G1

G.R. No.
L-69870 November 29, 1988
NATIONAL SERVICE CORPORATION (NASECO) AND ARTURO L. PEREZ, THE HONORABLE THIRD DIVISION,
NATIONAL LABOR RELATIONS COMMISSION, MINISTRY OF LABOR AND EMPLOYMENT, MANILA AND
EUGENIA C. CREDO, respondents.
519 Phil. 601
PUNO, J.:
The finding of illegal dismissal against petitioner Atty. Andrea Uy made by the Court of
Appeals is challenged in this petition for review on certiorari under Rule 45 of the
Rules of Court.
The facts are as follows:
Countrywide Rural Bank of La Carlota, Inc. (Countrywide Rural Bank) in Marbel,

Koronadal City, South Cotabato, is a private banking corporation duly licensed and
organized to engage in rural banking operations that offers a wide-range of deposit,
financial and lending services through its network of branches nationwide. In April
1998, Countrywide Rural Bank experienced liquidity problems. A group of its
depositors, alarmed at the imminent prospect of not being able to recover their
deposits and other investments, organized themselves into a committee of depositors.
The committee elected petitioner Felix Yusay as Chairman, petitioner Andrea Uy as
Secretary, Manu Gidwani as Vice-Chairman and Pompeyo Querubin as Treasurer. [1]
On January 18, 1999, the depositors of Countrywide Rural Bank (not the committee of
depositors led by petitioner Yusay) met at the Marbel Branch. Marlon V. Juesna, the
Vice-Chairman of the Board of Countrywide Rural Bank, presided over the meeting. In
the course of the meeting, respondent Amalia A. Bueno stood up and announced that
her services as Branch Manager of Marbel Branch were terminated by petitioner Uy.
Petitioner Uy, who was in the meeting, confirmed respondent Bueno's declaration. She
did not elaborate on the basis of the termination explaining that it involved internal
problems that could not be discussed with the depositors.[2]
The day after or on January 19, 1999, respondent Bueno filed a case for illegal dismissal
and prayed for reinstatement with payment of full back wages, damages and attorney's
fees against Countrywide Rural Bank, Miguel Mendoza, Primo Esleyer, Marlon Juesna,
and petitioners Uy and Felix Yusay before the Labor Arbiter of the Sub-Regional
Arbitration Branch No. XI of the National Labor Relations Commission (NLRC) in
General Santos City. Petitioners Uy and Yusay were sued in their capacity as Interim
President and Corporate Secretary, and Interim Board Chairman, respectively. Miguel
Mendoza, Primo Esleyer and Marlon Juesna were sued as Chairman, Vice-Chairman
and Executive Vice-President, respectively, of the Board of Countrywide Rural
Bank. [3] Respondent Bueno alleged that she was employed by Countrywide Rural Bank
on November 12, 1996 until her termination on January 18, 1999. [4]
An amicable settlement of the case failed. On September 28, 1999, respondent Bueno
filed a Manifestation for the early resolution of her complaint alleging that
Countrywide Rural Bank was already under receivership with the Philippine Deposit
Insurance Commission (PDIC) and she wanted the favorable decision submitted to the
PDIC for consideration. On November 18, 1999, with only the position paper of
respondent Bueno and without awaiting the reply of the Postmaster of Bacolod City as
to whether Countrywide Rural Bank and its co-respondents received the order to
submit their respective position papers, [5] the Labor Arbiter rendered a decision in
favor of respondent Bueno. He found the verbal and summary termination of the
services of respondent Bueno to be without valid cause and in violation of Article
277(b) of the Labor Code. Also, the Labor Arbiter held that as a regular employee of
Countrywide Rural Bank, respondent Bueno was protected by the security of tenure
provision or Article 279 of the Labor Code. He awarded separation pay in lieu of
reinstatement and back wages. In addition, he granted moral and exemplary damages
for the bad faith and/or malice that attended the manner of termination of respondent
Bueno. Finally, for being forced to litigate, the Labor Arbiter awarded attorney's fees of
10% in accordance with Article 111 of the Labor Code. He disposed, viz: [6]
WHEREFORE, premises considered, respondent Countrywide Rural Bank of La

Carlota, Inc. and individual respondent Atty. Andrea Uy are solidarily liable [to]
complainant Amalia Bueno to pay the sum of PESOS EIGHT HUNDRED ELEVEN
THOUSAND TWO HUNDRED (P811,200.00) ONLY representing her monetary
awards and attorney's fees.
All other claims are dismissed for lack of merit.

