right under the subject MOA. In this case, it is
clear that the judgment of the NLRC, having been based on a
compromise embodied in a written contract, was immediately
executory upon its issuance on October 12, 1998. Thus, it could
have been executed by motion within five (5) years. It was not.
Nonetheless, it could have been enforced by an independent
action within the next five (5) years, or within ten (10) years
from the time the NLRC Decision was promulgated. It was not.
Therefore, petitioners' right to have the NLRC judgment
executed by mere motion as well as their right of action to
enforce the same judgment had prescribed by the time they filed
their Motion for Writ of Execution on January 25, 2010.
It is true that there are instances in which this Court allowed
execution by motion even after the lapse of five years upon
meritorious grounds. However, in instances when this Court
allowed execution by motion even after the lapse of five years,
there is, invariably, only one recognized exception, i.e., when the
delay is caused or occasioned by actions of the judgment debtor
and/or is incurred for his benefit or advantage.14 In the present
case, there is no indication that the delay in the execution of the
MOA, as claimed by petitioners, was caused by respondent nor
was it incurred at its instance or for its benefit or advantage.
It is settled that the purpose of the law (or rule) in prescribing
time limitations for enforcing judgments or actions is to prevent
obligors from sleeping on their rights.15 In this regard,
petitioners insist that they are vigilant in exercising their right to
pursue payment of the monetary awards in their favor. However,
a careful review of the records at hand would show that
petitioners failed to prove their allegation. The only evidence
presented to show that petitioners ever demanded payment was
a letter dated May 22, 2008, signed by one Atty. Calderon,
representing herein individual petitioners, addressed to
respondent company and seeking proof that the company has
indeed complied with the provisions of the subject
MOA.16 Considering that the NLRC Decision approving the MOA
was issued as early as October 12, 1998, the letter from
petitioners' counsel, which was dated almost ten years after the
issuance of the NLRC Decision, can hardly be considered as
evidence of vigilance on the part of petitioners. No proof was
ever presented showing that petitioners did not sleep on their
rights. Despite their claims to the contrary, the records at hand
are bereft of any evidence to establish that petitioners exerted
any effort to enforce their rights under the subject MOA, either
individually, through their union or their counsel. It is a basic
rule in evidence that each party must prove his affirmative
allegation, that mere allegation is not evidence.17Indeed, as
allegation is not evidence, the rule has always been to the effect
that a party alleging a critical fact must support his allegation
with substantial evidence which has been construed to mean
such relevant evidence as a reasonable mind will accept as
adequate to support a conclusion.18 Unfortunately, petitioners
failed in this respect.
Even granting, for the sake of argument, that the records of the SO ORDERED.
case were lost, as alleged by petitioners, leading to the delay in
the enforcement of petitioners' rights, such loss of the records Republic of the Philippines
cannot be regarded as having interrupted the prescriptive SUPREME COURT
periods for filing a motion or an action to enforce the NLRC Manila
Decision because such alleged loss could not have prevented
petitioners from attempting to reconstitute the records and, FIRST DIVISION
thereafter, filing the required motion or action on time.19
September 28, 2015
As a final note, it bears to reiterate that while the scales of justice
usually tilt in favor of labor, the present circumstances prevent G.R. No. 187418
this Court from applying the same in the instant petition. Even if
our laws endeavor to give life to the constitutional policy on RAPID MANPOWER CONSULTANTS,
social justice and on the protection of labor, it does not mean INC., Petitioner, v. EDUARDO P. DE GUZMAN, Respondent.
that every labor dispute will be decided in favor of the
workers.20 The law also recognizes that management has rights RESOLUTION
which are also entitled to respect and enforcement in the
PEREZ, J.:
interest of fair play.21Stated otherwise, while the Court fully
recognizes the special protection which the Constitution, labor
This Petition for Review on Certiorari1 seeks to annul the
laws, and social legislation accord the workingman, the Court
Resolutions dated 8 December 20082 and 20 March 20093 of the
cannot, however, alter or amend the law on prescription to
Court of Appeals, Former Fifth Division in CA-G.R. SP No. 106386
relieve petitioners of the consequences of their
dismissing the case due to the failure of petitioner Rapid
inaction. Vigilantibus, non dormientibus, jura subveniunt - Laws
Manpower Consultants, Inc. (Rapid Manpower) to file with the
come to the assistance of the vigilant, not of the
National Labor Relations Commission (NLRC) a motion for
sleeping.22chanroblesvirtuallawlibrary
reconsideration before resorting to a petition
for certiorari before the Court of Appeals.
WHEREFORE, the instant petition is DENIED. The Resolutions of
the Court of Appeals, dated June 30, 2011 and September 28,
Respondent Eduardo P. de Guzman (De Guzman) was employed
2011, respectively, in CA-G.R. SP No. 118459, are AFFIRMED.
as an air conditioner and refrigerator technician by Omar Ahmed
Bin Bichr in Saudi Arabia, through its agent, petitioner Rapid
Manpower. The parties entered into a 2-year employment 24 September 2008 granted the motion for reconsideration filed
contract wherein De Guzman shall be paid a monthly salary of by De Guzman and reinstated. the Decision of the Labor
SR1,500.00. He was deployed from 18 May 2000-18 May 2002.4 Arbiter.12

On 18 September 2002, De Guzman filed a complaint for non- Aggrieved, Rapid Manpower filed a petition for certiorari with
payment of salaries/wages from October 2001 to June 2002, prayer for issuance of Temporary Restraining Order (TRO)
vacation pay, underpayment of salaries/wages (from SR1,500 to and/or Writ of Preliminary Injunction before the Court of
SR1,300), and travel expenses.5 Appeals.13

On 16 November 2004, Labor Arbiter Clarito D. Demaala, Jr. On 8 December 2008, the Court of Appeals rendered its
rendered a Decision6 in favor of De Guzman, the dispositive Resolution14 dismissing the petition on the ground of failure on
portion of which provides:chanRoblesvirtualLawlibrary the part of Rapid Manpower to file a motion for reconsideration
of the 24 September 2008 Resolution of the NLRC granting De
WHEREFORE, premises considered, judgment is hereby Guzman's motion for reconsideration.
rendered ordering respondents to pay complainant jointly and
severally the amount of SR8,000.00 or its Philippine peso Rapid Manpower moved for reconsideration but it was denied in
equivalent, representing complainant's underpayment of salaries a Resolution dated 20 March 2009.15
plus the amount of SR9,000.00 or its Philippine peso equivalent
representing complainant's unpaid wages from October 2001 to Hence, Rapid Manpower filed this petition for review raising the
May 2002 plus 10% as attorney's fees. following errors committed by the Court of
Appeals:chanRoblesvirtualLawlibrary
Other monetary claims are dismissed for lack of I.
merit.7ChanRoblesVirtualawlibrary
On appeal, the NLRC reversed the Decision of the Labor Arbiter IN DISMISSING ITS PETITION ON THE GROUND OF ITS
on 18 August 2005.8 According to the NLRC, De Guzman failed to SUPPOSED FAILURE TO FILE A MOTION FOR
substantiate his claim for non-payment and underpayment of RECONSIDERATION BEFORE PUBLIC RESPONDENT NLRC ON
wages.9 ITS RESOLUTION DATED SEPTEMBER 24, 2008

II.
De Guzman filed a motion for reconsideration10 from the NLRC's
Decision. By holding that the employer has the burden to prove
BY DISMISSING ITS PETITION, IN EFFECT UPHOLDING THE
that he paid the correct wages, the NLRC in its Resolution11 dated
ERRONEOUS DECISIONS AND/OR RESOLUTIONS OF PUBLIC
RESPONDENTS IN RULING THAT PRIVATE RESPONDENT IS
ENTITLED TO HIS CLAIM OF UNPAID AND/OR UNDERPAYMENT
OF SALARIES
III.
BY DISMISSING ITS PETITION, IN EFFECT UPHOLDING THE
ERRONEOUS DECISIONS AND/OR RESOLUTIONS OF PUBLIC
RESPONDENTS IN RULING THAT PRIVATE RESPONDENT IS
ENTITLED TO ATTORNEY'S FEES
IV.
BY DISMISSING ITS PETITION, IN EFFECT UPHOLDING THE
ERRONEOUS DECISIONS AND/OR RESOLUTIONS OF PUBLIC
RESPONDENTS THAT BESILDA I. FELIPE BE HELD JOINTLY AND
SEVERALLY LIABLE FOR THE MONETARY CLAIMS OF PRIVATE
RESPONDENT16ChanRoblesVirtualawlibrary
Rapid Manpower submits that the Court of Appeals had at times
given due course to a petition for certiorari even if no motion for
reconsideration had been filed where substantial issues were
raised and there was substantial compliance with the
requirements for filing of the petition.17 Rapid Manpower
explains that it honestly believed that NLRC would no longer
have any reason to deviate from its latest findings considering
that the findings are in the motion for reconsideration filed by De
Guzman.18 Rapid Manpower then argues that there is no factual
nor legal basis in awarding the claim for underpayment and/or
unpaid salaries because the burden to prove underpayment and
non-payment rests on the employee alleging it. Rapid Manpower
claims that De Guzman failed to substantiate his claims. It avers
that the award of attorney's fees likewise has no factual and legal
justification. Finally, Rapid Manpower maintains that Besilda
Felipe, being the general manager of Rapid Manpower, cannot be
held personally accountable for any liability which may arise
from De Guzman's employment overseas.19
The principal issue in this case is whether the petition
for certiorari before the Court of Appeals should be dismissed for
failure to file a motion for reconsideration before the NLRC. As a
general rule, a motion for reconsideration is an indispensable
condition before an aggrieved party can resort to the special civil
action for certiorari under Rule 65 of the Rules of Court. The
rationale for the rule is that the law intends to afford the NLRC
an opportunity to rectify such errors or mistakes it may have
committed before resort to courts of justice can be
had.20 However, jurisprudence allows exceptions to the rule in
the following cases:chanRoblesvirtualLawlibrary
a) where the order is a patent nullity, as where the court a
quo has no jurisdiction;
b) where the questions raised in the certiorari proceedings have
been duly raised and passed upon by the lower court, or are
the same as those raised and passed upon in the lower court;
c) where there is an urgent necessity for the resolution of the
question and any further delay would prejudice the interests
of the Government or of the petitioner or the subject matter
of the petition is perishable;
d) where, under the circumstances, a motion for reconsideration
would be useless;
e) where petitioner was deprived of due process and there is
extreme urgency for relief;
f) where, in a criminal case, relief from an order of arrest is
 urgent and the granting of such relief by the trial court is
improbable;
g) where the proceedings in the lower court are a nullity for lack
of due process;
h) where the proceeding was ex parte or in which the petitioner
had no opportunity to object; and
i) where the issue raised is one purely of law or public interest
is involved.21
The second exception applies in the instant case. The NLRC, in its
24 September 2008 Resolution was given the opportunity to
reevaluate its findings and reconsider its ruling when De
Guzman himself filed a motion for reconsideration assailing the
18 August 2005 NLRC resolution denying his monetary claims.
The issues raised in the certiorari proceedings are similar to
those passed upon and considered by the NLRC.
Furthermore, the issue raised is not exactly novel. This very
same issue was set forth in the case of Abraham v. NLRC22 which
is in all fours with this case. In said case, Abraham filed a
complaint for illegal dismissal against respondent Philippine
Institute of Technical Education (PITE). The Labor Arbiter
dismissed the complaint for lack of merit. The NLRC initially
reversed the ruling of the Labor Arbiter. But when respondent
moved for reconsideration, the NLRC granted the motion and
reinstated the order of dismissal by the Labor Arbiter. Abraham
directly filed a petition for certiorari before the Court of Appeals.
The appellate court dismissed Abraham's petition on the ground
that she failed to file a motion for reconsideration of the
Resolution of the NLRC reconsidering its previous Resolution.
The appellate court held that the filing of a motion for
reconsideration is a condition sine qua non before a petition
for certiorari may be given due course. We reversed the
appellate court on this point. We ruled that "the NLRC was
already given the opportunity to review its ruling and correct
itself when the respondent filed its motion for reconsideration of
the NLRC's initial ruling in favor of petitioner. In fact, it granted
the motion for reconsideration filed by the respondent and
reversed its previous ruling and reinstated the decision of the
Labor Arbiter dismissing the complaint of the petitioner. It
would be an exercise in futility to require the petitioner to file a
motion for reconsideration since the very issues raised in the
petition for certiorari, i.e. whether or not the petitioner was
constructively dismissed by the respondent and whether or not
she was entitled to her money claims, were already duly passed
upon and resolved by the NLRC. Thus the NLRC had more than
one opportunity to resolve the issues of the case and in fact
reversed itself upon a reconsideration. It is highly improbable or
unlikely under the circumstances that the Commission would
reverse or set aside its resolution granting a reconsideration."23
We apply said ruling in the case under consideration. The NLRC
Resolution subject of the petition for certiorari was in response
to a motion for reconsideration filed by De Guzman. To require
Rapid Manpower to file another motion for reconsideration
would be futile because the very issues raised in the motion for
reconsideration had already been evaluated by the NLRC.
Based on the foregoing, we remand the case to the Court of
Appeals to give it the opportunity to pass upon the factual issues
raised in this case.
WHEREFORE, the twin Resolutions of the Court of Appeals dated
8 December 2008 and 20 March 2009 in CA-G.R. SP No. 106386 October 14, 2015
dismissing the petition for certiorari filed by Rapid Manpower
Consultants, Inc. are hereby REVERSED and SET ASIDE. The G.R. No. 193990
case is remanded to the Court of Appeals for further proceedings.
EASTERN SHIPPING LINES, INC., AND/OR CONGRESSMAN
SO ORDERED. ERWIN L. CHIONGBIAN, Petitioners, v. JULIO C.
CANJA, Respondent.

DECISION

PERALTA, J.:

This is a Petition for Review on Certiorari1 under Rule 45 of the

Rules of Court seeking the reversal of the Decision2 dated July 20,
2010 and Resolution3 dated October 7, 2010 of the Court of
Appeals in CA-G.R. SP No. 112756 entitled Eastern Shipping Lines,
Inc. and/or Cong. Erwin L. Chiongbian vs. NLRC and Julio C. Canja.4

The facts are as follows:chanRoblesvirtualLawlibrary

The instant petition stemmed from a complaint for illegal

dismissal, illegal suspension, underpayment of holiday pay
premium, 13th month pay, separation pay, retirement benefits,
sick leave and vacation leave benefits, damages and attorney's
fees filed by respondent Julio C. Canja (Canja) against petitioners
Eastern Shipping Lines, Inc., its president and Congressman
Erwin L. Chiongbian before the Arbitration Branch of the NLRC.
Republic of the Philippines
SUPREME COURT In his complaint, Canja narrated that, sometime in February
Manila 1982, he was hired by ESLI as a maintenance worker in its office
at Anda Circle, Port Area, Manila. However, during his
THIRD DIVISION
employment, he was also made to work as a mason, painter, petitioners liable for illegal dismissal. It ratiocinated that
carpenter and gardener in the residence of petitioner Chiongbian petitioners failed to prove that Canja abandoned his work or that
at Forbes Park, Makati City. In 1987, Canja was even sent to he deliberately refused to resume employment without any
Sarangani Province in Cotabato to work in the beach resort of intention of returning. It likewise held that Canja is entitled to
Chiongbian for seven months. He was eventually ordered to the payment of backwages from May 2008 up to the date of their
return to Manila to continue his maintenance work for ESLI and Decision, and in lieu of reinstatement, the payment of separation
in the residence of Chiongbian. In April 2008, Chiongbian pay at the rate of one-half (14) month pay for every year of
instructed Canja not to report for work during the time his entire service.6
family was in the United States for a one-month vacation. He was
told that he will be called upon to resume his work when they Petitioners appealed the decision before the NLRC.
return from their vacation. In May 2008, Chiongbian came back
from abroad and called up Canja to continue his work. In a Resolution7 dated November 29, 2009, the NLRC affirmed
Nevertheless, only a week after his resumption of work, Canja the findings of the Labor Arbiter and declared Canja to be
was told to stop reporting since there was no available job for illegally dismissed. It observed that except for petitioners' bare
him. Canja asked for reconsideration as he has not committed allegation of abandonment, no other evidence was offered to
any wrongdoing to cause his termination from employment. He, support their defense of abandonment.
however, was allegedly not allowed to report again.
Petitioners moved for reconsideration, but the same was denied
For their part, petitioners denied that Canja was terminated from in a Resolution8 dated January 15, 2010.
his employment. They claimed that it was actually Canja who
refused to work without any valid reason even after being called Thus, on February 16, 2010, before the Court of Appeals,
upon by petitioners. They added that Canja actually still owed petitioners filed a Petition for Certiorari9 with Prayer for the
them a loan and cash advances that have not been fully paid yet. Issuance of a Temporary Restraining Order and/or Writ of
They insisted that Canja's act of refusing to return to work Preliminary Injunction, alleging grave abuse of discretion
showed that he wanted to sever his employer-employee amounting to lack or excess of jurisdiction on the part of the
relationship with them. Petitioners claimed that they sent one of NLRC in declaring Canja to be illegally dismissed and in awarding
their employees, a certain Alejandro Bustamante Antonio, to backwages and separation pay.
Canja's residence to persuade him to report back to work, but
the latter refused. In a Resolution10 dated March 17, 2010, the Court of Appeals
denied petitioners' prayer for the issuance of a temporary
On May 27, 2009, the Labor Arbiter rendered a Decision5 holding restraining order for failing to show compelling reasons that
they have a clear and legal right to the issuance thereof.
Meanwhile, the NLRC decision became final and executory on
April 3, 2010, thus, Entry of Judgment11was issued on April 7,
2010.
On July 20, 2010, in its disputed Decision,12 the Court of Appeals
affirmed with modification the Resolutions dated November 29,
2009 and January 15, 2010 of the NLRC, the dispositive portion
of which reads:cralawlawlibrary
WHEREFORE, premises considered, the instant Petition
for Certiorari is hereby DISMISSED. The Resolutions dated
November 29, 2009 and January 15, 2010 of public respondent
NLRC are AFFIRMED with MODIFICATION in that private
respondent Julio C. Canja's separation pay must be equivalent to
one (1) month pay for every year of service to be reckoned from
the first day of employment up to the finality of this decision,
while his full backwages are to be computed from the date of
illegal dismissal up to the finality of the decision. Let the records
of this case be remanded to the Computation and Examination
Unit of the NLRC for the proper computation of the amounts due
private respondent.13chanrobleslaw
The appellate court reasoned that there was no convincing
evidence to show that Canja intended to abandon his job. It ruled
that Canja's filing of illegal dismissal against petitioner is
inconsistent with the claim of abandonment.
Petitioners moved for reconsideration, but was denied in a
Resolution14 dated October 7, 2010. Thus, the instant petition for
review on certiorari raising the lone issue of:cralawlawlibrary
WHETHER OR NOT THE HONORABLE COURT OF APPEALS
ERRED IN ITS DECISION DATED 20 JULY 2010 AND 7 OCTOBER
2010 WHEN IT MODIFIED THE RESOLUTION OF THE NATIONAL
LABOR RELATIONS COMMISSION DATED 29 NOVEMBER 2009
ON THE BASIS OF A NEW CASE WHICH WAS DECIDED BY THE
SUPREME COURT DESPITE THE FACT THAT THIS CASE HAD
ALREADY BECOME FINAL AND EXECUTORY AND
SATISFIED.15chanrobleslaw
In essence, petitioners argue that because the NLRC Decision had
already become final and executory, as in fact there was already
an entry of judgment, the same can no longer be modified.
We disagree.
In Philippine Transmarine Carriers, Inc. v. Legaspi,16 the Court has
the occasion to rule that a petition for certiorari is not rendered
moot by the mere fact that there was already an executed NLRC
decision. For clarification, we quote:cralawlawlibrary
Section 14, Rule VII of the 2011 NLRC Rules of Procedure
provides that decisions, resolutions or orders of the NLRC shall
become final and executory after ten (10) calendar days from
receipt thereof by the parties, and entry of judgment shall be
made upon the expiration of the said period. In St. Martin Funeral
Home v. NLRC, however, it was ruled that judicial review of
decisions of the NLRC may be sought via a petition for certiorari
before the CA under Rule 65 of the Rules of Court; and under
Section 4 thereof, petitioners are allowed sixty (60) days from
notice of the assailed order or resolution within which to file the
petition. Hence, in cases where a petition for certiorari is filed
after the expiration of the 10-day period tinder the 2011 NLRC
Rules of Procedure hut within the 60-day period under Rule
65 of the Rules of Court, the CA can grant the petition and
modify, nullify and reverse a decision or resolution of the
NLRC.17
chanrobleslaw
In this case, the NLRC Decision was dated November 29, 2009.
Within the ten (10) days from receipt of the Decision, petitioners
filed a motion for reconsideration on December 21, 2009.
however, the NLRC denied the motion in a Resolution dated
January 15, 2010, to which a copy was received by petitioner on
February 8, 2010. Under the NLRC Rules of Procedure,
petitioners have sixty (60) days from receipt of the denial of the
motion for reconsideration within which to file the petition
for certiorari under Section 418 of Rule 65 of the Rules of Court.
The petition for certiorari filed on February 16, 2010 was then
timely. Consequently, the appellate court can still grant the
petition and modify, nullify and reverse a decision or resolution
of the NLRC.
Indeed, a decision issued by a court becomes final and executory
when such decision disposes of the subject matter in its entirety
or terminates a particular proceeding or action, leaving nothing
else to be done but to enforce by execution what has been
determined by the court, such as when after the lapse of the
reglementary period to appeal, no appeal has been
perfected.19 However, in this case, considering that the petition
was filed within the reglementary period to file a petition
for certiorari, the decision had not attained finality yet. It bears
stressing that a petition for certiorari under Rule 65 must be
filed not later than 60 days from notice of the judgment, order or
resolution sought to be annulled. Indubitably, the issuance of an
entry of judgment by the NLRC cannot render a petition
for certiorari as moot and academic.20
As to the substantive issues of this case, we will no longer delve
on its merits as in the first place, it was not raised as an issue in
the instant petition. The findings of facts and conclusion of the
NLRC are generally accorded not only great weight and respect
but even clothed with finality and deemed binding on this Court
as long as they are supported by substantial evidence. We find no
basis for deviating from the aforestated doctrine without any
clear showing that the findings of the Labor Arbiter, as affirmed
by the NLRC and the Court of Appeals, are bereft of sufficient
substantiation.21
We likewise affirm the appellate court's modification of the
payment of separation pay and backwages. The case of Bani
Rural Bank, Inc. v. De Guzman,22 is instructive,
to wit:cralawlawlibrary
Under Article 279 of the Labor Code and as held in a catena of
cases, an employee who is dismissed without just cause and
without due process is entitled to backwages and reinstatement
or payment of separation pay in lieu thereof:
Thus, an illegally dismissed employee is entitled to two reliefs:
backwages and reinstatement. The two reliefs provided are
separate and distinct. In instances where reinstatement is no
longer feasible because of strained relations between the
employee and the employer, separation pay is granted. In effect, are AFFIRMED with MODIFICATION. Petitioners
an illegally dismissed employee is entitled to either are ORDERED to PAY respondent Julio C. Canja the
reinstatement, if viable, or separation pay if reinstatement is no following:chanRoblesvirtualLawlibrary
longer viable, and backwages.
(a) Backwages computed from the date the petitioners illegally
The normal consequences of respondents' illegal dismissal, then, dismissed Canja until the finality of this
are reinstatement without loss of seniority rights, and payment Decision;ChanRoblesVirtualawlibrary
of backwages computed from the time compensation was
withheld up to the date of actual reinstatement. Where (b) Separation pay equivalent to one (1) month salary for every
reinstatement is no longer viable as an option, separation pay year of service until the finality of this Decision, and
equivalent to one (1) month salary for every year of service
should be awarded as an alternative. The payment of (c) Legal interest of six percent (6%) per annum of the total
separation pay is in addition to payment of backwages. monetary awards computed from the finality of this Decision
The computation of separation pay is based on the length of the until their full satisfaction.25cralawred
employee's service; and the computation of backwages is based
on the actual period when the employee was unlawfully The Labor Arbiter is hereby ORDERED to make another
prevented from working.23 recomputation according to the above directives.
chanrobleslaw
SO ORDERED.
We, therefore, find the appellate court's computation of
backwages and separation pay consistent with the provisions of
law and jurisprudence. Where there is illegal dismissal, as in this
case, and reinstatement is no longer viable as an option,
separation pay equivalent to one (1) month salary for every year
of service should be awarded as an alternative.24 The NLRC's
award of separation pay at the rate of one-half (1/2) month pay
for every year of service has no basis.

WHEREFORE, premises considered, the petition is DENIED. The Republic of the Philippines
Decision dated July 20, 2010 and the Resolution dated October 7, SUPREME COURT
2010 of the Court of Appeals in CA-G.R. SP No. 112756 Manila
 FIRST DIVISION
October 14, 2015
G.R. No. 161006
ROGELIO BARONDA, Petitioner, v. HON. COURT OF APPEALS,
AND HIDECO SUGAR MILLING CO., INC., Respondents.
DECISION
BERSAMIN, J.:
The reinstatement aspect of the Voluntary Arbitrator's award or
decision is immediately executory from its receipt by the
parties.chanRoblesvirtualLawlibrary
The Case
The petitioner assails the decision1 promulgated on August 21,
2003 in CA-G.R. SP No. 67059, whereby the Court of Appeals
(CA) annulled and set aside the order issued by the Voluntary
Arbitrator2 granting his motion for the issuance of the writ of
execution.3chanRoblesvirtualLawlibrary
Antecedents
Respondent Hideco Sugar Milling Co., Inc. (HIDECO) employed
the petitioner as a mud press truck driver with a daily salary of
P281.00. On May 1, 1998, he hit HIDECO's transmission lines
while operating a dump truck, causing a total factory blackout
from 9:00 pm until 2:00 am of the next day. Power was
eventually restored but the restoration cost HIDECO damages
totaling P26,481.11. Following the incident, HIDECO served a
notice of offense requiring him to explain the incident within
three days from notice. He complied. Thereafter, the
management conducted its investigation, and, finding him guilty
of negligence, recommended his dismissal.4 On June 15, 1998, the
resident manager served a termination letter and informed him
of the decision to terminate his employment effective at the close
of office hours of that day. Hence, HIDECO no longer allowed him
to report to work on the next day.5chanroblesvirtuallawlibrary
In August 1998, the petitioner, along with another employee also
dismissed by HIDECO, filed in the Office of the Voluntary
Arbitrator of the National Conciliation and Mediation Board in
Tacloban City a complaint for illegal dismissal against HIDECO.
Voluntary Arbitrator Antonio C. Lopez, Jr. handled the case and
eventually rendered his decision on January 13, 1999 by finding
the petitioner's dismissal illegal, and ordering his reinstatement.
Voluntary Arbitrator Lopez, Jr. deemed the petitioner's
separation from the service from June 16, 1998 to January 15,
1999 as a suspension from work without pay, and commanded
him to pay on installment basis the damages sustained by
HIDECO from the May 1, 1998 incident he had caused,6 to
wit:7chanroblesvirtuallawlibrary
Wherefore, in so far as the case of ROGELIO BARONDA is
concerned, this Office finds his dismissal illegal and
reinstatement is therefore ordered. His separation on June 16,
1998 up to January 15, 1999 is deemed suspension without pay
for his negligent acts, and is further ordered to pay respondent
employer the sum of P26,484.41 for actual damages at P1,500.00
every month deductible from his salary until complete payment
is made.
HIDECO filed a motion for reconsideration,8 but the Voluntary
Arbitrator denied the motion on August 11, 2000.9 Accepting the
outcome, HIDECO reinstated the petitioner on September 29,
2000.10chanroblesvirtuallawlibrary
Thereafter, on October 9, 2000, the petitioner filed his
manifestation with motion for the issuance of the writ of
execution in the Office of the Voluntary Arbitrator,11 praying for
the execution of the decision, and insisting on being entitled to
backwages and other benefits corresponding to the period from
January 16, 1999 up to September 28, 2000 totaling P192,268.66
based on Article 279 of the Labor Code ("An employee who is
unjustly dismissed from work shall be entitled to reinstatement
without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or
their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual
reinstatement'').
HIDECO opposed the petitioner's motion for execution,12 and
simultaneously presented its own motion for execution to
enforce the decision of the Voluntary Arbitrator directing the
petitioner to pay the actual damages totaling P26,484.41 at the
rate of P1,500.00/month deductible from his salary starting in
January 2001 until complete payment was
made. chanroblesvirtuallawlibrary
13
In his order dated March 20, 2001,14 the Voluntary Arbitrator
denied the petitioner's motion for execution on the ground that
the decision did not award any backwages; and granted
HIDECO's motion for execution by directing the petitioner to pay
HIDECO P26,484.41 at the rate of P1,500.00/month.
On May 17, 2001, the petitioner filed another motion for
execution praying that a writ of execution requiring HIDECO to
pay to him unpaid wages, 13th month pay and bonuses from
January 16, 2001, the date when his reinstatement was effected,
until his actual reinstatement.15 HIDECO opposed the petitioner's
second motion for execution because "the items prayed for by
the complainant in his Motion for Issuance of Writ of Execution
are not included in the dispository portion of the decision of the
voluntary arbitrator, neither are the said items mentioned in any
part of the same decision."16chanroblesvirtuallawlibrary
On July 25, 2001, however, the Voluntary Arbitrator granted the
petitioner's second motion for execution,17 to wit:
Wherefore, for failure of complainant to re-admit complainant
nor reinstate him in the payroll for the period from January 21,
[1999] up to September 28, 2000, let an order or execution issue
for the satisfaction of his reinstatement wages in the amount of
P155,647.00 (554 days at P281.00 per day), 13 month pay in the
amount of P7,200.00, bonus in the amount of P8,000.00 for 1999,
and P8,000.00 for his signing bonus.
The sheriff of the National Labor Relations Commission, Regional
Arbitration Branch No. VIII is directed to implement the writ.
 I. The voluntary arbitrator, in rendering the assailed order
So ordered. actually granted an award without giving due process to the
herein petitioner.20chanroblesvirtuallawlibrary
The Voluntary Arbitrator cited as basis Article 223 of the Labor
Code, which pertinently provides: II. The voluntary arbitrator resolved the (second) motion by
applying Art. 223 of the Labor Code. Was this the correct law to
Art. 223. Appeal - apply under the circumstances? Did he have jurisdiction to apply
this law?21chanroblesvirtuallawlibrary
x x x x
III. The decision dated January 13, 1999 clearly stated the relief
In any event, the decision of the Labor Arbiter reinstating a that had been granted to the complainant Baronda, which was
dismissed or separated employee, insofar as the reinstatement reinstatement. Baronda was reinstated on September 29, 2000,
aspect is concerned, shall immediately be executory, even thus [HIDECO] had complied with the decision. The questions
pending appeal. The employee shall either be admitted back to therefore: Could a relief that is not written in the decision be
work under the same terms and conditions prevailing prior to executed? Since the voluntary arbitrator clearly did this in this
his dismissal or separation or, at the option of the employer, case, is it not correct to say that he committed grave abuse of
merely reinstated in the payroll. The posting of a bond by the discretion?22chanroblesvirtuallawlibrary
employer shall not stay the execution for reinstatement provided
herein. IV. In the assailed Order dated July 25, 2001 the Voluntary
Arbitrator said, among others, that it treated a second motion for
Having received a copy of the order of July 25, 2001 on August 7, the issuance of a writ of execution, and that a first motion had
2001,18 HIDECO instituted a special civil action for certiorari in already been denied on the ground that no backwages had been
the Court of Appeals (CA) on October 2, awarded to the complainant Baronda. Did he have any legal basis
2001. chanRoblesvirtualLawlibrary
19
then to issue two different and contradictory orders for what are
essentially similar motions?23chanrobleslaw
Decision of the CA
In his comment,24 the petitioner countered that the petition
HIDECO's petition for certiorari averred that the Voluntary
for certiorari should be dismissed considering that HIDECO
Arbitrator had acted with grave abuse of discretion amounting to
should have appealed the decision of the Voluntary Arbitrator
lack or excess of jurisdiction in issuing the July 25, 2001 order. It
under Rule 43 of the Rules of Court because certiorari was not a
listed the following issues, namely:
substitute for a lost appeal; that HIDECO did not file a motion for
reconsideration of the questioned order, which would have been
an adequate remedy at law; that the petition for certiorari did
not raise any jurisdictional error on the part of the Voluntary
Arbitrator but only factual and legal issues not proper
in certiorari; and that the Voluntary Arbitrator did not commit
any error, much less grave abuse of discretion amounting to lack
or excess of jurisdiction in rendering the questioned order.
In the decision promulgated on August 21, 2003,25 the CA treated
HIDECO's petition for certiorari as a petition for review brought
under Rule 43, and brushed aside the matters raised by the
petitioner. It observed that the petition for certiorari included
the contents required by Section 6, Rule 43 for the petition for
review; that the writ of execution was proper only when the
decision to be executed carried an award in favor of the movant;
that the Voluntary Arbitrator had issued the writ of execution for
backwages despite his decision lacking such award for
backwages; and that the reliance by the Voluntary Arbitrator on
Article 223 of the Labor Code was misplaced because said
provision referred to decisions, awards or orders of the Labor
Arbiter, not the Voluntary Arbitrator. It disposed as follows:
WHEREFORE, the instant petition is hereby GRANTED and the
questioned Order dated July 25, 2001 of the public
respondent ANNULLED and SET ASIDE.
SO ORDERED.26chanroblesvirtuallawlibrary
Issues
In this appeal, the petitioner submits the following
issues,27 namely
I.
THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR
OF LAW WHEN IT CONSIDERED THE PETITION FOR
CERTIORARI FILED BY PRIVATE RESPONDENT AS ONE FILED
UNDER RULE 43 OF THE RULES OF COURT WHEN SAID
PETITION EXPRESSLY DECLARED THAT IT WAS FILED UNDER
RULE 65 OF THE RULES OF COURT. EVEN GRANTING FOR THE
SAKE OF ARGUMENT THAT SAID PETITION COULD BE
CONSIDERED AS FILED UNDER RULE 43 OF THE RULES OF
COURT, THE HONORABLE COURT OF APPEALS COMMITTED AN
ERROR OF LAW IN NOT CONSIDERING THAT IT WAS FILED OUT
OF TIME.chanRoblesvirtualLawlibrary
II.
THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR
OF LAW WHEN IT DID NOT DISMISS THE PETITION FILED BY
THE PRIVATE RESPONDENT FOR NOT HAVING PREVIOUSLY
FILED A MOTION FOR RECONSIDERATION BEFORE RESORTING
TO THE PETITION FOR
CERTIORARI.chanRoblesvirtualLawlibrary
III.
THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR
OF LAW WHEN IT CONSIDERED THE WRIT OF EXECUTION AS
ISSUED FOR THE SATISFACTION OF BACKWAGES INSTEAD OF by petition for review; hence, the CA erred
FOR REINSTATEMENT WAGES.chanRoblesvirtualLawlibrary in granting HIDECO's petition for certiorari

IV.
The order issued on July 25, 2001 by the Voluntary Arbitrator,
THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR albeit directing the execution of the award or decision of January
OF LAW AND SANCTIONED A VIOLATION OF THE EQUAL 13, 1999, was a final order, as contrasted from a merely
PROTECTION OF THE LAWS WHEN IT RULED THAT THE interlocutory order, because its issuance left nothing more to be
REINSTATEMENT ASPECT OF THE DECISION OF THE done or taken by the Voluntary Arbitrator in the case.28 It thus
VOLUNTARY ARBITRATOR IS NOT IMMEDIATELY completely disposed of what the reinstatement of the petitioner
EXECUTORY.chanRoblesvirtualLawlibrary as ordered by the Voluntary Arbitrator in the award or decision
of January 13, 1999 signified.
V.
The proper remedy from such order was to appeal to the CA by
THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR
petition for review under Rule 43 of the Rules of Court, whose
OF LAW WHEN IT DECLARED THAT PRIVATE RESPONDENT
Section 1 specifically provides:
WAS DENIED DUE PROCESS OF LAW.
Section 1. Scope. - This Rule shall apply to appeals from
In other words, the decisive issues for consideration and judgments or final orders of the Court of Tax Appeals and from
resolution are: (a) whether or not the CA erred in granting awards, judgments, final orders or resolutions of or authorized
HIDECO's petition for certiorari despite its procedural flaws; and by any quasi-judicial agency in the exercise of its quasi-judicial
(b) whether or not the reinstatement aspect of the Voluntary functions. Among these agencies are the Civil Service
Arbitrator's decision was executory pending Commission, Central Boards of Assessment Appeals, Securities
appeal.chanRoblesvirtualLawlibrary and Exchange Commission, Office of the President, Land
Registration Authority, Social Security Commission, Civil
Ruling
Aeronautics Board, Bureau of Patents, Trademarks and
Technology Transfer, National Electrification Administration,
Energy Regulation Board, National Telecommunications
The appeal is meritorious.chanRoblesvirtualLawlibrary
Commission, Department of Agrarian Reform under Republic Act
No. 6657, Government Service Insurance System, Employees
I
Compensation Commission, Agricultural Inventions Board,
HIDECO's proper recourse was to appeal
Insurance Commission, Philippine Atomic Energy Commission,
Board of Investments, Construction Industry Arbitration
Commission, and voluntary arbitrators authorized by law.
The period of appeal was 10 days from receipt of the copy of the
order of July 25, 2001 by the parties. It is true that Section 4 of
Rule 43 stipulates that the appeal shall be taken within 15 days
from notice of the award, judgment, final order or resolution, or
from the date of its last publication, if publication is required by
law for its effectivity, or of the denial of the petitioner's motion
for new trial or reconsideration duly filed in accordance with the
governing law of the court or agency a quo. However, Article
262-A of the Labor Code, the relevant portion of which follows,
expressly states that the award or decision of the Voluntary
Arbitrator shall be final and executory after 10 calendar days
from receipt of the copy of the award or decision by the
parties, viz.:
Art. 262-A. Procedures. - We hold that such treatment by the CA was procedurally
x x x x
The award or decision of the Voluntary Arbitrator or panel of
Voluntary Arbitrators shall contain the facts and the law on
which it is based. It shall be final and executory after ten (10)
calendar days from receipt of the copy of the award or
decision by the parties.
Upon motion of any interested party, the Voluntary Arbitrator or
panel of Voluntary Arbitrators or the Labor Arbiter in the region
where the movant resides, in case of the absence or incapacity of
the Voluntary Arbitrator or panel of Voluntary Arbitrators for
any reason, may issue a writ of execution requiring either the
sheriff of the Commission or regular courts or any public official
whom the parties may designate in the submission agreement to
execute the final decision, order or award. (Emphasis supplied)
On account of Article 262-A of the Labor Code, the period to
appeal was necessarily 10 days from receipt of the copy of the
award or decision of the Voluntary Arbitrator or panel of
Voluntary Arbitrators; otherwise, the order of July 25, 2001
would become final and immutable, because only a timely appeal
or motion for reconsideration could prevent the award or
decision from attaining finality and immutability.
Yet, HIDECO filed the petition for certiorari, not a petition for
review under Rule 43, and the CA liberally treated the petition
for certiorari as a petition for review under Rule 43.
unwarranted.
To begin with, even if the error sought to be reviewed concerned
grave abuse of discretion on the part of the Voluntary
Arbitrator,29 the remedy was an appeal in due course by filing
the petition for review within 10 days from notice of the award
or decision. This was because certiorari, as an extraordinary
remedy, was available only when there was no appeal, or any
plain, speedy and adequate remedy in the ordinary course of
law.30 In other words, the justification for HIDECO's resort to the
extraordinary equitable remedy of certiorari did not exist due to
the availability of appeal, or other ordinary remedies in law to
which HIDECO as the aggrieved party could resort.
Although it is true that certiorari cannot be a substitute for a lost
appeal, and that either remedy was not an alternative of the
other, we have at times permitted the resort to certiorari despite
the availability of appeal, or of any plain speedy and adequate
remedy in the ordinary course of law in exceptional situations,
such as: (1) when the remedy of certiorari is necessary to
prevent irreparable damages and injury to a party; (2) where the
trial judge capriciously and whimsically exercised his judgment;
(3) where there may be danger of a failure of justice; (4) where
appeal would be slow, inadequate and insufficient; (5) where the
issue raised is one purely of law; (6) where public interest is
involved; and (7) in case of urgency.31 Verily, as pointed out
in Jaca v. Davao Lumber Company,32 the availability of the
ordinary course of appeal does not constitute sufficient ground
to prevent a party from making use of certiorari where the
appeal is not an adequate remedy or equally beneficial, speedy
and sufficient; for it is inadequacy, not the mere absence of all
other legal remedies and the danger of failure of justice without
the writ that must usually determine the propriety
of certiorari. It is nonetheless necessary in such exceptional
situations for the petitioner to make a strong showing in such
situations that the respondent judicial or quasi-judicial official or
tribunal lacked or exceeded its jurisdiction, or gravely abused its
discretion amounting to lack or excess of jurisdiction.
HIDECO did not establish that its case came within any of the
aforestated exceptional situations.
And, secondly, HIDECO filed the petition for certiorari on October
2, 2001. Even assuming, as the CA held, that the petition
for certiorari contained the matters required by Rule 43, such
filing was not timely because 56 days had already lapsed from
HIDECO's receipt of the denial by the Voluntary Arbitrator of the
motion for reconsideration. In short, HIDECO had thereby
forfeited its right to appeal. We have always emphasized the
nature of appeal as a merely statutory right for the aggrieved
litigant, and such nature requires the strict observance of all the
rules and regulations as to the manner of its perfection and as to
the time of its taking. Whenever appeal is belatedly resorted to,
therefore, the litigant forfeits the right to appeal, and the higher
court ipso facto loses the authority to review, reverse, modify or
otherwise alter the judgment. The loss of such authority is
jurisdictional, and renders the adverse judgment both final and
immutable.chanRoblesvirtualLawlibrary
II
Voluntary Arbitrator's order of reinstatement of
the petitioner was immediately executory
The next query is whether the order of reinstatement of the
petitioner by the Voluntary Arbitrator was immediately
executory or not.
We answer the query in the affirmative. Although the timely
filing of a motion for reconsideration or of an appeal forestalls
the finality of the decision or award of the Voluntary
Arbitrator,33 the reinstatement aspect of the Voluntary
Arbitrator's decision or award remains executory regardless of
the filing of such motion for reconsideration or appeal.
The immediate reinstatement of the employee pending the
appeal has been introduced by Section 12 of Republic Act No.
6715, which amended Article 223 of the Labor Code, to wit:
SEC. 12. Article 223 of the same code is amended to read as
follows:
Art. 223. Appeal.
x x x x
In any event, the decision of the Labor Arbiter reinstating a
dismissed or separated employee, in so far as the
reinstatement aspect is concerned, shall immediately be
executory, even pending appeal. The employee shall either be
admitted back to work under the same terms and conditions
prevailing prior to his dismissal or separation or, at the option of
the employer, merely reinstated in the payroll. The posting of a
bond by the employer shall not stay the execution for
reinstatement provided herein, (bold underscoring supplied for
emphasis)
The normal consequences of a finding that an employee was
illegally dismissed are, firstly, that the employee becomes
entitled to reinstatement to his former position without loss of
seniority rights; and, secondly, the payment of wages
corresponding to the period from his illegal dismissal up to the
time of actual reinstatement. These two consequences give
meaning and substance to the constitutional right of labor to
security of tenure.34 Reinstatement pending appeal thus affirms
the constitutional mandate to protect labor and to enhance social
justice, for, as the Court has said in Aris (Phil.) Inc. v. National
Labor Relations Commission:35chanroblesvirtuallawlibrary
In authorizing execution pending appeal of the reinstatement
aspect of a decision of a Labor Arbiter reinstating a dismissed or
separated employee, the law itself has laid down a
compassionate policy which, once more, vivifies and enhances
- the provisions of the 1987 Constitution on labor and the
working-man.
x x x x
These duties and responsibilities of the State are imposed not so
much to express sympathy for the workingman as to forcefully
and meaningfully underscore labor as a primary social and
economic force, which the Constitution also expressly affirms
with equal intensity. Labor is an indispensable partner for the
nation's progress and stability.
If in ordinary civil actions execution of judgment pending appeal
is authorized for reasons the determination of which is merely
left to the discretion of the judge, We find no plausible reason to
withhold it in cases of decisions reinstating dismissed or
separated employees. In such cases, the poor employees had
been deprived of their only source of livelihood, their only means
of support for their family their lifeblood. To Us, this special
circumstance is far better than any other which a judge, in his
sound discretion, may determine. In short, with respect to
decisions reinstating employees, the law itself has determined
sufficiently overwhelming reason for its execution pending
appeal.