On May 24, 2000 petitioner Uy filed her Notice of Appeal and Memorandum of Appeal
with the Fifth Division of the NLRC in Cagayan de Oro City. She assailed the decision
of the Labor Arbiter on the grounds of denial of due process and serious errors in the
findings of fact. Finding that the appealed decision was received on February 10, 2000
but only appealed on May 18, 2000, the NLRC in its resolution dated July 31, 2000,
dismissed the appeal for being filed out of time. It ruled that the decision had become
final and executory. [7]
On August 28, 2000, petitioners Uy and Yusay [8] filed a Motion for Reconsideration
alleging that they never held office where a copy of the decision was served and that
they only received their copy of the decision on May 9, 2000. On December 21, 2001,
the NLRC granted their motion and absolved petitioner Uy from liability as it found
petitioners Uy and Yusay to be mere depositors of Countrywide Rural Bank on the
basis of the evidence submitted by respondent Bueno herself, i.e., the minutes of the
meeting of the depositors of Countrywide Rural Bank's Marbel Branch held on January
18, 1999. [9] It disposed, viz:
WHEREFORE, the above resolution is Reversed and Set Aside. In lieu thereof, a new
judgment is rendered modifying the appealed decision of the Labor Arbiter, dated
November 18, 1999, in that the portion thereof directing individual Atty. Andrea Uy to
personally pay complainant Amalia Bueno her monetary award is deleted for lack of
factual and legal basis.
On February 8, 2002, respondent Bueno filed a Motion for Reconsideration on
grounds of serious errors in the findings of fact and in the application of law. On
March 22, 2002, the NLRC denied the motion for lack of merit as the issues raised
had been "extensively treated and discussed in the resolution sought to be
reconsidered." [10] Thus, respondent Bueno appealed to the Court of Appeals (CA)
imputing on the part of the NLRC grave abuse of discretion amounting to lack of or in
excess of jurisdiction for (1) admitting the appeal and exculpating petitioner Uy from
monetary liability, and (2) declaring that petitioner Uy was not an officer of
Countrywide Rural Bank.
The CA resolved both issues in favor of respondent Bueno. Anent the first, it held that
petitioners Uy and Yusay filed their appeal out of time emphasizing the rules on
perfection of appeals, presumption of regularity in the performance of official duties
and substantiation by competent evidence on allegation of non-receipt of pleadings. It
observed that Countrywide Rural Bank and its co-respondents received the initial
processes relative to the case. Anent the second, the CA found the individual
respondents in the complaint that included petitioners Uy and Yusay to be officers of
Countrywide Rural Bank. Its bases were (a) the categorical admission in their appeal
before the NLRC that they were officers of Countrywide Rural Bank, (b) the October 10,
2000 resolution of the NLRC in another case, [11] which "already settled the issue" of
their being officers of Countrywide Rural Bank, (c) the termination of respondent
Bueno by petitioner Uy, which the latter did not dispute, and (d) the issuance of a
Memorandum of Termination in an attempt to legitimize the verbal dismissal of
respondent Bueno. Thus, the CA disposed on January 24, 2003, [12] viz:
WHEREFORE, premises considered, the instant petition is hereby GRANTED. The

assailed resolutions of public respondent Commission dated December 21, 2001 and
March 22, 2002, are ordered SET ASIDE and NULLIFIED. The resolution of public
respondent Commission dated July 31, 2000 [13] is AFFIRMED in its entirety.
Aggrieved, petitioners Uy and Yusay [14] filed their February 12, 2003 Motion for
Reconsideration, which the CA denied on May 26, 2003. Hence, this petition for
review before the Court, which presents the following issues:
WHETHER OR NOT THE RESPONDENT HONORABLE COURT OF APPEALS