x x x Then, by and pursuant to the same power (police power),
the State may authorize an immediate implementation, pending
appeal, of a decision reinstating a dismissed or separated
employee since that saving act is designed to stop, although
temporarily since the appeal may be decided in favor of the
appellant, a continuing threat or danger to the survival or even
the life of the dismissed or separated employee and its
family.36chanroblesvirtuallawlibrary
We also see no reason to obstruct the reinstatement decreed by
the Voluntary Arbitrator, or to treat it any less than the
reinstatement that is ordered by the Labor Arbiter. Voluntary
arbitration really takes precedence over other dispute
settlement devices. Such primacy of voluntary arbitration is
mandated by no less than the Philippine Constitution,37 and is
ingrained as a policy objective of our labor relations law.38 The
reinstatement order by the Voluntary Arbitrator should have the
same authority, force and effect as that of the reinstatement
order by the Labor Arbiter not only to encourage parties to settle
their disputes through this mode, but also, and more
importantly, to enforce the constitutional mandate to protect
labor, to provide security of tenure, and to enhance social justice.
The 2001 Procedural Guidelines in the Execution of Voluntary
Arbitration Awards/Decisions (Guidelines), albeit not explicitly
discussing the executory nature of the reinstatement order,
seems to align with the Court's stance by punishing the
noncompliance by a party of the decision or order for
reinstatement. Section 2, Rule III of the Guidelines states:
Sec. 2. Issuance, Form and Contents of a Writ of Execution. -
x x x x
b) If the execution be for the reinstatement of any person to any
position, office or employment, such writ shall be served by the
sheriff upon the losing party or in case of death of the losing
party upon his successor-in-interest, executor or administrator
andsuch party or person may be punished for contempt if he
disobeys such decision or order for reinstatement. (bold
underscoring supplied for emphasis)
The 2005 NCMB Revised Procedural Guidelines in the Conduct of
Voluntary Arbitration Proceedings also supports this Court's
position, for Section 6 of its Rule VIII reads:
Sec. 6. Effect of Filing of Petition for Ceriiorari on Execution. The
filing of a petition for certiorari with the Court of Appeals or the
Supreme Court shall not stay the execution of the assailed
decision unless a temporary restraining order or injunction is
issued by the Court of Appeals or the Supreme Court pending
resolution of such petition.(Emphasis Ours)
We declare, therefore, that the reinstatement decreed by the
Voluntary Arbitrator was immediately executory upon the
receipt of the award or decision by the parties.
WHEREFORE, the Court GRANTS the petition for review
on certiorari; REINSTATES the order dated July 25, 2001 of the
Voluntary Arbitrator; and ORDERS respondent Hideco Sugar
Milling Co., Inc. to pay the costs of suit.
 (DOLE) Regional Director, cancelling the registration of Samahan
SO ORDERED. ng Manggagawa sa Hanjin Shipyard (Samahan) as a worker's
association under Article 243 (now Article 249) of the Labor
Republic of the Philippines Code.
SUPREME COURT
Manila The Facts

SECOND DIVISION On February 16, 2010, Samahan, through its authorized

October 14, 2015
G.R. No. 211145
SAMAHAN NG MANGGAGAWA SA HANJIN SHIPYARD REP. BY
ITS PRESIDENT, ALFIE ALIPIO, Petitioner, v. BUREAU OF
LABOR RELATIONS, HANJIN HEAVY INDUSTRIES AND
CONSTRUCTION CO., LTD. (HHIC-PHIL.), Respondents.
DECISION
representative, Alfie F. Alipio, filed an application for
registration5 of its name "Samahan ng Mga Manggagawa sa
Hanjin Shipyard" with the DOLE. Attached to the application
were the list of names of the association's officers and members,
signatures of the attendees of the February 7, 2010 meeting,
copies of their Constitution and By-laws. The application stated
that the association had a total of 120 members.
On February 26, 2010, the DOLE Regional Office No. 3, City of San
Fernando, Pampanga (DOLE-Pampanga), issued the
corresponding certificate of registration6 in favor of Samahan.

MENDOZA, J.:
The right to self-organization is not limited to unionism. Workers
may also form or join an association for mutual aid and
protection and for other legitimate purposes.
This is a petition for review on certiorari seeking to reverse and
set aside the July 4, 2013 Decision1 and the January 28, 2014
Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No.
123397, which reversed the November 28, 2011 Resolution3 of
the Bureau of Labor Relations (BLR) and reinstated the April 20,
2010 Decision4 of the Department of Labor and Employment
On March 15, 2010, respondent Hanjin Heavy Industries and
Construction Co., Ltd. Philippines (Hanjin), with offices at
Greenbeach 1, Renondo Peninsula, Sitio Agustin, Barangay
Cawag, Subic Bay Freeport Zone, filed a petition7 with DOLE-
Pampanga praying for the cancellation of registration of
Samahan's association on the ground that its members did not
fall under any of the types of workers enumerated in the second
sentence of Article 243 (now 249).
Hanjin opined that only ambulant, intermittent, itinerant, rural
workers, self-employed, and those without definite employers
may form a workers' association. It further posited that one third
(1/3) of the members of the association had definite employers
and the continued existence and registration of the association
would prejudice the company's goodwill.
On March 18, 2010, Hanjin filed a supplemental petition,8 adding
the alternative ground that Samahan committed a
misrepresentation in connection with the list of members and/or
voters who took part in the ratification of their constitution and
by-laws in its application for registration. Hanjin claimed that
Samahan made it appear that its members were all qualified to
become members of the workers' association.
On March 26, 2010, DOLE-Pampanga called for a conference,
wherein Samahan requested for a 10-day period to file a
responsive pleading. No pleading, however, was submitted.
Instead, Samahan filed a motion to dismiss on April 14, 2010.9
The Ruling of the DOLE Regional Director
On April 20, 2010, DOLE Regional Director Ernesto Bihis ruled in
favor of Hanjin. He found that the preamble, as stated in the
Constitution and By-Laws of Samahan, was an admission on its
part that all of its members were employees of Hanjin, to wit:
KAMI, ang mga Manggagawa sa HANJIN Shipyard (SAMAHAN) ay
naglalayong na isulong ang pagpapabuti ng kondisyon sa
paggawa at katiyakan sa hanapbuhay sa pamamagitan ng
patuloy na pagpapaunlad ng kasanayan ng para sa mga kasapi
nito. Naniniwala na sa pamamagitan ng aming mga angking
lakas, kaalaman at kasanayan ay anting maitataguyod at
makapag-aambag sa kaunlaran ng isang lipunan. Na mararating
at makakamit ang antas ng pagkilala, pagdakila at
pagpapahalaga sa mga tulad naming mga manggagawa.
x x x10
The same claim was made by Samahan in its motion to dismiss,
but it failed to adduce evidence that the remaining 63 members
were also employees of Hanjin. Its admission bolstered Hanjin's
claim that Samahan committed misrepresentation in its
application for registration as it made an express representation
that all of its members were employees of the former. Having a
definite employer, these 57 members should have formed a labor
union for collective bargaining.11 The dispositive portion of the
decision of the Dole Regional Director, reads:
WHEREFORE, premises considered, the petition is hereby
GRANTED. Consequently, the Certificate of Registration as
Legitimate Workers Association (LWA) issued to the SAMAHAN
NG MGA MANGGAGAWA SA HANJIN SHIPYARD (SAMAHAN)
with Registration Numbers R0300-1002-WA-009 dated
February 26, 2010 is hereby CANCELLED, and said association is
dropped from the roster of labor organizations of this Office.
SO DECIDED.12
The Ruling of the Bureau of Labor Relations
Aggrieved, Samahan filed an appeal13 before the BLR, arguing
that Hanjin had no right to petition for the cancellation of its
registration. Samahan pointed out that the words "Hanjin
Shipyard," as used in its application for registration, referred to a
workplace and not as employer or company. It explained that
when a shipyard was put up in Subic, Zambales, it became known
as Hanjin Shipyard. Further, the remaining 63 members signed
the Sama-Samang Pagpapatunay which stated that they were
either working or had worked at Hanjin. Thus, the alleged
misrepresentation committed by Samahan had no leg to stand
on.14
In its Comment to the Appeal,15 Hanjin averred that it was a
party-in-interest. It reiterated that Samahan committed
misrepresentation in its application for registration before DOLE
Pampanga. While Samahan insisted that the remaining 63
members were either working, or had at least worked in Hanjin,
only 10 attested to such fact, thus, leaving its 53 members
without any workplace to claim.
On September 6, 2010, the BLR granted Samahan's appeal and
reversed the ruling of the Regional Director. It stated that the law
clearly afforded the right to self-organization to all workers
including those without definite employers.16 As an expression of
the right to self-organization, industrial, commercial and self-
employed workers could form a workers' association if they so
desired but subject to the limitation that it was only for mutual
aid and protection.17 Nowhere could it be found that to form a
workers' association was prohibited or that the exercise of a
workers' right to self-organization was limited to collective
bargaining.18
The BLR was of the opinion that there was no misrepresentation
on the part of Samahan. The phrase, "KAMI, ang mga
Manggagawa sa Hanjin Shipyard" if translated, would be: "We,
the workers at Hanjin Shipyard." The use of the preposition "at"
instead of "of " would indicate that "Hanjin Shipyard" was
intended to describe a place.19 Should Hanjin feel that the use of
its name had affected the goodwill of the company, the remedy
was not to seek the cancellation of the association's registration.
At most, the use by Samahan of the name "Hanjin Shipyard"
would only warrant a change in the name of the
association.20 Thus, the dispositive portion of the BLR decision
reads:
WHEREFORE, the appeal is hereby GRANTED. The Order of
DOLE Region III Director Ernesto C. Bihis dated 20 April 2010 is
REVERSED and SET ASIDE.
Accordingly, Samahan ng mga Manggagawa sa Hanjin Shipyard
shall remain in the roster of legitimate workers' association.21
On October 14, 2010, Hanjin filed its motion for
reconsideration.22
In its Resolution,23 dated November 28, 2011, the BLR affirmed
its September 6, 2010 Decision, but directed Samahan to remove
the words "Hanjin Shipyard" from its name. The BLR explained
that the Labor Code had no provision on the use of trade or
business name in the naming of a worker's association, such
matters being governed by the Corporation Code. According to
the BLR, the most equitable relief that would strike a balance
between the contending interests of Samahan and Hanjin was to
direct Samahan to drop the name "Hanjin Shipyard" without
delisting it from the roster of legitimate labor organizations.
The fallo reads:
WHEREFORE, premises considered, our Decision dated 6
September 2010 is hereby AFFIRMED with a DIRECTIVE for
SAMAHAN to remove "HANJIN SHIPYARD" from its name.
SO RESOLVED.24
Unsatisfied, Samahan filed a petition for certiorari25 under Rule
65 before the CA, docketed as CA-G.R. SP No. 123397.
In its March 21, 2012 Resolution,26 the CA dismissed the petition
because of Samahan's failure to file a motion for reconsideration
of the assailed November 28, 2011 Resolution.
On April 17, 2012, Samahan filed its motion for
reconsideration27 and on July 18, 2012, Hanjin filed its
comment28 to oppose the same. On October 22, 2012, the CA
issued a resolution granting Samahan's motion for
reconsideration and reinstating the petition. Hanjin was directed
to file a comment five (5) days from receipt of notice.29
On December 12, 2012, Hanjin filed its comment on the
petition,30 arguing that to require Samahan to change its name
was not tantamount to interfering with the workers' right to self-
organization.31 Thus, it prayed, among others, for the dismissal of
the petition for Samahan's failure to file the required motion for
reconsideration.32
On January 17, 2013, Samahan filed its reply.33
On March 22, 2013, Hanjin filed its memorandum.34
The Ruling of the Court of Appeals
On July 4, 2013, the CA rendered its decision, holding that the
registration of Samahan as a legitimate workers' association was
contrary to the provisions of Article 243 of the Labor Code.35 It
stressed that only 57 out of the 120 members were actually
working in Hanjin while the phrase in the preamble of Samahan's
Constitution and By-laws, "KAMI, ang mga Manggagawa sa
Hanjin Shipyard" created an impression that all its members
were employees of HHIC. Such unqualified manifestation which
was used in its application for registration, was a clear proof of
misrepresentation which warranted the cancellation of
Samahan's registration.
It also stated that the members of Samahan could not register it
as a legitimate worker's association because the place where
Hanjin's industry was located was not a rural area. Neither was
there any evidence to show that the members of the association
were ambulant, intermittent or itinerant workers.36
At any rate, the CA was of the view that dropping the words
"Hanjin Shipyard" from the association name would not
prejudice or impair its right to self-organization because it could
adopt other appropriate names. The dispositive portion reads:
WHEREFORE, the petition is DISMISSED and the BLR's directive,
ordering that the words "Hanjin Shipyard" be removed from
petitioner association's name, is AFFIRMED. The Decision dated
April 20, 2010 of the DOLE Regional Director in Case No. R0300-
1003-CP-001, which ordered the cancellation of petitioner
association's registration is REINSTATED.
SO ORDERED.37
Hence, this petition, raising the following
ISSUES
I. THE COURT OF APPEALS SERIOUSLY ERRED IN FINDING
THAT SAMAHAN CANNOT FORM A WORKERS' ASSOCIATION
OF EMPLOYEES IN HANJIN AND INSTEAD SHOULD HAVE
FORMED A UNION, HENCE THEIR REGISTRATION AS A
WORKERS' ASSOCIATION SHOULD BE CANCELLED.
II. THE COURT OF APPEALS SERIOUSLY ERRED IN ORDERING
THE REMOVAL/DELETION OF THE WORD "HANJIN" IN THE
NAME OF THE UNION BY REASON OF THE COMPANY'S
PROPERTY RIGHT OVER THE COMPANY NAME "HANJIN."38
Samahan argues that the right to form a workers' association is
not exclusive to intermittent, ambulant and itinerant workers.
While the Labor Code allows the workers "to form, join or assist
labor organizations of their own choosing" for the purpose of
collective bargaining, it does not prohibit them from forming a
labor organization simply for purposes of mutual aid and
protection. All members of Samahan have one common place of
work, Hanjin Shipyard. Thus, there is no reason why they cannot
use "Hanjin Shipyard" in their name.39
Hanjin counters that Samahan failed to adduce sufficient basis
that all its members were employees of Hanjin or its legitimate
contractors, and that the use of the name "Hanjin Shipyard"
would create an impression that all its members were employess
of HHIC.40
Samahan reiterates its stand that workers with a definite
employer can organize any association for purposes of mutual
aid and protection. Inherent in the workers' right to self-
organization is its right to name its own organization. Samahan
referred "Hanjin Shipyard" as their common place of work.
Therefore, they may adopt the same in their association's
name.41
The Court's Ruling
The petition is partly meritorious.
Right to self-organization includes right to form a union, workers'
association and labor management councils
More often than not, the right to self-organization connotes
unionism. Workers, however, can also form and join a workers'
association as well as labor-management councils (LMC).
Expressed in the highest law of the land is the right of all
workers to self-organization. Section 3, Article XIII of the 1987
Constitution states:
Section 3. The State shall afford full protection to labor, local and
overseas, organized and unorganized, and promote full
employment and equality of employment opportunities for all. It
shall guarantee the rights of all workers to self-organization,
collective bargaining and negotiations, and peaceful concerted
activities, including the right to strike in accordance with law.
xxx
[Emphasis Supplied]
And Section 8, Article III of the 1987 Constitution also states:
Section 8. The right of the people, including those employed in
the public and private sectors, to form unions, associations, or
societies for purposes not contrary to law shall not be abridged.
In relation thereto, Article 3 of the Labor Code provides:
Article 3. Declaration of basic policy. The State shall afford
protection to labor, promote full employment, ensure equal work
opportunities regardless of sex, race or creed and regulate the
relations between workers and employers. The State shall
assure the rights of workers to self-organization, collective
bargaining, security of tenure, and just and humane
conditions of work.
[Emphasis Supplied]
As Article 246 (now 252) of the Labor Code provides, the right to
self-organization includes the right to form, join or assist labor
organizations for the purpose of collective bargaining through
representatives of their own choosing and to engage in lawful
concerted activities for the same purpose for their mutual aid
and protection. This is in line with the policy of the State to foster
the free and voluntary organization of a strong and united labor
movement as well as to make sure that workers participate in
policy and decision-making processes affecting their rights,
duties and welfare.42
The right to form a union or association or to self-organization
comprehends two notions, to wit: (a) the liberty or freedom, that
is, the absence of restraint which guarantees that the employee
may act for himself without being prevented by law; and (b) the
power, by virtue of which an employee may, as he pleases, join or
refrain from joining an association.43
In view of the revered right of every worker to self-organization,
the law expressly allows and even encourages the formation of
labor organizations. A labor organization is defined as "any
union or association of employees which exists in whole or in
part for the purpose of collective bargaining or of dealing with
employers concerning terms and conditions of employment."44 A
labor organization has two broad rights: (1) to bargain
collectively and (2) to deal with the employer concerning terms
and conditions of employment. To bargain collectively is a right
given to a union once it registers itself with the DOLE. Dealing
with the employer, on the other hand, is a generic description of
interaction between employer and employees concerning
grievances, wages, work hours and other terms and conditions of
employment, even if the employees' group is not registered with
the DOLE.45
A union refers to any labor organization in the private sector
organized for collective bargaining and for other legitimate
purpose,46 while a workers' association is an organization of
workers formed for the mutual aid and protection of its
members or for any legitimate purpose other than collective
bargaining.47
Many associations or groups of employees, or even combinations
of only several persons, may qualify as a labor organization yet
fall short of constituting a labor union. While every labor union is
a labor organization, not every labor organization is a labor
union. The difference is one of organization, composition and
operation.48
Collective bargaining is just one of the forms of employee
participation. Despite so much interest in and the promotion of
collective bargaining, it is incorrect to say that it is the device and
no other, which secures industrial democracy. It is equally
misleading to say that collective bargaining is the end-goal of
employee representation. Rather, the real aim is employee
participation in whatever form it may appear, bargaining or no
bargaining, union or no union.49 Any labor organization which
may or may not be a union may deal with the employer. This
explains why a workers' association or organization does not
always have to be a labor union and why employer-employee
collective interactions are not always collective bargaining.50
To further strengthen employee participation, Article 255 (now
261)51 of the Labor Code mandates that workers shall have the
right to participate in policy and decision-making processes of
the establishment where they are employed insofar as said
processes will directly affect their rights, benefits and welfare.
For this purpose, workers and employers may form LMCs.
A cursory reading of the law demonstrates that a common
element between unionism and the formation of LMCs is the
existence of an employer-employee relationship. Where neither
party is an employer nor an employee of the other, no duty to
bargain collectively would exist.52 In the same manner,
expressed in Article 255 (now 261) is the requirement that such
workers be employed in the establishment before they can
participate in policy and decision making processes.
In contrast, the existence of employer-employee relationship is
not mandatory in the formation of workers' association. What
the law simply requires is that the members of the workers'
association, at the very least, share the same interest. The very
definition of a workers' association speaks of "mutual aid and
protection."
Right to choose whether to form or join a union or workers'
association belongs to workers themselves
In the case at bench, the Court cannot sanction the opinion of the
CA that Samahan should have formed a union for purposes of
collective bargaining instead of a workers' association because
the choice belonged to it. The right to form or join a labor
organization necessarily includes the right to refuse or refrain
from exercising the said right. It is self-evident that just as no one
should be denied the exercise of a right granted by law, so also,
no one should be compelled to exercise such a conferred
right.53 Also inherent in the right to self-organization is the right
to choose whether to form a union for purposes of collective
bargaining or a workers' association for purposes of providing
mutual aid and protection.
The right to self-organization, however, is subject to certain
limitations as provided by law. For instance, the Labor Code
specifically disallows managerial employees from joining,
assisting or forming any labor union. Meanwhile, supervisory
employees, while eligible for membership in labor organizations,
are proscribed from joining the collective bargaining unit of the
rank and file employees.54 Even government employees have the
right to self-organization. It is not, however, regarded as existing
or available for purposes of collective bargaining, but simply for
the furtherance and protection of their interests.55
Hanjin posits that the members of Samahan have definite
employers, hence, they should have formed a union instead of a
workers' association. The Court disagrees. There is no provision
in the Labor Code that states that employees with definite
employers may form, join or assist unions only.
The Court cannot subscribe either to Hanjin's position that
Samahan's members cannot form the association because they
are not covered by the second sentence of Article 243 (now 249),
to wit:
Article 243. Coverage and employees' right to self-organization.
All persons employed in commercial, industrial and agricultural
enterprises and in religious, charitable, medical, or educational
institutions, whether operating for profit or not, shall have the
right to self-organization and to form, join, or assist labor
organizations of their own choosing for purposes of collective
bargaining. Ambulant, intermittent and itinerant workers,
self-employed people, rural workers and those without any
definite employers may form labor organizations for their
mutual aid and protection. (As amended by Batas Pambansa
Bilang 70, May 1, 1980)
[Emphasis Supplied]
Further, Article 243 should be read together with Rule 2 of
Department Order (D.O.) No. 40-03, Series of 2003, which
provides:
RULE II
COVERAGE OF THE RIGHT TO SELF-ORGANIZATION
Section 1. Policy. - It is the policy of the State to promote the
free and responsible exercise of the right to self-organization
through the establishment of a simplified mechanism for the
speedy registration of labor unions and workers associations,
determination of representation status and resolution of
inter/intra-union and other related labor relations disputes.
Only legitimate or registered labor unions shall have the right to
represent their members for collective bargaining and other
purposes. Workers' associations shall have the right to represent
their members for purposes other than collective bargaining.
Section 2. Who may join labor unions and workers' associations.
- All persons employed in commercial, industrial and agricultural
enterprises, including employees of government owned or
controlled corporations without original charters established
under the Corporation Code, as well as employees of religious,
charitable, medical or educational institutions whether operating
for profit or not, shall have the right to self-organization and to
form, join or assist labor unions for purposes of collective
bargaining: provided, however, that supervisory employees shall
not be eligible for membership in a labor union of the rank-and-
file employees but may form, join or assist separate labor unions
of their own. Managerial employees shall not be eligible to form,
join or assist any labor unions for purposes of collective
bargaining. Alien employees with valid working permits issued
by the Department may exercise the right to self-organization
and join or assist labor unions for purposes of collective
bargaining if they are nationals of a country which grants the
same or similar rights to Filipino workers, as certified by the
Department of Foreign Affairs.
For purposes of this section, any employee, whether employed
for a definite period or not, shall beginning on the first day of
his/her service, be eligible for membership in any labor
organization.
All other workers, including ambulant, intermittent and other
workers, the self-employed, rural workers and those without any
definite employers may form labor organizations for their
mutual aid and protection and other legitimate purposes except
collective bargaining.
[Emphases Supplied]
Clearly, there is nothing in the foregoing implementing rules
which provides that workers, with definite employers, cannot
form or join a workers' association for mutual aid and
protection. Section 2 thereof even broadens the coverage of
workers who can form or join a workers' association. Thus, the
Court agrees with Samahan's argument that the right to form a
workers' association is not exclusive to ambulant, intermittent
and itinerant workers. The option to form or join a union or a
workers' association lies with the workers themselves, and
whether they have definite employers or not.
No misrepresentation on the part of Samahan to warrant
cancellation of registration
In this case, Samahan's registration was cancelled not because its
members were prohibited from forming a workers' association
but because they allegedly committed misrepresentation for
using the phrase, "KAMI, ang mga Manggagawa sa HAN JIN
Shipyard."
Misrepresentation, as a ground for the cancellation of
registration of a labor organization, is committed "in connection
with the adoption, or ratification of the constitution and by-laws
or amendments thereto, the minutes of ratification, the list of
members who took part in the ratification of the constitution and
by-laws or amendments thereto, and those in connection with
the election of officers, minutes of the election of officers, and the
list of voters, xxx."56
In Takata Corporation v. Bureau of Relations,57 the DOLE Regional
Director granted the petition for the cancellation of certificate of
registration of Samahang Lakas Manggagawa sa Takata
(Salamat) after finding that the employees who attended the
organizational meeting fell short of the 20% union registration
requirement. The BLR, however, reversed the ruling of the DOLE
Regional Director, stating that petitioner Takata Corporation
(Takata) failed to prove deliberate and malicious
misrepresentation on the part of respondent Salamat. Although
Takata claimed that in the list of members, there was an
employee whose name appeared twice and another was merely a
project employee, such facts were not considered
misrepresentations in the absence of showing that the
respondent deliberately did so for the purpose of increasing
their union membership. The Court ruled in favor of Salamat.
In S.S. Ventures International v. S.S. Ventures Labor Union,58 the
petition for cancellation of certificate of registration was denied.
The Court wrote:
If the union's application is infected by falsification and like
serious irregularities, especially those appearing on the face of
the application and its attachments, a union should be denied
recognition as a legitimate labor organization. Prescinding
from these considerations, the issuance to the Union of
Certificate of Registration No. RO300-00-02-UR-0003 necessarily
implies that its application for registration and the supporting
documents thereof are prima facie free from any vitiating
irregularities. Another factor which militates against the veracity
of the allegations in the Sinumpaang Petisyon is the lack
of particularities on how, when and where respondent union
perpetrated the alleged fraud on each member. Such
details are crucial for in the proceedings for cancellation of
union registration on the ground of fraud or
misrepresentation, what needs to be established is that the
specific act or omission of the union deprived the complaining
employees-members of their right to choose.
[Emphases Supplied]
Based on the foregoing, the Court concludes that
misrepresentation, to be a ground for the cancellation of the
certificate of registration, must be done maliciously and
deliberately. Further, the mistakes appearing in the application
or attachments must be grave or refer to significant matters. The
details as to how the alleged fraud was committed must also be
indubitably shown.
The records of this case reveal no deliberate or malicious intent
to commit misrepresentation on the part of Samahan. The use of
such words "KAMI, ang mga Manggagawa sa HANJIN Shipyard" in
the preamble of the constitution and by-laws did not constitute
misrepresentation so as to warrant the cancellation of
Samahan's certificate of registration. Hanjin failed to indicate
how this phrase constitutes a malicious and deliberate
misrepresentation. Neither was there any showing that the
alleged misrepresentation was serious in character.
Misrepresentation is a devious charge that cannot simply be
entertained by mere surmises and conjectures.
Even granting arguendo that Samahan's members
misrepresented themselves as employees or workers of Hanjin,
said misrepresentation does not relate to the adoption or
ratification of its constitution and by-laws or to the election of its
officers.
Removal of the word "Hanjin Shipyard" from the association's
name, however, does not infringe on Samahan's right to self-
organization
Nevertheless, the Court agrees with the BLR that "Hanjin
Shipyard" must be removed in the name of the association. A
legitimate workers' association refers to an association of
workers organized for mutual aid and protection of its members
or for any legitimate purpose other than collective bargaining
registered with the DOLE.59 Having been granted a certificate of
registration, Samahan's association is now recognized by law as
a legitimate workers' association.
According to Samahan, inherent in the workers' right to self-
organization is its right to name its own organization. It seems to
equate the dropping of words "Hanjin Shipyard" from its name
as a restraint in its exercise of the right to self-organization.
Hanjin, on the other hand, invokes that "Hanjin Shipyard" is a
registered trade name and, thus, it is within their right to
prohibit its use.
As there is no provision under our labor laws which speak of the
use of name by a workers' association, the Court refers to the
Corporation Code, which governs the names of juridical persons.
Section 18 thereof provides:
No corporate name may be allowed by the Securities and
Exchange Commission if the proposed name
is identical or deceptively or confusingly similar to that of any organization was committed.
existing corporation or to any other name already protected by
law or is patently deceptive, confusing or contrary to existing WHEREFORE, the petition is PARTIALLY GRANTED. The July 4,
laws. When a change in the corporate name is approved, the 2013 Decision and the January 28, 2014 Resolution of the Court
Commission shall issue an amended certificate of incorporation of Appeals are hereby REVERSED and SET ASIDE. The
under the amended name. September 6, 2010 Resolution of the Bureau of Labor Relations,
as modified by its November 28, 2011 Resolution,
[Emphases Supplied] is REINSTATED.
The policy underlying the prohibition in Section 18 against the
registration of a corporate name which is "identical or SO ORDERED.
deceptively or confusingly similar" to that of any existing
corporation or which is "patently deceptive" or "patently
confusing" or "contrary to existing laws," is the avoidance of
fraud upon the public which would have occasion to deal with
the entity concerned, the evasion of legal obligations and duties,
and the reduction of difficulties of administration and
supervision over corporations.60

For the same reason, it would be misleading for the members of

Samahan to use "Hanjin Shipyard" in its name as it could give the
wrong impression that all of its members are employed by
Hanjin.

Further, Section 9, Rule IV of D.O. No. 40-03, Series of 2003

explicitly states:
The change of name of a labor organization shall not affect its
legal personality. All the rights and obligations of a labor
organization under its old name shall continue to be exercised by Republic of the Philippines
the labor organization under its new name. SUPREME COURT
Thus, in the directive of the BLR removing the words "Hanjin Manila
Shipyard," no abridgement of Samahan's right to self-
SECOND DIVISION
 November 09, 2015
G.R. No. 192955
EDILBERTO P. ETOM, JR., Petitioner, v. AROMA LODGING
HOUSE THROUGH EDUARDO G. LEM, PROPRIETOR AND
GENERAL MANAGER, Respondent.
DECISION
DEL CASTILLO, J.:
Assailed in this Petition for Review on Certiorari1 is the January
21, 2010 Decision2 of the Court of Appeals (CA) in CA-G.R. SP No.
110901. The CA granted the Petition for Certiorari3 filed
therewith and set aside the April 30, 2009 Decision4 and June 30,
2009 Resolution5 of the National Labor Relations Commission
(NLRC) in NLRC LAC No. 09-003303-08 which affirmed with
modification the August 20, 2008 Decision6 of Labor Arbiter (LA)
Eduardo G. Magno in NLRC NCR No. 04-05453-08 and found
Edilberto Etom (petitioner) entitled to unpaid wages, 13th month
pay and holiday pay. Also assailed is the July 2, 2010 CA
Resolution7 which denied petitioner's motion for
reconsideration.
Factual Antecedents
This case stemmed from a complaint8 dated April 15, 2008 filed
by petitioner against Aroma Lodging House (respondent) for
illegal dismissal and money claims. Petitioner alleged that
respondent, a business engaged in providing affordable
lodging,9 employed him as roomboy in 1997 with a monthly
salary of P2,500.00. He averred that his working hours were
from 5:00 a.m. to 11:00 p.m. from Monday to Saturday, including
holidays. His tasks included cleaning the lodging house and
washing towels and bedsheets.10
Petitioner claimed that on February 4, 2008, respondent refused
to allow him to report for work. Petitioner argued that
respondent did not inform him of any violation that would
warrant his dismissal. He also claimed that he was not given an
opportunity to explain and answer any imputation against him
by his employer.11
On the other hand, respondent asserted that it employed
petitioner as roomboy in 2000.12 He was paid salary above the
required minimum wage, holiday pay, 13th month pay and
overtime pay. Respondent also stated that it provided petitioner
with free meals, allowed him to receive "tips" from customers,
and sell bottles left by customers in the lodge. It also gave him
commission on certain occasions.13
Respondent averred that despite its beneficence, petitioner still
showed an adverse attitude in work. In particular, he created
trouble within the workplace, stole items from customers and
was even charged with rape in 2003.14 Petitioner also figured in
a fistfight with another roomboy, Reynaldo Baccus, whom he
tried to stab with a knife on September 2, 2006. He likewise had
an altercation with Arnold Sansona (Sansona), a checker in the
lodge, who reprimanded him for watching television during
working hours. He also had a quarrel with another co-worker,
Jess Abuca (Abuca). On separate occasions, while purportedly
armed with a knife, petitioner chased Sansona and Abuca.15 In its April 30, 2009 Decision,23 the NLRC affirmed the ruling of
the LA but deleted the award of punitive damages.
Respondent averred that it served upon petitioner a
memorandum16 requiring him to explain why he chased a co- The NLRC concurred with the LA ruling that petitioner was
employee with a knife. However, respondent refused to receive underpaid considering that he was receiving only P2,500.00 as
said memorandum. Taking into consideration the safety of its monthly salary. It decreed that petitioner was entitled to receive
employees and customers, it terminated petitioner for serious salary differential amounting to P166,080.38 for three years
misconduct.17 computed from February 20, 2005 to February 20, 2008 less
10% thereof for the facilities provided by respondent.
Ruling of the Labor Arbiter
On June 30, 2009, the NLRC denied respondent's motion for
On August 20, 2008, the LA rendered a Decision18finding reconsideration.24
petitioner to have been legally dismissed. The LA, however,
ordered respondent to pay petitioner punitive damages Undaunted, respondent filed with the CA a Petition
amounting to P10,000.00 for non-compliance with the for Certiorari insisting that petitioner was not entitled to salary
termination notice requirement, salary differential computed at differential, 13th month pay and holiday pay because he admitted
P199,482.80, holiday pay amounting to P3,107.50 and in an affidavit that he had been receiving wages and other
13th month pay of P7,150.00. benefits in accordance with law.25 It also asseverated that it was
exempt from Minimum Wage Law since it had no more than 10
Respondent appealed to the NLRC arguing that petitioner was employees.26
not underpaid.19 It stated that in a "Sama-Samang Sinumpaang
Salaysay"20 - which was submitted in another labor case, - For his part, petitioner argued that the Petition
petitioner and another employee averred that they were regular for Certiorari should not be entertained for late filing of the
employees of respondent since 2000 and that they were motion for reconsideration of the NLRC Decision. He contended
receiving wages beyond the minimum required by that respondent received the NLRC Decision on May 13, 2009 but
law.21 Respondent also claimed that it furnished petitioner with a filed a motion for reconsideration only on May 26, 2009. Thus, he
copy of notice to explain and notice of termination but the latter maintained that such filing was three days late.27
refused to receive them.22
Ruling of the Court of Appeals
Ruling of the National Labor Relations Commission
On January 21, 2010, the CA rendered the assailed
Decision28 granting the Petition for Certiorari, the decretal
portion of which reads:chanRoblesvirtualLawlibrary
FOR THE STATED REASONS, the petition is GRANTED and the
assailed decisions, dated April 30, 2009 and June 30, 2009 of the
National Labor Relations Commission (Second Division),
awarding private respondent Edilberto Etom of unpaid wages,
13th month pay and holiday pay are hereby REVERSED and
SETASIDE.xxx
SO ORDERED.29ChanRoblesVirtualawlibrary
The CA held that respondent timely filed a motion for
reconsideration of the NLRC Decision. It added that "if the
motion for reconsideration was filed out of time, the NLRC would
have dismissed it outright, instead of resolving it on its merit."30
Moreover, the CA explained that for having executed an earlier
notarized affidavit stating that he received wages above the
required minimum salary, petitioner could not subsequently
claim that he was underpaid by respondent.31 It also declared
that there is no factual basis to support the grant of 13thmonth
pay and holiday pay in favor of petitioner.32
On July 2, 2010, the CA denied petitioner's motion for
reconsideration.33
Hence, petitioner filed the instant Petition raising the following
assignment of errors:chanRoblesvirtualLawlibrary
1. THE HONORABLE COURT OF APPEALS COMMITTED A
VERY GRAVE ERROR WHEN IT BASED ITS CONCLUSION
THAT HEREIN RESPONDENT'S] MOTION FOR
RECONSIDERATION OF THE DECISION OF THE NLRC
WAS NOT FILED OUT OF TIME, ON CONJECTURES [sic]
DESPITE THE CATEGORICAL ADMISSION OF HEREIN
RESPONDENTS [sic] AND THE MACHINE RECEIVED
COPY OF SAID MOTION.
2. THE HONORABLE COURT OF APPEALS COMMITTED A
VERY GRAVE ERROR WHEN IT UPHELD THE JOINT-
AFFIDAVIT OF HEREIN PETITIONER AND HIS CO-
EMPLOYEE AS ADMISSION AGAINST INTEREST DESPITE
THE DOCUMENTARY EVIDENCE THAT PETITIONER
WAS NOT PAID HIS MINIMUM WAGE AND DESPITE
DECISIONS OF THE HONORABLE SUPREME COURT ON
QUITCLAIMS AND WAIVERS.
3. THE COURT OF APPEALS COMMITTED A VERY GRAVE
ERROR WHEN HEREIN PETITIONER WAS NOT GIVEN
THE OPPORTUNITY TO FILE A REPLY AND SUCH OTHER
RESPONSIVE PLEADING TO THE PETITION FOR
CERTIORARI, PURSUANT TO SECTION 6 OF RULE 65,
AND/OR MEMORANDUM PURSUANT TO SECTION 8
THEREOF.34
Petitioner reiterates that respondent's motion for
reconsideration of the NLRC Decision was filed beyond the
reglementary period.35 He also maintains that he was underpaid,
and was not given 13th month pay and holiday pay by
respondent.36
In addition, petitioner alleges that his affidavit dated March 19,
2004 was executed during the pendency of a criminal case
against him. He contends that respondent pressured him to sign
it.37 He likewise avers that he is illiterate and does not
understand the implication of said affidavit.38 He further explains
that he was unable to disclaim the voluntary execution and
authenticity of the affidavit because he was not given the chance
to file a memorandum where he could have discussed all the
issues in the Petition for Certiorari.39
For its part, respondent reiterates the timely filing of its motion
for reconsideration before the NLRC. It also agrees with the CA
ruling giving evidentiary value to petitioner's affidavit.40
Our Ruling
As a rule, the perfection of appeal within the period required by
law is mandatory and jurisdictional. Failure to appeal within
such period results in the assailed decision becoming final and
executory. As regards a motion for reconsideration of a decision
of the NLRC, the same must be filed within 10 days from the
receipt of the assailed decision. It must, nevertheless, be
emphasized that the NLRC is not bound by the technical rules of
procedure. Thus, in deciding labor cases, the NLRC is allowed to
liberally apply its rules.41
In this case, petitioner alleges that the subject motion for
reconsideration was filed beyond the 10-day reglementary
period. However, we note the explanation made by respondent
for the seeming late filing of its motion to
wit:chanRoblesvirtualLawlibrary
x x x [I]t is public knowledge that May 23, 2009 happens to be a
Saturday, hence, under established rules and relevant
jurisprudence, the filing of petitioners' (herein respondent)
Motion for Reconsideration should be on May 25, 2009, the next
working day after May 23, 2009. On May 25, 2009, Petitioners
filed their Motion for Reconsideration before the public
respondent, however, through a glitch in the docket machine
date and time puncher of the NLRC at that date and hour, the
petitioners' Motion for Reconsideration date of filing was
erroneously marked and stamped as May 26, 2009 1:47 A.M.
Petitioners only managed to take notice of the mistake in the
date and time of the docket of their Motion for Reconsideration
on the following day, May 26, 2009, the real May 26, 2009.
Petitioners thence quickly went to the NLRC Docket Section to
report the mistake and x x x was [sic] told by the Docket Section
Personnel that they have already corrected the erroneous date
and time of petitioners' docketed Motion for Reconsideration to
the x x x correct May 25, 2009, 1:47 P.M. and have forwarded the
Motion for Reconsideration of the [petitioners to the NLRC x x x
Indeed, it would be plainly absurd for a government office docket
section like that of the public respondent NLRC to be open for
business at such unholy hour of 1:47 A.M. x x
x42ChanRoblesVirtualawlibrary
Based on the foregoing explanation, we are convinced that
respondent timely filed its motion for reconsideration of the
NLRC Decision. In fact, the NLRC took cognizance of it and
decided the motion on the merit.
In any event, we held in Opinaldo v. Ravina43 that the NLRC may
liberally apply its rules and decide a motion for reconsideration
on the merits. We upheld the liberal application by the NLRC of
its technical rules to resolve the issues on the merits because "a
full resolution of the case on the merits is the more palpable
explanation for the liberal application of its rules."44
Petitioner also argues that he failed to disclaim the voluntary
execution of the affidavit - where he admitted to have been paid
wages beyond the minimum required by law - because he was
not given the opportunity to file a memorandum.
His contention is unmeritorious.
Section 6,45 Rule 65 of the Rules of Court provides that before the
court gives due course to a petition for certiorari, it may require
the respondent to file a comment to the petition. Afterwards, the
court may require the filing of a reply and such pleadings as it
may deem necessary. In turn, Section 846 of Rule 65 states that
after the comment or other pleadings are filed or the period for
their filing has expired, the court may require the parties to file
memoranda.
It is thus clear that the filing of a reply and other subsequent
pleading, as well as memoranda, is subject to the sound
judgment of the court. "The word 'may' when used in a statute is
permissive only and operates to confer discretion x x x."47 In this
case, the CA, in the exercise of its judgment, may or may not
require the filing of any pleading and submit the case for
resolution, after the petition and the comment thereto had been
filed.
Anent the substantive issue raised by petitioner, the power of the
Court to review a CA Decision in labor cases is limited.
Specifically, in a petition for review under Rule 45 of the Rules of
Court, the Court has to resolve whether the CA properly
determined the presence of grave abuse of discretion on the part
of the NLRC in rendering its Decision, and not whether the NLRC
Decision on the merits was correct. However, while the strict
inquiry on the correctness of evaluation of evidence is not
required in a certiorariproceeding, it is still necessary to
determine that the conclusions of labor tribunals were
supported by substantial evidence. This is because a decision
unsupported by substantial evidence is a judgment rendered
with grave abuse of discretion.48
In addition, as a rule, once the employee has asserted with
particularity in his position paper that his employer failed to pay
his benefits, it becomes incumbent upon the employer to prove
payment of the employee's money claims. In fine, the burden is
on the employer to prove payment, rather than on the employee
to establish non-payment.49
Both the LA and the NLRC held that respondent did not pay
petitioner the required minimum wage, holiday pay and
13th month pay. The CA, however, overturned the factual findings
of these labor tribunals. Thus, we deem it necessary to review
the facts on record.
While a notarized document is presumed to be regular such
presumption is not absolute and may be overcome by clear and
convincing evidence to the contrary. The fact that a document is
notarized is not a guarantee of the validity of its contents.50
Here, petitioner is an unlettered employee who may not have
understood the full import of his statements in the affidavit.
Notably, petitioner, along with a co-worker did not state the
specific amount of what they referred as salary above the
minimum required by law. Their statement only reads as
follows:chanRoblesvirtualLawlibrary
Na kami ay namamasukan bilang mga 'roomboy' sa naturang
Aroma Lodge magmula pa noong taong 2000 at bilang mga
regular na mga empleyado nito, kami ay nakakatangap ng
pasueldo na lagpas sa 'minimum wage' na takda ng batas, bukod
pa sa libreng tirahan (stay-in), pagkain, [paggamit] ng ilaw at
tubig, at mga 'tips' at komisyon sa mga parokyano ng Aroma
Lodge.51ChanRoblesVirtualawlibrary
As found by the LA, respondent did not present substantial
evidence that it paid the required minimum wage, 13th month
pay and holiday pay in favor of petitioner.52 Respondent's mere
reliance on the foregoing affidavit is misplaced because the
requirement of established jurisprudence is for the employer to
prove payment, and not merely deny the employee's accusation
of non-payment on the basis of the latter's own declaration.
In conclusion, we find that the CA erred in ascribing grave abuse
of discretion on the part of the NLRC in awarding salary
differential, 13th month pay and holiday pay in favor of
petitioner.
WHEREFORE, the Petition is GRANTED. The January 21, 2010
Decision and July 2, 2010 Resolution of the Court of Appeals in
CA-G.R. SP No. 110901 are REVERSED and SET ASIDE.
Accordingly, the April 30, 2009 Decision and June 30, 2009
Resolution of the National Labor Relations Commission in NLRC
LAC No. 09-003303-08 are REINSTATED and AFFIRMED.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 209689, December 02, 2015
MARISSA B. QUIRANTE, Petitioner, v. OROPORT CARGO
HANDLING SERVICES, INC., ET AL.Respondents.
DECISION
REYES, J.:
Before the Court is the Petition for Review on Certiorari1 filed by
Marissa B. Quirante (Quirante) to assail the Decision2 rendered
on March 14, 2013 and Resolution3 issued on September 30,
2013 by the Court of Appeals (CA) in CA-G.R. SP No. 03109-MIN.
The CA affirmed the Resolution4 dated December 24, 2008 of the
National Labor Relations Commission's (NLRC) Fifth Division,
which declared that Quirante was validly dismissed from
employment by Oroport Cargo Handling Services, Inc.
(OROPORT). Felicisimo C. Caete, Jr. (Caete) and Venus S.
Cabaraban (Cabaraban) are OROPORT's Human Resources
Division Head and Superintendent, respectively (the three are to
be referred collectively as the respondents). The CA and NLRC
rulings reversed the Decision5 dated October 17, 2007 of
Executive Labor Arbiter Noel Augusto S. Magbanua (LA
Magbanua), who found Quirante's termination from service as
illegal and directed payment of full backwages, moral damages
and attorney's fees.
Antecedents
Quirante was employed by Gold City Integrated Port Services,
Inc. (INPORT) from 1984 to 1996. From 1997 to 1999, she
worked for Continental Arrastre and Stevedoring Company
(CASCO). In March of 1999, INPORT and CASCO merged to form
OROPORT. Thenceforth, Quirante served as a Claims Staff of
OROPORT, with a monthly salary of P9,775.33.6
Quirante's employment with OROPORT was essentially
uneventful. However, on November 5, 2006, a carton, which
contained eight trays of eggs, was mishandled. Three trays of
eggs were totally damaged, while the remaining five were
rejected by the shipper.7
Arthur Sabellina (Sabellina), a truck helper, acknowledged
liability for the damage and authorized the deduction from his
salaries of the amount corresponding to the value of the
eggs.8 Sabellina likewise wrote a letter addressed to Rico T.
Evasco, Jr. (Evasco), Senior Finance Officer of OROPORT,
requesting for the release of the eggs.9
According to Evasco, Sabellina filed a complaint alleging that
despite repeated requests which he made on November 6, 2006,
the Claims Section personnel did not release to him the five
undamaged trays of eggs. On November 7, 2006, Quirante
disposed the five trays of eggs even when she had no information
about who was responsible for the damage and without Evasco's
approval, in violation of the standard procedure in handling
claims. Quirante got two trays and paid P60.00 therefor. In-
bound Cargo Supervisor Jaime Hynson (Hynson) also took two
trays and paid P60.00. Billing Clerk Yolanda Countian obtained a
tray for P30.00.10
On November 27, 2006, Administrative Memo No. 137-2006,
signed by Cabaraban and Caete, was issued against Quirante.
Quirante was directed to show cause in writing within 24 hours
from the memo's receipt why she should not be dismissed for
serious misconduct in disposing without authority property
under her custody and unjustifiably withholding collections
related thereto.11
In Quirante's answer to the memo, she narrated having initially
seen the subject five trays of eggs on top of a table at the Open
Transit Shed in the afternoon of November 6, 2006. Some of the
eggs were cracked and red ants feasted on them. She admitted
taking two trays of eggs. She, however, claimed that the five
undamaged trays of eggs were never formally endorsed or
turned over to the Claims Section, but were sent to her office by
Hynson. Besides, the trays of eggs were perishable items and
Hynson merely intended to save them from becoming useless so
as to lessen the amount for which the employee responsible for
the damage would be liable.12
Administrative Memo No. 138-200613 dated December 4, 2006,
directed Quirante to appear before the Administrative
Investigation Board (AIB) to answer the charges against her of
serious misconduct allegedly committed through unauthorized
disposal of property and withholding collections related thereto.
During the proceedings before the AIB, Quirante was assisted by
two officers of the Phase II Port Workers Union Associated
Labor Unions (Union).14

On January 12, 2007, the AIB recommended to OROPORT's
President the dismissal of Quirante from service for serious
misconduct. The AIB found inconsistent Quirante's claim that she
had no custody over the five trays of eggs, which were in fact
brought to her office. Quirante failed to justify her acceptance
without proper documentation and disposal without approval
from her immediate supervisor, of the trays of eggs in violation
of standard procedures. The AIB, however, found that Quirante
did not withhold any collections.15
On the same day, OROPORT's President adopted the AIB's
recommendation. Quirante was formally notified of her
termination from employment, effective January 15, 2007, on
grounds of (a) "implied transgression of established policy and
definite rule of action regarding the processing standard in
handling claims;" and (b) "unauthorized disposal of property
entrusted to [OROPORT] under its custody without justifiable
reason and/or approval by [an] immediate superior."16
The Proceedings Before the LA
On January 22, 2007, Quirante filed before the NLRC a complaint
for illegal dismissal with prayer for reinstatement and payment
of full backwages, damages and attorney's fees.17 Quirante
alleged that the infractions ascribed to her were mere excuses to
justify her dismissal from service. OROPORT magnified the
incident because Quirante was a stockholder belonging to the
minority block and an active Union officer as well.18
The respondents jointly filed a Position Paper19 dated November
9, 2007. However, earlier, on October 17, 2007, LA Magbanua
had already resolved Quirante's complaint through a Decision,
the dispositive portion of which reads as follows:
WHEREFORE, premises considered, judgment is hereby
rendered declaring the dismissal of [Quirante] as illegal;
ordering [OROPORT] to immediately reinstate [Quirante] within
ten (10) days from receipt of this decision; further ordering
[OROPORT] to pay [Quirante] full back wages inclusive of other
benefits in the amount of P97,941.28, moral damages in the
amount of P50,000.00 and ten (10%) percent attorney's fees in
the amount of P14,794.12, a total sum of P162,735.40.
SO ORDERED.20ChanRoblesVirtualawlibrary
LA Magbanua stated that the respondents failed to submit their
respective position papers despite the lapse of seven months.
Hence, he resolved the complaint solely on the basis of evidence
submitted by Quirante.
The Proceedings Before the NLRC
The respondents filed an appeal21 before the NLRC. They
contended that Quirante was guilty of serious misconduct and
due process was observed in terminating her from employment.
They also claimed that LA Magbanua rendered a mere
perfunctory decision, without reviewing and analyzing the
available evidence. They likewise insisted that the NLRC is not
precluded from receiving evidence offered for the first time
during appeal. However, the respondents, in lieu of a cash or
surety bond, submitted before the NLRC a Bank
Certification22 issued by the Metropolitan Bank and Trust
Company (Metrobank) stating that OROPORT has a cash deposit
of P97,941.28 in a regular savings account. The said deposit
would be held by Metrobank pending the final disposition of
Quirante's complaint before the NLRC.
Quirante did not file an answer or a comment to the
respondents' appeal.23
On December 24, 2008, the NLRC's Fifth Division issued a
Resolution reversing LA Magbanua's decision and dismissing
Quirante's complaint citing the following as grounds:
We take judicial notice, as moved by [the respondents], of the
fact that [OROPORT] is a duly licensed cargo handling contractor
operating at the Port of Cagayan de Oro City, offering its services
to the public. As it is duly licensed by the Philippine Ports
Authority (PPA), a government instrumentality, then OROPORT
may be properly classified as a public utility and not just an
ordinary business entity. As such[,] it is akin to a common carrier
which has to exercise extraordinary diligence in the handling and
safekeeping of the goods which come into its custody.
We, therefore, rule that the investigation proceedings conducted
by [the respondents] with respect to [Quirante] and which led to
her dismissal is thus part of [OROPORT's] mandated duty under
the law to observe extraordinary diligence in the vigilance over
the goods which is inherent from the nature of its business and
for reasons of public policy.
x x x x
While the law imposes many obligations on the employer, such
as providing just compensation to workers, observance of
procedural requirements of notice and hearing in the
termination of employment, it also recognizes the right of the
employer to expect from its workers not only good performance,
adequate work and diligence, but also good conduct and loyalty.
The employer may not be compelled to continue to employ such
persons whose continuance in the service will patently be
inimical to his interests. The law protecting the rights of the
laborer authorizes neither oppression nor self-destruction of the
employer.
x x x x
[Quirante's] claims that management has all the reasons not to
like her and that her dismissal is arbitrary and whimsical are not
supported by the records of the case and remains to be disputed
as the [respondents] categorically denied the same. x x x.
xxx [T]he dismissal of [Quirante] is for a just cause (dishonesty)
which was committed when she disposed the damaged cargo
(one carton hatching eggs) without the approval of her division
head on November 7, 2006. As absolute honesty is required in
the handling of goods accepted from the public by a cargo
handling contractor like OROPORT, we find furthermore that the
amount involved is not an issue but whether the act was actually
committed or not.24ChanRoblesVirtualawlibrary
Quirante filed a Motion for Reconsideration25 before the NLRC
alleging that the NLRC had no jurisdiction to give due course to
the respondents' appeal as no cash or surety bond was posted in
violation of the requirement under paragraph 2, Article 22326 of
the Labor Code. The NLRC denied Quirante's motion through the
Resolution issued on February 27, 2009.
The Proceedings Before the CA x x x x

Quirante thereafter filed before the CA a Petition x x x [T]he records disclose that the investigation of [Quirante]
for Certiorari27 essentially anchored on the issues of (1) was instigated by a complaint filed by [Sabellina] x x x as the
OROPORT's failure to post a cash or surety bond when it filed its latter wanted to acquire the damaged eggs for liquidation in
appeal before the NLRC, and (2) the arbitrariness on the part of order to offset the corresponding deduction in his payroll for the
OROPORT in dismissing her from service. value of the goods he negligently handled.

On March 14, 2013, the CA rendered the herein assailed Decision x x x x

denying Quirante's petition. The CA ratiocinated that:
[T]he Supreme Court articulated, in no uncertain terms, that x x x [Quirante's] deviation from the standard procedure for the
labor tribunals, such as the NLRC, are not precluded from documentation and disposition of damaged cargo, and her
receiving evidence submitted on appeal as technical rules are not consequent act of arbitrarily appropriating the damaged eggs,
binding in cases submitted before them. and dolling them out to others the remaining to her co-
employees for them to take home, despite the obvious criminal
x x x x implications, constituted serious misconduct on her part.

x x x [T]he NLRC therefore did not gravely abuse its discretion In fact, a perusal of the records reveals that [Quirante] herself
when it admitted and considered OROPORT's evidence on even casually admitted to bringing home the damaged eggs, and
appeal, as the former is [not] bound by the technical rules on even sanctioned her co-employees' similar act.
evidence and may validly admit them, aside from the feet that
[Quirante] herself failed to file any-pleading in order to refute [Quirante] therefore committed two serious offenses, first for
the allegations and evidence presented by OROPORT. failing to follow the standard procedure for the documentation
and disposition of damaged goods in line with her task as claims
xxxx officer, and second, for appropriating the eggs, and allowing her
Did [Quirante's] act of failing to properly account for and co-employees to do the same, without the knowledge and
document the damaged eggs in line with the standard consent of her superiors.
procedure set forth by OROPORT, and her consequent
appropriation of the same, constitute serious misconduct to This Court cannot countenance the contentions of [Quirante] that
warrant her dismissal from service? her dismissal form OROPORT was deeply rooted in her
participation of labor union activities, as the records are bereft of
any evidence to support these allegations. Neither can [Quirante]
advance the argument that the damaged eggs were never
officially endorsed to her office, as the bottom line remains that
she admitted to being in possession of the same, took home 2
trays with her, and even sanctioned her co-employees' similar
act. The fact that the damaged eggs were not officially endorsed
to her office neither absolved her from failing to document the
same, no[r] justified her act of appropriation.28 (Citations
omitted)
The CA denied Quirante's motion for reconsideration through
the Resolution issued on September 30, 2013.
Issues
Aggrieved, Quirante is now before the Court raising the issues of
whether or not:chanRoblesvirtualLawlibrary
(1) the NLRC erred in (a) giving due course to the respondents'
appeal despite the latter's failure to post a bond, and (b)
admitting evidence not presented before LA Magbanua; and
(2) the alleged mishandling of trays of cracked eggs constitutes
just cause to dismiss an employee, who happened to be an active
union officer with a long and spotless service record.29
In support of the instant petition, Quirante invokes Article 223 of
the Labor Code, which clearly states that an appeal by the
employer may only be perfected upon the posting of a cash or
surety bond in the amount equivalent to the award in the
judgment appealed from. The respondents failed to comply with
the bond requirement, hence, it was jurisdictional error for the
CA to give due course to an unperfected appeal.30 Quirante also
cites Filipinas Systems, Inc. v. NLRC31 to emphasize that the
practice of offering evidence for the first time during appeal
before the NLRC should not be tolerated as it smacks of
unfairness and runs counter to the principle of speedy
administration of justice.32 Quirante further claims that the
alleged mishandling of the trays of eggs was an isolated blemish
in her otherwise immaculate service record. Hence, the penalty
of dismissal is too harsh especially since the acts ascribed to her
were not performed with any wrongful intent.33
In their Comment,34 the respondents contend that the Bank
Certification which they submitted before the NLRC substantially
complied with the appeal bond requirement under Article 223 of
the Labor Code.35 Moreover, Quirante's argument that dismissal
is too harsh a penalty for her infraction was initially presented
before the CA. Her change of theory violates due
process.36 Further, bad faith cannot be attributed to the
respondents in dismissing Quirante.37 Citing Integrated
Microelectronics, Inc. v. Pionilla;38 the respondents point out that
as an exception to the general rule, employees can be reinstated
sans an award of backwages in cases where the dismissal would
be too harsh a penalty and the employer was not motivated by
bad faith in ordering the dismissal.39 Anent the substantial issue
of the alleged illegality of the dismissal, the respondents reiterate
that as found in the proceedings below, Quirante took two trays
of eggs. Regardless of their actual monetary value, Quirante
committed a dishonest act, which justified her dismissal from
service.40
Ruling of the Court
 No motion to reduce bond shall be entertained except on
There is merit in the instant petition. meritorious grounds and upon the posting of a bond in a
reasonable amount in relation to the monetary award.
There was no compliance with the appeal bond
requirement. The filing of the motion to reduce bond without compliance with
the requisites in the preceding paragraph shall not stop the
In Mindanao Times Corporation v. Confesor,41 the employer, running of the period to perfect an appeal. x x x
instead of posting a cash or surety bond, submitted to the NLRC a Clearly, an appeal from a judgment as that involved in the
Deed of Assignment and a passbook. The Court is emphatic in its present case is perfected "only" upon the posting of a cash or
ruling that the employer's appeal was not perfected, hence, surety bond. Accessories Specialist, Inc. v.
rendering the LA's decision final and executory, viz: Alabanzaenlightens:chanRoblesvirtualLawlibrary
Article 223 of the Labor Code provides that an appeal by the
employer to the NLRC from a judgment of a labor arbiter which The posting of a bond is indispensable to the perfection of
involves a monetary award may be perfected only upon the an appeal in cases involving monetary awards from the
posting of a cash or surety bond issued by a reputable bonding decision of the LA. The intention of the lawmakers to make the
company duly accredited by the NLRC, in an amount equivalent bond a mandatory requisite for the perfection of an appeal by the
to the monetary award in the judgment appealed from. x x x employer is clearly limned in the provision that an appeal by the
employer may be perfected "only upon the posting of a cash or
x x x x surety bond." The word "only" makes it perfectly plain that
the lawmakers intended the posting of a cash or surety bond
Further, Sec. 6 of the [New Rules of Procedure of the NLRC] by the employer to be the essential and exclusive means by
provides: which an employer's appeal may be perfected. The word
SECTION 6. BOND. In case the decision of the Labor Arbiter or the "may" refers to the perfection of an appeal as optional on the
Regional Director involves a monetary award, an appeal by the part of the defeated party, but not to the compulsory posting of
employer may be perfected only upon the posting of a cash or an appeal bond, if he desires to appeal. The meaning and the
surety bond. The appeal bond shall either be in cash or surety in intention of the legislature in enacting a statute must be
an amount equivalent to the monetary award, exclusive of determined from the language employed; and where there is no
damages and attorney[']s fees. ambiguity in the words used, then there is no room for
construction.
x x x x
The filing of the bond is not only mandatory but also a
jurisdictional requirement that must be complied with in
order to confer jurisdiction upon the NLRC. Non-compliance
therewith renders the decision of the LA final and
executory. This requirement is intended to assure the workers
that if they prevail in the case, they will receive the money
judgment in their favor upon the dismissal of the employer's
appeal. It is intended to discourage employers from using an
appeal to delay or evade their obligation to satisfy their
employees' just and lawful claims. x x x42 (Citations omitted and
emphasis, italics and underscoring in the original)
Prescinding from the above, OROPORT's submission before the
NLRC of a Bank Certification, in lieu of posting a cash or surety
bond, cannot be considered as substantial compliance with
Article 223 of the Labor Code. The filing of the appeal bond is a
jurisdictional requirement and the rules thereon mandate no less
than a strict construction. For failure to properly post a bond,
OROPORT's appeal was not perfected.
Delay in the submission of evidence should be adequately
explained.
Anent the submission of evidence for the first time during
appeal, Misamis Oriental II Electric Service Cooperative
(MORESCO II) v. Cagalawan43 instructs:
Labor tribunals, such as the NLRC, are not precluded from
receiving evidence submitted on appeal as technical rules are not
binding in cases submitted before them. However, any delay in
the submission of evidence should be adequately explained and
should adequately prove the allegations sought to be proven.
In the present case, MORESCO II did not cite any reason why it
had Jailed to file its position paper or present its cause before the
Labor Arbiter despite sufficient notice and time given to do so.
Only after an adverse decision was rendered did it present its
defense and rebut the evidence of Cagalawan by alleging that his
transfer was made in response to the letter-request of the area
manager of the Gingoog sub-office asking for additional
personnel to meet its collection quota. To our mind, however, the
belated submission of the said letter-request without any valid
explanation casts doubt on its credibility, specially so when the
same is not a newly discovered evidence. x x x Why it was not
presented at the earliest opportunity is a serious question which
lends credence to Cagalawan's theory that it may have just been
fabricated for the purpose of appeal.44 (Citations omitted and
underscoring ours)
In the instant petition, LAMagbanua resolved Quirante's
complaint on the basis of the evidence the latter submitted
because the respondents failed to file their respective position
papers despite the lapse of seven months from the conduct of the
final mediation conference.45 The respondents did not amply
explain the reason for their delay. Hence, doubt is cast upon the
credibility of the evidence offered.
Despite the non-perfection of the appeal before the NLRC,
compelling reasons exist justifying the modification of LA
Magbanua's decision.
The Court thus concludes that (1) for failure to properly post a
bond, the respondents' appeal were not perfected, and (2) the
NLRC erroneously admitted evidence presented for the first time
during appeal when there was no ample justification provided
for their belated submission.

Be that as it may, this Court, for reasons discussed below, deems
it proper to modify LA Magbanua's decision.
First. The basis of LA Magbanua's decision was unclear. He made
a mere recital of Quirante's factual allegations, then proceeded to
rule that for failure of the respondents to controvert the claims,
there was no alternative but to declare the dismissal as illegal.46
Second. From the allegations and evidence submitted by the
parties, it can be inferred that Quirante was not actually faultless.
She took two trays of eggs without following the standard
procedure laid down regarding claims and disposition of
damaged goods. However, what the standard procedure exactly
is and what the proper penalty should be for its breach were not
clearly established. The respondents made no explicit references
to the employees' handbook or code of conduct, if they exist at
all. There was no adequate proof that the breach committed by
Quirante merits her dismissal from service, especially if the
transgression was made without wrongful intent. Quirante
deserves to be penalized, but dismissal is just too harsh. The
Court finds that a suspension for one month would have been
sufficient and more commensurate to the gravity of Quirante's
offense.
Third. As Quirante indeed had an infraction, albeit not properly
punishable with dismissal from service, bad faith cannot be
attributed to the respondents when they acted to protect the
interest of OROPORT from what appeared to be dishonest
conduct. Thus, LA Magbanua's award of moral damages and full
backwages should be deleted in view of the Court's
pronouncement in Pionilla,47viz:
As a general rule, an illegally dismissed employee is entitled to
reinstatement (or separation pay, if reinstatement is not viable)
and payment of full backwages. In certain cases, however, the
Court has carved out an exception to the foregoing rule and
thereby ordered the reinstatement of the employee without
backwages on account of the following: (a) the fact that dismissal
of the employee would be too harsh of a penalty; and (b) that the
employer was in good faith in terminating the employee. x x
x.48 (Underscoring ours)
Fourth. Quirante was dismissed in 2007. LA Magbanua ordered
her reinstatement. However, due to the passage of a long period
of time rendering reinstatement infeasible, "impracticable and
hardly in the best interest of the parties,"49 the Court now finds
the propriety of awarding separation pay instead. Separation pay
is equivalent to at least one month pay, or one month pay for
every year of service, whichever is higher (with a fraction of at
least six months being considered as one whole year), computed
from the time of employment or engagement up to the finality of
the decision.50
Fifth. LA Magbanua failed to impose an interest on the monetary
award at the rate of six percent (6%) per annum, from the date of
finality of this decision until full payment in accordance
with Nacar v. Gallery Frames.51
The Court, however, finds LA Magbanua's award of attorney's
fees as proper. In labor cases, when an employee is forced to
litigate in order to seek redress of his or her grievances,
entitlement to the payment of attorney's fees equivalent to ten
percent (10%) of the monetary award is justified.52 Commission, which is hereby DIRECTED to COMPUTE the
monetary benefits awarded in accordance with this Decision and
Be it noted that LA Magbanua's decision is silent on the personal to submit its compliance thereon within thirty (30) days from
liabilities of Caete and Cabaraban. The Court finds no reason to notice hereof.
disturb such silence considering that Quirante offered no ample
evidence to prove that the two officers acted wantonly and SO ORDERED.
maliciously in directing her dismissal from service.

WHEREFORE, the instant petition is GRANTED. The Decision

rendered on March 14, 2013 and Resolution issued on
September 30, 2013 by the Court of Appeals in CA-G.R. SP No.
03109-MIN- finding that petitioner Marissa B. Quirante was
validly dismissed from service are REVERSED and SET ASIDE.
Oroport Cargo Handling Services, Inc. is DIRECTED TO
PAY Marissa B. Quirante the
following:chanRoblesvirtualLawlibrary

(1) separation pay, in lieu of reinstatement, equivalent to one

month pay for every year of service, with a fraction of at least six
months being considered as one whole year, computed from the
time of employment or engagement up to the finality of this
decision;

(2) attorney's fees equivalent to ten percent (10%) of the total

separation pay; and Republic of the Philippines
SUPREME COURT
(3) interest on all monetary awards at the rate of six percent Manila
(6%) per annum from the finality of this Decision until full
payment. FIRST DIVISION

The case is REMANDED to the National Labor Relations December 09, 2015
G.R. No. 213696
QUANTUM FOODS, INC., Petitioner, v. MARCELINO ESLOYO
AND GLEN MAGSILA, Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the
Decision2 dated January 18, 2011 and the Resolution3 dated July
4, 2014 of the Court of Appeals, Cebu City (CA) in CA-G.R. CEB-SP
No. 04622, which reversed and set aside the Decision4 dated
February 20, 2009 and the Resolution5 dated July 10, 2009 of the
National Labor Relations Commission (NLRC) in NLRC VAC No.
08-000526-2008, thereby reinstating the Decision6 dated
December 27, 2007 of the Labor Arbiter (LA), finding
respondents Marcelino Esloyo (Esloyo) and Glen Magsila
(Magsila) to have been illegally dismissed.
The Facts
Petitioner Quantum Foods, Inc. (QFI) is a domestic corporation
engaged in the distribution and selling of food products
nationwide, with principal office located in Brgy. Merville,
Paraaque City. It hired Esloyo as Major Accounts
Representative on December 14, 1998, whose consistent good
performance led to successive promotions, until his promotion
to the position of Regional Sales Manager for Visayas and
Mindanao in 2004.7 On the other hand, it hired Magsila as Key
Accounts Representative for the Panay Area on March 1, 2005 on
a probationary status and gave him a "permanent" status on
August 31, 2005.8 In the course of their employment, Esloyo and
Magsila were each required to post a cash bond in the amount of
P10,000.00 and P7,000.00, respectively.9
In 2006, QFI decided to reorganize its sales force nationwide
following a drastic drop in net income in 2005, and Magsila was
among those retrenched.10 In a letter11 dated February 13, 2006,
Magsila was informed of his termination effective March 31,
2006, given the option not to report for work beginning
February 27, 2006, and advised to turn over his responsibilities
and clear his accountabilities to facilitate the release of his final
pay. The corresponding Establishment Termination Report12 of
the retrenched employees was likewise submitted to the
Department of Labor and Employment. However, Magsila's final
pay and other benefits were not released due to alleged
discovery of unauthorized/undocumented deductions, which he
purportedly failed to explain.13
Meanwhile, in response to several anonymous complaints
against Esloyo for alleged misbehavior and violations of various
company rules and regulations, such as sexual harassment,
misappropriation of company funds/ property,
falsification/padding of reports and serious misconduct, QFI's
auditor, Vilma A. Almendrala, conducted an audit/investigation
in Iloilo City on March 13 to 18, 2006,14 and submitted an Audit
Report15 dated March 23, 2006 detailing her findings. A Show
Cause Memorandum16 dated March 24, 2006 (March 24, 2006
Show Cause Memorandum) was thereafter issued by QFI Human
Resources (HR) Manager Rogelio Ma. J. dela Cruz (dela Cruz),
directing Esloyo to explain.
Esloyo submitted his written explanation denying the
charges,17 which QFI found to be unsatisfactory.18Consequently,
in a letter19 dated March 31, 2006, Esloyo was informed of his
termination from work effective April 3, 2006 on the ground of
loss of trust and confidence due to his numerous violations of the
company rules and regulations.
Aggrieved, Esloyo and Magsila (respondents) filed separate
complaints for illegal dismissal with money claims against QFI,
its President/General Manager, Robert N. Suarez, and its HR
Manager, De la Cruz, before the NLRC, docketed as SRAB VI, Case
Nos. 04-50116-2006 and 07-50239-2006, respectively, which
were subsequently consolidated.20 They also impleaded Dole
Philippines, Inc. (Dole) as party to the case, claiming that said
company required them to perform additional tasks that were
necessary and desirable for its operations, and that Dole, as well
as its Executive personnel had created and organized QFI, and
thus, should be held jointly and solidarily liable with QFI for
respondents' claims.21
Esloyo asserted that his dismissal was illegal, claiming that: (a)
the charges were all fabricated; (b) no formal investigation was
conducted; and (c) he was not given the opportunity to confront
his accusers; adding too that prior to the March 24, 2006 Show
Cause Memorandum, he received an e-mail memorandum
directing him to report to the head office for re-assignment but
was, instead, placed on floating status.22 Magsila, on the other
hand, averred that there was no valid retrenchment as the losses
claimed by QFI were unsubstantiated and that he was merely
replaced.23
For its part, QFI maintained that respondents' dismissals were
valid, hence, it is not liable for their money claims.24 On the other
hand, Dole denied any employer-employee relationship with
respondents.25cralawred
The LA Ruling
In a Decision26 dated December 27, 2007, the LA found
respondents to have been illegally dismissed, and ordered QFI to
pay them their respective backwages, 13th month pay, unpaid
salaries, separation pay in lieu of reinstatement equivalent to
one (1) month pay for every year of service, and refund of their
cash bonds, or a total monetary judgment of
P1,817,856.71, plus
27 10% attorney's fees.
The LA held that Esloyo's dismissal was tainted with malice and
bad faith, finding that: (a) he was not given the opportunity to
refute the charges leveled against him, as instead of conducting
an administrative investigation, QFI ordered his re-assignment
and thereafter placed him on "floating status"; and (b) the audit
report submitted was based on unverified statements. The LA
likewise found no substantial evidence to support the charges
against Esloyo, and thus, ruled that the claim of loss of trust and
confidence was without basis.28
In the same vein, the LA declared Magsila's dismissal to be illegal,
holding that there could be no valid retrenchment since a
replacement was hired even before the effectivity of the latter's
dismissal, noting too, that the dismissal was effected only after
he had acted as witness for Esloyo in the sexual harassment
charge.29
 The NLRC Ruling
On the other hand, Dole was deleted as party to the case, upon a
finding that it has no employer-employee relationship with In a Decision36 dated February 20, 2009, the NLRC denied
respondents; while the impleaded QFI officials were absolved respondents' motion to dismiss and gave due course to QFI's
from personal liability.30 appeal, holding that: (a) the lack of verification was a formal
defect that could be cured by requiring an oath;37 (b) the belated
Dissatisfied, QFI filed its Notice of Appeal and Memorandum of filing of the certificate of non-forum shopping may be allowed
Appeal31 before the NLRC on February 8, 2008, accompanied under exceptional circumstances as technical rules of procedure
by:chanRoblesvirtualLawlibrary should be used to promote, not frustrate justice;38 and (c) there
was substantial compliance with the bond requirement, and
(a) a Motion to Reduce Bond32 averring that it was encountering merit in QFI's appeal that would justify a liberal application of
difficulty raising the amount of the bond and finding an the requirement on the timely filing of the appeal bond.39
insurance company that can cover said amount during the short
period of time allotted for an appeal; and (b) a cash bond in the Contrary to the LA's ruling, the NLRC held that respondents were
amount of P400,000.00 (partial bond).33 not illegally dismissed.40 It gave credence to the audit report
which showed the various infractions committed by Esloyo in
Respondents filed a motion to dismiss the appeal for QFI's violation of the company rules and regulations, and in breach of
failure: (a) to attach a Verification and Certification of Non- the confidence reposed on him, warranting his dismissal.41 It also
Forum Shopping as required by the New Rules and Procedure of found substantial evidence to support the losses suffered by QFI,
the NLRC; and (b) to post a bond in an amount equivalent to the and thus, declared Magsila's dismissal to prevent losses as a valid
monetary judgment as mandated by law.34 exercise of the management's prerogative.42

QFI thereafter moved to admit its Verification/Certification for Consequently, the NLRC deleted the awards of backwages,
Non-Forum Shopping and related documents, explaining that the 13th month pay, and attorney's fees in favor of respondents for
failure to attach said documents was due to the inadvertence of lack of basis, but sustained: (a) the award of separation pay in
its counsel who was just recovering from the open favor of Magsila who was dismissed for an authorized cause; and
cholecystectomy performed on him, and that the appeal was (b) the refund of respondents' cash bonds in the absence of proof
based on meritorious grounds. Subsequently, but before the that the same had been returned by QFI.43
NLRC could act on the Motion to Reduce Bond, it posted a surety
bond from an accredited insurance company fully covering the Respondents filed a motion for reconsideration,44 which was
monetary judgment, which respondents vehemently opposed.35
denied in a Resolution45 dated July 10, 2009, prompting them to
elevate the matter on certiorari before the CA.46 The central issue for the Court's resolution is whether or not the
CA erred in ascribing grave abuse of discretion on the part of the
The CA Ruling NLRC in giving due course to QFI's appeal.

In a Decision47 dated January 18, 2011, the CA reversed and set
aside the NLRC's ruling and reinstated the LA's Decision. It ruled
that QFI's failure to post the required bond in an amount
equivalent to the monetary judgment impeded the perfection of
its appeal, and rendered the LA's Decision final and
executory.48 Thus, the NLRC was bereft of jurisdiction and
abused its discretion in entertaining the appeal.49 It also held
that the posting of the partial bond together with the Motion to
Reduce Bond did not stop the running of the period to perfect the
appeal, considering that: (a) the grounds relied upon by QFI are
not meritorious; and (b) the partial bond posted was not
reasonable in relation to the monetary judgment.50
The Court's Ruling
There is merit in the petition.
In labor cases, the law governing appeals from the LA's ruling to
the NLRC is Article 22954 of the Labor Code which provides:
ART. 229. Appeal. - Decisions, awards, or orders of the Labor
Arbiter are final and executory unless appealed to the
Commission by any or both parties within ten (10) calendar days
from receipt of such decisions, awards, or orders. Such appeal
may be entertained only on any of the following
grounds:chanRoblesvirtualLawlibrary

The CA further observed that the appeal filed on February 8, (a) If there is a prima facie evidence of abuse of discretion on the
2008 was plagued with several infirmities that effectively part of the Labor Arbiter;
prevented its perfection, noting that: (a) there was no showing
that de la Cruz, who filed/signed the petition, was authorized to (b) If the decision, order or award was secured through fraud or
represent QFI and sign the verification; and (b) it was coercion, including graft and corruption;
unaccompanied by a certificate of non-forum shopping.
Accordingly, it found no compelling reason to justify the (c) If made purely on questions of law; and
relaxation of the rules.51
(d) If serious errors in the findings of facts are raised which
Undeterred, QFI filed a motion for reconsideration52 which was would cause grave or irreparable damage or injury to the
denied in a Resolution53 dated July 4, 2014; hence, this petition. appellant.