ERRED IN ITS FINDINGS THAT THE NATIONAL LABOR RELATIONS
COMMISSION HAS GRAVELY ABUSED ITS DISCRETION AMOUNTING TO LACK
OR IN EXCESS OF JURISDICTION IN ISSUING THE RESOLUTIONS DATED 21
DECEMBER 2001 AND 22 MARCH 2002.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN ITS FINDING THAT

SUMMONS WAS PROPERLY SERVED ON THE PETITIONERS.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN AFFIRMING THAT THE

PETITIONERS ARE OFFICERS OF THE BANK.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN FINDING

THAT THE DISMISSAL OF PRIVATE RESPONDENT WAS DONE IN BAD FAITH.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN ITS

FINDING THAT PETITIONERS ARE SOLIDARILY LIABLE WITH THE
COUNTRYWIDE RURAL BANK OF LA CARLOTA INC.
We immediately note that the Countrywide Rural Bank failed to appeal its liability over
the illegal dismissal of the respondent before the NLRC, the CA and this Court. Such
failure to perfect an appeal has the effect of rendering the judgment final and executory
as to it. [15]
We now come to the liability of petitioner Uy. The findings of the Labor Arbiter, the
NLRC and the CA as to the liability of petitioner Uy are conflicting, thus, the
application of the exception to the rule that only legal issues may be raised in a petition
for review on certiorari under Rule 45 of the Rules of Court. [16]
First, the Labor Arbiter found her solidarily liable with Countrywide Rural Bank, thus:
x x x Record reveals that she was verbally and summarily terminated on January 18,
1999 in an unconventional manner by individual respondent ATTY. ANDREA UY
(Interim President and Corporate Secretary) by announcing and confirming said
termination during the depositors meeting held at the Marbel Branch office, without
valid cause and in violation of the procedures outlined in Art. 277(b) of the Labor Code
in terminating the services of an employee.
xxx
Corporate directors and officers are solidarily liable with the corporation for the
termination of employment of employees only if the termination is done with malice or
in bad faith (Progress Homes vs. NLRC, 269 SCRA 274). The dismissal of complainant
was attended with malice or bad faith when she was summarily terminated and
announced during the depositors meeting by individual respondent Atty. Andrea Uy
(Interim President and Corporate Secretary). [17]
Second, the NLRC, after reconsidering its earlier pronouncement that petitioner Uy
had lost her appeal for filing it beyond the mandatory reglementary period, held her
not liable with Countrywide Rural Bank, thus:
From her own evidence, the minutes of depositors meeting held on January 18, 1999 at
the bank's Marbel Branch (Annex "C", complainant's position paper), it was shown
clearly that individual respondents were mere depositors of respondent bank. They
were only elected as officers of the Interi[m] Board of Directors created by the group or
association of depositors with the sole task to rehabilitate respondent bank. The
excerpts from the minutes of meeting are quoted hereunder, to wit:
xxx
Mr. Michael Viray asked Atty. Uy who are you by the way? What group do you belong
to? You did not introduce yourself to us.
Atty. Uy answered that she is also a depositor like them and they formed an association
of depositors in Bacolod and signified their intention to buy the bank thru equity swap
as required by BSP. They formed the Interim Board and volunteered to rehabilitate the
bank. The Interi[m] Board elected her as the President. [18]
Finally, the CA reversed and found against petitioner Uy, where her liability was
viewed, thus:
x x x It is crystal clear based on the facts and records of the case that individual private
respondents were officers of co-private respondent bank. In fact, they themselves have
categorically admitted in their appeal before the public respondent Commission that
they were corporate officers of the co-respondent bank.
Significantly, the resolution made by the public respondent Commission in its decision
in the case titled "Arlene Villanueva vs. Countrywide Rural Bank of La Carlota (Marbel
Branch) and/or Atty. Andrea Uy (Corp. Sec.) and Felix Yusay (Board Chairman)"
docketed as NLRC CA No. M-005740-2000 (RAB 11-01-50043-99) dated October 10,
2000, has already settled the issue that private respondent Uy was indeed then the
Corporate Secretary of respondent bank, and that respondent Uy has indicated her
executive office address to the same address where the summons was served to her in
the illegal dismissal case filed against her by the petitioner.
The abovementioned admission made by the private respondents was further bolstered
by the fact of private respondent Uy terminating the services of petitioner as an
employee of co-respondent bank which fact of termination was not disputed by private
respondent Uy. [19]
Whether petitioner Uy [20] should be held solidarily liable with Countrywide Rural
Bank in the illegal dismissal of respondent Bueno, depends on the jurisdiction of the
Labor Arbiter over the case at bar.
The records show that petitioner Uy was a mere depositor of the bank who was elected
Interim President and Corporate Secretary by a committee of depositors to protect
their interests given the bad state of Countrywide Rural Bank's affairs. In his findings,
the Labor Arbiter mentioned the meeting of the depositors on January 18, 1999 but he
failed to account for the exact personality of petitioner Uy whose statement relative to
her role in the affairs of Countrywide Rural Bank was related in the minutes of the
same meeting. It was only through the NLRC that petitioner Uy's role was
established, i.e., that she was one of the depositors of Countrywide Rural Bank who
formed themselves into a group or association indicating their intention to help
rehabilitate Countrywide Rural Bank. This part of the minutes of the meeting is
revealing:
Mr. Viray commented that they were not informed of this Interim Board. Atty. Uy
glance[d] at ex-Manager Bueno to which Mrs. Bueno announced that the Branch did
not [receive] any written Memorandum as to the composition/members of this Interim
Board.
Mrs. Viray requested Atty. Uy and Mr. Juesna to name the members of this Interim
Board. Mr. Juesna enumerated the names of Mr. Felix Yusay as the Chairman, Atty.
Andrea Uy as the President and Corporate Secretary, etc.
[Mrs.] Bueno interrupted. "That's precisely why I questioned if the Interim Board is
sanctioned by BSP or SEC to avoid confusion on who to deal with." [21]
Clearly, even respondent Bueno was uncertain as to the exact role of the Interim Board
that elected petitioner Uy as Interim President and Corporate Secretary. She herself
questioned the personality of the Interim Board in the management of Countrywide
Rural Bank even while she alleged that petitioner Uy as its Interim President and
Corporate Secretary caused her dismissal. More significantly, there is no evidence that
the committee of depositors that elected petitioner Uy as Interim President and
Corporate Secretary was recognized by the Bangko Sentral ng Pilipinas, and hence had
the legal authority to act for the bank.
Lacking this evidence, the act of petitioner Uy in dismissing respondent cannot be