The Issue Before the Court In case of a judgment involving a monetary award, an appeal
by the employer may be perfected only upon the posting of a
cash or surety bond issued by a reputable bonding company
duly accredited by the Commission in the amount equivalent
to the monetary award in the judgment appealed from.
x x x x (Emphasis and underscoring supplied)
In this relation, Section 4, Rule VI of the 2005 Revised Rules of
Procedure of the NLRC55 (the Rules) enumerates the requisites
for the perfection of appeal, viz.:
Section 4. Requisites For Perfection Of Appeal. - a) The appeal
shall be:chanRoblesvirtualLawlibrary
1) filed within the reglementary period provided in Section 1 of
this Rule;
2) verified by the appellant himself in accordance with Section
4, Rule 7 of the Rules of Court, as amended; 3) in the form of a
memorandum of appeal which shall state the grounds relied
upon and the arguments in support thereof, the relief prayed for,
and with a statement of the date the appellant received the
appealed decision, resolution or order; 4) in three (3) legibly
typewritten or printed copies; and 5) accompanied by i) proof
of payment of the required appeal fee; ii) posting of a cash or
surety bond as provided in Section 6 of this Rule; iii) a
certificate of non-forum shopping; and iv) proof of service
upon the other parties.
b) A mere notice of appeal without complying with the other
requisites aforestated shall not stop the running of the
period for perfecting an appeal.
x x x x (Emphases supplied)
Notably, while QFI timely filed its Notice of Appeal and
Memorandum of Appeal, it was only accompanied by a partial
bond with a Motion to Reduce Bond, and not a bond in an
amount equivalent to the monetary judgment, the effects of
which will be discussed later. The appeal likewise suffered from
the following deficiencies, inter alia: (a) the verification was
signed by QFI HR Manager dela Cruz, without the requisite board
resolution authorizing him to sign for and in behalf of QFI; and
(b) it was unaccompanied by a Certificate of Non-Forum
Shopping. Nonetheless, QFI subsequently submitted its
Verification/Certification of Non-Forum Shopping and related
documents, explaining that the failure to attach said documents
was due to the inadvertence of its counsel who was then
recuperating from the open cholecystectomy performed on him,
and that the appeal was based on meritorious grounds.56
In China Banking Corp. v. Mondragon Int'l. Phils., Inc.,57 the Court
had the occasion to rule that the subsequent submission of proof
of authority to act on behalf of a petitioner corporation justifies
the relaxation of the Rules for the purpose of allowing its petition
to be given due course.58 Besides, the verification of a pleading is
a formal, not a jurisdictional, requirement intended to secure the
assurance that the matters alleged in a pleading are true and
correct. Thus, the court or tribunal may simply order the
correction of unverified pleadings or act on them and waive
strict compliance with the rules,59 as the NLRC did.
On the other hand, the certification requirement is rooted in the
principle that a party-litigant shall not be allowed to pursue
simultaneous remedies in different fora, as this practice is
detrimental to an orderly judicial procedure. However, under
justifiable circumstances, the Court has relaxed the rule
requiring the submission of such certification considering that
although it is obligatory, it is not jurisdictional.60
In the present case, it is apparent that the plausible merit of the
case was the "special circumstance" or "compelling
reason"61 that prompted the NLRC to relax the certification
requirement and give due course to QFI's appeal as it, in fact,
arrived at a contrary ruling from that of the LA. It is well to
emphasize that technical rules are not binding in cases
submitted before the NLRC. In fact, labor officials are enjoined to
use every and reasonable means to ascertain the facts in each
case speedily and objectively, without regard to technicalities of
law or procedure, in the interest of due process.62 Consequently,
the NLRC cannot be faulted for relaxing its own rules in the
interest of substantial justice.
Coming now to the bond requirement, while it has been settled
that the posting of a cash or surety bond is indispensable to the
perfection of an appeal in cases involving monetary awards from
the decision of the LA,63 in several cases,64 the Court has relaxed
this stringent requirement whenever justified. Thus, the Rules -
specifically Section 6, Rule VI - thereof, allow the reduction of the
appeal bond upon a showing of: (a) the existence of a
meritorious ground for reduction, and (b) the posting of a
bond in a reasonable amount in relation to the monetary
award, to wit:
SEC. 6. Bond. - In case the decision of the Labor Arbiter or the
Regional Director involves a monetary award, an appeal by the
employer may be perfected only upon the posting of a bond,
which shall either be in the form of cash deposit or surety bond
equivalent in amount to the monetary award, exclusive of
damages and attorney's fees.
x x x x
No motion to reduce bond shall be entertained except on
meritorious grounds, and only upon the posting of a bond in
a reasonable amount in relation to the monetary award.
The mere filing of a motion to reduce bond without complying
with the requisites in the preceding paragraphs shall not stop the
running of the period to perfect an appeal.65(Emphasis and
underscoring supplied)
In this regard, it bears stressing that the reduction of the bond
provided thereunder is not a matter of right on the part of the
movant and its grant still lies within the sound discretion of the
NLRC upon a showing of meritorious grounds and the
reasonableness of the bond tendered under the
circumstances.66The requirement on the existence of a
"meritorious ground" delves on the worth of the parties'
arguments, taking into account their respective rights and the
circumstances that attend the case.67
In Nicol v. Footjoy Industrial Corp.,68 the Court summarized the
guidelines under which the NLRC must exercise its discretion in
considering an appellant's motion for reduction of bond in this
wise:
"[T]he bond requirement on appeals involving monetary awards
has been and may be relaxed in meritorious cases. These cases
include instances in which (1) there was substantial compliance
with the Rules, (2) surrounding facts and circumstances
constitute meritorious grounds to reduce the bond, (3) a liberal
interpretation of the requirement of an appeal bond would serve
the desired objective of resolving controversies on the merits, or
(4) the appellants, at the very least, exhibited their willingness
and/or good faith by posting a partial bond during the
reglementary period."69ChanRoblesVirtualawlibrary
Here, QFI posted a partial bond in the amount of P400,000.00, or
more than twenty percent (20%) of the monetary judgment,
within the reglementary period to appeal, together with the
Motion to Reduce Bond anchored on its averred difficulty in
raising the amount of the bond and searching for an insurance
company that can cover said amount within the short period of
time to perfect its appeal. Before the NLRC could even act on the
Motion to Reduce Bond, QFI posted a surety bond from an
accredited insurance company covering fully the judgment
award.
However, the CA held that the grounds relied upon by QFI are
not meritorious, and that the partial bond posted was not
reasonable in relation to the monetary judgment.
Case law has held that for purposes of justifying the reduction of
the appeal bond, the merit referred to may pertain to (a) an
appellant's lack of financial capability to pay the full amount
of the bond, or (b) the merits of the main appeal such as when
there is a valid claim that there was no illegal dismissal to justify
the award, the absence of an employer-employee relationship,
prescription of claims, and other similarly valid issues that are
raised in the appeal.70
In this case, the NLRC held that a liberal application of the
requirement on the timely filing of the appeal bond is justified,
finding that (a) the posting of a P400,000.00 cash bond within
the reglementary period to appeal and the subsequent posting of
a surety bond constitute substantial compliance of the bond
requirement; and (b) there is merit in QFI's appeal.
As to what constitutes "a reasonable amount of bond" that must
accompany the motion to reduce bond in order to suspend the
period to perfect an appeal, the Court, in McBurnie v.
Ganzon,71 pronounced:
To ensure that the provisions of Section 6, Rule VI of the NLRC
Rules of Procedure that give parties the chance to seek a
reduction of the appeal bond are effectively carried out, without
however defeating the benefits of the bond requirement in favor
of a winning litigant, all motions to reduce bond that are to be
filed with the NLRC shall be accompanied by the posting of
a cash or surety bond equivalent to 10% of the monetary
award that is subject of the appeal, which shall provisionally
be deemed the reasonable amount of the bond in the
meantime that an appellant's motion is pending resolution
by the Commission. In conformity with the NLRC Rules, the
monetary award, for the purpose of computing the necessary
appeal bond, shall exclude damages and attorney's fees. Only
after the posting of a bond in the required percentage shall an
appellant's period to perfect an appeal under the NLRC Rules be
deemed suspended.72 (Emphasis and underscoring supplied)
Hence, the posting of a P400,000.00 cash bond equivalent to
more than 20% of the monetary judgment, together with the
Motion to Reduce Bond within the reglementary period was
sufficient to suspend the period to perfect the appeal. The WHEREFORE, the petition is GRANTED. The Decision dated
posting of the said partial bond coupled with the subsequent January 18, 2011 and the Resolution dated July 4, 2014 of the
posting of a surety bond in an amount equivalent to the Court of Appeals, Cebu City in CA-G.R. CEB-SP No. 04622 are
monetary judgment also signified QFI's good faith and hereby REVERSED and SET ASIDE. The case is REMANDED to
willingness to recognize the final outcome of its appeal.73 the CA for appropriate action.

In determining the reasonable amount of appeal bonds, however, SO ORDERED.

the Court primarily considers the merits of the motions and the
appeals.74 Thus, in Rosewood Processing, Inc. v. NLRC,75 the Court
considered the posting of a P50,000.00 bond together with the
motion to reduce bond as substantial compliance with the legal
requirements of an appeal from a P789,154.39 monetary award
"[considering the clear merits which appear, res ipsa loquitor, in
the appeal from the labor arbiter's Decision and the petitioner's
substantial compliance with rules governing appeals."76

It should be emphasized that the NLRC has full discretion to

grant or deny the motion to reduce bond,77and its ruling will not
be disturbed unless tainted with grave abuse of discretion.
Verily, an act of a court or tribunal can only be considered to be
tainted with grave abuse of discretion when such act is done in a
capricious or whimsical exercise of judgment as is equivalent to
lack of jurisdiction,78 which clearly is not extant with respect to
the NLRC's cognizance of QFI's appeal. Far from having gravely
abused its discretion, the NLRC correctly preferred substantial
justice over the rigid and stringent application of procedural
rules. This, by all means, is not a case of grave abuse of discretion Republic of the Philippines
calling for the issuance of a writ of certiorari,79 warranting the SUPREME COURT
reversal of the CA's ruling granting the certiorari petition and the Manila
remand of the case to the C A for appropriate action.
SECOND DIVISION
G.R. No. 192947, December 09, 2015
MELANIE E. DE OCAMPO, Petitioner, v. RPN-9/RADIO
PHILIPPINES NETWORK, INC., Respondent.
DECISION
For its part, the National Labor Relations Commission affirmed
the December 13, 20077 Order of Executive Labor Arbiter
Manuel M. Manansala (Executive Labor Arbiter Manansala),
which denied De Ocampo's Motion to Recompute the Monetary
Award with Motion to Issue Alias Writ of Execution.8

LEONEN, J.: De Ocampo was the complainant in a case for illegal dismissal,
unpaid salaries, damages, and attorney's fees against respondent
Unlike an appeal, a pending petition for certiorari shall not stay Radio Philippines Network, Inc. (RPN-9) and several RPN-9
the judgment or order that it assails. Unless a restraining order officers, namely: President Cerge Remonde; News and Current
or writ of preliminary injunction is issued, the assailed decision Affairs Manager Rodolfo Lacuna; and Human Resources Manager
lapses into finality. Thereafter, it can no longer be disturbed, Lourdes Angeles. This case was docketed as NLRC-NCR Case No.
altered, or modified, and execution may ensue. 00-05-05 857-2003.9

This Petition for Review on Certiorari, filed under Rule 45 of the On May 12, 2004, Executive Labor Arbiter Manansala rendered
1997 Rules of Civil Procedure, prays that the assailed March 5, the Decision10 finding De Ocampo to have been illegally
2010 Decision1 and July 8, 2010 Resolution2 of the Court of dismissed. RPN-9 was ordered to pay her separation pay in lieu
Appeals in CA-G.R. SP No. 108457 be reversed and set aside. The of reinstatement and full backwages. The impleaded officers of
Petition further prays that the recomputation that petitioner RPN-9 were absolved from liability. The dispositive portion of
Melanie De Ocampo (De Ocampo) sought in the monetary award this Decision reads:
she had already received be permitted in order that she may
receive additional backwages, separation pay, and 13th month WHEREFORE, premises considered, judgment is hereby
pay, as well as 12% interest per annum.3 rendered:chanRoblesvirtualLawlibrary

In its assailed March 5, 2010 Decision, the Court of Appeals
dismissed De Ocampo's Petition for Certiorari and affirmed the
September 30, 2008 Decision4 and December 15, 2008
Resolution5 of the National Labor Relations Commission. In its
assailed July 8, 2010 Resolution, the Court of Appeals denied De
Ocampo's Motion for Reconsideration.6
1. Declaring respondent Radio Philippines Network, Inc. (RPNI)
also known as RPN-9 guilty of illegal dismissal for the reasons
above-discussed. Consequently, the aforenamed respondent is
hereby directed to pay complainant Melanie De Ocampo the sum
of P206,433.50 and P109,200.00 representing her full-
backwages and separation pay, respectively, for the reasons
above-discussed, and as computed by the Examination and
Computation Unit of this Arbitration Branch (See Annex "A", of
this Decision).
2. Directing respondent Radio Philippines Network, Inc. (RPNI)
also known as RPN-9 to pay complainant Melanie De Ocampo the
sum of P54,600.00 representing her 13th Month Pay as compjted
[sic] by the Examination and Computation Unit of this
Arbitration Branch (See Annex "A", of this Arbitration Branch
[sic]).
3. Directing the aforenamed respondent to pay complainant
Melanie De Ocampo ten (10%) percent attorney's fees based on
the total monetary award for having been forced to prosecute
and/or litigate the instant case/complaint by hiring the services
of legal counsel [sic].
4. Dismissing the claims for Holiday Pay and Service Incentive
Leave Pay for lack of merit for the reasons above-cited.
5. Dismissing the other money claims and/or charges of
complainant Melanie De Ocampo for lack of factual and legal
basis.
6. Dismissing the charges against individual respondents Cerge
Remonde, Rodolfo Lacuna, and Lourdes Angeles, as President,
Manager of News and Current Affairs, and Manager of Human
Resources, respectively, of respondent RPN-9 for lack of merit.
SO ORDERED.11ChanRoblesVirtualawlibrary
In its Decision12 dated February 28, 2006, the National Labor
Relations Commission affirmed the May 12, 2004 Decision of
Executive Labor Arbiter Manansala. In the Resolution dated April
28, 2006, RPN-9's Motion for Reconsideration was denied.13
RPN-9 then filed before the Court of Appeals a Petition for
Certiorari with prayer for temporary restraining order and/or
preliminary injunction. The Petition was docketed as C.A.-G.R. SP.
No. 95229.14
In the Resolution dated December 11, 2006, the Court of Appeals
issued a temporary restraining order preventing the National
Labor Relations Commission from enforcing its ruling for a
period of 60 days. The sixty-day period lapsed without a writ of
preliminary injunction being subsequently issued by the Court of
Appeals.15 Accordingly, the ruling of Executive Labor Arbiter
Manansala, as affirmed by the National Labor Relations
Commission, became final and executory on May 27,
2006.16 Entry of Judgment was issued on July 19, 2006.17
De Ocampo then filed a Motion for Issuance of Writ of
Execution.18 In the Order19 dated October 30, 2006, the National
Labor Relations Commission granted De Ocampo's Motion.
Conformably, a Writ of Execution20 was issued on May 7, 2007.
This Writ directed the Deputy Sheriff to collect from RPN-9 the
total amount of P410,826.85.21
This amount was fully satisfied through Banco de Oro Check No.
0087385, which was deposited at the National Labor Relations
Commission Cashier's Office on August 22, 2007.22 On the
following day, or on August 23, 2007, De Ocampo filed a Motion
to Release the amount of P410,826.85.23
The full satisfaction of the original award notwithstanding, De
Ocampo filed a Motion to Recompute the Monetary Award with
Motion to Issue Alias Writ of Execution24 on September 11, 2007.
In the Motion, De Ocampo sought the increase of the monetary
award given her. Specifically, she sought the payment of an
additional amount of P518,700.00 representing additional
backwages, separation pay, and 13th month pay. She also prayed
for an additional amount of P53,188.83, representing 12%
interest per annum on the original monetary award.25cralawred
In the Order26 dated December 13, 2007, Executive Labor Arbiter
Manansala denied De Ocampo's Motion to Recompute the
Monetary Award with Motion to Issue Alias Writ of Execution on
the ground that the May 12, 2004 Decision fixing the amounts of
the monetary award due to De Ocampo had become final and
executory.
In its September 30, 2008 Decision,27 the National Labor
Relations Commission sustained Executive Labor Arbiter
Manansala's December 13, 2007 Decision.28 In its December 15,
2008 Resolution,29 the National Labor Relations Commission
denied De Ocampo's Motion for Reconsideration.
In its assailed March 5, 2010 Decision,30 the Court of Appeals
dismissed De Ocampo's Petition for Certiorari and sustained the
September 30, 2008 Decision and December 15, 2008 Resolution
of the National Labor Relations Commission. In its assailed July 8,
2010 Resolution,31 the Court of Appeals denied De Ocampo's
Motion for Reconsideration.
Aggrieved, De Ocampo filed the present Petition32 insisting that
she remains entitled to additional monetary awards, thereby
warranting a recomputation of the amount due to her.
For resolution is the sole issue of whether petitioner Melanie De
Ocampo may still seek a recomputation of and an increase in the
monetary award given her.
She cannot.
I
It is basic that a judgment can no longer be disturbed, altered, or
modified as soon as it becomes final and executory;33 "[n]othing
is more settled in law."34 Once a case is decided with finality, "the
controversy is settled and the matter is laid to
rest."35 Accordingly, a final judgment may no longer be modified
in any respect "even if the modification is meant to correct what
is perceived to be an erroneous conclusion of fact or law, and
regardless of whether the modification is attempted to be made
by the court rendering it or by the highest court of the
land."36 Once a judgment becomes final, the court or tribunal
loses jurisdiction, and any modified judgment that it issues, as
well as all proceedings taken for this purpose, is null and void.37
This elementary rule finds basis in "public policy and sound
practice that at the risk of occasional error, the judgment of
courts and the award of quasi-judicial agencies must become
final at some definite date fixed by law."38 Basic rationality
dictates that there must be an end to litigation. Any contrary
posturing renders justice inutile and reduces to futility the
winning party's capacity to benefit from a resolution of the
case.39
This rule, however, does admit of exceptions. As this court
explained in Sacdalan v. Court of Appeals:40
The only exceptions to the general rule are the correction of
clerical errors, the so-called nunc pro tunc entries which cause no
prejudice to any party, void judgments, and whenever
circumstances transpire after the finality of the decision
rendering its execution unjust and inequitable.41 (Citations
omitted)
Consistent with the principle of finality of judgments, it follows
that no appeal may be taken from orders of execution of
judgments.42
II
As basic as the principle of finality of judgments is the rule that
filing a petition for certiorari under Rule 65 of the 1997 Rules of
Civil Procedure "shall not interrupt the course of the principal
case unless a temporary restraining order or a writ of
preliminary injunction has been issued against the public
respondent from further proceeding in the case."43 Unlike an
appeal, a pending petition for certiorari shall not stay the
judgment or order that it assails.
The 2005 Rules of Procedure of the National Labor Relations
Commission, which were in effect when the material incidents of
this case occurred, explicitly and specifically makes this principle
applicable to decisions of labor arbiters and of the National
Labor Relations Commission. Rule XI, Section 10 of the 2005
Rules of Procedure of the National Labor Relations Commission
states:
SECTION 10. Effect of Petition for Certiorari on Execution. A
petition for certiorari with the Court of Appeals or the Supreme
Court shall not stay the execution of the assailed decision unless
a restraining order is issued by said courts.
In contrast, Rule XI, Section 9 states the following with respect to
appeals:
SECTION 9. Effect of Perfection of Appeal on Execution. The
perfection of an appeal shall stay the execution of the decision of
the Labor Arbiter on appeal, except execution for reinstatement
pending appeal.
Accordingly, where no restraining order or writ of preliminary
injunction is issued, the assailed decision lapses into finality.
Thereafter, execution may ensue. As Rule XI, Section 1 of the
2005 Rules of Procedure of the National Labor Relations
Commission states:
SECTION 1. Execution Upon Finality of Decision or Order. a) A
writ of execution may be issued motu proprio or on motion, upon
a decision or order that finally disposes of the action or
proceedings after the parties and their counsels or authorized
representatives are furnished with copies of the decision or
order in accordance with these Rules, but only after the
expiration of the period to appeal if no appeal has been filed, as
shown by the certificate of finality. If an appeal has been filed, a
writ of execution may be issued when there is an entry of
judgment as provided for in Section 14 of Rule VII.
b) No motion for execution shall be entertained nor a writ of
execution be issued unless the Labor Arbiter or the Commission
is in possession of the records of the case which shall include an
entry of judgment if the case was appealed; except that, as
provided for in Section 14 of Rule V and Section 6 of this Rule,
and in those cases where partial execution is allowed by law, the
Labor Arbiter shall retain duplicate original copies of the
decision to be implemented and proof of service thereof for the
purpose of immediate enforcement.
The pivotal facts of this case are also settled. After the filing
before the Court of Appeals of RPN-9's Petition for Certiorari, the
Court of Appeals issued a temporary restraining order
preventing, for a period of 60 days, the National Labor Relations
Commission from enforcing its ruling. However, the sixty-day
period lapsed without a writ of preliminary injunction being
subsequently issued by the Court of Appeals.44 Thus, on May 27,
2006, the ruling of Executive Labor Arbiter Manansala, as
affirmed by the National Labor Relations Commission, became
final and executory on May 27, 2006.45 Conformably, Entry of
Judgment was made on July 19, 2006.46
None of the four exceptions mentioned in Sacdalan v. Court of
Appeals47 that warrant a modification of judgments that have
attained finality is availing in this case.
What petitioner seeks is not a mere clerical correction. Rather,
she seeks an overhaul of Executive Labor Arbiter Manansala's
Decision in order that it may award her a total additional sum of
P571,888.83 representing backwages, separation pay, 13th
month pay, and accrued interest. Petitioner does not merely seek
an entry into the records of acts done but not entered (i.e., nunc
pro tunc entries). Petitioner does not claim that Executive Labor
Arbiter Manansala's Decision is void, only that its computation of
monetary awards is inadequate. Neither does petitioner allege
that certain events transpired after May 27, 2006 rendering
Executive Labor Arbiter Manansala's Decision unjust or
inequitable.
The Decision having attained finality, and as this case does not
fall under any of the recognized exceptional circumstances, there
remains no opening for revisiting, amending, or modifying
Executive Labor Arbiter Manansala's judgment.
III
Not only is Executive Labor Arbiter Manansala's Decision
binding and conclusive as a matter of procedural law; it is as
binding and conclusive on petitioner because of both her
inaction and her own actions. She is estopped from seeking a
modification of Executive Labor Arbiter Manansala's Decision.
Following the rendition of Executive Labor Arbiter Manansala's
Decision on May 12, 2004, petitioner did not file a motion for
reconsideration, pursue an appeal before the National Labor
Relations Commission, file a petition for certiorari before any
court, or otherwise assail the whole or any part of the Decision.
This judgment, as well as its execution, was stayed not by
petitioner's actions but by those of respondent RPN-9. RPN-9
filed an appeal before the National Labor Relations Commission
and, following the denial of this appeal, filed a Rule 65 Petition
before the Court of Appeals, where it sought preliminary
injunctive relief.
By her inaction, petitioner made it appear that as far as she was
concerned, Executive Labor Arbiter Manansala's Decision should
have stood as it did. Her inaction revealed that she saw no reason
for the same Decision to be revisited or reconsidered by
Executive Labor Arbiter Manansala himself, by the National
Labor Relations Commission, or by any court. She failed to act in
a timely mannerthat is, by pursuing the appropriate remedy
within the duration permitted by the rules. She failed "to assert a
right within a reasonable time, [and this] warrant[ed] a
presumption that the party entitled to assert it [i.e., petitioner]
either has abandoned it or declined to assert it."48 Stated
otherwise, to petitioner may be imputed estoppel by laches.
Moreover, as soon as Entry of Judgment was made, petitioner
filed a Motion for Issuance of Writ of Execution.49 After the Writ
of Execution was satisfied and the check representing payment
of the monetary award was deposited with the Cashier's Office of
the National Labor Relations Commission, petitioner lost no time
in seeking to have the monetary award in her hands: just a day
after deposit was made, petitioner was quick to file a Motion to
Release the amount of P410,826.85.50
Accordingly, petitioner's willful acceptance of the judgment
rendered by Executive Labor Manansala is not only something
that may be implied from her omission or inaction. Rather, it is
something explicitly affirmed by her own motions and
submissions. Whatever doubt there was, if any, as to her
concession to the monetary award given her was dispelled by the
positive assertions and pleas for relief that petitioner herself
made.
No recourse, whether in law or equity, leaves room for petitioner
to avail herself of the modifications she seeks. The most basic
legal principles dictate that Executive Labor Arbiter Manansala's
Decisionin all its aspectshas long attained finality and may
no longer be revisited. Principles of equity require that
petitioner be bound by her own omissions and declarations.
WHEREFORE, the Petition for Review on Certiorari is DENIED.
The assailed March 5, 2010 Decision and July 8, 2010 Resolution
of the Court of Appeals Former Sixth Division in CA-G.R. SP No.
108457 are AFFIRMED.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
January 11, 2016
G.R. No. 156635
THE HONGKONG & SHANGHAI BANKING CORPORATION
EMPLOYEES UNION, MA. DALISAY P. DELA CHICA, MARVILON
B. MILITANTE, DAVID Z. ATANACIO, JR., CARMINA C. RIVERA,
MARIO T. FERMIN(T), ISABELO E. MOLO, RUSSEL M. PALMA,
IMELDA G. HERNANDEZ, VICENTE M. LLACUNA, JOSEFINA A.
ORTIGUERRO, MA. ASUNCION G. KIMSENG, MIGUEL R. SISON,
RAUL P. GERONIMO, MARILOU E. CADENA, ANA N. TAMONTE,
AVELINO Q. RELUCIO, JORALYN R. GONGORA, CORAZON E.
ALBOS, ANABELLA J. GONZALES, MA. CORAZON Q.
BALTAZAR, MARIA LUZ I. JIMENEZ, ELVIRA A. ORLINA,
SAMUEL B. ELLARMA, ROSARIO A. FLORES, EDITHA L.
BROQUEZA, REBECCA T. FAJARDO, MA. VICTORIA C. LUNA,
MA. THERESA G. GALANG, BENIGNO V. AMION, GERARDO J.
DE LEON, ROWENA T. OCAMPO, MALOU P. DIZON, RUBEN DE
C. ATIENZA, MELO E. GABA, HERNAN B. CAMPOSANTO, NELIA
D. M. DERIADA, LOLITO L. HILIS, GRACE C. MABUNAY, FE
ESPERANZA C. GERONG, MANUEL E. HERRERA, JOSELITO J.
GONZAGA, ULDARTCO D. PEDIDA, ROSALINA JULIET B.
LOQUELLANO, MARCIAL F. GONZAGA, MERCEDES R. PAULE,
JOSE TEODORO A. MOTUS, BLANCHE D. MOTUS, DAISY M.
FAGUTAO, ANTONIO A. DEL ROSARIO, EMMANUEL JUSTIN S.
GREY, FRANCISCA DEL MUNDO, JULIETA A. CRUZ, RODRIGO J.
DURANO, CATALINA R. YEE, MENANDRO CALIGAGAN, MAIDA
M. SACRO MILITANTE, LEONILA M. PEREZ, AND EMMA
MATEO, Petitioners, v. NATIONAL LABOR RELATIONS
COMMISSION AND THE HONGKONG & SHANGHAI BANKING
CORPORATION, LTD., Respondents.
DECISION
BERSAMIN, J.:
A strike staged without compliance with the requirements of
Article 2631 of the Labor Code is illegal, and may cause the
termination of the employment of the participating union
officers and members. However, the liability for the illegal strike
is individual, not collective. To warrant the termination of an
officer of the labor organization on that basis, the employer must
show that the officer knowingly participated in the illegal strike.
An ordinary striking employee cannot be terminated based
solely on his participation in the illegal strike, for the employer
must further show that the employee committed illegal acts
during the strike.
The Case
Under appeal is the decision promulgated on January 31, 2002
by the Court of Appeals (CA) in CA-GR. SP No. 56797 entitled The
Hongkong & Shanghai Banking Corporation Employees Union, et
al. v. National Labor Relations Commission and The Hongkong &
Shanghai Banking Corporation, Ltd.,2 which disposed as follows:
WHEREFORE, the instant petition is DISMISSED and the
questioned decision of the National Labor Relations Commission
is AFFIRMED with MODIFICATION.
Private respondent Hongkong & Shanghai Banking Corporation
is ordered to pay each of the following: Isabelo Molo, Elvira
Orlina, Samuel Ellarma, Rosario Flores, Rebecca Fajardo, Ma.
Victoria Luna, Malou Dizon, Ruben Atienza, Melo Gaba, Nelia
Deriada, Fe Esperanza Gerong, Manuel Herrera, Rosalina Juliet
Loquellano, Mercedes Paule, Binche Motus, Antonio del Rosario,
Francisca del Mundo and Maida Militante:
(a) full backwages from the time of their dismissal in 1993 up to
the time this decision becomes final; and
(b) separation pay equivalent to one-half (1/2) month salary for
every year of service up to 1993.
SO ORDERED.3

Also under review is the resolution promulgated on December 9,
2002 whereby the CA denied the petitioners' motion for
reconsideration.4
Antecedents
In the period material to this case, petitioner Hongkong &
Shanghai Banking Corporation Employees Union (Union) was the
duly recognized collective bargaining agent of the rank-and-file
employees of respondent Hongkong & Shanghai Banking
Corporation (HSBC). A collective bargaining agreement (CBA)
governed the relations between the Union and its members, on
one hand, and HSBC effective April 1, 1990 until March 31, 1993
for the non-representational (economic) aspect, and effective
April 1, 1990 until March 31, 1995 for the representational
aspect.5 The CBA included a salary structure of the employees
comprising of grade levels, entry level pay rates and the
individual pays depending on the length of service.6
On January 18, 1993, HSBC announced its implementation of a
job evaluation program (JEP) retroactive to January 1, 1993. The
JEP consisted of a job designation per grade level with the
accompanying salary scale providing for the minimum and
maximum pay the employee could receive per salary level.7 By
letter dated January 20, 1993,8 the Union demanded the
suspension of the JEP, which it labeled as an unfair labor practice
(ULP). In another letter dated January 22, 1993, the Union
informed HSBC that it would exercise its right to concerted
action. On the same day of January 22, 1993, the Union members
started picketing during breaktime while wearing black hats and
black bands on their arms and other appendages.9 In its letter
dated January 25, 1993, HSBC responded by insisting that the
JEP was an express recognition of its obligation under the
CBA.10 The Union's concerted activities persisted for 11
months,11 notwithstanding that both sides had meanwhile
started the re-negotiation of the economic provisions of their
CBA12 on March 5, 1993.13 The continued concerted actions
impelled HSBC to suspend the negotiations on March 19,
1993,14 and to issue memoranda, warnings and reprimands to
remind the members of the Union to comply with HSBC's Code of
Conduct.
Due to the sustained concerted actions, HSBC filed a complaint
for ULP in the Arbitration Branch of the National Labor Relations
Commission (NLRC), docketed as NLRC-NCR Case No. 00-04-
02481-93. The Labor Arbiter's decision was appealed to the
NLRC whose disposition to remand the case to the Labor Arbiter
for further proceedings was in turn assailed. Ultimately, in G.R.
No. 125038 entitled The Hongkong & Shanghai Banking
Corporation Employees Union v. National Labor Relations
Commission and The Hongkong & Shanghai Banking Corporation,
Ltd., the Court affirmed the disposition of the NLRC, and directed
the remand of the case to the Labor Arbiter for further
proceedings.15
The Union conducted a strike vote on December 19, 1993 after
HSBC accorded regular status to Patrick King, the first person
hired under the JEP. The majority of the members of the Union
voted in favor of a strike.16 The following day, the Union served
its letter on HSBC in protest of the continued implementation of
the JEP, and insisted that HSBC's modification of the salary
structure under the JEP constituted ULP.
On December 22, 1993, at around 12:30 p.m., the Union's officers
and members walked out and gathered outside the premises of
HSBC's offices on Ayala Avenue, Makati and Ortigas Center,
Pasig.17 According to HSBC, the Union members blocked the
entry and exit points of the bank premises, preventing the bank
officers, including the chief executive officer, from entering
and/or leaving the premises.18 This prompted HSBC to resort to
a petition for habeas corpus on behalf of its officials and
employees thus prevented from leaving the premises, whom it
airlifted on December 24, 1993 to enable them to leave the bank
premises.19
On December 24, 1993, HSBC filed its complaint to declare the
strike illegal.20 The HSBC also petitioned for injunction (with
prayer for temporary restraining order (TRO)/writ of
prohibitory injunction) in the NLRC, which issued the TRO on
January 6, 1994, and the writ of preliminary injunction on
January 31, 1994.21 On November 22, 2001, the Court upheld the
actions taken in that case in The Hongkong and Shanghai Banking
Corporation Employees Union v. National Labor Relations
Commission and The Hongkong and Shanghai Banking
Corporation Limited.22
In the meantime, HSBC issued return-to-work notices to the
striking employees on December 22, 1993. Only 25 employees
complied and returned to work. Due to the continuing concerted
actions, HSBC terminated the individual petitioners on December
27, 1993.23 The latter, undeterred, and angered by their
separation from work, continued their concerted activities.
Ruling of the Labor Arbiter
On August 2, 1998, Labor Arbiter (LA) Felipe P. Pati declared the
strike illegal for failure of the Union to file the notice of strike
with the Department of Labor and Employment (DOLE); to
observe the cooling-off period; and to submit the results of the
strike vote to the National Conciliation and Mediation Board
(NCMB) pursuant to Article 263 of the Labor Code. He concluded
that because of the illegality of the strike the Union members and
officers were deemed to have lost their employment status. Lie
disposed thusly:
WHEREFORE, premises considered, judgment is hereby
rendered as follows:
chanRoblesvirtualLawlibrary
1. The 22 December 1993 strike conducted by the union is
hereby declared illegal;
2. The following Union officers and members who participated in
the 22 December 1993 strike are hereby deemed to have lost
their employment status as of that date, namely: Dalisay Dela
Chica, Isabelo Molo, Danilo Alonso, Alvar Rosales, Russel Palma,
Imelda Hernandez, Vicente Llacuna, Josefina Ortiguero, Agustin
Iligan, Ma. Asuncion Kimseng, Miguel Sison, Raul Geronimo,
Marilou Cadena, Ana Tamonte, Yolanda Enciso, Avelino Relucio,
Joralyn Gongora, Corazon Albos, Anabella Gozales, Ma. Corazon
Baltazar, Maria Luz Jimenez, Concordio Madayag, Elvira Orlina,
Ma. Lourdes Austria, Josephine Landas, Samuel Ellarma, Rosario
Flores, Editha Broqueza, Marina Sal vac ion, Ma. Cecilia Ocampo,
Rebecca Fajardo, Ma. Victoria Luna, Ma. Theresa Ofelia Galang,
Benigno Amion, Mercedes Castro, Gerardo de Leon, Rowena
Ocampo, Malou Dizon, Juliet Dacumos, Blandina dela Pena,
Ruben Atienza, Ma. Fe Temporal, Mcllo Gaba, Herman
Camposanto, Nelia Deriada, Lolito Hilis, Ma. Dulce Abellar, Grace
Mabunay, Fe Esperanza Gerong, Romeo Tumlos, Sonia Argos,
Manuel Herrera, Joselito Gonzaga, Uldarico Pedida, Cynthia
Calangi, Rosalina Loquellano, Marcial Gonzaga, Mercedes Paule,
Jess Nicolas, Teodoro Motus, Blanche Motus, Daisy Martinez
Fagutao, Antonio del Rosario, Emmanuel Justin Grey, Francisca
del Mundo, Juliet Cruz, Rodrigo Durano, Carmina Rivera, David
Atanacio, Jr., Ofelia Rabuco, Alfred Tan Jr., Catalina Yee,
Menandro Caligaga, Melorio Maida Militante, Antonio Marilon,
and Leonila Peres, Emma Mateo, Felipe Vital, Jr., Mario Fermin,
and Virgilio Reli;
3. The Union, its officers and members are hereby held jointly
and severally liable to pay the Bank the amount of P45,000.00 as
actual damages.
All the other claims for moral and exemplary damages are denied
for lack of merit.
SO ORDERED.24ChanRoblesVirtualawlibrary
Decision of the NLRC
On appeal, the NLRC modified the ruling of LA Pati, and
pronounced the dismissal of the 18 Union members unlawful for
failure of LISBC to accord procedural due process to them, viz.:
xxx [W]e note, however, that as per the submission of the parties,
not all the respondents (members) have been identified by
complainant as having violated the law on free ingress and
egress (i.e., Article 264[e]). A meticulous review of the
testimonies given during trial and a comparison of the same
show that 25 respondents were not named by complainant's
witnesses.
Of the 25, 6 of them (Rabuco, Salvacion, Castro, Dacumos, Calangi
and Nicolas) have already settled with the complainant during
the pendency of the appeal. Of the remaining 19, one respondent
is a union officer (Rivera) while the remaining 18 respondents
(Molo, Orlina, Ellarma, Flores, Fajardo, Luna, Dizon, Atienza,
Gaba, Deriada, Gerong, Herrera, Loquellano, Paule, Motus, Del
Rosario, Mundo and Militante) are neither officers nor members
who have been pinpointed as having committed illegal act[s].
We, therefore, disagree with the Labor Arbiter's generalization
that these 18 respondents have similarly lost their employment
status simply because they participated in or acquiesced to the
holding of the strike.
x x x x
Only insofar as the xxx 18 respondents are concerned, We rule
that complainant did fail to give them sufficient opportunity to
present their side and adequate opportunity to answer the
charges against them. More was expected from complainant and
its observance of due process may not be dispensed with no
matter how brazen and blatant the violation or its rules and
regulations may have perceived. The twin requirement of notice
and hearing in termination cases are as much indispensable and
mandatory as the procedural requirements enumerated in
Article 262 of the Labor Code. In this case, We cannot construe
complainant's notice to return-to-work as substantial
compliance with due process requirement. Binche Motus, Antonio del Rosario, Francisca del Mundo and
Maida Militante.
Contrary however to respondents' insistence that complainant
failed to observe due process in the case of the 18 respondents SO ORDERED.25ChanRoblesVirtualawlibrary
does not mean that they are automatically entitled to backwages
or reinstatement. Consistent with decided cases, these The petitioners filed their motion for reconsideration, but the
respondents are entitled only to indemnity for complainant's NLRC denied their motion.26
omission, specifically to the amount of P5,000.00 each, xxx
Judgment of the CA
As a final word, and only as regard these 18 respondents, We
take note of the fact that they have remained silent spectators, if On certiorari, the CA, through the assailed judgment promulgated
not mere bystanders, in the illegal strike and illegal acts on January 31, 2002,27 deleted the award of indemnity, but
committed by the other individual respondents, and since the ordered HSBC to pay baekwages to the 18 employees in
grounds for which they have been terminated do not involve accordance with Serrano v. National Labor Relations
moral turpitude, the consequences for their acts must Commission,28 to wit:
nevertheless be tempered with some sense of compassion.
In Ruben Serrano v. NLRC and Isetcmn Department Store xxx, the
Consistent with prevailing jurisprudence and in the interest of
Court ruled that an employee who is dismissed, whether or not
social justice, We find the award of separation pay to each of the
for just or authorized cause but without prior notice of his
18 respondents equivalent to one-half (1/2) month salary for
termination, is entitled to full baekwages from the time he was
every year of service as equitable and proper.
terminated until the decision in his case becomes final, when the
dismissal was for cause; and in case the dismissal was without
X X X X
just or valid cause, the backwages shall be computed from the
time of his dismissal until his actual reinstatement. In the case at
WHEREFORE, the decision dated 26 August 1998 is hereby
bar, where the requirement of notice and hearing was not
AFFIRMED with the modification that complainant is ordered to
complied with, the aforecited doctrine laid down in
pay (a) P5,000.00 and (b) one-half (1/2) month salary for every
the Serrano case applies.29
year of service up to December 1993 to each of the following
respondents: Isabelo Molo, Elvira Orlina, Samuel Ellarma,
On motion for reconsideration, the CA reiterated its judgment,
Rosario Flores, Rebecca Fajardo, Ma. Victoria Luna, Malou Dizon,
and denied HSBC's motion to delete the award of backwages.30
Ruben Atienza, Melo Gaba, Nelia Deriada, Fe Esperanza Gerong,
Manuel Herrera, Rosalina Juliet Loquellano, Mercedes Paule.
Hence, this appeal by petition for review on certiorari.

Pending the appeal, petitioners Elvira A. Orlina, Rosario A.
Flores, Ma. Victoria C. Luna, Malou Dizon, Fe Esperanza Gerong,
Francisca del Mundo, and Ruben Atienza separately presented
motions to withdraw as petitioners herein by virtue of their
having individually executed compromise
agreements/quitclaims with HSBC.31 The Court granted all the
motions to withdraw;32 hence, this adjudication relates only to
the remaining petitioners.
Issues
The HSBC is liable for damages for having acted in utter bad faith
by dismissing the petitioners after having previously submitted
the dispute to the NLRC
D
Union officers who did not knowingly participate in the strike do
not lose their employment status
E
The responsibility for illegal acts committed in the course of a
strike is individual and not collective

F
The remaining petitioners raise the following grounds in support
The January 5, 1994 incident does not warrant the dismissal of
of their appeal, namely:
the petitioners involved thereat
I
G
The penalty, if any, imposable on union officers should be
THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW
suspension and not dismissal
IN HOLDING THAT ALL THE PETITIONERS WERE VALIDLY
DISMISSED
II
A
The Court of Appeals cannot selectively apply the right to due
THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW
process in determining the validity of the dismissal of the
IN HOLDING THAT THE STRIKE WAS ILLEGAL
employee
A
B The test of good faith laid down by this Honorable Court is
The refusal to lift the strike upon orders of the HSBC is not just whether the union is of the reasonable belief that the
cause for the dismissal of the employees management was committing an unfair labor practice

C B
The decision as to when to declare the strike is wholly revisited because the amendment under Batas Pambansa Blg.
dependent on the union, and the same cannot negate good faith 227 indicated the legislative intent to ease the restriction on the
right to strike.
C
The Court of Appeals committed grave error in concluding that HSBC counters that the appeal raises factual issues already
this Court had already ruled on the validity of the settled by the CA, NLRC, and the LA, rendering such issues
implementation of the Job Evaluation Program and no longer inappropriate for determination in this appeal; that it was not
considered the evidence presented by petitioners to establish liable for illegal dismissal because the petitioners had willfully
unfair labor practice on the part of the HSBC staged their illegal strike without prior compliance with Article
263 of the Labor Code;34 that the procedural requirements of
D
Article 263 of the Labor Code were mandatory and indispensable
The doctrine automatically making a strike illegal due to non-
conformably with Article 26435 of the Labor Code, which, in
compliance with the mandatory procedural requirements needs
relation to Article 263(c), (d) and (f), expressly made such non-
to be revisited
compliance a prohibited activity; that for this reason Article 264
penalized the Union officers who had participated in the illegal
The petitioners argue that they were illegally dismissed; that the
strike with loss of their employment status;36 that good faith
CA erred in selectively applying the twin notice requirement;
could not be accorded to the petitioners because aside from the
that in the case of the Union officers, there must be a prior
non-compliance with the mandatory procedure, they did not
showing that they had participated in the illegal strike before
present proof to show that the strike had been held for a lawful
they could be terminated from employment, but that HSBC did
purpose, or that the JEP had amounted to ULP, or that they had
not make such showing, as, in fact, petitioners Carmina C. Rivera
made a sincere effort to settle the disagreement;37 and that as far
and Mario T. Fermin were on leave during the period of the
as the 18 employees were concerned, they were entitled only to
strike;33 that they could not be dismissed on the ground of
nominal damages, not backwages, following the ruling in Agabon
insubordination or abandonment in view of participation in a
v. National Labor Relations Commission38 that meanwhile
concerted action being a guaranteed right; that their
modified the doctrine in Serrano v. National Labor Relations
participation in the concerted activities out of their sincere belief
Commission.39
that HSBC had committed ULP in implementing the JEP
constituted good faith to be appreciated in their favor; that their
Two main issues to be resolved are, therefore, namely: (1)
actions merited only their suspension at most, not the extreme
whether the strike commenced on December 22, 1993 was
penalty of dismissal; and that the prevailing rule that non-
lawfully conducted; and (2 whether the petitioners were illegally
compliance with the procedural requirements under the Labor
dismissed.
Code before staging a strike would invalidate the strike should be
Ruling of the Court employment of union officers duly elected in accordance with
the union constitution and by-laws, which may constitute union
We PARTLY GRANT the petition for review on certiorari. busting, where the existence of the union is threatened, the 15-
day cooling off period shall not apply and the union may take
I action immediately.
Non-compliance with Article 263 of the
Labor Code renders a labor strike illegal (d) The notice must be in accordance with such implementing
rules and regulations as the [Secretary] of Labor and
The right to strike is a constitutional and legal right of all Employment may promulgate.
workers because the strike, which seeks to advance their right to
improve the terms and conditions of their employment, is (e) During the cooling-off period, it shall be the duty of the
recognized as an effective weapon of labor in their struggle for a [Department] to exert all efforts at mediation and conciliation to
decent existence. However, the right to strike as a means for the effect a voluntary settlement. Should the dispute remain
attainment of social justice is never meant to oppress or destroy unsettled until the lapse of the requisite number of clays from
the employers. Thus, the law prescribes limits on the exercise of the mandatory filing of the notice, the labor union may strike or
the right to strike.40cralawred the employer may declare a lockout.

Article 263 of the Labor Code specifies the limitations on the (f) A decision to declare a strike must be approved by a majority
exercise of the right to strike, viz.: of the total union membership in the bargaining unit concerned,
obtained by secret ballot in meetings or referenda called for that
Article 263. Strikes, picketing, and lockouts, x x x
purpose. A decision to declare a lockout must be approved by a
majority of the board of directors of the corporation or
x x x x
association or of the partners in a partnership, obtained by
secret ballot in a meeting called for that purpose. The decision
(c) In cases of bargaining deadlocks, the duly certified or
shall be valid for the duration of the dispute based on
recognized bargaining agent may file a notice of strike or the
substantially the same grounds considered when the strike or
employers may file a notice of lockout with the [Department] at
lockout vote was taken. The [Department] may, at its own
least 30 days before the intended date thereof. In cases of unfair
initiative or upon request of any affected party, supervise the
labor practices, the period of notice shall be 15 days and in the
conduct of the secret balloting. In every case, the union or the
absence of a duly certified or recognized bargaining agent, the
employer shall furnish the [Department] the results of the voting
notice of strike may be filed by any legitimate labor organization
at least seven days before the intended strike or lockout, subject
in behalf of its members. However, in case of dismissal from
to the cooling-off period herein provided.
xxxx
The procedural requirements for a valid strike are, therefore, the
following, to wit: (1) a notice of strike filed with the DOLE at
least 30 days before the intended date thereof, or 15 days in case
of ULP; (2) a strike vote approved by the majority of the total
union membership in the bargaining unit concerned, obtained by
secret ballot in a meeting called for that purpose; and (3) a notice
of the results of the voting at least seven days before the
intended strike given to the DOLE. These requirements are
mandatory, such that non-compliance therewith by the union
will render the strike illegal.41
According to the CA, the petitioners neither filed the notice of
strike with the DOLE, nor observed the cooling-off period, nor
submitted the result of the strike vote. Moreover, although the
strike vote was conducted, the same was done by open, not
secret, balloting,42 in blatant violation of Article 263 and Section
7, Rule XIII of the Omnibus Rules Implementing the Labor
Code.43 It is not amiss to observe that the evident intention of the
requirements for the strike-notice and the strike-vote report is
to reasonably regulate the right to strike for the attainment of
the legitimate policy objectives embodied in the law.44 As such,
the petitioners committed a prohibited activity under Article
264(a) of the Labor Code, and rendered their strike illegal.
We underscore that the language of the law itself unmistakably
bears out the mandatory character of the limitations it has
prescribed, to wit:
Art. 264. Prohibited activities. - (a) No labor organization or
employer shall declare a strike or lockout without first having
bargained collectively in accordance with Title VII of this Book
or without first having filed the notice required in the
preceding Article or without the necessary strike or lockout
vote first having been obtained and reported to the
[Department], (emphasis supplied)
xxxx
Accordingly, the petitioners' plea for the revisit of the doctrine to
the effect that the compliance with Article 263 was mandatory
was entirely unwarranted. It is significant to remind that the
doctrine has not been established by judicial declaration but by
congressional enactment. Verba legis non est recedendum.The
words of a statute, when they are clear, plain and free from
ambiguity, must be given their literal meaning and must be
applied without interpretation.45 Had the legislators' intention
been to relax this restriction on the right of labor to engage in
concerted activities, they would have stated so plainly and
unequivocally.
II
Commission of unlawful acts during
the strike further rendered the same illegal
The petitioners insist that all they did was to conduct an orderly,
peaceful, and moving picket. They deny employing any act of
violence or obstruction of HSBC's entry and exit points during
the period of the strike.
The contrary was undeniably true. The strike was far from
orderly and peaceful. HSBC's claim that from the time when the
strike was commenced on December 22, 1993 the petitioners
had on several instances obstructed the ingress into and egress
from its offices in Makati and in Pasig was not competently
disputed, and should thus be accorded credence in the light of
the records. We agree with HSBC, for all the affidavits46 and
testimonies of its witnesses,47 as well as the photographs48 and
the video recordings49 reviewed by LA Pati depicted the acts of
obstruction, violence and intimidation committed by the
petitioners during their picketing. It was undeniable that such
acts of the strikers forced HSBC's officers to resort to unusual
means of gaining access into its premises at one point.50 In this
connection, LA Pati even observed as follows:
[I]t must be pointed out that the Bank has shown by clear and
indubitable evidence that most of the respondents have actually
violated the prescription provided for in paragraph (b) of Article
264 on free ingress and egress. The incident depicted in the
video footage of 05 January 1994, which has been viewed several
times during the trial and even privately, demonstrates beyond
doubt that the picket was a non-moving, stationary one -
nothing less but a barricade. This office is more than
convinced that the respondents, at least on that day, have
demonstrated an abnormally high degree of hatred and
anger at the Bank and its officers (including the Bank's chief
executive officer who fell to the ground as a result of the
pushing and shoving) leading them to do anything to carry
out their resolve not to let anymore inside the
Bank. Additionally, as observed by this Labor Arbiter, the tensed
and disquieting relation between the parties became all the more
apparent during the actual hearings as clearly evident from the
demeanor and actuations of the respondents.51 (Emphasis
supplied)
The situation during the strike actually went out of hand because
of the petitioners' illegal conduct, compelling HSBC to secure an
injunction from the NLRC as well as to file its petition for habeas
corpus in the proper court in the interest of its trapped officers
and employees; and at one point to lease an helicopter to extract
its employees and officers from its premises on the eve of
Christmas Day of 1993.
For sure, the petitioners could not justify their illegal strike by
invoking the constitutional right of labor to concerted actions.
Although the Constitution recognized and promoted their right
to strike, they should still exercise the right within the bounds of
law.52 Those bounds had been well-defined and well-known.
Specifically, Article 264(e) of the Labor Code expressly enjoined
the striking workers engaged in picketing from committing any
act of violence, coercion or intimidation, or from obstructing the
free ingress into or egress from the employer's premises for
lawful purposes, or from obstructing public thoroughfares.53 The
employment of prohibited means in carrying out concerted
actions injurious to the right to property of others could only
render their strike illegal. Moreover, their strike was rendered
unlawful because their picketing which constituted an
obstruction to the free use of the employer's property or the
comfortable enjoyment of life or property, when accompanied by
intimidation, threats, violence, and coercion as to constitute
nuisance, should be regulated.54 In fine, the strike, even if
justified as to its ends, could become illegal because of the means
employed, especially when the means came within the
prohibitions under Article 264(e) of the Labor Code:55
III
Good faith did not avail because of the
patent violation of Article 263 of the Labor Code
The petitioners assert their good faith by maintaining that their
strike was conducted out of their sincere belief that HSBC had
committed ULP in implementing the JEP. They had also hoped
that HSBC would be willing to negotiate matters related to the
JEP considering that the economic aspect of the CBA was set to
expire on March 31, 1993.
We rule out good faith on the part of the petitioners.
The petitioners' disregard of the procedural requirements for
conducting a valid strike negated their claim of good faith. For
their claim to be upheld, it was not enough for them to believe
that their employer was guilty of ULP, for they must also
sufficiently show that the strike was undertaken with a modicum
of obeisance to the restrictions on their exercise of the right to
strike prior to and during its execution as prescribed by the law.
They did not establish their compliance with the requirements
specifically for the holding of the strike vote and the giving of the
strike notice.56
The petitioners should entirely bear the consequence of their
non-compliance with the legal requirements. As we said
in Pilipino Telephone Corporation v. Pilipino Telephone Employees
Association (PILTEA):57
[W]e do not find any reason to deviate from our rulings in Gold
City Integrated Port Service, Inc. and Nissan Motors Philippines,
Inc. It bears emphasis that the strike staged by the Union in the
instant case was illegal for its procedural infirmities and for
defiance of the Secretary's assumption order. The CA, the NLRC
and the Labor Arbiter were unanimous in finding that bad faith
existed in the conduct of the subject strike. The relevant portion
of the CA Decision states:
chanRoblesvirtualLawlibrary
xxx We cannot go to the extent of ascribing good faith to the
means taken in conducting the strike. The requirement of the
law is simple, that is 1. Give a Notice of Strike; 2. Observe the
cooling period; 3. Observe the mandatory seven day strike ban;
3. If the act is union busting, then the union may strike doing
away with the cooling-off period, subject only to the seven-day
strike ban. To be lawful, a strike must simply have a lawful
purpose and should be executed through lawful means. Here,
the union cannot claim good faith in the conduct of the
strike because, as can be gleaned from the findings of the
Labor Arbiter, this was an extensively coordinated strike
having been conducted all throughout the offices of PILTEL
all over the country. Evidently, the strike was planned.
Verily, they cannot now come to court hiding behind the shield of
"good faith." Be that as it may, petitioners claim good faith only
in so far as their grounds for the strike but not on the conduct of
the strike. Consequently, they still had to comply with the
procedural requirements for a strike, which, in this case, they
failed to do so.58ChanRoblesVirtualawlibrary
IV
The finding on the illegal strike did not justify the
wholesale termination of the strikers from employment
The next issue to resolve is whether or not HSBC lawfully
dismissed the petitioners for joining the illegal strike.
As a general rule, the mere finding of the illegality of the strike
does not justify the wholesale termination of the strikers from
their employment.59 To avoid rendering the recognition of the
workers' right to strike illusory, the responsibility for the illegal
strike is individual instead of collective.60 The last paragraph of
Article 264(a) of the Labor Code defines the norm for terminating
the workers participating in an illegal strike, viz.:
Article 264. Prohibited Activities -xxx
x x x x
Any worker whose employment has been terminated as a
consequence of any unlawful lockout shall be entitled to
reinstatement with full backwages. Any union officer who
knowingly participates in an illegal strike and any worker
or union officer who knowingly participates in the
commission of illegal acts during a strike may be declared to
have lost his employment status: Provided, That mere
participation of a worker in a lawful strike shall not constitute
sufficient ground for termination of his employment, even if a
replacement had been hired by the employer during such lawful
strike, (emphasis supplied)
Conformably with Article 264, we need to distinguish between
the officers and the members of the union who participate in an
illegal strike. The officers may be deemed terminated from their
employment upon a finding of their knowing participation in the
illegal strike, but the members of the union shall suffer the same
fate only if they are shown to have knowingly participated in the
commission of illegal acts during the strike. Article 264 expressly
requires that the officer must have knowingly participated in the
illegal strike. We have explained this essential element in Club
Filipino, Inc. v. Bautista,61 thusly:
Note that the verb "participates" is preceded by the adverb
"knowingly." This reflects the intent of the legislature to require
"knowledge" as a condition sine qua non before a union officer
can be dismissed from employment for participating in an illegal
strike. The provision is worded in such a way as to make it very
difficult for employers to circumvent the law by arbitrarily
dismissing employees in the guise of exercising management
prerogative. This is but one aspect of the State's constitutional
and statutory mandate to protect the rights of employees to self-
organization.62
The petitioners assert that the CA erroneously affirmed the
dismissal of Carmina Rivera and Mario Fermin by virtue of their
being officers of the Union despite lack of proof of their having
participated in the strike.
The assertion is partly correct.
In the case of Fermin, HSBC did not satisfactorily prove his
presence during the strike, much less identify him as among the
strikers. In contrast, Union president Ma. Dalisay dela Chica
testified that Fermin was not around when the Union's Board
met after the strike vote to agree on the date of the strike.63 In
that regard, Corazon Fermin, his widow, confirmed the Union
president's testimony by attesting that her husband had been on
leave from work prior to and during the strike because of his
heart condition.64Although Corazon also attested that her
husband had fully supported the strike, his extending moral
support for the strikers did not constitute sufficient proof of his
participation in the strike in the absence of a showing of any
overt participation by him in the illegal strike. The burden of
proving the overt participation in the illegal strike by Fermin
solely belonged to HSBC, which did not discharge its burden.
Accordingly, Fermin, albeit an officer of the Union, should not be
deemed to have lost his employment status.
However, the dismissal of Rivera and of the rest of the Union's
officers, namely: Ma. Dalisay dela Chica, Marvilon Militante and
David Atanacio, is upheld. Rivera admitted joining the picket line
on a few occasions.65 Dela Chica, the Union president, had
instigated and called for the strike on December 22, 1993.66 In
addition, HSBC identified Dela Chica67 and Militante68 as having
actively participated in the strike. Their responsibility as the
officers of the Union who led the illegal strike was greater than
the responsibility of the members simply because the former had
the duty to guide their members to obey and respect the
law.69 When said officers urged and made their members violate
the law, their dismissal became an appropriate penalty for their
unlawful act.70 The law granted to HSBC the option to dismiss the
officers as a matter of right and prerogative.71
Unlike the Union's officers, the ordinary striking members could
not be terminated for merely taking part in the illegal strike.
Regardless of whether the strike was illegal or not, the dismissal
of the members could be upheld only upon proof that they had
committed illegal acts during the strike. They must be
specifically identified because the liability for the prohibited acts
was determined on an individual basis.72For that purpose,
substantial evidence available under the attendant
circumstances justifying the penalty of dismissal sufficed.73
We declare the illegality of the termination of the employment of
the 18 members of the Union for failure of HSBC to prove that
they had committed illegal acts during the strike. We also declare
that Daisy Fagutao was unlawfully dismissed because HSBC did
not adduce substantial evidence establishing her presence and
her commission of unlawful acts during the strike.
We clarify that the 18 employees, including Fagutao and Union
officer Fermin, were illegally dismissed because of lack of any
valid ground to dismiss them, and for deprivation of procedural
due process. Thus, we take exception to that portion of the NLRC
ruling that held:
We here note that all of the herein named respondents were
terminated by complainant for reasons other than their holding
of an participation in the illegal strike. Specifically, the grounds
for their termination were enumerated in the notices of
termination sent out by complainant as follows: abandonment,
insubordination and seriously hampering operations. To Our
mind, the complainant in the exercise of its management
prerogative, had every reason to discipline these respondents for case.
their disregard of the complainant's return-to-work order and
for the damage sustained by reason thereof. Although these 18 As to abandonment, two requirements need to be established,
respondents did not commit any illegal act during the strike, We namely: (1) the failure to report for work or absence must be
can not simply ignore the fact that they nonetheless breached without valid or justifiable reason; and (2) there must be a clear
complainant's rules and regulations and which acts serve as intention to sever the employer-employee relationship. The
valid causes to terminate their employment. These respondents second element is the more decisive factor and must be
took a risk when they refused to heed complainant's lawful order manifested by overt acts.78 In that regard, the employer carries
and knowingly caused damage and prejudice to complainant's the burden of proof to show the employee's deliberate and
operations; they should be prepared to take the consequences unjustified refusal to resume his employment without any
and be held accountable for their actions. Whether or not intention of returning.79 However, the petitioners
complainant observed due process prior to the termination of unquestionably had no intention to sever the employer-
these respondents is however a totally different employee relationship because they would not have gone to the
matter.74ChanRoblesVirtualawlibrary trouble of joining the strike had their purpose been to abandon
their employment.80
We hold that said employees' right to exercise their right to
concerted activities should not be defeated by the directive of Moreover, we cannot subscribe to the view that the striking
HSBC for them to report back to work. Any worker who joined employees should be dismissed for having seriously hampered
the strike did so precisely to assert or improve the terms and and damaged HSBC's operations. In this aspect of the case, HSBC
conditions of his work.75 Otherwise, the mere expediency of did not discharge its burden to prove that the acts of the
issuing the return to work memorandum could suffice to stifle employees constituted any of the just causes under the Labor
the constitutional right of labor to concerted actions. Such Code or were prohibited under the company's code of conduct as
practice would vest in the employer the functions of a strike to warrant their dismissal.
breaker,76 which is prohibited under Article 264(c) of the Labor
Code. V
Non-compliance with due process resulted
The petitioners' refusal to leave their cause against HSBC in illegal dismissal; the employer's liability
constituted neither insubordination nor abandonment. For depended on the availing circumstances
insubordination to exist, the order must be: (1) reasonable and
lawful; (2) sufficiently known to the employee; and (3) in While Article 264 authorizes the termination of the union
connection to his duties.77 None of these elements existed in this officers and employees, it does not remove from the employees
their right to due process. Regardless of their actions during the
strike, the employees remain entitled to an opportunity to
explain their conduct and why they should not be penalized.
In Suico v. National Labor Relations Commission,81 we have
reiterated the need for the employers to comply with the twin-
notice requirement despite the cause for the termination arising
from the commission of the acts prohibited by Article 264, thus:
Art. 277(b) in relation to Art. 264(a) and (e) recognizes the right
to due process of all workers, without distinction as to the cause
of their termination. Where no distinction is given, none is
construed. Hence, the foregoing standards of due process apply
to the termination of employment of Suico, et al. even if the cause
therefor was their supposed involvement in strike-related
violence prohibited under Art. 264 (a) and (e).82
Consequently, failure of the employer to accord due process to
its employees prior to their termination results in illegal
dismissal.
The petitioners maintain that the CA applied the twin-notice
requirement in favor of the 18 employees. HSBC disagrees,
claiming instead that the award of backwages in favor of said
employees should be modified following Agabon.
We partially agree with both parties.
Article 277(b)83 of the Labor Code mandates compliance with the
twin-notice requirement in terminating an employee, viz.:
Article 277. Miscellaneous Provisions.
x x x x
(b) Subject to the constitutional right of workers to security of
tenure and their right to be protected against dismissal except
for a just and authorized cause and without prejudice to the
requirement of notice under Article 283 of this Code, the
employer shall furnish the worker whose employment is
sought to be terminated a written notice containing a
statement of the causes for termination and shall afford the
latter ample opportunity to be heard and to defend himself
with the assistance of his representative, if he so desires, in
accordance with company rules and regulations promulgated
pursuant to guidelines set by the Department of Labor and
Employment, x x x (Emphasis supplied)
In King of Kings Transport, Inc. v. Mamac,84 we have laid down the
contents of the notices to be served upon an employee prior to
termination, as follows:
(1) The first written notice to be served on the employees should
contain the specific causes or grounds for termination against
them, and a directive that the employees are given the
opportunity to submit their written explanation within a
reasonable period. "Reasonable opportunity" under the Omnibus
Rules means every kind of assistance that management must
accord to the employees to enable them to prepare adequately
for their defense. This should be construed as a period of at least
five (5) calendar days from receipt of the notice to give the
employees an opportunity to study the accusation against them,
consult a union official or lawyer, gather data and evidence, and
- decide on the defenses they will raise against the complaint.
Moreover, in order to enable the employees to intelligently
prepare their explanation and defenses, the notice should
contain a detailed narration of the facts and circumstances that
will serve as basis for the charge against the employees. A
general description of the charge will not suffice.
Lastly, the notice should specifically mention which
company rules, if any, are violated and/or which among the
grounds under Art. 282 is being charged against the
employees.
banking hours on the day immediately following knowledge
or receipt of this notice. Should you report for work no
disciplinary action shall be imposed on you. Ibis is without
prejudice to any action the Bank may take against the Union.
Should you fail to report back for work within the period
abovestated, the Bank shall be forced to terminate your
employment and take all appropriate measures to continue
serving its clients.86

x x x x
(3) After determining that termination of employment is
justified, the employers shall serve the employees a written
notice of termination indicating that: (1) all circumstances
involving the charge against the employees have been
considered; and (2) grounds have been established to justify
the severance of their employment.85(Emphasis supplied)
HSBC admitted issuing two pro forma notices to the striking
employees. The first notice, sent on December 22, 1993, reads as
follows:
As the notice indicates, HSBC did not fully apprise the strikers of
the ground under the Labor Code that they had supposedly
violated. It also thereby deprived them the ample opportunity to
explain and justify their actions. Instead, it manifested therein its
firm resolve to impose the extreme penalty of termination
should they not comply with the order. Plainly, the tenor of the
notice was short of the requirements of a valid first notice.
The second notice was as follows:
Re: NOTICE OF TERMINATION
__________________________________________________________