deemed an act as an officer of the bank. Consequently, it cannot be held that there
existed an employer-employee relationship between petitioner Uy and respondent
Bueno when the former allegedly dismissed the latter. This requirement of employer-
employer relationship is jurisdictional for the provisions of the Labor Code, specifically
Book VI thereof, on Post-Employment, to apply. Since the employer-employee
relationship between petitioner Uy and respondent Bueno was not established, the
labor arbiter never acquired jurisdiction over petitioner Uy. Consequently, whether
petitioner Uy was properly served with summons is immaterial. Likewise, that she
terminated the services of respondent Bueno in bad faith and with malice is of no
moment. Her liability, if any, should be determined in another forum.
IN VIEW WHEREOF, the petition is GRANTED. The Court of Appeals Decision dated
January 24, 2003 and Resolution dated May 26, 2003 in CA-G.R. SP No. 70672, which
found petitioner Atty. Andrea Uy solidarily liable with Countrywide Rural Bank of
Carlota, Inc. in Marbel, Koronadal City, South Cotabato, are REVERSED. No costs.
SO ORDERED.
Sandoval-Gutierrez, Azcuna, and Garcia, JJ. concur.

Corona, J., sick leave.
G.R. No. 196539 : October 10, 2012
MARIETTA N. PORTILLO, Petitioner, v. RUDOLF LIETZ, INC., RUDOLF LIETZ and COURT OF APPEALS Respondents.
DECISION
PEREZ, J.:
Before us is a petition for certiorari assailing the Resolution 1 dated 14 October 2010 of the Court of Appeals in CA-G.R. SP
Ï‚rÎ½l l
No. I 065g I which modified its Decision2 dated 31 March 2009, thus allowing the legal compensation or petitioner Marietta
Ï‚ rÎ½ll
N. Portillo's (Portillo) monetary claims against respondent corporation Rudolf Lietz, Inc.'s (Lietz Inc.)3 claim for liquidated
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damages arising from Portillos alleged violation of the "Goodwill Clause" in the employment contract executed by the parties.
The facts are not in dispute.
In a letter agreement dated 3 May 1991, signed by individual respondent Rudolf Lietz (Rudolf) and conformed to by Portillo,
the latter was hired by the former under the following terms and conditions: chanro blesvi rt uallawl ibra ry
A copy of [Lietz Inc.s] work rules and policies on personnel is enclosed and an inherent part of the terms and conditions of
employment.
We acknowledge your proposal in your application specifically to the effect that you will not engage in any other gainful
employment by yourself or with any other company either directly or indirectly without written consent of [Lietz Inc.], and
we hereby accept and henceforth consider your proposal an undertaking on your part, a breach of which will render you
liable to [Lietz Inc.] for liquidated damages.
If you are in agreement with these terms and conditions of employment, please signify your conformity below.4 Ï‚ rÎ½ll
On her tenth (10th) year with Lietz Inc., specifically on 1 February 2002, Portillo was promoted to Sales Representative and
received a corresponding increase in basic monthly salary and sales quota. In this regard, Portillo signed another letter
agreement containing a "Goodwill Clause:"
It remains understood and you agreed that, on the termination of your employment by act of either you or [Lietz Inc.], and
for a period of three (3) years thereafter, you shall not engage directly or indirectly as employee, manager, proprietor, or
solicitor for yourself or others in a similar or competitive business or the same character of work which you were employed
by [Lietz Inc.] to do and perform. Should you breach this good will clause of this Contract, you shall pay [Lietz Inc.] as
liquidated damages the amount of 100% of your gross compensation over the last 12 months, it being agreed that this sum
is reasonable and just.5 Ï‚rÎ½ll
Three (3) years thereafter, on 6 June 2005, Portillo resigned from Lietz Inc. During her exit interview, Portillo declared that
she intended to engage in businessa rice dealership, selling rice in wholesale.
On 15 June 2005, Lietz Inc. accepted Portillos resignation and reminded her of the "Goodwill Clause" in the last letter
agreement she had signed. Upon receipt thereof, Portillo jotted a note thereon that the latest contract she had signed in
February 2004 did not contain any "Goodwill Clause" referred to by Lietz Inc. In response thereto, Lietz Inc. categorically
wrote:chan roble svi rtual lawlib rary
Please be informed that the standard prescription of prohibiting employees from engaging in business or seeking
employment with organizations that directly or indirectly compete against [Lietz Inc.] for three (3) years after resignation
remains in effect.
The documentation you pertain to is an internal memorandum of your salary increase, not an employment contract. The