Re: NOTICE OF RETURN TO WORK On_________ , 1993, you and a majority of the rank-and-file staff
__________________________________________________ "walked out" by leaving your respective work stations without
prior leave and failed to return.
On ___________________ at ________ o'clock in the morning/afternoon,
you "walked-out" by leaving your assigned work station without You were directed to report back for work when a copy of the
prior permission/leave during work hours. Bank's Memorandum/Notice to Return to Work
dated________________ 1993 was:
You arc hereby directed to report back for work at the start of
1. [ ] Posted on the Bank's premises on_______________
2. [ ] served on your (sic) personally on____________________.
3. [ ] delivered to your last known address on file with the Bank
and received by you (your representative) on
Despite being directed to return to work, you have failed to
comply.
Your "walk-out" is an illegal act amounting to abandonment,
insubordination, and seriously hampering and damaging the
bank's operations. Consequently, your employment with the
Bank is terminated effective ____________________, 1993.87
The second notice merely ratified the hasty and unilateral
decision to terminate the petitioners without the benefit of a
notice and hearing. Hence, this notice should be struck down for
having violated the right of the affected employees to due
process.
The failure by HSBC to strictly observe the twin-notice
requirement resulted in the illegal dismissal. However, the
extent of its liability should depend on the distinct circumstances
of the employees.
HSBC should be held liable for two types of illegal dismissal
the first type was made without both substantive and procedural
due process, while the other was based on a valid cause but
lacked compliance with procedural due process. To the first type
belonged the dismissal of Fermin, Fagutao and the 18 employees
initially identified by the NLRC, while the second type included
the rest of the petitioners.
HSBC maintains that the dismissed 18 employees should not be
entitled to backwages in conformity with Agabon.
We disagree. Agabon involved the second type of dismissal, not
the first type to which the 18 employees belonged. The rule for
employees unlawfully terminated without substantive and
procedural due process is to entitle them to the reliefs provided
under Article 27988 of the Labor Code, that is, reinstatement
without loss of seniority rights and other privileges and to his
full backwages, inclusive of allowances, and other benefits or
their monetary equivalent computed from the time the
compensation was withheld up to the time of actual
reinstatement. However, the award of baekwages is subject to
the settled policy that when employees voluntarily go on strike,
no baekwages during the strike shall be awarded.89
As regards reinstatement, the lapse of 22 years since the strike
now warrants the award of separation pay in lieu of
reinstatement, the same to be equivalent of one (1) month for
every year of service.90Accordingly, Fermin who did not
participate in the strike, should be paid full baekwages plus
separation pay of one (1) month per year of service, while
petitioners Isabelo Molo, Samuel Ellarma, Rebecca Fajardo, Melo
Gaba, Nelia Deriada, Manuel Herrera, Rosalina Juliet Loquellano,
Mercedes Paule, Blanche Motus, Antonio del Rosario, Maida
Militante and Daisy Fagutao, who admitted their participation in
the strike, were entitled to baekwages except during the period
of the strike, and to separation pay of one (1) month per year of
service in lieu of reinstatement.
In Agabon, we said that a dismissal based either on a just or
authorized cause but effected without due process should be
upheld. The employer should be nonetheless liable for non-
compliance with procedural due process by paying indemnity in
the form of nominal damages amounting to P30,000.00.
In view of the non-observance of procedural due process by
HSBC, the following petitioners should be entitled to nominal
damages of P30,000.00 each,91 namely: Ma. Dalisay dela Chica,
Marvilon Militante, David Atanacio, Carmina Rivera, Russel
Palma, Imelda Hernandez, Vicente Llacuna, Josefina A.
Ortiguerro, Ma. Asuncion Kimseng, Miguel R. Sison, Raul P.
Geronimo, Marilou Cadena, Ana Tamonte, Avelino Relucio,
Joralyn Gongora, Corazon Albos, Anabella Gonzales, Ma. Corazon
Baltazar, Maria Luz Jimenez, Editha Broqueza, Ma. Theresa
Galang, Benigno Amoin, Gerardo de Leon, Rowena Ocampo,
Hernan Camposanto, Lolito Hilis, Grace Mabunay, Joselito
Gonzaga, Uldarico Pedida, Marcial Gonzaga, Jose Teodoro Motus,
Emmanuel Justin Grey, Julieta Cruz, Rodrigo Durano, Catalina
Yee, Menandro Caligagan, Leonila Perez, and Emma Mateo.
ACCORDINGLY, the Court AFFIRMS the decision promulgated
on January 31, 2002 in CA-G.R. SP No. 56797
with MODIFICATION that respondent Hongkong & Shanghai
Banking Corporation (HSBC) shall pay:
1. Mario S. Fermin, full backwages and separation pay
equivalent to one (1) month per year of service in lieu of
reinstatement;
2. Isabelo Molo, Samuel Ellarma, Rebecca Fajardo, Melo
Gaba, Nelia Deriada, Manuel Herrera, Rosalina Juliet
Loquellano, Mercedes Paule, Blanche Motus, Antonio del
Rosario, Maida Militante and Daisy Fagutao, backwages
except during the period of the strike, and separation pay
equivalent to one (1) month per year of service in lieu of
reinstatement; and
3. Ma. Dalisay dela Chica, Marvilon Militante, David
Atanacio, Carmina Rivera, Russel Palma, Imelda
Hernandez, Vicente Llacuna, Josefina A. Ortiguerro, Ma.
Asuncion Kimseng, Miguel R. Sison, Raul P. Geronimo,
Marilou Cadena, Ana Tamonte, Avelino Relucio, Joralyn
Gongora, Corazon Albos, Anabella Gonzales, Ma. Corazon
Baltazar, Maria Luz Jimenez, Editha Broqueza, Ma.
Theresa Galang, Benigno Amion, Gerardo de Leon,
Rowena Ocampo, Hernan Camposanto, Lolito Hilis, Grace
Mabunay, Joselito Gonzaga, Uldarico Pedida, Marcial
Gonzaga, Jose Teodoro Motus, Emmanuel Justin Grey,
Julieta Cruz, Rodrigo Durano, Catalina Yee, Menandro
Caligagan, Leonila Perez and Emma Mateo, indemnity in
the form of nominal damages in the amount of
P30,000.00 each.
No pronouncement as to costs.
SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
January 11, 2016
G.R. No. 178501
NILO S. RODRIGUEZ, FRANCISCO T. ALISANGCO, BENJAMIN T.
ANG, VICENTE P. ANG, SILVESTRE D. ARROYO, RUDERICO C.
BAQUIRAN, WILFREDO S. CRUZ, EDMUNDO M. DELOS REYES,
JR., VIRGILIO V. ECARMA, ISMAEL F. GALISIM, TITO F.
GARCIA, IBERATO D. GUTIZA, GLADYS L. JADIE, LUISITO M.
JOSE, PATERNO C. LABUGA, JR. NOEL Y. LASTIMOSO, DANILO
C. MATIAS, BEN T. MATURAN, VIRGILIO N. OCHARAN,
GABRIEL P. PIAMONTE, JR., ARTURO A. SABADO, MANUEL P.
SANCHEZ, MARGOT A. CORPUS as the surviving spouse of the
deceased ARNOLD S. CORPUS, and ESTHER VICTORIA A.
ALCANESES as the surviving spouse of the deceased EFREN S.
ALCANESES, Petitioners,
vs.
PHILIPPINE AIRLINES, INC., AND NATIONAL LABOR
RELATIONS COMMISSION, Respondents.
x-----------------------x
G.R. No. 178510
PHILIPPINE AIRLINES, INC., Petitioner,
vs.
NILO S. RODRIGUEZ, FRANCISCO T. ALISANGCO, BENJAMIN T.
ANG, VICENTE P. ANG, SILVESTRE D. ARROYO, RUDERICO C.
BAQUIRAN, ARNOLD* S. CORPUS, WILFREDO S. CRUZ,
EDMUNDO M. DELOS REYES, JR., VIRGILIO V. ECARMA,
ISMAEL F. GALISIM, TITO F. GARCIA, LIBERATO D. GUTIZA,
GLADYS L. JADIE, LUISITO M. JOSE, PATERNO C. LABUGA, JR.,
NOEL Y. LASTIMOSO, DANILO C. MATIAS, BEN T. MATURAN,
VIRGILIO N. OCHARAN, GABRIEL M. PIAMONTE, JR.,
RODOLFO O. POE, JR., ARTURO A. SABADO, MANUEL P.
SANCHEZ, and ESTHER VICTORIA A. ALCAESES, as the Sole
Heir of the Deceased EFREN S. ALCAESES, Respondents.
DECISION
LEONARDO-DE CASTRO, J.:
Before the Court are two consolidated Petitions for Review
on Certiorari under Rule 45 of the Revised Rules of Court
assailing the Decision1 dated November 30, 2006 and Resolution
dated June 8, 2007 of the Court of Appeals in CA-G.R. SP No.
71190.
The petitioners in G.R. No. 178501 are 24 former pilots of
Philippine Airlines, Inc. (PAL), namely, Nilo S. Rodriguez
(Rodriguez), Francisco T. Alisangco (Alisangco ), Benjamin T.
Ang, Vicente P. Ang, Silvestre D. Arroyo (Arroyo), Ruderico C.
Baquiran (Baquiran), Wilfredo S. Cruz, Edmundo M. Delos Reyes,
Jr. (Delos Reyes), Virgilio V. Ecarma (Ecanna), Ismael F. Galisim
(Galisim), Tito F. Garcia (Garcia), Liberato D. Gutiza (Gutiza),
Gladys L. Jadie (Jadie), Luisito M. Jose (Jose), Paterno C. Labuga,
Jr. (Labuga), Noel Y. Lastimoso (Lastimoso), Danilo C. Matias
(Matias), Ben T. Maturan (Maturan), Virgilio N. Ocharan
(Ocharan), Gabriel M. Piamonte, Jr. (Piamonte), Arturo A. Sabado
(Sabado), Manuel P. Sanchez (Sanchez), Margot A. Corpus as the
surviving spouse of the deceased Arnold S. Corpus (Corpus), and
Esther Victoria A. Alcafieses as the surviving spouse of the
deceased Efren S. Alcafieses (Alcafieses ), hereinafter collectively
referred to as Rodriguez, et al., deemed by PAL to have lost their
employment status for taking part in the illegal strike in June
1998.
The petitioner in G.R. No. 178510 is PAL, a domestic corporation
organized and existing under the laws of the Republic of the
Philippines, operating as a common carrier transporting
passengers and cargo through aircraft. PAL named Rodriguez, et
al. and Rodolfo O. Poe (Poe) as respondents in its Petition.
In its assailed Decision, the Court of Appeals: (1) reversed the
Decision dated November 6, 2001 of the National Labor
Relations Commission (NLRC) in NLRC NCR CA No. 027348-01
which declared the loss of employment of Rodriguez, et
al. (except for Jadie) to be in accordance with law; and (2)
reinstated the Decision dated December 11, 2000 of the Labor
Arbiter in NLRC NCR Case No. 00-06-06290-99 which held PAL
liable for the illegal dismissal of Rodriguez, et al. but with the
modifications directing PAL to pay the pilots their separation pay
in lieu of reinstatement and deleting the awards for moral and
exemplary damages and attorney's fees.
Rodriguez, et al., pray that the Court partially reverse the
judgment of the Court of Appeals by ordering their reinstatement
with backwages and restoring the awards for moral and
exemplary damages and attorney's fees; while PAL petitions that
the same judgment be completely annulled and set aside.
The relevant facts of the case are as follows:
On December 9, 1997, the Airline Pilots Association of the
Philippines (ALP AP) filed with the National Conciliation and
Mediation Board (NCMB) a Notice of Strike, docketed as NCMB
NCR NS 12-514-97 (Strike Case), on the grounds of unfair labor
practice and union-busting by PAL.2
By virtue of the authority vested upon him under Article
263(g)3 of the Labor Code of the Philippines (Labor Code), the
Secretary4 of the Department of Labor and Employment (DOLE)
assumed jurisdiction over the Strike Case, and issued an
Order5 on December 23, 1997 prohibiting all actual and
impending strikes and lockouts. On May 25, 1998, the DOLE
Secretary issued another Order6 reiterating the prohibition
against strikes and lockouts.
Despite the abovementioned Orders of the DOLE Secretary,
ALPAP filed a second Notice of Strike on June 5, 1998 and staged
a strike on the same day at around 5:30 in the afternoon. The
DOLE Secretary immediately called PAL and ALP AP for
conciliation conferences on June 6 and 7, 1998 to amicably settle
the dispute between them.7 After his efforts failed, the DOLE
Secretary issued an Order8 on June 7, 1998 (Return-to-Work
Order) with the following directive:
WHEREFORE, FOEGOING PREMISES CONSIDERED, all striking
officers and members of ALP AP are hereby ordered to return to
work within twenty-four (24) hours from receipt of this Order
and for PAL management to accept them under the same terms
and conditions of employment prior to the strike.
Our directive to both parties to cease and desist from committing
any and all acts that will exacerbate the situation is hereby
reiterated.9
On June 26, 1998, the members of ALP AP reported for work but
PAL did not accept them on the ground that the 24-hour period
for the strikers to return set by the DOLE Secretary in his Return-
to-Work Order had already lapsed, resulting in the forfeiture of
their employment.
Consequently, ALPAP filed with the NLRC on June 29, 1998 a
Complaint10 for illegal lockout against PAL, docketed as NLRC
NCR Case No. 00-06-05253-98 (Illegal Lockout Case). ALP AP
averred that after its counsel received the Return-to-Work Order
on June 25, 1998, its members reported back to work on June 26,
1998 in compliance with the 24-hour period set in the said
Order. ALP AP prayed that PAL be ordered to unconditionally
accept its members back to work and pay the salaries and other
benefits due them. On August 21, 1998, the Acting Executive
Labor Arbiter ordered the consolidation of the Illegal Lockout
Case with the Strike Case pending before the DOLE Secretary.11
The DOLE Secretary12 issued a Resolution13 on June 1, 1999 in
the consolidated Strike and Illegal Lockout Cases, with a
dispositive portion that reads:
WHEREFORE, PREMISES CONSIDERED, this Office hereby:
xxxx
b. DECLARES the strike conducted by ALPAP on June 5, 1998 and
thereafter illegal for being procedurally infirm and in open
defiance of the return-to-work order of June 7, 1998 and
consequently, the strikers are deemed to have lost their
employment status; and
c. DISMISSES the complaint for illegal lockout for lack of merit.14
ALP AP filed a Motion for Reconsideration but it was denied by
the DOLE Secretary in a Resolution dated July 23, 1999.15
ALP AP assailed the foregoing Resolutions dated June 1, 1999
and July 23, 1999 of the DOLE Secretary in the consolidated
Strike and Illegal Lockout Cases in a Petition for Certiorari under
Rule 65 of the Revised Rules of Court filed before the Court of
Appeals and docketed as CA-G.R. SP No. 54880. The appellate
court dismissed said Petition in a Decision16 dated August 22,
2001. ALP AP elevated the case to this Court by filing a Petition
for Certiorari, bearing the title "Airline Pilots Association of the
Philippines v. Philippine Airlines, Inc." docketed as G.R. No.
152306 (1st ALP AP case). The Court dismissed the Petition of
ALP AP in a minute Resolution17 dated April 10, 2002 for failure
of ALPAP to show grave abuse of discretion on the part of the
appellate court. Said Resolution dismissing the Ft ALPAP
case became final and executory on August 29, 2002.18
Meanwhile, 32 ALP AP members, consisting of Rodriguez, et
al., Poe, Nino B. Dela Cruz (Dela Cruz), Baltazar B. Musong
(Musong), Elmer F. Pefia (Pefia), Cesar G. Cruz, Antonio 0. Noble,
Jr. (Noble), Nicomen H. Versoza, Jr. (Versoza), and Ryan Jose C.
Hinayon (Hinayon), hereinafter collectively referred to as
complainants - with varying ranks of captain, first officer, and
second officer19 - filed with the NLRC on June 7, 1999 a
Complaint20 for illegal dismissal against PAL, docketed as NLRC-
NCR Case No. 00-06-06290-99 (Illegal Dismissal Case). The
Complaint stated three causes of action, to wit:
CAUSES OF ACTION
A. ILLEGAL DISMISSAL in that [PAL] terminated the
employment of the above-named complainants on 7 June 1998
(except for complainant Liberato D. Gutiza, who was dismissed
on 6 June 1998) for their alleged participation in a strike staged
by ALP AP at the Philippine Airlines, Inc. commencing on 5 June
1998 when in truth and in fact:
(i) Complainants EFREN S. ALCAESES, VICENTE
P. ANG, BENJAMIN T. ANG, SILVESTRE D.
ARROYO, LIBERA TO D. GUTIZA, LUISITO M. JOSE,
DANILO C. MATIAS, GABRIEL M. PIAMONTE, JR.,
MANUEL P. SANCHEZ, and NICOMEN H.
VERSOZA, JR. actually reported for work and
duly discharged all their duties and
responsibilities as pilots by flying their
assigned equipment and completing their
respective flights to their specified destinations,
as scheduled;
(ii) Complainants GLADYS L. JADIE and BEN T.
MATURAN, having been on duly approved and
scheduled medical leaves, were authorized and
permitted to absent themselves from work on 5
June 1998 up to the termination of their
employment on 7 June 1998, complainant JADIE
being then on maternity leave and grounded as
she was already in her ninth month of pregnancy,
while complainant MATURAN was recuperating
from a laparotomy and similarly medically
grounded until 15 June 1998;
(iii) Complainants EDMUNDO M. DELOS REYES,
JR., BALTAZAR B. MUSONG, ANTONIO O. NOBLE,
JR., ELMER F. PENA, and ARTURO A. SABADO
were not required to work and were legally
excused from work on 5 June 1998 up to the
termination of their employment on 7 June 1998
as they were on their annual vacation leaves as
approved and pre-scheduled by [PAL] as early as
December 1997 conformably with Company
policy and practice on vacation leave scheduling;
(iv) Complainants NILO S. RODRIGUEZ,
RUDERICO C. BAQUIRAN, ARNOLD S. CORPUS,
CESAR G. CRUZ, WILFREDO S. CRUZ, NINO B.
DELA CRUZ, VIRGILIO V. ECARMA, ISMAEL F.
GALISIM, TITO F. GARCIA, RYAN JOSE C. HINA
YON, PATERNO C. LABUGA, JR., NOEL Y.
LASTIMOSO, RODOLFO 0. POE and VIRGILIO N.
OCHARAN were likewise not required to work
and were legally excused from work on 5 June
1998 up to the termination of their employment
 on 7 June 1998 as they were off duty and did not 2. Productivity pay
have any scheduled flights based on the June
1998 monthly flights schedules issued to them by 3. Transportation allowance
[PAL] in May 1998; and
4. Rice subsidy
(v) Complainant FRANCISCO T. ALISANGCO
was serving a seven-day suspension and, thus, 5. Retirement Fund
not required to work from 4 June 1998 to 10 June
1998 under Memorandum of Suspension, dated 5 6. Pilots Occupational Disability Fund
May 1998.
7. Vacation leave
negating that there was any stoppage of work or refusal to
return to work on the part of the above-named complainants, as 8. Sick leave
was made the basis of the termination of their employment by
[PAL] on 7 June 1998 (6 June 1998 for complainant Gutiza), due 9. Unutilized days off
solely to their union affiliation and membership.
10. Trip leave
FURTHER, [PAL] denied the above-named complainants due
process in the termination of their employment in that it failed to 11. Trip passes
notify them in writing of the charges against them, did not give
C. DAMAGES
them any opportunity to be heard and to explain their side at an
administrative investigation, and to date, has not served them
1. Actual Damages
with any formal notice of the termination of their employment
and the cause or causes therefor.
2. Moral Damages
THUS, [PAL] summarily effected the dismissal of the
3. Exemplary Damages
abovenamed complainants without just or lawful cause.
4. Attorney's Fees
B. NON-PAYMENT OF SALARIES AND OTHER BENEFITS
5. Cost of Suit.21
1. Basic or guaranteed pay
Complainants alleged that they were not participants of the June
5, 1998 strike of ALP AP and that they had no obligation to
comply with the Return-to-Work Order of the DOLE Secretary.
PAL terminated complainants from employment together with
the strikers who disobeyed the Return-to-Work Order, even
though complainants had valid reasons for not reporting for
work.
Complainants, except for Gutiza,22 further asserted that PAL did
not observe the twin requirements of notice and hearing in
effecting their termination; that PAL refused to admit them when
they reported for work on June 26, 1998; and that PAL, which
long planned to reduce its fleet and manpower, took advantage
of the strike by dismissing its pilots en masse. Complainants thus
prayed for reinstatement to their former positions without loss
of seniority rights; backwages and other monetary claims; and
moral and exemplary damages, and attorney's fees.
In its Motion to Dismiss and/or Position Paper for
Respondent,23 PAL averred that the Complaint for illegal
dismissal is an offshoot of the Strike and Illegal Lockout Cases
wherein the DOLE Secretary already adjudged with finality that
the striking pilots lost their employment for participating in an
illegal strike and/or disobeying the Return-to-Work Order.
Hence, PAL argued that the Complaint was already barred by res
judicata.
In addition, PAL presented the following evidence to refute
complainants' allegation that they were not strikers: (a) the
logbook showing that complainants belatedly complied with the
Return-to-Work Order on June 26, 1998; and (b) the
photographs showing that some of complainants were at the
strike area or picket line, particularly: Maturan, who was
supposed to be on sick leave from June 1 to 15, 1998 but was
seen picketing on June 9, 1998; Delos Reyes, Musong, Noble,
Sabado, and Pea, who were supposed to be on vacation leave
but were seen in the strike area24and who did not report back for
work after their respective vacation leaves ended; Rodriguez,
Baquiran, Corpus, Cesar G. Cruz, Wilfredo S. Cruz, De La Cruz,
Ecarma, Galisim, Garcia, Hinayon, Labuga, Lastimosa, Poe, and
Ocharan, who were off-duty but participated in the strike against
PAL; and Alcaeses, Benjamin T. Ang, Vicente P. Ang, Arroyo,
Gutiza, Jose, Matias, Piamonte, Sanchez, and Versoza who, after
returning from abroad and completing their respective flights,
joined the strike instead of offering their services to PAL who
was in dire need of pilots at that time. As regards Jadie, PAL
contended that she forfeited her employment by failing to report
for work at the end of her maternity leave.
Labor Arbiter Francisco A. Robles (Robles) rendered a
Decision25 on December 11, 2000. According to Labor Arbiter
Robles, the Illegal Dismissal Case may proceed independently
from the Strike and Illegal Lockout Cases:
On the threshold issue of jurisdiction, it is unfortunately a lost
cause for [PAL] to argue that the instant case involves a dispute
already assumed and decided by the Secretary of Labor in
NCMB-NCR-NS-12-514-97 and its related cases. The strike case
resolved by the Labor Secretary is not more and no less than that
- a strike case wherein the validity of ALPAP's declared mass
action on June 5, 1998 is at issue. In contrast, going by the
allegations of the complaint in the instant case, the cause of
action pleaded by complainants against [PAL] are for illegal
dismissal, non-payment of salaries and benefits, and damages,
based precisely on the pivotal fact alleged by complainants that
they are not "strikers" in the eyes of the law and yet had been
inexplicably slapped with termination of their employment along
with the strikers. Not one of the consolidated cases NCMB-NCR-
NS-12-514-97, NCMB-NCR-NS-06-236-98 NLRC-NCR-No. 00-06-
05235-98 shall resolve or has already resolved the instant
termination dispute.
We note that this case has not been ordered consolidated with
the strike case, nor has [PAL] at anytime asked for such
consolidation. The June 1, 1999 Resolution of the Secretary of
Labor in NCMB-NCR-NS-12-514-97, cited by [PAL] as having a
binding effect on complainants do not mention the[ m] at all, or
purport to treat of their peculiar case of being non-strikers
dismissed as strikers. We cannot therefore subscribe to the view
advanced by [PAL] that this is a dispute already assumed by the
Secretary of Labor and decided by him with the affirmance of the
strikers' loss of employment in his June 1, 1999 Resolution in
NCMB-NCR-NS-12-514-97. Complainants should be given their
day in court with respect to their claims herein as there is simply
no basis for assuming that the same have already been resolved
in the strike case.
It is well-settled that as an element of res judicata, there must be
between the first and second action identity of parties, identity of
subject matter and identity of causes of action. (Linzag vs. Court
of Appeals, 291 SCRA 304; Nabus vs. Court of Appeals, G.R. No.
91670, February 7, 1991, 193 SCRA 732; VDA Fish Broker, et al.
vs. NLRC, et al., G.R. Nos. 76142-43, December 27, 1993). The
parties, subject matter and causes of action involved in this case
are so vastly different from those in NCMB-NCR-NS-12-514-97
etc. that it is difficult if not virtually impossible to conceive how
the resolution of such strike case can constitute res judicata in
the case of complainants herein. This Office therefore cannot but
exercise the jurisdiction duly invoked by complainants over this
termination dispute with the filing of their complaint.26
Labor Arbiter Robles then proceeded to resolve the merits of the
case in complainants' favor:
Turning now to the merits of the case, [PAL] has not rebutted
and even admits that complainants' status and individual
circumstances at or about the time of the strike declared on June
5, 1998 are essentially as stated by them in their complaint (i.e.,
that complainants were working or were on leave of absence,
day-off, etc.) and related in further detail in their submitted
individual sworn statements in the case. Since complainants
were concededly working or otherwise excused from work at the
time of the strike, their employment with [PAL] should not have
been prejudiced or affected in any way at all by its occurrence.
Yet [PAL] implemented the mass dismissal of close to 600 pilots,
including complainants, without distinction as to their guilt or
innocence of "striking".
A strike, by definition, is a temporary stoppage of work by the
concerted action of employees as a result of an industrial or
labor dispute (Art. 212 (o) of the Labor Code). It is incongruous
to accuse an employee who was actually working or was excused
from work of "stoppage" of the work he was precisely carrying
out or was not required to perform. [PAL] should have made
these distinctions between the pilots who staged the strike and
those peculiarly situated as complainants (working or excused
from work) before taking action against its employees for the
June 5, 1998 strike, instead of dismissing them in a sweepingly
reckless, arbitrary, and oppressive manner.
Indeed, on the basis of [PAL]'s Return-to-Work Notice and the
DOLE Return-to-Work Order, loss of employment in connection
with the strike was a consequence to be faced only by "PAL pilots
who joined the strike" and "all striking officers and members and
officers (sic) of ALP AP", to whom the warning notices had
expressly been issued. It should not have been made to apply to
complainants, who were working or were not at all supposed to
be working at the time of the strike, and therefore had every
reason to believe that the issuances addressed to "strikers" do
not refer to them. For the same reason, it does not make any
sense to consider complainants as having "defied" the return-to-
work mandate in failing to beat the deadline prescribed for the
strikers. Precisely, complainants were notstrikers.
[PAL] asserts that it "called" on its reserve pilots including
complainants to man its flights when the strike was declared and
in any case complainants should have "offered" their services at
that time because it was in dire need of pilots. However, not a
single piece of evidence was ever presented by [PAL] to prove
that it sent out any rush dispatch messages to complainants, or
even made a telephone call, to upgrade them to active duty or
recall them from their leave of absences/days-off/suspension on
the ground that their services were urgently needed. It being the
responsibility of (PAL] under the CBA to draw up the pilots'
monthly schedule and deploy them on flight assignments, it did
not have to wait for complainants to volunteer manning PAL
flights. [PAL] had the prerogative to change complainants' flight
schedules in accordance with the CBA. It did not exercise this
prerogative. It cannot now blame complainants for the
consequences of its own inaction.
As for [PAL]' s contention that the photographs taken of
complainants at the picket line proves their being "strikers", the
pictures do not show that those who admittedly were working at
the time of the strike were in fact among the picketers at the
Company premises and not on the PAL flights that they claim to
have crewed for. In any case, [PAL] does not take issue with the
working status of the complainants who had flights on or about
June 5, 1998; only that complainants did not report for work
thereafter. On the other. hand, the rest of the complainants were
excused from work. Their "free time" would be meaningless if
they were not at liberty to man the picket line while off-duty
without fear of adverse consequences from their lawful exercise
of their guaranteed rights. It is to be stressed that complainants
have sufficiently shown by their uncontradicted evidence that
they were working or were excused from work during the
material period of the strike until their dismissal. Without more,
the unexplained pictures of the complainants at the picket line
(most of which were taken long after June 9, 1998) cannot be
said to constitute a proven case of "striking."
We further find pertinent the cited cases of Bangalisan vs. Court
of Appeals (276 SCRA 619) and Dela Cruz vs. Court of Appeals
(305 SCRA 303) to the effect that an alleged "striker" who was
excused from work during a strike staged by his co-workers
cannot be penalized with the loss of his employment as a striker
in the absence of his actual participation in the strike since those
who avail of their free time "to dramatize their grievances and to
dialogue with the proper authorities within the bounds of the
law" cannot be held liable for their participation in the mass
action against their employer, this being a valid exercise of their
constitutionally guaranteed rights. Picketers are not necessarily
strikers. If complainants had manned the picket lines at some
time during their off-duty, it was their right to do so. They cannot
be accused of stoppage of work if they do.
As correctly pointed out by complainants, [PAL] certainly had the
records to verify if complainants were in fact striking, working,
or off-duty as of June 5, 1998. Despite this, it precipitately ousted
complainants from their employment in a mass purging of about
600 pilots as strikers. Significantly, [PAL] had made no attempt
to rebut complainants' evidence (consisting of sworn statements
of witnesses and documentary exhibits) tending to show that:
1. Management's declared intention since 1997
was to retrench/retire about 200 pilots and
drastically downscale operations because of
alleged business losses, but its restructuring
program gained no ground despite the passage of
several months because ALP AP was staunchly
opposed to it and in the meantime, [PAL]
continued "bleeding';
2. A PAL management pilot, Capt. Emmanuel
Generoso, disclosed to several ALP AP pilots that
a strike by ALPAP would be a welcome
development as it would make management's job
of ridding the company pilots easier;
3. The instant ALP AP declared the strike,
complainants ceased receiving their salaries,
allowances, and benefits which fell due, as though
[PAL] had merely been waiting for the strike to
happen and, this done, it considered the pilots'
termination as effected ipso facto. Complainants
were not furnished any written notice requiring
them to show cause why they should not be
dismissed from employment for any offense; nor
were they given written notices of termination
(except for complainant Liberato Gutiza who
received a termination letter with the effectivity
date of June 6, 1998 after being made to crew
Flight No. PR-100 which arrived in Manila from
Honolulu on June 7, 1998);
4. Confirming the veracity of several press
statements made by [PAL] on its mass dismissal
of about 600 pilots by June 7, 1998, when some of
the complainants thereafter called PAL Flight
Deck Crew Scheduling to check on their next
scheduled flights, they were informed that they
were terminated employees and no longer had
any flight assignments, and would furthermore
be barred from entering the Gate to [PAL] offices;
5. Complainants were given employment
application forms to accomplish and submit if
 they were to resume their work as PAL pilots;
and
6. [PAL] considered its dismissal of almost 600
pilots, including complainants, as "reaffirmed"
under the DOLE Return-to-Work Order as of June
9, 1998 or upon the lapse of the 24-hour deadline
fixed therein. It immediately downscaled its flight
operations on the basis of a 44-man pilot
complement, shutting down several stations in
the process.
The foregoing facts, which stand in the record unrebutted by
countervailing evidence from [PAL], all too clearly reveal
management's prior decision and firm resolve to dismiss its
pilots at the first opportunity, which it found in the June 5, 1998
strike. Of course, complainants' case presented an unexpected
complication since they cannot be lumped together with the
strikers given their circumstances at the time of the strike. [PAL]
however took its chances, it dismissed them anyway and is now
straining in vain to rationalize complainants' termination as
"strikers". The facts present a classical case of dismissal in bad
faith. Complainants never had a chance to hold on to their
employment since [PAL] was hell-bent from the start on the
mass dismissal of its pilots regardless of the existence of actual
and valid grounds to terminate their employment. It should be
made to face the consequences thereof.27
Ultimately, Labor Arbiter Robles adjudicated:
IN VIEW OF THE FOREGOING, judgment is hereby rendered:
(a) Finding the dismissal of complainants to be illegal;
(b) Ordering [PAL] to reinstate complainants to their
former positions without loss of seniority rights,
privileges and benefits;
(c) Ordering [PAL] to pay complainants their full
backwages from June 9, 1998 up to date ofreinstatement,
xx x.
xxxx
and in addition, (i) longevity pay at P500.00/month for
every year of service based on seniority date falling after
June 9, 1998; (ii) Christmas bonus for 1998 and 1999 per
the CBA; (iii) complainants' proportionate share in the P5
million contribution of [PAL] to the Retirement Fund, and
(iv) cash equivalent of vacation leave and sick leave
which complainants earned from June 9, 1998 until
reinstatement based on the CBA scheduled (sic).
(d) Ordering [PAL] to pay moral damages to
complainants in the amount of P300,000.00 each;
(e) Ordering [PAL] to pay exemplary damages to
complainants in the amount of P200,000.00 each;
(f) Ordering [PAL] to pay complainants on their money
claims for unpaid salaries for the period June 1-8, 1998,
and productivity allowance, transportation allowance,
and rice subsidy for May 1998 and June 1-8, 1998; and
 (g) Ordering [PAL] to pay complainants attorney's fees in
an amount equivalent to ten percent (10%) of the total
monetary award. 28
PAL appealed before the NLRC, docketed as NLRC NCR CA No.
027348-01. In its Decision dated November 6, 2001, the NLRC
reversed Labor Arbiter Robles' Decision.
On the jurisdictional and procedural matters, the NLRC found
that: (a) The on-going receivership proceedings before the
Securities and Exchange Commission (SEC) involving PAL had no
effect on the jurisdiction of the Labor Arbiter or the NLRC over
the Illegal Dismissal Case; (b) The Illegal Dismissal Case was not
barred by res judicata despite the prior ruling of the DOLE
Secretary in the Strike Case because the latter did not resolve the
particular cause of action asserted by the complainants in the
former; and (c) The issue on forum shopping was rendered moot
by the finding of the NLRC on the absence of res judicata.
The NLRC next addressed the substantive issue of whether or
not complainants were illegally dismissed. The NLRC ruled in the
negative for all the complainants except Jadie. According to the
NLRC, the strike was not a one-day affair. It started on June 5,
1998 and lasted until the later part of June 1998. Complainants'
assertion that they were not strikers was controverted by the
photographs submitted as evidence by PAL showing that several
complainants were at the strike area on June 9, 1998, some even
holding a streamer saying: "WE ARE ON STRIKE." The NLRC gave
weight to the finding of the DOLE Secretary, affirmed by the
Court of Appeals in CA-G.R. SP No. 54880, that ALPAP was served
a copy of the Return-to-Work Order on June 8, 1998, thus, the
ALPAP strikers had 24 hours, or until June 9, 1998, to comply
with said Order. However, based on the logbook, the
complainants only reported back to work on June 26, 1998. As a
result of their defiance of the DOLE Secretary's Return-to-Work
Order, complainants lost their employment status as of June 9,
1998. Even if complainants were supposedly on official leave or
off-duty during the strike, records revealed that their official
leave or off-duty status had expired at least two weeks before
June 26, 1998. The logbook establishing that complainants
reported for work only on June 26, 1998 must prevail over the
complainants' unsupported allegations that they called PAL
offices upon the expiration of their respective leaves or days off
to verify the status of their flights. The NLRC additionally pointed
out that complainants, while claiming they were not strikers,
reported back for work in compliance with the DOLE Secretary's
Return-to-Work Order, their signatures appearing in the logbook
pages under the captions: "RETURN-TO-WORK RETURNEES,"
"RETURN-TO-WORK COMPLIANCE," and "RETURN-TO-WORK
DOLE COMPLIANCE."
In the case of Gutiza, the NLRC held that he was dismissed for
being a union officer who knowingly participated in the illegal
strike.29 The NLRC also particularly noted that while other
complainants belatedly reported for work on June 26, 1998
together with the other ALP AP pilots, Baquiran did not ever
attempt to comply with the Return-to-Work Order, and was
declared to have simply abandoned his job.30 The NLRC only
spared Jadie, there being no evidence that she participated in the
illegal strike. Jadie was on leave being in her ninth month of
pregnancy at the time of the strike, actually giving birth on June
24, 1998. The NLRC opined that given her circumstances, it was
impossible for Jadie to comply with the Return-to-Work Order,
hence, she was illegally dismissed on June 9, 1998.31However,
Jadie could no longer be reinstated. Jadie's former position as
Captain of the F-50 aircraft no longer existed as said aircraft was
returned to the lessors in accordance with the Amended and
Restated Rehabilitation Plan of PAL. Also, per the certification of
the Air Transportation Office (ATO), Jadie's license already
expired in 1998. Consequently, the NLRC directed PAL to pay
Jadie backwages and separation pay, instead of reinstatement.
The dispositive portion of the NLRC Decision dated November 6,
2001 reads:
WHEREFORE, premises considered, we hold that the following
complainants lost their employment status with respondent PAL
for cause and in accordance with law: Arnold S. Corpus, Cesar G.
Cruz, Liberato D. Gutiza, Luisito M. Jose, Paterno C. Labuga, Jr.,
Baltazar B. Musong, Arturo A. Sabado, Jr., Nilo S. Rodriguez,
Edmundo delos Reyes, Jr., Tito F. Garcia, Virgilio V. Ecarma, Noel
Y. Lastimoso, Virgilio N. Ocharan, Rodolfo 0. Poe, Efren S.
Alcaeses, Benjamin T. Ang, Vicente T. Ang, Silvestre D. Arroyo,
Manuel P. Sanchez, Nicomen H. Versoza, Jr., Danilo C. Matias,
Francisco T. Alisangco, Antonio 0. Noble, Jr., Ben T. Maturan,
Wilfredo S. Cruz, Ismael F. Galisim, Gabriel M. Piamonte,' Jr.,
Elmer F. Pea, Nino B. dela Cruz, Ruderico C. Baquiran and Ryan
Jose C. Hinayon.
The Labor Arbiter's decision declaring that the aforementioned
complainants were illegally dismissed, and all the monetary
awards granted to them, are hereby reversed and set aside for
lack of merit. The Labor Arbiter's order for the reinstatement of
the complainants is likewise declared to be devoid of merit, and
any claim based on said order of reinstatement, such as, but not
limited to, backwages pending appeal, is declared to be without
any legal basis.
Respondent PAL is hereby directed to pay complainant Gladys L.
Jadie, the monetary award granted in the assailed decision which
is P2,024,865.00 and (I) longevity pay at P500.00/month of
every year of service based on seniority date falling after June 9,
1998; (II) Christmas bonus for 1998 and 1999 per the CBA; (III)
[Jadie's] proportionate share in the P5 million contribution of
[PAL] to the Retirement Fund, and (IV) cash equivalent of
vacation leave and sick leave which [Jadie] earned from June 9,
1998 until September 11, 2000.
[PAL] is also ordered to pay [ Jadie] her unpaid salaries for the
period June 1-8, 1998 and productivity allowance, transportation
allowance, and rice subsidy for May 1998 and June 1-8, 1998.
In addition, [PAL] is ordered to pay [ Jadie] separation pay
equivalent to one half (1/2) month for every year of service as a
PAL employee.
[PAL] is ordered to pay [ Jadie] attorney's fees in an amount
equivalent to ten percent (10%) of the total monetary award.32
Aggrieved, Rodriguez, et al., Dela Cruz, and Poe filed a Petition
for Certiorari with the Court of Appeals, docketed as CA-G.R. SP
No. 71190, assailing the NLRC judgment for having been
rendered with grave abuse of discretion. Dela Cruz subsequently
withdrew his Petition on June 25, 2003.
The Court of Appeals promulgated its Decision on November 30,
2006 favoring Rodriguez, et al., and Poe. The appellate court
adjudged that: (a) PAL indiscriminately dismissed on June 7,
1998 its more than 600 pilots, including Rodriguez, et al. and
Poe, who did not comply with its Return-to-Work Notice
published in the Philippine Daily Inquirer; (b) PAL simply took
advantage of the strike on June 5, 1998 to dismiss ALPAP
members en masse, regardless of whether the members
participated in the strike or not, so as to reduce its pilots
complement to an acceptable level and to erase seniority; (c)
since they were already terminated on June 7, 1998, any activity
undertaken by Rodriguez, et al. and Poe on and after June 9,
1998 was already immaterial; (d) the NLRC gave undue weight
to the photographs and logbook presented by PAL; (e) the
photographs were not properly identified nor the circumstances
under which they had been taken satisfactorily established; (f)
the logbook and its entries are self-serving because the logbook
was supplied by PAL itself and there was a dearth of explanation
as to the implications of the pilots' signatures appearing therein
and the significance of the annotations "RETURN-TO-WORK
RETURNEES " "RETURN-TO-WORK COMPLIANCE " and
"RETURN-TO-WORK DOLE COMPLIANCE;" and (g) as for Jadie,
PAL did not satisfactorily prove that her reinstatement was an
impossibility as there was no showing that her services were
obsolete or could no longer be utilized.
Although the Court of Appeals essentially agreed with the
findings and conclusion of Labor Arbiter Robles that
Rodriguez, et al. and Poe were illegally dismissed, it modified
Labor Arbiter Robles' Decision as follows:
All told, We find that [NLRC] gravely abused its discretion in
setting aside the Decision of the Labor Arbiter which found that
[Rodriguez, et al. and Poe] had indeed been illegally dismissed.
We are mindful, however, that the relief of reinstatement of
[Rodriguez, et al. and Poe] may no longer be viable or practicable
in view of several factors, i.e., the animosity between the parties
([Rodriguez, et al. and Poe] occupy positions of confidence)
herein as engendered by this protracted and heated litigation,
the fact that [Rodriguez, et al. and Poe) may have already
secured equivalent or other employments after the significant
lapse of time since the institution of their suit and, finally, the
nature of [PAL' s] business which require the continuous
operations of its planes, and because of which, new pilots have
already been hired.
We, therefore, modify the Decision of the Labor Arbiter by
affirming the grant of backwages to [Rodriguez, et al. and Poe]
but, instead, order the payment of separation pay in lieu of
reinstatement.
Moreover, We delete the awards of moral and exemplary
damages as well as attorney's fees. Moral and exemplary
damages cannot be justified solely upon the premise that an
employer dismissed his employee without cause or due process.
The termination must be attended with bad faith, or fraud or in a
manner oppressive to labor, which were not convincingly
established herein. Where a party is not entitled to actual or
moral damages, an award of exemplary damages is likewise
without basis (San Miguel Corporation vs. Del Rosario, 477 SCRA
619; Tanay Recreation Center and Development Corp. vs. Fausto,
455 SCRA 457). Likewise, the policy of the law is to put no
premium on the right to litigate. Hence, the award of attorney's
fees should also be deleted. 33
The Court of Appeals decreed in the end:
WHEREFORE, premises considered, the petition for certiorari is
hereby GRANTED. The Decisions of the public respondent NLRC,
dated November 6, 2001 and March 25, 2002 are hereby SET
ASIDEand the Decision of Labor Arbiter Francisco Robles, dated
December 11, 2000, is REINSTATEDsubject to
the MODIFICATIONS that in lieu of reinstatement, [PAL] is
ordered to pay [Rodriguez, et al. and Poe] separation pay and
that the awards of moral and exemplary damages and attorney's
fees are hereby deleted.
The Court NOTES the withdrawal of the petition insofar as
petitioner Nino de la Cruz is concerned.34
Rodriguez, et al., and Poe filed a Motion for Partial
Reconsideration, while PAL filed a Motion for Reconsideration of
the foregoing Decision, but the appellate court denied both
motions in a Resolution35 dated June 8, 2007.
Hence, Rodriguez, et al., and PAL assail before this Court the
Decision dated November 30, 2006 and Resolution dated June 8,
2007 of the Court of Appeals by way of separate Petitions for
Review on Certiorari, docketed as G.R. No. 178501 and G.R. No.
178510, respectively.
In G.R. No. 178501, Rodriguez, et al., assigned four errors on the
part of the Court of Appeals, viz.:
I. THE COURT OF APPEALS ERRED IN ORDERING THE PAYMENT
OF SEPARATION PAY TO [RODRIGUEZ, ET AL.] IN LIEU OF
REINSTATEMENT, ON THE GROUNDS THAT [RODRIGUEZ, ET
AL.] "MAY HA VE ALREADY SECURED" OTHER EMPLOYMENT
AND THAT "NEW PILOTS HA VE ALREADY BEEN HIRED",
CONTRARY TO THE EXPRESS PROVISIONS OF THE LABOR
CODE, THE IMPLEMENTING RULES AND REGULATIONS
THEREOF, AS WELL AS EXISTING JURISPRUDENTIAL POLICY,
ALL MANDATING THAT ILLEGALLY DISMISSED EMPLOYEES
SHALL BE ENTITLED TO THE TWIN REMEDIES OF
REINSTATEMENT AND PAYMENT OF BACKWAGES.
II. THE COURT OF APPEALS ERRED WHEN IT DENIED THE AW
ARD OF REINSTATEMENT ON THE SUPPOSITION THAT SAID
RELIEF, WHICH IS A RIGHT AUTHORIZED UNDER THE LAW
AND EXISTING JURISPRUDENCE, "MAY NO LONGER BE VIABLE
OR PRACTICABLE" IN THE PRESENT CASE DUE TO ALLEGED
STRAINED RELATIONS BETWEEN THE PARTIES.
III. THE COURT OF APPEALS ERRED IN DENYING THE AWARD
OF MORAL AND EXEMPLARY DAMAGES, DESPITE ITS OWN
FINDING THAT PRIVATE RESPONDENT HAD ENGAGED IN AN
"INDISCRIMINATE DISMISSAL" AND HAD SIMPLY TAKEN
ADVANTAGE OF THE 5 JUNE 1998 STRIKE TO DISMISS
[RODRIGUEZ, ET AL.] EN MASSE, IN VIOLATION OF LAW AND
JURISPRUDENTIAL PRECEDENTS.
IV. THE COURT OF APPEALS ERRED IN DENYING THE AWARD
OF ATTORNEY'S FEES, DESPITE FINDING THAT PRIVATE
RESPONDENT HAD ARBITRARILY AND CAPRICIOUSLY
TERMINATED [RODRIGUEZ, ET AL. 'S]
EMPLOYMENT, THUS FORCING THEM TO LITIGATE AND
CONSEQUENTLY INCUR EXPENSES TO PROTECT THEIR RIGHTS
AND INTERESTS, CONTRARY TO SETTLED LAW AND
JURISPRUDENCE.36
Whereas PAL based its Petition in G.R. No. 178510 on the
following assignment of errors:
I. [RODRIGUEZ, ET AL. AND POE'S] COMPLAINT FOR ILLEGAL
DISMISSAL IS BARRED BY THE FINAL AND EXECUTORY
DECISION IN THE COMPLAINT FOR ILLEGAL LOCKOUT FILED
BY ALPAP IN BEHALF OF ALL ITS MEMBERS, INCLUDING
[RODRIGUEZ, ET AL. AND POE].
II. THE DECISION OF THIS HONORABLE COURT IN G.R. NO.
170069 FILED BY ONE OF [RODRIGUEZ, ET AL. AND POE'S]
ORIGINAL CO-COMPLAINANTS (CESAR CRUZ) IS APPLICABLE
AND BINDING ON [RODRIGUEZ, ET AL. AND POE], BEING BASED
ON THE SAME FACTS AND EVIDENCE.
III. THE COURT OF APPEALS SERIOUSLY ERRED WHEN IT
REVIEWED AND REASSESSED THE FACTUAL FINDINGS OF THE
NLRC AND SUPPLANTED THE SAME WITH ITS OWN FACTUAL
FINDINGS AND CONCLUSIONS IN A PETITION FOR CERTIORARI
WHERE THE ONLY ISSUE WAS WHETHER THE NLRC ACTED
WITHOUT JURISDICTION OR WITH GRAVE ABUSE OF
DISCRETION.
IV. THE SIXTH DIVISION OF THE COURT OF APPEALS GRAVELY
ERRED IN HOLDING THAT PAL MERELY TOOK ADV ANT AGE OF
THE ALP AP STRIKE TO DISMISS ITS PILOTS EN
MASSE, CONTRARY TO THE FACTUAL FINDINGS OF THE
SECRETARY OF LABOR, THE NLRC, THE COURT OF APPEALS
AND THIS HONORABLE COURT IN EARLIER CASES INVOL YING
THE SAME FACTS AND EVIDENCE.37
In the meantime, during the pendency of the instant Petitions,
the Court decided on June 6, 2011 Airline Pilots Association of the
Philippines v. Philippine Airlines, Inc,.38 docketed as G.R. No.
168382 (2nd ALPAP case). The 2nd ALP AP case arose from
events that took place following the finality on August 29, 2002
of the Resolution dated April 10, 2002 which dismissed the Ft
ALP AP case. Below is the factual background for the 2nd ALP AP
case as summarized by the Court in said Decision:
On January 13, 2003, ALPAP filed before the Office of the DOLE
Secretary a Motion in [the Strike Case], requesting the said office
to conduct an appropriate legal proceeding to determine who
among its officers and members should be reinstated or deemed
to have lost their employment with PAL for their actual
participation in the strike conducted in June 1998. ALPAP
contended that there is a need to conduct a proceeding in
order to determine who actually participated in the illegal
strike since not only the striking workers were dismissed by
PAL but all of ALPAP's officers and members, even though
some were on official leave or abroad at the time of the
strike.It also alleged that there were some who joined the strike
and returned to work but were asked to sign new contracts of
employment, which abrogated their earned seniority. Also, there
were those who initially defied the return-to-work order but
immediately complied with the same after proper receipt thereof
by ALP AP's counsel. However, PAL still refused to allow them to
enter its premises. According to ALPAP, such measure, as to
meet the requirements of due process, is essential because it
must be first established that a union officer or member has
participated in the strike or has committed illegal acts
before they could be dismissed from employment. In other
words, a fair determination of who must suffer the consequences
of the illegal strike is indispensable since a significant number of
ALP AP members did not at all participate in the strike. The
motion also made reference to the favorable recommendation
rendered by the Freedom of Association Committee of the
International Labour Organization (ILO) in ILO Case No. 2195
which requested the Philippine Government "to initiate
discussions in order to consider the possible reinstatement in
their previous employment of all ALPAP's workers who were
dismissed following the strike staged in June 1998." A
Supplemental Motion was afterwards filed by ALP AP on January
28, 2003, this time asking the DOLE Secretary to resolve all
issues relating to the entitlement to employment benefits by the
officers and members of ALP AP, whether terminated or not.
In its Comment to ALP AP's motions, PAL argued that the
motions cannot legally prosper since the DOLE Secretary has no
authority to reopen or review a final judgment of the Supreme
Court relative to [the Strike Case]; that the requested proceeding
is no longer necessary as the CA or this Court did not order the
remand of the case to the DOLE Secretary for such
determination; that the NLRC rather than the DOLE Secretary
has jurisdiction over the motions as said motions partake of a
complaint for illegal dismissal with monetary claims; and that all
money claims are deemed suspended in view of the fact that PAL
is under receivership.
On January 24, 2003, the DOLE called the parties to a hearing to
discuss and clarify the issues raised in ALP AP's motions. In a
letter dated July 4, 2003 addressed to ALPAP President, Capt.
Ismael C. Lapus, Jr., then Acting DOLE Secretary, Imson, resolved
ALP AP's motions in the following manner:
xxxx
After a careful consideration of the factual antecedents,
applicable legal principles and the arguments of the parties, this
Office concludes that [the Strike Case] has indeed been resolved
with finality by the highest tribunal of the land, the Supreme
Court. Being final and executory, this Office is bereft of authority
to reopen an issue that has been passed upon by the Supreme
Court.
It is important to note that in pages 18 to 19 of ALP AP's
Memorandum, it admitted that individual complaints for illegal
dismissal have been filed by the affected pilots before the NLRC.
It is therefore an implied recognition on the part of the pilots
that the remedy to their present dilemma could be found in the
NLRC.
xxxx
Thus, to avoid multiplicity of suits, splitting causes of action and
forum-shopping which are all obnoxious to an orderly
administration of justice, it is but proper to respect the final and
executory order of the Supreme Court in this case as well as the
jurisdiction of the NLRC over the illegal dismissal cases. Since
ALP AP and the pilots have opted to seek relief from the NLRC,
this Office should respect the authority of that Commission to
resolve the dispute in the normal course of law. This Office will
no longer entertain any further initiatives to split the jurisdiction
or to shop for a forum that shall only foment multiplicity of labor
disputes. Parties should not jump from one forum to another.
This Office will make sure of that.
By reason of the final ruling of the Honorable Supreme Court, the
erring pilots have lost their
employment status and second, because these pilots have filed
cases to contest such loss before another forum, the Motion and
Supplemental Motion of ALP AP as well as the arguments raised
therein are merely NOTED by this Office."
ALP AP filed its motion for reconsideration arguing that the
issues raised in its motions have remained unresolved hence, it is
the duty of DOLE to resolve the same it having assumed
jurisdiction over the labor dispute. ALP AP also denied having
engaged in forum shopping as the individual complainants who
filed the cases before the NLRC are separate and distinct from
ALP AP and that the causes of action therein are different.
According to ALP AP, there was clear abdication of duty when
then Acting Secretary Imson refused to properly act on the
motions. In a letter dated July 30, 2003, Secretary Sto. Tomas
likewise merely noted ALP AP's motion for reconsideration,
reiterating the DOLE's stand to abide by the final and executory
judgment of the Supreme Court.
Proceedings before the Court of Appeals
ALP AP filed a petition for certiorari with the CA, insisting that
the assailed letters dated July 4, 2003 and July 30, 2003, which
merely noted its motions, were issued in grave abuse of
discretion.
xxxx
The CA, in its Decision dated December 22, 2004, dismissed the
petition. It found no grave abuse of discretion on the part of Sto.
Tomas and Imson in refusing to conduct the necessary
proceedings to determine issues relating to ALP AP members'
employment status and entitlement to employment benefits. The
CA held that both these issues were among the issues taken up
and resolved in the June 1, 1999 DOLE Resolution which was
affirmed by the CA in CA-G.R. SP No. 54880 and subsequently
determined with finality by this Court in [the 1st ALP AP
case]. Therefore, said issues could no longer be reviewed. The CA
added that Sto. Tomas and Imson merely acted in deference to
the NLRC's jurisdiction over the illegal dismissal cases filed by
individual ALP AP members.
ALP AP moved for reconsideration which was denied for lack of
merit in CA Resolution dated May 30, 2005.39(Emphases
supplied.)
ALP AP once more sought remedy from this Court through a
Petition for Review on Certiorari in the 2nd ALPAP case. The
Court therein denied the Petition of ALP AP for lack of merit,
based on the ratiocination extensively quoted below:
We deny the petition.
There was no grave abuse of participated in the strike but only mentions that those strikers
discretion on the part of Sto. Tomas who failed to heed the return-to-work order are deemed to have
and Imson in merely noting ALPAP's lost their employment. This omission, however, cannot prevent
twin motions in due deference to a an effective execution of the decision. As was held in Reinsurance
final and immutable judgment Company of the Orient, Inc. v. Court of Appeals, any ambiguity may
rendered by the Supreme Court. be clarified by reference primarily to the body of the decision or
supplementary to the pleadings previously filed in the case. In
From the June 1, 1999 DOLE Resolution, which declared the any case, especially when there is an ambiguity, "a judgment
strike of June 5, 1998 as illegal and pronounced all ALP AP shall be read in connection with the entire record and construed
officers and members who participated therein to have lost their accordingly."
employment status, an appeal was taken by ALP AP. This was
dismissed by the CA in CA-G .R. SP No. 54880, which ruling was There is no necessity to conduct a
affirmed by this Court and which became final and executory on proceeding to determine the
August 29, 2002. participants in the illegal strike or
those who refused to heed the return
In the instant case, ALP AP seeks for a conduct of a proceeding to to work order because the ambiguity
determine who among its members and officers actually can be cured by reference to the
participated in the illegal strike because, it insists, the June 1, body of the decision and the
1999 DOLE Resolution did not make such determination. pleadings filed.
However, as correctly ruled by Sto. Tomas and Imson and
affirmed by the CA, such proceeding would entail a reopening of A review of the records reveals that in [the Strike Case], the
a final judgment which could not be permitted by this Court. DOLE Secretary declared the ALP AP officers and members
Settled in law is that once a decision has acquired finality, it to have lost their employment status based on either of two
becomes immutable and unalterable, thus can no longer be grounds, viz.: their participation in the illegal strike on June
modified in any respect. Subject to certain recognized 5, 1998 or their defiance of the return-to-work order of the
exceptions, the principle of immutability leaves the judgment DOLE Secretary. The records of the case unveil the names of
undisturbed as "nothing further can be done except to execute each of these returning pilots. The logbook with the heading
it." "Return to Work Compliance/Returnees" bears their
individual signature signifying their conformity that they
True, the dispositive portion of the DOLE Resolution does not were among those workers who returned to work only on
specifically enumerate the names of those who actually June 26, 1998 or after the deadline imposed by DOLE. From
this crucial and vital piece of evidence, it is apparent that
each of these pilots is bound by the judgment. Besides, the
complaint for illegal lockout was filed on behalf of all these
returnees. Thus, a finding that there was no illegal lockout
would be enforceable against them. In fine, only those
returning pilots, irrespective of whether they comprise the
entire membership of ALPAP, are bound by the June 1, 1999
DOLE Resolution.
ALPAP harps on the inequity of PAL's termination of its
officers and members considering that some of them were
on leave or were abroad at the time of the strike. Some were
even merely barred from returning to their work which
excused them for not complying immediately with the
return-to-work order. Again, a scrutiny of the records of the
case discloses that these allegations were raised at a very late
stage, that is, after the judgment has finally decreed that the
returning pilots' termination was legal. Interestingly, these
defenses were not raised and discussed when the case was still
pending before the DOLE Secretary, the CA or even before this
Court. We agree with the position taken by Sto. Tomas and Imson
that from the time the return-to-work order was issued until this
Court rendered its April 10, 2002 resolution dismissing ALP AP's
petition, no ALP AP member has claimed that he was unable to
comply with the return-to-work directive because he was either
on leave, abroad or unable to report for some reason. These
defenses were raised in ALPAP's twin motions only after the
Resolution in G.R. No. 152306 reached finality in its last
ditch effort to obtain a favorable ruling. It has been held that
a proceeding may not be reopened upon grounds already
available to the parties during the pendency of such
proceedings; otherwise, it may give way to vicious and
vexatious proceedings. ALP AP was given all the
opportunities to present its evidence and arguments. It
cannot now complain that it was denied due process.
Relevant to mention at this point is that when NCMB NCR NS
12-514-97 (strike/illegal lockout case) was still pending,
several complaints for illegal dismissal were filed before the
Labor Arbiters of the NLRC by individual members of ALPAP,
questioning their termination following the strike staged in
June 1998. PAL likewise manifests that there is a pending
case involving a complaint for the recovery of accrued and
earned benefits belonging to ALPAP members. Nonetheless,
the pendency of the foregoing cases should not and could
not affect the character of our disposition over the instant
case. Rather, these cases should be resolved in a manner
consistent and in accord with our present disposition for
effective enforcement and execution of a final
judgment.40 (Emphases supplied.)
The Decision dated June 6, 2011 of the Court in the 2nd ALPAP
case became final and executory on September 9, 2011.
Bearing in mind the final and executory judgments in
the 1st and 2nd ALPAP cases, the Court denies the Petition of
Rodriguez, et al., in G.R. No. 178501 and partly grants that of PAL
in G.R. No. 178510.
The Court, in the 2nd ALPAP case, acknowledged the illegal
dismissal cases instituted by the individual ALPAP members
before the NLRC following their termination for the strike in June
1998 (which were apart from the Strike and Illegal Lockout
Cases of ALPAP before the DOLE Secretary) and affirmed the
jurisdiction of the NLRC over said illegal dismissal cases. The
Court, though, also expressly pronounced in the 2nd ALPAP
case that "the pendency of the foregoing cases should not and
could not affect the character of our disposition over the instant
case. Rather, these cases should be resolved in a manner
consistent and in accord with our present disposition for
effective enforcement and execution of a final judgment."
The Petitions at bar began with the Illegal Dismissal Case of
Rodriguez, et al. and eight other former pilots of PAL before the
NLRC. Among the Decisions rendered by Labor Arbiter Robles,
the NLRC, and the Court of Appeals herein, it is the one by the
NLRC which is consistent and in accord with the disposition for
effective enforcement and execution of the final judgments in
the 1st and 2nd ALPAP cases.
The 1st and 2nd ALPAP cases which became final and executory
on August 29, 2002 and September 9, 2011, respectively,
constitute res judicata on the issue of who participated in the
illegal strike in June 1998 and whose services were validly
terminated.
The Court expounded on the doctrine of res judicata in Spouses
Layos v. Fil-Estate Golf and Development, Inc.41:
Res judicata literally means "a matter adjudged; a thing judicially
acted upon or decided; a thing or matter settled by
judgment." Res judicata lays the rule that an existing final
judgment or decree rendered on the merits, and without fraud or
collusion, by a court of competent jurisdiction, upon any matter
within its jurisdiction, is conclusive of the rights of the parties or
their privies, in all other actions or suits in the same or any other
judicial tribunal of concurrent jurisdiction on the points and
matters in issue in the first suit.
It is espoused in the Rules of Court, under paragraphs (b) and (c)
of Section 47, Rule 39, which provide:
SEC. 47. Effect of judgments or final orders. - The effect of a
judgment or final order rendered by a court of the Philippines,
having jurisdiction to pronounce the judgment or final order,
may be as follows:
xxxx
(b) In other cases, the judgment or final order is, with respect to
the matter directly adjudged or as to any other matter that could
have been raised in relation thereto, conclusive between the
parties and their successors in interest by title subsequent to the
commencement of the action or special proceeding, litigating the
same thing and under the same title and in the same capacity;
and
(c) In any other litigation between the same parties or their
successors in interest, that only is deemed to have been adjudged
in a former judgment or final order which appears upon its face
to have been so adjudged, or which was actually and necessarily
included therein or necessary thereto.
The doctrine of res judicata lays down two main rules which may
be stated as follows: (1) The judgment or decree of a court of
competent jurisdiction on the merits concludes the litigation
between the parties and their privies and constitutes a bar to a
new action or suit involving the same cause of action either
before the same or any other tribunal; and (2) any right, fact, or
matter in issue directly adjudicated or necessarily involved in
the determination of an action before a competent court in which
a judgment or decree is rendered on the merits is conclusively
settled by the judgment therein and cannot again be litigated
between the parties and their privies whether or not the claims
or demands, purposes, or subject matters of the two suits are the
same. These two main rules mark the distinction between the
principles governing the two typical cases in which a judgment
may operate as evidence. In speaking of these cases, the first
general rule above stated, and which corresponds to the afore-
quoted paragraph (b) of Section 4 7, Rule 3 9 of the Rules of
Court, is referred to as "bar by former judgment"; while the
second general rule, which is embodied in paragraph (c) of the
same section and rule, is known as "conclusiveness of judgment".
The Resolution of this Court in Calalang v. Register of Deeds of
Quezon City, provides the following enlightening discourse on
conclusiveness of judgment:
The doctrine res judicata actually embraces two different
concepts: (1) bar by former judgment and (b) conclusiveness of
judgment.
The second concept - conclusiveness of judgment - states that a
fact or question which was in issue in a former suit and was
there judicially passed upon and determined by a court of
competent jurisdiction, is conclusively settled by the judgment
therein as far as the parties to that action and persons in privity
with them are concerned and cannot be again litigated in any
future action between such parties or their privies, in the same
court or any other court of concurrent jurisdiction on either the
same or different cause of action, while the judgment remains
unreversed by proper authority. It has been held that in order
that a judgment in one action can be conclusive as to a particular
matter in another action between the same parties or their
privies, it is essential that the issue be identical. If a particular
point or question is in issue in the second action, and the
judgment will depend on the determination of that particular
point or question, a former judgment between the same parties
or their privies will be final and conclusive in the second if that
same point or question was in issue and adjudicated in the first
suit (Nabus vs. Court of Appeals, 193 SCRA 732 [1991]). Identity
of cause of action is not required but merely identity of issue.
Justice Feliciano, in Smith Bell & Company (Phils.), Inc. vs. Court of
Appeals (197 SCRA 201, 210 [1991]), reiterated Lopez vs.
Reyes (76 SCRA 179 [1977]) in regard to the distinction between
bar by former judgment which bars the prosecution of a second
action upon the same claim, demand, or cause of action, and
conclusiveness of judgment which bars the relitigation of
particular facts or issues in another litigation between the same
parties on a different claim or cause of action.
The general rule precluding the relitigation of material facts or
questions which were in issue and adjudicated in former action
are commonly applied to all matters essentially connected with
the subject matter of the litigation. Thus, it extends to questions
necessarily implied in the final judgment, although no specific
finding may have been made in reference thereto and although
such matters were directly referred to in the pleadings and were
not actually or formally presented. Under this rule, if the record
of the former trial shows that the judgment could not have been
rendered without deciding the particular matter, it will be
considered as having settled that matter as to all future actions
between the parties and if a judgment necessarily presupposes
certain premises, they are as conclusive as the judgment itself.
Another case, Oropeza Marketing Corporation v. Allied Banking
Corporation, further differentiated between the two rules of res
judicata, as follows:
There is "bar by prior judgment" when, as between the first
case where the judgment was rendered and the second case that
is sought to be barred, there is identity of parties, subject
matter, and causes of action. In this instance, the judgment in
the first case constitutes an absolute bar to the second action.
Otherwise put, the judgment or decree of the court of competent
jurisdiction on the merits concludes the litigation between the
parties, as well as their privies, and constitutes a bar to a new
action or suit involving the same cause of action before the same
or other tribunal.
But where there is identity of parties in the first and second
cases, but no identity of causes of action, the first judgment is
conclusive only as to those matters actually and directly
controverted and determined and not as to matters merely
involved therein. This is the concept of res judicata known as
"conclusiveness of judgment". Stated differently, any right, fact,
or matter in issue directly adjudicated or necessarily involved in
the determination of an action before a competent court in which
judgment is rendered on the merits is conclusively settled by the
judgment therein and cannot again be litigated between the
parties and their privies whether or not the claim, demand,
purpose, or subject matter of the two actions is the same.
In sum, conclusiveness of judgment bars the re-litigation in a
second case of a fact or question already settled in a previous
case. The second case, however, may still proceed provided that
it will no longer touch on the same fact or question adjudged in
the first case. Conclusiveness of judgment requires only the
identity of issues and parties, but not of causes of action.
(Emphases ours.)
The elements for res judicata in the second concept,
i.e., conclusiveness of judgment, are extant in these cases.
There is identity of parties in the 1st and 2nd ALPAP cases, on one
hand, and the Petitions at bar. While the 1st and 2nd ALPAP cases
concerned ALP AP and the present Petitions involved several
individual members of ALPAP, the union acted in the 1st and 2nd
ALPAP cases in representation of its members. In fact, in the 2nd
ALPAP case, the Court explicitly recognized that the complaint for
illegal lockout was filed by ALP AP on behalf of all its members
who were returning to work.42 Also in the said case, ALPAP
raised, albeit belatedly, exactly _the same arguments as
Rodriguez, et al. herein. Granting that there is no absolute
identity of parties, what is required, however, for the application
of the principle of res judicata is not absolute, but only
substantial identity of parties. ALP AP and Rodriguez, et al. share
an identity of interest from which flowed an identity of relief
sought, namely, the reinstatement of the terminated ALP AP
members to their former positions. Such identity of interest is
sufficient to make them privy-in-law, one to the other, and meets
the requisite of substantial identity of parties.43
There is likewise an identity of issues between the 1st and 2nd
ALPAP cases and these cases. Rodriguez, et al., insist that they did
not participate in the June 1998 strike, being on official leave or
scheduled off-duty. Nonetheless, on the matter of determining
the identities of the ALPAP members who lost their employment
status because of their participation in the illegal strike in June
1998, the Court is now conclusively bound by its factual and legal
findings in the 1st and 2nd ALPAP cases.
In the 1st ALPAP case, the Court upheld the DOLE Secretary's
Resolution dated June 1, 1999 declaring that the strike of June 5,
1998 was illegal and all ALP AP officers and members who
participated therein had lost their employment status. The Court
in the 2nd ALP AP case ruled that even though the dispositive
portion of the DOLE Secretary's Resolution did not specifically
enumerate the names of those who actually participated in the
illegal strike, such omission cannot prevent the effective
execution of the decision in the 1st ALPAP case. The Court
referred to the records of the Strike and Illegal Lockout Cases,
particularly, the logbook, which it unequivocally pronounced as a
"crucial and vital piece of evidence." In the words of the Court in
the 2nd ALPAP case, "[t]he logbook with the heading 'Return-To-
Work Compliance/Returnees' bears their individual signature
signifying their conformity that they were among those workers
who returned to work only on June 26, 1998 or after the
deadline imposed by DOLE.xx x In fine, only those returning
pilots, irrespective of whether they comprise the entire
membership of ALPAP, are bound by the June 1, 1999 DOLE
Resolution."
The logbook was similarly submitted as evidence by PAL against
the complainants in the Illegal Dismissal Case now on appeal.
Rodriguez, et al., except for Jadie and Baquiran, were signatories
in the logbook as returnees,44 bound by the Resolution dated
June 1, 1999 of the DOLE Secretary. The significance and weight
accorded by the NLRC to the logbook can no longer be gainsaid
considering the declarations of the Court in the 2nd ALPAP
case. Moreover, the logbook entries were corroborated by
photographs showing Rodriguez, et al., excluding Baquiran,
Galisim, Jadie, Wilfredo S. Cruz, and Piamonte, actually
participating in the strike. The objection that the photographs
were not properly authenticated deserves scant consideration as
rules of evidence are not strictly observed in proceedings before
administrative bodies like the NLRC, where decisions may be
reached on the basis of position papers only.45 It is also worth
noting that those caught on photographs did not categorically
deny being at the strike area on the time/s and date/s the
photographs were taken, but assert that they were there in
lawful exercise of their right while on official leave or scheduled
off-duty, or in the alternative, that they were already dismissed
from service as early as June 7, 1998 and their presence at the
strike area thereafter was already irrelevant. The Court further
concurs in the observation of the NLRC that the official leave or
scheduled off-duty of Rodriguez, et al. expired at least two weeks
prior to June 26, 1998, yet they did not make any effort to return
to work before said date. Rodriguez, et al. instead heeded the
advice of their lawyer to report en masse with the other ALP AP
members, only proving that they were complying not with the
Return-to-Work Order of the DOLE Secretary but the orders of
their union and its counsel.
There is no compelling reason for the Court to disturb the
findings of the NLRC as to Baquiran and Jadie, the two pilots who
did not sign the logbook.
To stress, the Return-to-Work Order was served on ALPAP on
June 8, 1998, and its members had 24 hours or until June 9, 1998
to report back for work. There is no evidence that Baquiran
complied, or at least, attempted to comply with said Order.
Neither did Baquiran report back for work with the other ALPAP
members on June 26, 1998. Baquiran, who made no attempt to
report for work at all, cannot be in a better position than the
other ALPAP members who belatedly reported for work on June
26, 1998 and were still deemed to have lost their employment.
As the NLRC declared, Baquiran "simply abandoned his job."
Only Jadie among Rodriguez, et al., was illegally dismissed by
PAL. During the strike, Jadie was already on maternity leave.
Jadie did not join the strike and could not be reasonably expected
to report back for work by June 9, 1998 in compliance with the
Return-to-Work Order. Indeed, Jadie gave birth on June 24, 1998.
However, as both the NLRC and the Court of Appeals had held,
Jadie can no longer be reinstated for the following reasons: (1)
Jadie's former position as Captain of the E-50 aircraft no longer
existed as said aircraft was already returned to its lessors in
accordance with the Amended and Restated Rehabilitation Plan
of PAL; (2) Per ATO certification, Jadie's license expired in 1998;
(3) the animosity between the parties as engendered by the
protracted and heated litigation; (4) the possibility that Jadie had
already secured equivalent or other employment after the
significant lapse of time since the institution of the Illegal
Dismissal Case; and (5) the nature of the business of PAL which
requires the continuous operations of its planes and, thus, the
hiring of new pilots. In lieu of reinstatement, Jadie is entitled to
separation pay.
Following latest jurisprudence,46 Jadie is entitled to the following
reliefs/awards for her illegal dismissal: (1) separation pay
equivalent to one month salary for every year of service in lieu of
reinstatement; (2) backwages from June 9, 1998; (3) longevity
pay at PS00.00/month for every year of service based on
seniority date falling after June 9, 1998; (4) Christmas bonuses;
(5) Jadie's proportionate share in the P5 Million contribution of
PAL to the Retjrement Fund; and (5) cash equivalent of vacation
leaves and sick leaves which Jadie earned after June 9, 1998. All
of the aforementioned awards shall be computed until finality of
this Decision.
Jadie is further entitled to receive benefits due her even prior to
her illegal dismissal on June 9, 1998, namely: (1) unpaid salaries
for June 1 to 8, 1998; and (2) productivity allowance,
transportation allowance, and rice subsidy for May 1998 and
June 1 to 8, 1998.
All monetary awards due Jadie shall earn legal interest of 6% per
annum from date of finality of this Decision until fully paid.
Finally, the Court acts upon the Motion for Leave to Reinstate
Elmer F. Pea, Antonio P. Noble, Baltazar B. Musong, Nicomen H.
Versoza and Ryan Jose C. Hinayon as Petitioners in G.R. No.
178501. Pea, Noble, Musong, Versoza, and Hinayon, hereinafter
referred to collectively as Pea, et al., were among the original
complainants in the Illegal Dismissal Case before the Labor
Arbiter. However, Pea, et al. were unable to join as petitioners
in the Petition for Certiorari before the Court of Appeals in CAG.
R. SP No. 71190, as well as the present Petition in G.R. No.
178501, because at the time said Petitions were filed, they were
already employed outside the country. The Court denies the
Motion. When Pea, et al. failed to join the Petition in CA-G.R. SP
No. 71190, the Decision dated November 6, 2001 of the NLRC in
NLRC NCR CA No. 027348-01 had become final and executory as
to them. Pea, et al. cannot simply be "reinstated" as petitioners
in G.R. No. 178501 since they are not parties to and had no legal
interest in the appealed Decision dated November 30, 2006 of
the Court of Appeals in CA-G.R. SP No. 71190.
WHEREFORE, premises considered, judgment is hereby
rendered:
(1) DISMISSING the Petition of Rodriguez, et al., in G.R.
No. 178501 and PARTLY GRANTING the Petition of PAL
in G.R. No. 178510;
(2) REVERSING and SETTING ASIDE the Decision dated
November 30, 2006 of the Court of Appeals in CA-G.R. SP
No. 71190;
(3) DECLARING that Jadie was illegally dismissed
and ORDERING PAL to pay her the following:
(a) As consequences of her illegal dismissal: (i)
separation pay equivalent to one (1) month
salary for every year of service in lieu of
reinstatement; (ii) backwages from June 9, 1998;
(iii) longevity pay at P500.00/month for every
year of service based on seniority date falling
after June 9, 1998; (iv) Christmas bonuses from
1998; (v) Jadie's proportionate share in the PS
Million contribution of PAL to the Retirement
Fund; and (vi) cash equivalent of vacation leaves
and sick leaves which Jadie earned after June 9,
1998, all of which shall be computed until finality
of this Decision;
(b) Benefits due her prior to her illegal dismissal
on June 9, 1998: (i) unpaid salaries for June 1 to
8, 1998; and (ii) productivity allowance,
transportation allowance, and rice subsidy for
May 1998 and June 1 to 8, 1998; and
(c) Legal interest of 6% per annum on all
monetary awards due her from the date of
finality of this Decision until full payment thereof;
(4) DISMISSING for lack of merit the Complaint for
Illegal Dismissal of Rodriguez, Alisangco, Benjamin T.
Ang, Vicente P. Ang, Arroyo, Baquiran, Wilfredo S. Cruz,
Delos Reyes, Ecarma, Galisim, Garcia, Gutiza, Jose,
Labuga, Lastimoso, Matias, Maturan, Ocharan, Piamonte,
Sabado, Sanchez, Corpus, and Alcaeses; and
 (5) DENYING the Motion for Leave to Reinstate Elmer F. reversed and set aside the Resolutions dated 29 June 2009 and
Pea, Antonio P. Noble, Baltazar B. Musong, Nicomen H. 16 December 2009 of the National Labor Relations Commission
Versoza and Ryan Jose C. Hinayon as Petitioners in G.R. (NLRC) in NLRC No. MIC-03-000229-08 (RAB XI-09-00774-
No. 178501. 2007), and remanded the case to the Regional Arbitration
Branch, Region XI, Davao City for further proceedings.
SO ORDERED.
The Facts
Republic of the Philippines
SUPREME COURT Respondents Epifanio P. Mejares, Remegio C. Baluran, Jr., Dante
Manila Saycon, and Cecilio Cucharo (respondents) were among the
complainants, represented by their labor union named
SECOND DIVISION "Nagkahiusang Mamumuo ng Bit, Djevon, at Raquilla Farms sa
Hijo Resources Corporation" (NAMABDJERA-HRC), who filed
January 13, 2016 with the NLRC an illegal dismissal case against petitioner Hijo
Resources Corporation (HRC).
G.R. No. 208986
Complainants (which include the respondents herein) alleged
HIJO RESOURCES CORPORATION, Petitioner, that petitioner HRC, formerly known as Hijo Plantation
vs. Incorporated (HPI), is the owner of agricultural lands in Madum,
EPIFANIO P. MEJARES, REMEGIO C. BAL URAN, JR., DANTE Tagum, Davao del Norte, which were planted primarily with
SAYCON, and CECILIO CUCHARO, represented by Cavendish bananas. In 2000, HPI was renamed as HRC. In
NAMABDJERA-HRC, Respondents. December 2003, HRCs application for the conversion of its
agricultural lands into agri-industrial use was approved. The
DECISION machineries and equipment formerly used by HPI continued to
be utilized by HRC.
CARPIO, J.:
Complainants claimed that they were employed by HPI as farm
The Case workers in HPIs plantations occupying various positions as area
harvesters, packing house workers, loaders, or labelers. In 2001,
This petition for review1 assails the 29 August 2012 complainants were absorbed by HRC, but they were working
Decision2 and the 13 August 2013 Resolution3 of the Court of under the contractor-growers: Buenaventura Tano (Bit Farm);
Appeals in CA-G.R. SP No. 04058-MIN. The Court of Appeals
Djerame Pausa (Djevon Farm); and Ramon Q. Laurente (Raquilla
Farm). Complainants asserted that these contractor-growers
received compensation from HRC and were under the control of
HRC. They further alleged that the contractor-growers did not
have their own capitalization, farm machineries, and equipment.
On 1 July 2007, complainants formed their union NAMABDJERA-
HRC, which was later registered with the Department of Labor
and Employment (DOLE). On 24 August 2007, NAMABDJERA-
HRC filed a petition for certification election before the DOLE.
When HRC learned that complainants formed a union, the three
contractor-growers filed with the DOLE a notice of cessation of
business operations. In September 2007, complainants were
terminated from their employment on the ground of cessation of
business operations by the contractor-growers of HRC. On 19
September 2007, complainants, represented by NAMABDJERA-
HRC, filed a case for unfair labor practices, illegal dismissal, and
illegal deductions with prayer for moral and exemplary damages
and attorneys fees before the NLRC.
On 19 November 2007, DOLE Med-Arbiter Lito A. Jasa issued an
Order,4 dismissing NAMABDJERA-HRCs petition for certification
election on the ground that there was no employer-employee
relationship between complainants (members of NAMABDJERA-
HRC) and HRC. Complainants did not appeal the Order of Med-
Arbiter Jasa but pursued the illegal dismissal case they filed.
On 4 January 2008, HRC filed a motion to inhibit Labor Arbiter
Maria Christina S. Sagmit and moved to dismiss the complaint for
illegal dismissal. The motion to dismiss was anchored on the
following arguments: (1) Lack of jurisdiction under the principle
of res judicata; and (2) The Order of the Med-Arbiter finding that
complainants were not employees of HRC, which complainants
did not appeal, had become final and executory.
The Labor Arbiters Ruling
On 5 February 2008, Labor Arbiter Sagmit denied the motion to
inhibit. Labor Arbiter Sagmit likewise denied the motion to
dismiss in an Order dated 12 February 2008. Labor Arbiter
Sagmit held that res judicata does not apply. Citing the cases
of Manila Golf & Country Club, Inc. v. IAC5 and Sandoval Shipyards,
Inc. v. Pepito,6 the Labor Arbiter ruled that the decision of the
Med-Arbiter in a certification election case, by the nature of that
proceedings, does not foreclose further dispute between the
parties as to the existence or non-existence of employer-
employee relationship between them. Thus, the finding of Med-
Arbiter Jasa that no employment relationship exists between
HRC and complainants does not bar the Labor Arbiter from
making his own independent finding on the same issue. The non-
litigious nature of the proceedings before the Med-Arbiter does
not prevent the Labor Arbiter from hearing and deciding the
case. Thus, Labor Arbiter Sagmit denied the motion to dismiss
and ordered the parties to file their position papers.
HRC filed with the NLRC a petition for certiorari with a prayer
for temporary restraining order, seeking to nullify the 5
February 2008 and 12 February 2008 Orders of Labor Arbiter
Sagmit.
The Ruling of the NLRC
The NLRC granted the petition, holding that Labor Arbiter Sagmit
gravely abused her discretion in denying HRCs motion to
dismiss. The NLRC held that the Med-Arbiter Order dated 19
November 2007 dismissing the certification election case on the
ground of lack of employer-employee relationship between HRC
and complainants (members of NAMABDJERA-HRC)
constitutes res judicata under the concept of conclusiveness of
judgment, and thus, warrants the dismissal of the case. The NLRC
ruled that the Med-Arbiter exercises quasi-judicial power and
the Med-Arbiters decisions and orders have, upon their finality,
the force and effect of a final judgment within the purview of the
doctrine of res judicata.
On the issue of inhibition, the NLRC found it moot and academic
in view of Labor Arbiter Sagmits voluntary inhibition from the
case as per Order dated 11 March 2009.
The Ruling of the Court of Appeals
The Court of Appeals found the ruling in the Sandoval case more
applicable in this case. The Court of Appeals noted that
the Sandoval case, which also involved a petition for certification
election and an illegal dismissal case filed by the union members
against the alleged employer, is on all fours with this case. The
issue in Sandoval on the effect of the Med-Arbiters findings as to
the existence of employer-employee relationship is the very
same issue raised in this case. On the other hand, the case
of Chris Garments Corp. v. Hon. Sto. Tomas7 cited by the NLRC,
which involved three petitions for certification election filed by
the same union, is of a different factual milieu.
The Court of Appeals held that the certification proceedings
before the Med-Arbiter are non-adversarial and merely
investigative. On the other hand, under Article 217 of the Labor
Code, the Labor Arbiter has original and exclusive jurisdiction
over illegal dismissal cases. Although the proceedings before the
Labor Arbiter are also described as non-litigious, the Court of
Appeals noted that the Labor Arbiter is given wide latitude in
ascertaining the existence of employment relationship. Thus,
unlike the Med-Artbiter, the Labor Arbiter may conduct
clarificatory hearings and even avail of ocular inspection to
ascertain facts speedily.
Hence, the Court of Appeals concluded that the decision in a
certification election case does not foreclose further dispute as to
the existence or non-existence of an employer-employee
relationship between HRC and the complainants.
On 29 August 2012, the Court of Appeals promulgated its
Decision, the dispositive portion of which reads:
WHEREFORE, the petition is hereby GRANTED and the assailed
Resolutions dated June 29, 2009 and December 16, 2009 of the
National Labor Relations Commission are hereby REVERSED
AND SET ASIDE. Let NLRC CASE No. RAB-XI-09-00774-0707 be
remanded to the Regional Arbitration Branch, Region XI, Davao
City for further proceedings.
SO ORDERED.8
The Issue
Whether the Court of Appeals erred in setting aside the NLRC
ruling and remanding the case to the Labor Arbiter for further
proceedings.
The Ruling of the Court
We find the petition without merit.
There is no question that the Med-Arbiter has the authority to
determine the existence of an employer-employee relationship
between the parties in a petition for certification election. As
held in M.Y. San Biscuits, Inc. v. Acting Sec. Laguesma:9
Under Article 226 of the Labor Code, as amended, the Bureau of
Labor Relations (BLR), of which the med-arbiter is an officer, has
the following jurisdiction
"ART. 226. Bureau of Labor Relations. The Bureau of Labor
Relations and the Labor Relations Division[s] in the regional
offices of the Department of Labor 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.
The Bureau shall have fifteen (15) working days to act on labor
cases before it, subject to extension by agreement of the parties."
(Italics supplied)
From the foregoing, the BLR has the original and exclusive
jurisdiction to inter alia, decide all disputes, grievances or
problems arising from or affecting labor-management relations
in all workplaces whether agricultural or non-agricultural.
Necessarily, in the exercise of this jurisdiction over labor-
management relations, the med-arbiter has the authority,
original and exclusive, to determine the existence of an
employer-employee relationship between the parties.
Apropos to the present case, once there is a determination as to
the existence of such a relationship, the med-arbiter can then
decide the certification election case.1wphi1 As the authority to
determine the employer-employee relationship is necessary and
indispensable in the exercise of jurisdiction by the med-arbiter,
his finding thereon may only be reviewed and reversed by the
Secretary of Labor who exercises appellate jurisdiction under
Article 259 of the Labor Code, as amended, which provides
"ART. 259. Appeal from certification election orders. Any party
to an election may appeal the order or results of the election as
determined by the Med-Arbiter directly to the Secretary of Labor
and Employment on the ground that the rules and regulations or
parts thereof established by the Secretary of Labor and
Employment for the conduct of the election have been violated.
Such appeal shall be decided within fifteen (15) calendar days."10
In this case, the Med-Arbiter issued an Order dated 19 November
2007, dismissing the certification election case because of lack of
employer-employee relationship between HRC and the members
of the respondent union. The order dismissing the petition was
issued after the members of the respondent union were
terminated from their employment in September 2007, which
led to the filing of the illegal dismissal case before the NLRC on
19 September 2007. Considering their termination from work, it
would have been futile for the members of the respondent union
to appeal the Med-Arbiters order in the certification election
case to the DOLE Secretary. Instead, they pursued the illegal
dismissal case filed before the NLRC.
The Court is tasked to resolve the issue of whether the Labor
Arbiter, in the illegal dismissal case, is bound by the ruling of the
Med-Arbiter regarding the existence or non-existence of
employer-employee relationship between the parties in the
certification election case.
The Court rules in the negative. As found by the Court of Appeals,
the facts in this case are very similar to those in
the Sandoval case, which also involved the issue of whether the
ruling in a certification election case on the existence or non-
existence of an employer-employee relationship operates as res
judicata in the illegal dismissal case filed before the NLRC.
In Sandoval, the DOLE Undersecretary reversed the finding of the
Med-Arbiter in a certification election case and ruled that there
was no employer-employee relationship between the members
of the petitioner union and Sandoval Shipyards, Inc. (SSI), since
the former were employees of the subcontractors. Subsequently,
several illegal dismissal cases were filed by some members of the
petitioner union against SSI. Both the Labor Arbiter and the
NLRC ruled that there was no employer-employee relationship
between the parties, citing the resolution of the DOLE
Undersecretary in the certification election case. The Court of
Appeals reversed the NLRC ruling and held that the members of
the petitioner union were employees of SSI. On appeal, this Court
affirmed the appellate courts decision and ruled that the Labor
Arbiter and the NLRC erred in relying on the pronouncement of
the DOLE Undersecretary that there was no employer-employee
relationship between the parties. The Court cited the ruling in
the Manila Golf11 case that the decision in a certification election
case, by the very nature of that proceeding, does not foreclose all
further dispute between the parties as to the existence or non-
existence of an employer-employee relationship between them.
This case is different from the Chris Garments case cited by the
NLRC where the Court held that the matter of employer-
employee relationship has been resolved with finality by the
DOLE Secretary, whose factual findings were not appealed by the
losing party. As mentioned earlier, the Med-Arbiters order in
this case dismissing the petition for certification election on
the basis of non-existence of employer-employee
relationship was issued after the members of the
respondent union were dismissed from their
employment. The purpose of a petition for certification election
is to determine which organization will represent
the employees in their collective bargaining with the
employer.12 The respondent union, without its member-
employees, was thus stripped of its personality to challenge
the Med-Arbiters decision in the certification election case.
Thus, the members of the respondent union were left with
no option but to pursue their illegal dismissal case filed
before the Labor Arbiter. To dismiss the illegal dismissal case
filed before the Labor Arbiter on the basis of the pronouncement
of the Med-Arbiter in the certification election case that there
was no employer-employee relationship between the parties,
which the respondent union could not even appeal to the DOLE
Secretary because of the dismissal of its members, would be
tantamount to denying due process to the complainants in the
illegal dismissal case. This, we cannot allow.
WHEREFORE, we DENY the petition. We AFFIRM the 29 August
2012 Decision and the 13 August 2013 Resolution of the Court of
Appeals in CA-G.R. SP No. 04058-MIN.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
January 25, 2016
G.R. No. 201595
ALLAN M. MENDOZA, Petitioner,
vs.
OFFICERS OF MANILA WATER EMPLOYEES UNION (MWEU),
namely, EDUARDO B. BORELA, BUENAVENTURA QUEBRAL,
ELIZABETH COMETA, ALEJANDRO TORRES, AMORSOLO
TIERRA, SOLEDAD YEBAN, LUIS RENDON, VIRGINIA
APILADO, TERESITA BOLO, ROGELIO BARBERO, JOSE
CASAAS, ALFREDO MAGA, EMILIO FERNANDEZ, ROSITA
BUENA VENTURA, ALMENIO CANCINO, ADELA IMANA,
MARIO MANCENIDO, WILFREDO MANDILAG, ROLANDO
MANLAP AZ, EFREN MONTEMAYOR, NELSON PAGULAYAN,
CARLOS VILLA, RIC BRIONES, and CHITO
BERNARDO, Respondents.
DECISION
DEL CASTILLO, J.:
This Petition for Review on Certiorari1 assails the April 24, 2012
Decision2 of the Court of Appeals (CA) which dismissed the
Petition for Certiorari3 in CA-G.R. SP No. 115639.
Factual Antecedents
Petitioner was a member of the Manila Water Employees Union
(MWEU), a Department of Labor and Employment (DOLE)-
registered labor organization consisting of rank-and-file
employees within Manila Water Company (MWC). The
respondents herein named Eduardo B. Borela (Borela),
Buenaventura Quebral (Quebral), Elizabeth Cometa (Cometa),
Alejandro Torres (Torres), Amorsolo Tierra (Tierra), Soledad
Yeban (Yeban), Luis Rendon (Rendon), Virginia Apilado
(Apilado), Teresita Bolo (Bolo), Rogelio Barbero (Barbero), Jose
Casaas (Casaas), Alfredo Maga (Maga), Emilio Fernandez
(Fernandez), Rosita Buenaventura (Buenaventura), Almenio
Cancino (Cancino), Adela Imana, Mario Mancenido (Mancenido),
Wilfredo Mandilag (Mandilag), Rolando Manlapaz (Manlapaz),
Efren Montemayor (Montemayor), Nelson Pagulayan, Carlos
Villa, Ric Briones, and Chito Bernardo were MWEU officers
during the period material to this Petition, with Borela as
President and Chairman of the MWEU Executive Board, Quebral
as First Vice-President and Treasurer, and Cometa as Secretary.4
In an April 11, 2007 letter,5 MWEU through Cometa informed
petitioner that the union was unable to fully deduct the
increased P200.00 union dues from his salary due to lack of the
required December 2006 check-off authorization from him.
Petitioner was warned that his failure to pay the union dues
would result in sanctions upon him. Quebral informed Borela,
through a May 2, 2007 letter,6 that for such failure to pay the
union dues, petitioner and several others violated Section 1(g),
Article IX of the MWEUs Constitution and By-Laws.7 In turn,
Borela referred the charge to the MWEU grievance committee for
investigation.
On May 21, 2007, a notice of hearing was sent to petitioner, who
attended the scheduled hearing. On June 6, 2007, the MWEU
grievance committee recommended that petitioner be
suspended for 30 days.
In a June 20, 2007 letter,8 Borela informed petitioner and his
corespondents of the MWEU Executive Boards "unanimous
approval"9 of the grievance committees recommendation and
imposition upon them of a penalty of 30 days suspension,
effective June 25, 2007.
In a June 26, 2007 letter10 to Borela, petitioner and his co-
respondents took exception to the imposition and indicated their
intention to appeal the same to the General Membership
Assembly in accordance with Section 2(g), Article V of the
unions Constitution and By-Laws,11 which grants them the right
to appeal any arbitrary resolution, policy and rule promulgated
by the Executive Board to the General Membership Assembly. In
a June 28, 2007 reply,12 Borela denied petitioners appeal, stating
that the prescribed period for appeal had expired.
Petitioner and his co-respondents sent another letter13 on July 4,
2007, reiterating their arguments and demanding that the
General Membership Assembly be convened in order that their
appeal could be taken up. The letter was not acted upon.
Petitioner was once more charged with non-payment of union
dues, and was required to attend an August 3, 2007
hearing.14 Thereafter, petitioner was again penalized with a 30-
day suspension through an August 21, 2007 letter15by Borela
informing petitioner of the Executive Boards "unanimous
approval"16 of the grievance committee recommendation to
suspend him effective August 24, 2007, to which he submitted a
written reply,17 invoking his right to appeal through the
convening of the General Membership Assembly. However, the
respondents did not act on petitioners plea.
Meanwhile, MWEU scheduled an election of officers on
September 14, 2007. Petitioner filed his certificate of candidacy
for Vice-President, but he was disqualified for not being a
member in good standing on account of his suspension.
On October 2, 2007, petitioner was charged with non-payment of
union dues for the third time. He did not attend the scheduled
hearing. This time, he was meted the penalty of expulsion from
the union, per "unanimous approval"18 of the members of the
Executive Board. His pleas for an appeal to the General
Membership Assembly were once more unheeded.19
In 2008, during the freedom period and negotiations for a new
collective bargaining agreement (CBA) with MWC, petitioner
joined another union, the Workers Association for Transparency,
Empowerment and Reform, All-Filipino Workers Confederation
(WATER-AFWC). He was elected union President. Other MWEU
members were inclined to join WATER-AFWC, but MWEU
director Torres threatened that they would not get benefits from
the new CBA.20
The MWEU leadership submitted a proposed CBA which
contained provisions to the effect that in the event of
retrenchment, non-MWEU members shall be removed first, and
that upon the signing of the CBA, only MWEU members shall
receive a signing bonus.21
Ruling of the Labor Arbiter
On October 13, 2008, petitioner filed a Complaint22 against
respondents for unfair labor practices, damages, and attorneys
fees before the National Labor Relations Commission (NLRC),
Quezon City, docketed as NLRC Case No. NCR-10-14255-08. In
his Position Paper and other written submissions,23 petitioner
accused the respondents of illegal termination from MWEU in
connection with the events relative to his non-payment of union
dues; unlawful interference, coercion, and violation of the rights
of MWC employees to self-organization in connection with the
proposed CBA submitted by MWEU leadership, which petitioner
claims contained provisions that discriminated against non-
MWEU members. Petitioner prayed in his Supplemental Position
Paper that respondents be held guilty of unfair labor practices
and ordered to indemnify him moral damages in the amount of
P100,000.00, exemplary damages amounting to P50,000.00, and
10% attorneys fees.
In their joint Position Paper and other pleadings,24 respondents
claimed that the Labor Arbiter had no jurisdiction over the
dispute, which is intra-union in nature; that the Bureau of Labor
Relations (BLR) was the proper venue, in accordance with Article
226 of the Labor Code25 and Section 1, Rule XI of Department
Order 40-03, series of 2003, of the DOLE;26 and that they were
not guilty of unfair labor practices, discrimination, coercion or
restraint.
On May 29, 2009, Labor Arbiter Virginia T. Luyas-Azarraga
issued her Decision27 which decreed as follows:
Indeed the filing of the instant case is still premature. Section 5,
Article X-Investigation Procedures and Appeal Process of the
Union Constitution and By-Laws provides that:
Section 5. Any dismissed and/or expelled member shall have the
rights to appeal to the Executive Board within seven (7) days
from the date of notice of the said dismissal and/or expulsion,
which in [turn] shall be referred to the General Membership
Assembly. In case of an appeal, a simple majority of the decision
of the Executive Board is imperative. The same shall be
approved/disapproved by a majority vote of the general
membership assembly in a meeting duly called for the purpose.
On the basis of the foregoing, the parties shall exhaust first all the
administrative remedies before resorting to compulsory
arbitration. Thus, instant case is referred back to the Union for
the General Assembly to act or deliberate complainants appeal
on the decision of the Executive Board.
WHEREFORE PREMISES CONSIDERED, instant case is referred
back to the Union level for the General Assembly to act on
complainants appeal.
SO ORDERED.28
Ruling of the National Labor Relations Commission
Petitioner appealed before the NLRC, where the case was
docketed as NLRC LAC No. 07-001913-09. On March 15, 2010,
the NLRC issued its Decision,29 declaring as follows:
Complainant30 imputes serious error to the Labor Arbiter when
she decided as follows:
a. Referring back the subject case to the Union level for
the General Assembly to act on his appeal.
b. Not ruling that respondents are guilty of ULP as
charged.
c. Not granting to complainant moral and exemplary
damages and attorneys fees.
Complainant, in support of his charges, claims that respondents
restrained or coerced him in the exercise of his right as a union
member in violation of paragraph "a", Article 249 of the Labor
Code,31particularly, in denying him the explanation as to whether
there was observance of the proper procedure in the increase of
the membership dues from P100.00 to P200.00 per month.
Further, complainant avers that he was denied the right to
appeal his suspension and expulsion in accordance with the
provisions of the Unions Constitution and By-Laws. In addition,
complainant claims that respondents attempted to cause the
management to discriminate against the members of WATER-
AFWC thru the proposed CBA.
Pertinent to the issue then on hand, the Labor Arbiter ordered
that the case be referred back to the Union level for the General
Assembly to act on complainants appeal. Hence, these appeals.
After a careful look at all the documents submitted and a
meticulous review of the facts, We find that this Commission
lacks the jurisdictional competence to act on this case.
Article 217 of the Labor Code,32 as amended, specifically
enumerates the cases over which the Labor Arbiters and the
Commission have original and exclusive jurisdiction. A perusal of
the record reveals that the causes of action invoked by
complainant do not fall under any of the enumerations therein.
Clearly, We have no jurisdiction over the same.
Moreover, pursuant to Section 1, Rule XI, as amended, DOLE
Department Order No. 40-03 in particular, Item A, paragraphs
(h) and (j) and Item B, paragraph (a)(3), respectively, provide:
"A. Inter-Intra-Union disputes shall include:
"(h) violation of or disagreements over any provision of the
Constitution and By-Laws of a Union or workers
association.
 "(j) violation of the rights and conditions of membership in
a Union or workers association.
"B. Other Labor Relations disputes, not otherwise covered by
Article 217 of the Labor Code, shall include
"3. a labor union and an individual who is not a member of said
union."
Clearly, the above-mentioned disputes and conflict fall under the
jurisdiction of the Bureau of Labor Relations, as these are
inter/intra-union disputes.
WHEREFORE, the decision of the Labor Arbiter a quo dated May
29, 2009 is hereby declared NULL and VOID for being rendered
without jurisdiction and the instant complaint is DISMISSED.
SO ORDERED.33
Petitioner moved for reconsideration,34 but in a June 16, 2010
Resolution,35 the motion was denied and the NLRC sustained its
Decision.
Ruling of the Court of Appeals
In a Petition for Certiorari36 filed with the CA and docketed as
CA-G.R. SP No. 115639, petitioner sought to reverse the NLRC
Decision and be awarded his claim for damages and attorneys
fees on account of respondents unfair labor practices, arguing
among others that his charge of unfair labor practices is
cognizable by the Labor Arbiter; that the fact that the dispute is
inter- or intra-union in nature cannot erase the fact that
respondents were guilty of unfair labor practices in interfering
and restraining him in the exercise of his right to self-
organization as member of both MWEU and WATER-AFWC, and
in discriminating against him and other members through the
provisions of the proposed 2008 CBA which they drafted; that
his failure to pay the increased union dues was proper since the
approval of said increase was arrived at without observing the
prescribed voting procedure laid down in the Labor Code; that
he is entitled to an award of damages and attorneys fees as a
result of respondents illegal acts in discriminating against him;
and that in ruling the way it did, the NLRC committed grave
abuse of discretion.
On April 24, 2012, the CA issued the assailed Decision containing
the following pronouncement:
The petition lacks merit.
Petitioners causes of action against MWEU are inter/intra-union
disputes cognizable by the BLR whose functions and jurisdiction
are largely confined to union matters, collective bargaining
registry, and labor education. Section 1, Rule XI of Department
Order (D.O.) No. 40-03, Series of 2003, of the Department of
Labor and Employment enumerates instances of inter/intra-
union disputes, viz:
Section 1. Coverage. Inter/intra-union disputes shall include:
xxxx
(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;
xxxx
(g) validity/invalidity of impeachment/ expulsion of union and
workers association officers and members;
xxxx
(j) violations of or disagreements over any provision in a union
or workers association constitution and by-laws;
xxxx
(l) violations of the rights and conditions of union or workers
association membership;
xxxx
(n) such other disputes or conflicts involving the rights to self-
organization, union membership and collective bargaining
(1) between and among legitimate labor organizations;
(2) between and among members of a union or workers
association.
In brief, "Inter-Union Dispute" refers to any conflict between and
among legitimate labor unions involving representation
questions for purposes of collective bargaining or to any other
conflict or dispute between legitimate labor unions. "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 affiliation of
union. On the other hand, the circumstances of unfair labor
practices (ULP) of a labor organization are stated in Article 249
of the Labor Code, to wit:
Article 249. Unfair labor practices of labor organizations. It shall
be unlawful for labor organization, its officers, agents, or
representatives to commit any of the following unfair labor
practices:
(a) To restrain or coerce employees in the exercise of
their right to self-organization; Provided, That the labor
organization shall have the right to prescribe its own
rules with respect to the acquisition or retention of
membership;
(b) To cause or attempt to cause an employer to
discriminate against an employee, including
discrimination against an employee with respect to
whom membership in such organization has been denied
or terminated on any ground other than the usual terms
and conditions under which membership or continuation
of membership is made available to other members;
xxxx
Applying the aforementioned rules, We find that the issues
arising from petitioners right to information on the increased
membership dues, right to appeal his suspension and expulsion
according to CBL provisions, and right to vote and be voted on
are essentially intra-union disputes; these involve violations of
rights and conditions of union membership. But his claim that a
director of MWEU warned that non-MWEU members would not
receive CBA benefits is an inter-union dispute. It is more of an
"interference" by a rival union to ensure the loyalty of its
members and to persuade non-members to join their union. This
is not an actionable wrong because interfering in the exercise of
the right to organize is itself a function of self-organizing.37 As
long as it does not amount to restraint or coercion, a labor
organization may interfere in the employees right to self-
organization.38 Consequently, a determination of validity or
illegality of the alleged acts necessarily touches on union
matters, not ULPs, and are outside the scope of the labor
arbiters jurisdiction.
As regards petitioners other accusations, i.e., discrimination in
terms of meting out the penalty of expulsion against him alone,
and attempt to cause the employer, MWC, to discriminate against
non-MWEU members in terms of retrenchment or reduction of
personnel, and signing bonus, while We may consider them as
falling within the concept of ULP under Article 249(a) and (b),
still, petitioners complaint cannot prosper for lack of substantial
evidence. Other than his bare allegation, petitioner offered no
proof that MWEU did not penalize some union members who
failed to pay the increased dues. On the proposed discriminatory
CBA provisions, petitioner merely attached the pages containing
the questioned provisions without bothering to reveal the
MWEU representatives responsible for the said proposal. Article
249 mandates that "x x x only the officers, members of the
governing boards, representatives or agents or members of labor
associations or organizations who have actually participated in,
authorized or ratified unfair labor practices shall be held
criminally liable." Plain accusations against all MWEU officers,
without specifying their actual participation, do not suffice. Thus,
the ULP charges must necessarily fail.
In administrative and quasi-judicial proceedings, only
substantial evidence is necessary to establish the case for or
against a party. Substantial evidence is that amount of relevant
evidence which a reasonable mind might accept as adequate to
justify a conclusion. Petitioner failed to discharge the burden of
proving, by substantial evidence, the allegations of ULP in his
complaint. The NLRC, therefore, properly dismissed the case.
FOR THESE REASONS, the petition is DISMISSED.
SO ORDERED.39
Thus, the instant Petition.
Issue
In an August 28, 2013 Resolution,40 this Court resolved to give
due course to the Petition, which claims that the CA erred:
A. IN DECLARING THAT THE PRESENCE OF INTER/INTRA-
UNION CONFLICTS NEGATES THE COMPLAINT FOR UNFAIR
LABOR PRACTICES AGAINST A LABOR ORGANIZATION AND ITS
OFFICERS, AND IN AFFIRMING THAT THE NLRC PROPERLY
DISMISSED THE CASE FOR ALLEGED LACK OF JURISDICTION.
B. IN NOT RULING THAT RESPONDENTS ARE GUILTY OF
UNFAIR LABOR PRACTICES UNDER ARTICLE 249(a) AND (b) OF
THE LABOR CODE.
C. IN DECLARING THAT THE THREATS MADE BY A UNION
OFFICER AGAINST MEMBERS OF A RIVAL UNION IS (sic)
MERELY AN "INTERFERENCE" AND DO NOT AMOUNT TO
"RESTRAINT" OR "COERCION".
D. IN DECLARING THAT PETITIONER FAILED TO PRESENT
SUBSTANTIAL EVIDENCE IN PROVING RESPONDENTS SPECIFIC
ACTS OF UNFAIR LABOR PRACTICES.
E. IN NOT RULING THAT RESPONDENTS ARE SOLIDARILY
LIABLE TO PETITIONER FOR MORAL AND EXEMPLARY
DAMAGES, AND ATTORNEYS FEES.41
Petitioners Arguments
Praying that the assailed CA dispositions be set aside and that
respondents be declared guilty of unfair labor practices under
Article 249(a) and (b) and adjudged liable for damages and
attorneys fees as prayed for in his complaint, petitioner
maintains in his Petition and Reply42 that respondents are guilty
of unfair labor practices which he clearly enumerated and laid
out in his pleadings below; that these unfair labor practices
committed by respondents fall within the jurisdiction of the
Labor Arbiter; that the Labor Arbiter, the NLRC, and the CA failed
to rule on his accusation of unfair labor practices and simply
dismissed his complaint on the ground that his causes of action
are intra- or inter-union in nature; that admittedly, some of his
causes of action involved intra- or inter-union disputes, but other
acts of respondents constitute unfair labor practices; that he
presented substantial evidence to prove that respondents are
guilty of unfair labor practices by failing to observe the proper
procedure in the imposition of the increased monthly union
dues, and in unduly imposing the penalties of suspension and
expulsion against him; that under the unions constitution and
by-laws, he is given the right to appeal his suspension and
expulsion to the general membership assembly; that in denying
him his rights as a union member and expelling him, respondents
are guilty of malice and evident bad faith; that respondents are
equally guilty for violating and curtailing his rights to vote and be
voted to a position within the union, and for discriminating
against non-MWEU members; and that the totality of
respondents conduct shows that they are guilty of unfair labor
practices.
Respondents Arguments
In their joint Comment,43 respondents maintain that petitioner
raises issues of fact which are beyond the purview of a petition
for review on certiorari; that the findings of fact of the CA are
final and conclusive; that the Labor Arbiter, NLRC, and CA are
one in declaring that there is no unfair labor practices committed
against petitioner; that petitioners other allegations fall within
the jurisdiction of the BLR, as they refer to intra- or inter-union
disputes between the parties; that the issues arising from
petitioners right to information on the increased dues, right to
appeal his suspension and expulsion, and right to vote and be
voted upon are essentially intra-union in nature; that his
allegations regarding supposed coercion and restraint relative to
benefits in the proposed CBA do not constitute an actionable
wrong; that all of the acts questioned by petitioner are covered
by Section 1, Rule XI of Department Order 40-03, series of 2003
as intra-/inter-union disputes which do not fall within the
jurisdiction of the Labor Arbiter; that in not paying his union
dues, petitioner is guilty of insubordination and deserved the
penalty of expulsion; that petitioner failed to petition to convene
the general assembly through the required signature of 30% of
the union membership in good standing pursuant to Article VI,
Section 2(a) of MWEUs Constitution and By-Laws or by a
petition of the majority of the general membership in good
standing under Article VI, Section 3; and that for his failure to
resort to said remedies, petitioner can no longer question his
suspension or expulsion and avail of his right to appeal.
Our Ruling
The Court partly grants the Petition.
In labor cases, issues of fact are for the labor tribunals and the CA
to resolve, as this Court is not a trier of facts. However, when the
conclusion arrived at by them is erroneous in certain respects,
and would result in injustice as to the parties, this Court must
intervene to correct the error. While the Labor Arbiter, NLRC,
and CA are one in their conclusion in this case, they erred in
failing to resolve petitioners charge of unfair labor practices
against respondents.
It is true that some of petitioners causes of action constitute
intra-union cases cognizable by the BLR under Article 226 of the
Labor Code.
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. 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 x x x.44
However, petitioners charge of unfair labor practices falls within
the original and exclusive jurisdiction of the Labor Arbiters,
pursuant to Article 217 of the Labor Code. In addition, Article
247 of the same Code provides that "the civil aspects of all cases
involving unfair labor practices, which may include claims for
actual, moral, exemplary and other forms of damages, attorneys
fees and other affirmative relief, shall be under the jurisdiction of
the Labor Arbiters."
Unfair labor practices may be committed both by the employer
under Article 248 and by labor organizations under Article 249
of the Labor Code,45 which provides as follows:
ART. 249. Unfair labor practices of labor organizations. - It shall
be unfair labor practice for a labor organization, its officers,
agents or representatives:
(a) To restrain or coerce employees in the exercise of
their right to self-organization. However, a labor
organization shall have the right to prescribe its own
rules with respect to the acquisition or retention of
membership;
(b) To cause or attempt to cause an employer to
discriminate against an employee, including
discrimination against an employee with respect to
whom membership in such organization has been denied
or to terminate an employee on any ground other than
the usual terms and conditions under which membership
or continuation of membership is made available to other
members;
(c) To violate the duty, or refuse to bargain collectively
with the employer, provided it is the representative of
the employees;
(d) To cause or attempt to cause an employer to pay or
deliver or agree to pay or deliver any money or other
things of value, in the nature of an exaction, for services
which are not performed or not to be performed,
including the demand for fee for union negotiations;
(e) To ask for or accept negotiation or attorneys fees
from employers as part of the settlement of any issue in
collective bargaining or any other dispute; or
(f) To violate a collective bargaining agreement.
The provisions of the preceding paragraph notwithstanding, only
the officers, members of governing boards, representatives or
agents or members of labor associations or organizations who
have actually participated in, authorized or ratified unfair labor
practices shall be held criminally liable. (As amended by Batas
Pambansa Bilang 130, August 21, 1981).
Petitioner contends that respondents committed acts
constituting unfair labor practices which charge was
particularly laid out in his pleadings, but that the Labor Arbiter,
the NLRC, and the CA ignored it and simply dismissed his
complaint on the ground that his causes of action were intra- or
inter-union in nature. Specifically, petitioner claims that he was
suspended and expelled from MWEU illegally as a result of the
denial of his right to appeal his case to the general membership
assembly in accordance with the unions constitution and by-
laws. On the other hand, respondents counter that such charge is
intra-union in nature, and that petitioner lost his right to appeal
when he failed to petition to convene the general assembly
through the required signature of 30% of the union membership
in good standing pursuant to Article VI, Section 2(a) of MWEUs
Constitution and By-Laws or by a petition of the majority of the
general membership in good standing under Article VI, Section 3.
Under Article VI, Section 2(a) of MWEUs Constitution and By-
Laws, the general membership assembly has the power to
"review revise modify affirm or repeal [sic] resolution and
decision of the Executive Board and/or committees upon
petition of thirty percent (30%) of the Union in good
standing,"46 and under Section 2(d), to "revise, modify, affirm or
reverse all expulsion cases."47 Under Section 3 of the same
Article, "[t]he decision of the Executive Board may be appealed
to the General Membership which by a simple majority vote
reverse the decision of said body. If the general Assembly is not
in session the decision of the Executive Board may be reversed
by a petition of the majority of the general membership in good
standing."48 And, in Article X, Section 5, "[a]ny dismissed and/or
expelled member shall have the right to appeal to the Executive
Board within seven days from notice of said dismissal and/or
expulsion which, in [turn] shall be referred to the General
membership assembly. In case of an appeal, a simple majority of
the decision of the Executive Board is imperative. The same shall
be approved/disapproved by a majority vote of the general
membership assembly in a meeting duly called for the
purpose."49
In regard to suspension of a union member, MWEUs
Constitution and By-Laws provides under Article X, Section 4
thereof that "[a]ny suspended member shall have the right to
appeal within three (3) working days from the date of notice of
said suspension. In case of an appeal a simple majority of vote of
the Executive Board shall be necessary to nullify the suspension."
Thus, when an MWEU member is suspended, he is given the right
to appeal such suspension within three working days from the
date of notice of said suspension, which appeal the MWEU
Executive Board is obligated to act upon by a simple majority
vote. When the penalty imposed is expulsion, the expelled
member is given seven days from notice of said dismissal and/or
expulsion to appeal to the Executive Board, which is required to
act by a simple majority vote of its members. The Boards
decision shall then be approved/ disapproved by a majority vote
of the general membership assembly in a meeting duly called for
the purpose.1avvphi1
The documentary evidence is clear that when petitioner received
Borelas August 21, 2007 letter informing him of the Executive
Boards unanimous approval of the grievance committee
recommendation to suspend him for the second time effective
August 24, 2007, he immediately and timely filed a written
appeal. However, the Executive Board then consisting of
respondents Borela, Tierra, Bolo, Casaas, Fernandez, Rendon,
Montemayor, Torres, Quebral, Pagulayan, Cancino, Maga,
Cometa, Mancenido, and two others who are not respondents
herein did not act thereon. Then again, when petitioner was
charged for the third time and meted the penalty of expulsion
from MWEU by the unanimous vote of the Executive Board, his
timely appeal was again not acted upon by said board this time
consisting of respondents Borela, Quebral, Tierra, Imana,
Rendon, Yeban, Cancino, Torres, Montemayor, Mancenido,
Mandilag, Fernandez, Buenaventura, Apilado, Maga, Barbero,
Cometa, Bolo, and Manlapaz.
Thus, contrary to respondents argument that petitioner lost his
right to appeal when he failed to petition to convene the general
assembly through the required signature of 30% of the union
membership in good standing pursuant to Article VI, Section 2(a)
of MWEUs Constitution and By-Laws or by a petition of the
majority of the general membership in good standing under
Article VI, Section 3, this Court finds that petitioner was illegally
suspended for the second time and thereafter unlawfully
expelled from MWEU due to respondents failure to act on his
written appeals. The required petition to convene the general
assembly through the required signature of 30% (under Article
VI, Section 2[a]) or majority (under Article VI, Section 3) of the
union membership does not apply in petitioners case; the
Executive Board must first act on his two appeals before the
matter could properly be referred to the general membership.
Because respondents did not act on his two appeals, petitioner
was unceremoniously suspended, disqualified and deprived of
his right to run for the position of MWEU Vice-President in the
September 14, 2007 election of officers, expelled from MWEU,
and forced to join another union, WATER-AFWC. For these,
respondents are guilty of unfair labor practices under Article 249
(a) and (b) that is, violation of petitioners right to self-
organization, unlawful discrimination, and illegal termination of
his union membership which case falls within the original and
exclusive jurisdiction of the Labor Arbiters, in accordance with
Article 217 of the Labor Code.
The primary concept of unfair labor practices is stated in Article
247 of the Labor Code, which states:
Article 247. Concept of unfair labor practice and procedure for
prosecution thereof. Unfair labor practices violate the
constitutional right of workers and employees to self-
organization, are inimical to the legitimate interests of both labor
and management, including their right to bargain collectively
and otherwise deal with each other in an atmosphere of freedom
and mutual respect, disrupt industrial peace and hinder the
promotion of healthy and stable labor-management relations.
"In essence, [unfair labor practice] relates to the commission of
acts that transgress the workers right to organize."50"[A]ll the
prohibited acts constituting unfair labor practice in essence
relate to the workers right to self-organization."51 "[T]he term
unfair labor practice refers to that gamut of offenses defined in
the Labor Code which, at their core, violates the constitutional
right of workers and employees to self-organization."52
Guaranteed to all employees or workers is the right to self-
organization and to form, join, or assist labor organizations of
their own choosing for purposes of collective bargaining. This is
made plain by no less than three provisions of the Labor Code of
the Philippines. Article 243 of the Code provides as follows:
ART. 243. Coverage and employees right to self-organization.
All persons employed in commercial, industrial and agricultural
enterprises and in religious, charitable, medical, or educational
institutions whether operating for profit or not, shall have the
right to self-organization and to form, join, or assist labor
organizations of their own choosing for purposes or collective
bargaining. Ambulant, intermittent and itinerant workers, self-
employed people, rural workers and those without any definite
employers may form labor organizations for their mutual aid and
protection.
Article 248 (a) declares it to be an unfair labor practice for an
employer, among others, to interfere with, restrain or coerce
employees in the exercise of their right to self-organization.
Similarly, Article 249 (a) makes it an unfair labor practice for a
labor organization to restrain or coerce employees in the
exercise of their rights to self-organization . . .
xxxx
The right of self-organization includes the right to organize or
affiliate with a labor union or determine which of two or more
unions in an establishment to join, and to engage in concerted
activities with co-workers for purposes of collective bargaining
through representatives of their own choosing, or for their
mutual aid and protection, i.e., the protection, promotion, or
enhancement of their rights and interests.53
As members of the governing board of MWEU, respondents are
presumed to know, observe, and apply the unions constitution
and by-laws. Thus, their repeated violations thereof and their
disregard of petitioners rights as a union member their
inaction on his two appeals which resulted in his suspension,
disqualification from running as MWEU officer, and subsequent
expulsion without being accorded the full benefits of due process
connote willfulness and bad faith, a gross disregard of his
rights thus causing untold suffering, oppression and, ultimately,
ostracism from MWEU. "Bad faith implies breach of faith and
willful failure to respond to plain and well understood
obligation."54This warrants an award of moral damages in the
amount of P100,000.00. Moreover, the Civil Code provides:
Art. 32. Any public officer or employee, or any private individual,
who directly or indirectly obstructs, defeats, violates or in any
manner impedes or impairs any of the following rights and
liberties of another person shall be liable to the latter for
damages:
xxxx
(12) The right to become a member of associations or societies
for purposes not contrary to law;
In Vital-Gozon v. Court of Appeals,55 this Court declared, as
follows:
Moral damages include physical suffering, mental anguish, fright,
serious anxiety, besmirched reputation, wounded feelings, moral
shock, social humiliation, and similar injury. They may be
recovered if they are the proximate result of the defendants
wrongful act or omission. The instances when moral damages
may be recovered are, inter alia, acts and actions referred to in
Articles 21, 26, 27, 28, 29, 30, 32, 34 and 35 of the Civil Code,
which, in turn, are found in the Chapter on Human Relations of
the Preliminary Title of the Civil Code. x x x
Under the circumstances, an award of exemplary damages in the
amount of P50,000.00, as prayed for, is likewise proper.
"Exemplary damages are designed to permit the courts to mould
behavior that has socially deleterious consequences, and their
imposition is required by public policy to suppress the wanton
acts of the offender."56 This should prevent respondents from
repeating their mistakes, which proved costly for
petitioner.1wphi1
Under Article 2229 of the Civil Code, [e]xemplary or corrective
damages are imposed, by way of example or correction for the
public good, in addition to the moral, temperate, liquidated or
compensatory damages. As this court has stated in the past:
Exemplary damages are designed by our civil law to permit the
courts to reshape behaviour that is socially deleterious in its
consequence by creating negative incentives or deterrents Republic of the Philippines
against such behaviour.57 SUPREME COURT
Manila
Finally, petitioner is also entitled to attorneys fees equivalent to
10 per cent (10%) of the total award. The unjustified acts of THIRD DIVISION
respondents clearly compelled him to institute an action
primarily to vindicate his rights and protect his interest. Indeed, March 07, 2016
when an employee is forced to litigate and incur expenses to
protect his rights and interest, he is entitled to an award of G.R. No. 198967
attorneys fees.58
JOSE EMMANUEL P. GUILLERMO, Petitioner, v. CRISANTO P.
WHEREFORE, the Petition is PARTIALLY GRANTED. The USON, Respondent.
assailed April 24, 2012 Decision of the Court of Appeals in CA-
G.R. SP No. 115639 is hereby MODIFIED, in that all of the DECISION
respondents - except for Carlos Villa, Ric Briones, and Chito
Bernardo - are declared guilty of unfair labor practices PERALTA, J.:
and ORDERED TO INDEMNIFY petitioner Allan M. Mendoza the
amounts of Pl00,000.00 as and by way of moral damages, Before the Court is a petition for review on certiorari under Rule
PS0,000.00 as exemplary damages, and attorney's fees 45 of the Rules of Court seeking to annul and set aside the Court
equivalent to 10 per cent (10%) of the total award. of Appeals Decision1 dated June 8, 2011 and Resolution2 dated
October 7, 2011 in CA G.R. SP No. 115485, which affirmed in
SO ORDERED. toto the decision of the National Labor Relations Commission
(NLRC).

The facts of the case follow. On March 11, 1996, respondent

Crisanto P. Uson (Uson) began his employment with Royal Class
Venture Phils., Inc. (Royal Class Venture) as an accounting
clerk.3 Eventually, he was promoted to the position of accounting
supervisor, with a salary of Php13,000.00 a month, until he was
allegedly dismissed from employment on December 20, 2000.4

On March 2, 2001, Uson filed with the Sub-Regional Arbitration .

Branch No. 1, Dagupan City, of the NLRC a Complaint for Illegal On September 12, 2002, the undersigned proceeded at the stated
Dismissal, with prayers for backwages, reinstatement, salaries present business office address of the respondent which is at
and 13thmonth pay, moral and exemplary damages and Minien East, Sta. Barbara, Pangasinan to serve the writ of
attorney's fees against Royal Class Venture.5 execution. Upon arrival, I found out that the establishment
erected thereat is not [in] the respondent's name but JOEL and
Royal Class Venture did not make an appearance in the case SONS CORPORATION, a family corporation owned by the
despite its receipt of summons.6 On May 15, 2001, Uson filed his Guillermos of which, Jose Emmanuel F. Guillermo the General
Position Paper7 as complainant. Manager of the respondent, is one of the stockholders who
received the writ using his nickname "Joey," [and who] concealed
On October 22, 2001, Labor Arbiter Jose G. De Vera rendered a his real identity and pretended that he [was] the brother of Jose,
Decision8 in favor of the complainant Uson and ordering therein which [was] contrary to the statement of the guard-on-duty that
respondent Royal Class Venture to reinstate him to his former Jose and Joey [were] one and the same person. The former also
position and pay his backwages, 13th month pay as well as moral informed the undersigned that the respondent's (sic)
and exemplary damages and attorney's fees. corporation has been dissolved.

Royal Class Venture, as the losing party, did not file an appeal of
the decision.9 Consequently, upon Uson's motion, a Writ of
Execution10 dated February 15, 2002 was issued to implement
the Labor Arbiter's decision.
On May 17, 2002, an Alias Writ of Execution11 was issued. But
with the judgment still unsatisfied, a Second Alias Writ of
Execution12 was issued on September 11, 2002.
Again, it was reported in the Sheriff's Return that the Second
Alias Writ of Execution dated September 11, 2002 remained
"unsatisfied." Thus, on November 14, 2002, Uson filed a Motion
for Alias Writ of Execution and to Hold Directors and Officers of
Respondent Liable for Satisfaction of the Decision.13 The motion
quoted from a portion of the Sheriffs Return, which states:
On the succeeding day, as per [advice] by the [complainant's]
counsel that the respondent has an account at the Bank of
Philippine Islands Magsaysay Branch, A.B. Fernandez Ave.,
Dagupan City, the undersigned immediately served a notice of
garnishment, thus, the bank replied on the same day stating that
the respondent [does] not have an account with the
branch.14ChanRoblesVirtualawlibrary
On December 26, 2002, Labor Arbiter Irenarco R. Rimando
issued an Order15 granting the motion filed by Uson. The order
held that officers of a corporation are jointly and severally liable
for the obligations of the corporation to the employees and there
is no denial of due process in holding them so even if the said
officers were not parties to the case when the judgment in favor
of the employees was rendered.16Thus, the Labor Arbiter pierced
the veil of corporate fiction of Royal Class Venture and held
herein petitioner Jose Emmanuel Guillermo (Guillermo), in his
personal capacity, jointly and severally liable with the
corporation for the enforcement of the claims of Uson.17
Guillermo filed, by way of special appearance, a Motion for
Reconsideration/To Set Aside the Order of December 26,
2002.18 The same, however, was not granted as, this time, in an
Order dated November 24, 2003, Labor Arbiter Nia Fe S.
Lazaga-Rafols sustained the findings of the labor arbiters before
her and even castigated Guillenno for his unexplained absence in
the prior proceedings despite notice, effectively putting
responsibility on Guillermo for the case's outcome against him.19
On January 5, 2004, Guillermo filed a Motion for Reconsideration
of the above Order,20 but the same was promptly denied by the
Labor Arbiter in an Order dated January 7, 2004.21
On January 26, 2004, Uson filed a Motion for Alias Writ of
Execution,22 to which Guillermo filed a Comment and Opposition
on April 2, 2004.23
On May 18, 2004, the Labor Arbiter issued an Order24 granting
Uson's Motion for the Issuance of an Alias Writ of Execution and
rejecting Guillermo's arguments posed in his Comment and
Opposition.
Guillermo elevated the matter to the NLRC by filing a
Memorandum of Appeal with Prayer for a (Writ of) Preliminary
Injunction dated June 10, 2004.25cralawred
In a Decision26 dated May 11, 2010, the NLRC dismissed
Guillermo's appeal and denied his prayers for injunction.
On August 20, 2010, Guillermo filed a Petition
for Certiorari27 before the Court of Appeals, assailing the NLRC
decision.
On June 8, 2011, the Court of Appeals rendered its assailed
Decision28 which denied Guillermo's petition and upheld all the
findings of the NLRC.
The appellate court found that summons was in fact served on
Guillermo as President and General Manager of Royal Class
Venture, which was how the Labor Arbiter acquired jurisdiction
over the company.29 But Guillermo subsequently refused to
receive all notices of hearings and conferences as well as the
order to file Royal Class Venture's position paper.30 Then, it was
learned during execution that Royal Class Venture had been
dissolved.31 However, the Court of Appeals held that although the
judgment had become final and executory, it may be modified or
altered "as when its execution becomes impossible or
unjust."32 It also noted that the motion to hold officers and
directors like Guillermo personally liable, as well as the notices
to hear the same, was sent to them by registered mail, but no
pleadings were submitted and no appearances were made by
anyone of them during the said motion's pendency.33 Thus, the
court held Guillermo liable, citing jurisprudence that hold the
president of the corporation liable for the latter's obligation to
illegally dismissed employees.34 Finally, the court dismissed
Guillermo's allegation that the case is an intra-corporate
controversy, stating that jurisdiction is determined by the
allegations in the complaint and the character of the relief
sought.35
From the above decision of the appellate court, Guillermo filed a
Motion for Reconsideration36 but the same was again denied by
the said court in the assailed Resolution37 dated October 7, 2011.
Hence, the instant petition.
Guillermo asserts that he was impleaded in the case only more
than a year after its Decision had become final and executory, an
act which he claims to be unsupported in law and
jurisprudence.38 He contends that the decision had become final,
immutable and unalterable and that any amendment thereto is
null and void.39 Guillermo assails the so-called "piercing the veil"
of corporate fiction which allegedly discriminated against him
when he alone was belatedly impleaded despite the existence of
other directors and officers in Royal Class Venture.40 He also
claims that the Labor Arbiter has no jurisdiction because the case
is one of an intra-corporate controversy, with the complainant
Uson also claiming to be a stockholder and director of Royal
Class Venture.41
In his Comment,42 Uson did not introduce any new arguments
but merely cited verbatim the disquisitions of the Court of
Appeals to counter Guillermo's assertions in his petition.
To resolve the case, the Court must confront the issue of whether
an officer of a corporation may be included as judgment obligor
in a labor case for the first time only after the decision of the
Labor Arbiter had become final and executory, and whether the
twin doctrines of "piercing the veil of corporate fiction" and
personal liability of company officers in labor cases apply. The
petition is denied.
In the earlier labor cases of Claparols v. Court of Industrial
Relations43 and A.C. Ransom Labor Union-CCLU v. NLRC,44 persons
who were not originally impleaded in the case were, even during
execution, held to be solidarity liable with the employer
corporation for the latter's unpaid obligations to complainant-
employees. These included a newly-formed corporation which
was considered a mere conduit or alter ego of the originally
impleaded corporation, and/or the officers or stockholders of the
latter corporation.45 Liability attached, especially to the
responsible officers, even after final judgment and during
execution, when there was a failure to collect from the employer
corporation the judgment debt awarded to its
workers.46 In Naguiat v. NLRC,47 the president of the corporation
was found, for the first time on appeal, to be solidarily liable to
the dismissed employees. Then, in Reynoso v. Court of
Appeals,48 the veil of corporate fiction was pierced at the stage of
execution, against a corporation not previously impleaded, when
it was established that such corporation had dominant control of
the original party corporation, which was a smaller company, in
such a manner that the latter's closure was done by the former in
order to defraud its creditors, including a former worker.
The rulings of this Court in A.C. Ransom, Naguiat, and Reynoso,
however, have since been tempered, at least in the aspects of the
lifting of the corporate veil and the assignment of personal
liability to directors, trustees and officers in labor cases. The
subsequent cases of McLeod v. NLRC,49Spouses Santos v.
NLRC50 and Carag v. NLRC,51 have all established, save for certain
exceptions, the primacy of Section 3152 of the Corporation Code
in the matter of assigning such liability for a corporation's debts,
including judgment obligations in labor cases. According to these
cases, a corporation is still an artificial being invested by law
with a personality separate and distinct from that of its
stockholders and from that of other corporations to which it may
be connected.53 It is not in every instance of inability to collect
from a corporation that the veil of corporate fiction is pierced,
and the responsible officials are made liable. Personal liability
attaches only when, as enumerated by the said Section 31 of the
Corporation Code, there is a wilfull and knowing assent to
patently unlawful acts of the corporation, there is gross
negligence or bad faith in directing the affairs of the corporation,
or there is a conflict of interest resulting in damages to the
corporation.54 Further, in another labor case, Pantranco
Employees Association (PEA-PTGWO), et al. v. NLRC, et al.,55 the
doctrine of piercing the corporate veil is held to apply only in
three (3) basic areas, namely: ( 1) defeat of public convenience
as when the corporate fiction is used as a vehicle for the evasion
of an existing obligation; (2) fraud cases or when the corporate
entity is used to justify a wrong, protect fraud, or defend a crime;
or (3) alter ego cases, where a corporation is merely a farce since
it is a mere alter ego or business conduit of a person, or where
the corporation is so organized and controlled and its affairs are
so conducted as to make it merely an instrumentality, agency,
conduit or adjunct of another corporation. In the absence of
malice, bad faith, or a specific provision of law making a
corporate officer liable, such corporate officer cannot be made
personally liable for corporate liabilities.56 Indeed, in Reahs
Corporation v. NLRC,57 the conferment of liability on officers for a
corporation's obligations to labor is held to be an exception to
the general doctrine of separate personality of a corporation.
It also bears emphasis that in cases where personal liability
attaches, not even all officers are made accountable. Rather, only
the "responsible officer," i.e., the person directly responsible for
and who "acted in bad faith" in committing the illegal dismissal
or any act violative of the Labor Code, is held solidarily liable, in
cases wherein the corporate veil is pierced.58 In other instances,
such as cases of so-called corporate tort of a close corporation, it
is the person "actively engaged" in the management of the
corporation who is held liable.59 In the absence of a clearly
identifiable officer(s) directly responsible for the legal infraction,
the Court considers the president of the corporation as such
officer.60
The common thread running among the aforementioned cases,
however, is that the veil of corporate fiction can be pierced, and
responsible corporate directors and officers or even a separate
but related corporation, may be impleaded and held answerable
solidarily in a labor case, even after final judgment and on
execution, so long as it is established that such persons have
deliberately used the corporate vehicle to unjustly evade the
judgment obligation, or have resorted to fraud, bad faith or
malice in doing so. When the shield of a separate corporate
identity is used to commit wrongdoing and opprobriously elude
responsibility, the courts and the legal authorities in a labor case
have not hesitated to step in and shatter the said shield and deny
the usual protections to the offending party, even after final
judgment. The key element is the presence of fraud, malice or
bad faith. Bad faith, in this instance, does not connote bad
judgment or negligence but imports a dishonest purpose or some
moral obliquity and conscious doing of wrong; it means breach
of a known duty through some motive or interest or ill will; it
partakes of the nature of fraud.61
As the foregoing implies, there is no hard and fast rule on when
corporate fiction may be disregarded; instead, each case must be
evaluated according to its peculiar circumstances.62 For the case
at bar, applying the above criteria, a finding of personal and
solidary liability against a corporate officer like Guillermo must
be rooted on a satisfactory showing of fraud, bad
faith or malice, or the presence of any of the justifications for
disregarding the corporate fiction. As stated in McLeod,63 bad
faith is a question of fact and is evidentiary, so that the records
must first bear evidence of malice before a finding of such may
be made.
It is our finding that such evidence exists in the record. Like
the A. C. Ransom, and Naguiat cases, the case at bar involves an
apparent family corporation. As in those two cases, the records
of the present case bear allegations and evidence that Guillermo,
the officer being held liable, is the person responsible in the
actual running of the company and for the malicious and illegal
dismissal of the complainant; he, likewise, was shown to have a
role in dissolving the original obligor company in an obvious
"scheme to avoid liability" which jurisprudence has always
looked upon with a suspicious eye in order to protect the rights
of labor.64
Part of the evidence on record is the second page of the verified
Position Paper of complainant (herein respondent) Crisanto P.
Uson, where it was clearly alleged that Uson was "illegally
dismissed by the President/General Manager of respondent
corporation (herein petitioner) Jose Emmanuel P. Guillermo
when Uson exposed the practice of the said President/General
Manager of dictating and undervaluing the shares of stock of the
corporation."65 The statement is proof that Guillermo was the
responsible officer in charge of running the company as well as
the one who dismissed Uson from employment. As this sworn
allegation is uncontroverted - as neither the company nor
Guillermo appeared before the Labor Arbiter despite the service
of summons and notices - such stands as a fact of the case, and
now functions as clear evidence of Guillermo's bad faith in his
dismissal of Uson from employment, with the motive apparently
being anger at the latter's reporting of unlawful activities.
Then, it is also clearly reflected in the records that it was
Guillermo himself, as President and General Manager of the
company, who received the summons to the case, and who also
subsequently and without justifiable cause refused to receive all
notices and orders of the Labor Arbiter that followed.66This
makes Guillermo responsible for his and his company's failure to
participate in the entire proceedings before the said office. The
fact is clearly narrated in the Decision and Orders of the Labor
Arbiter, Uson's Motions for the Issuance of Alias Writs of
Execution, as well as in the Decision of the NLRC and the assailed
Decision of the Court of Appeals,67 which Guillermo did not
dispute in any of his belated motions or pleadings, including in
his petition for certiorari before the Court of Appeals and even in
the petition currently before this Court.68 Thus, again, the same
now stands as a finding of fact of the said lower tribunals which
binds this Court and which it has no power to alter or
revisit.69 Guillermo's knowledge of the case's filing and existence
and his unexplained refusal to participate in it as the responsible
official of his company, again is an indicia of his bad faith and
malicious intent to evade the judgment of the labor tribunals.
Finally, the records likewise bear that Guillermo dissolved Royal
Class Venture and helped incorporate a new firm, located in the
same address as the former, wherein he is again a stockl1older.
This is borne by the Sherif11s Return which reported: that at
Royal Class Venture's business address at Minien East, Sta.
Barbara, Pangasinan, there is a new establishment named "Joel
and Sons Corporation," a family corporation owned by the
Guillermos in which Jose Emmanuel F. Guillermo is again one of
the stockholders; that Guillermo received the writ of execution
but used the nickname "Joey" and denied being Jose Emmanuel F.
Guillermo and, instead, pretended to be Jose's brother; that the
guard on duty confirmed that Jose and Joey are one and the same
person; and that the respondent corporation Royal Class Venture
had been dissolved.70 Again, the facts contained in the Sheriffs
Return were not disputed nor controverted by Guillermo, either
in the hearings of Uson's Motions for Issuance of Alias Writs of
Execution, in subsequent motions or pleadings, or even in the
petition before this Court. Essentially, then, the facts form part of
the records and now stand as further proof of Guillermo's bad
faith and malicious intent to evade the judgment obligation.
The foregoing clearly indicate a pattern or scheme to avoid the
obligations to Uson and frustrate the execution of the judgment
award, which this Court, in the interest of justice, will not
countenance.
As for Guillermo's assertion that the case is an intra-corporate
controversy, the Court sustains the finding of the appellate court
that the nature of an action and the jurisdiction of a tribunal are
determined by the allegations of the complaint at the time of its
filing, irrespective of whether or not the plaintiff is entitled to
recover upon all or some of the claims asserted
therein.71 Although Uson is also a stockholder and director of
Royal Class Venture, it is settled in jurisprudence that not all
conflicts between a stockholder and the corporation are intra-
corporate; an examination of the complaint must be made on
whether the complainant is involved in his capacity as a
stockholder or director, or as an employee.72 If the latter is found
and the dispute does not meet the test of what qualities as an
intra-corporate controversy, then the case is a labor case
cognizable by the NLRC and is not within the jurisdiction of any
other tribunal.73In the case at bar, Uson's allegation was that he
was maliciously and illegally dismissed as an Accounting
Supervisor by Guillermo, the Company President and General
Manager, an allegation that was not even disputed by the latter
nor by Royal Class Venture. It raised no intra-corporate
relationship issues between him and the corporation or
Guillermo; neither did it raise any issue regarding the regulation
of the corporation. As correctly found by the appellate court,
Uson's complaint and redress sought were centered alone on his
dismissal as an employee, and not upon any other relationship
he had with the company or with Guillermo. Thus, the matter is
clearly a labor dispute cognizable by the labor tribunals.
WHEREFORE, the petition is DENIED. The Court of Appeals
Decision dated June 8, 2011 and Resolution dated October 7,
2011 in CA G.R. SP No. 115485 are AFFIRMED.
SO ORDERED.