absence of the three-year prohibition clause in this document (or any document for that matter) does not cancel the
prohibition itself. We did not, have not, and will not issue any cancellation of such in the foreseeable future[.] [T]hus[,]
regretfully, it is erroneous of you to believe otherwise.6Ï‚ rÎ½ll
In a subsequent letter dated 21 June 2005, Lietz Inc. wrote Portillo and supposed that the exchange of correspondence
between them regarding the "Goodwill Clause" in the employment contract was a moot exercise since Portillos articulated
intention to go into business, selling rice, will not compete with Lietz Inc.s products.
Subsequently, Lietz Inc. learned that Portillo had been hired by Ed Keller Philippines, Limited to head its Pharma Raw
Material Department. Ed Keller Limited is purportedly a direct competitor of Lietz Inc.
Meanwhile, Portillos demands from Lietz Inc. for the payment of her remaining salaries and commissions went unheeded.
Lietz Inc. gave Portillo the run around, on the pretext that her salaries and commissions were still being computed.
On 14 September 2005, Portillo filed a complaint with the National Labor Relations Commission (NLRC) for non-payment of 1
months salary, two (2) months commission, 13th month pay, plus moral, exemplary and actual damages and attorneys fees.
In its position paper, Lietz Inc. admitted liability for Portillos money claims in the total amount of P110,662.16. However,
Lietz Inc. raised the defense of legal compensation: Portillos money claims should be offset against her liability to Lietz Inc.
for liquidated damages in the amount of â‚±869,633.097 for Portillos alleged breach of the "Goodwill Clause" in the
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employment contract when she became employed with Ed Keller Philippines, Limited.
On 25 May 2007, Labor Arbiter Daniel J. Cajilig granted Portillos complaint: chan roble svirtuallaw lib rary
WHEREFORE, judgment is hereby rendered ordering respondents Rudolf Lietz, Inc. to pay complainant Marietta N. Portillo the
amount of Php110,662.16, representing her salary and commissions, including 13th month pay.8 Ï‚rÎ½l l
On appeal by respondents, the NLRC, through its Second Division, affirmed the ruling of Labor Arbiter Daniel J. Cajilig. On
motion for reconsideration, the NLRC stood pat on its ruling.
Expectedly, respondents filed a petition for certiorari before the Court of Appeals, alleging grave abuse of discretion in the
labor tribunals rulings.
As earlier adverted to, the appellate court initially affirmed the labor tribunals: cha nrob lesvi rtua llawli bra ry
WHEREFORE, considering the foregoing premises, judgment is hereby rendered by us DENYING the petition filed in this
case. The Resolution of the National Labor Relations Commission (NLRC), Second Division, in the labor case docketed as
NLRC NCR Case No. 00-09- 08113-2005 [NLRC LAC No. 07-001965-07(5)] is hereby AFFIRMED.9 Ï‚rÎ½ll
The disposition was disturbed. The Court of Appeals, on motion for reconsideration, modified its previous decision, thus: chanroblesv irtuallawl ib rary
WHEREFORE, in view of the foregoing premises, we hereby MODIFY the decision promulgated on March 31, 2009 in that,
while we uphold the monetary award in favor of the [petitioner] in the aggregate sum of â‚±110,662.16 representing the
unpaid salary, commission and 13th month pay due to her, we hereby allow legal compensation or set-off of such award of
monetary claims by her liability to [respondents] for liquidated damages arising from her violation of the "Goodwill Clause" in
her employment contract with them.10 Ï‚rÎ½ll
Portillos motion for reconsideration was denied.
Hence, this petition for certiorari listing the following acts as grave abuse of discretion of the Court of Appeals: chanroble svi rtual lawlib rary
THE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION BY EVADING TO RECOGNIZE (sic) THAT THE
RESPONDENTS EARLIER PETITION IS FATALLY DEFECTIVE;
THE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION BY OVERSTEPPING THE BOUNDS OF APPELLATE
JURISDICTION[;]
THE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION BY MODIFYING ITS PREVIOUS DECISION BASED ON
AN ISSUE THAT WAS RAISED ONLY ON THE FIRST INSTANCE AS AN APPEAL BUT WAS NEVER AT THE TRIAL COURT
AMOUNTING TO DENIAL OF DUE PROCESS[;]
THE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION BY EVADING THE POSITIVE DUTY TO UPHOLD THE
RELEVANT LAWS[.]11 Ï‚rÎ½ll
Simply, the issue is whether Portillos money claims for unpaid salaries may be offset against respondents claim for liquidated
damages.
Before anything else, we address the procedural error committed by Portillo, i.e., filing a petition forcertiorari, a special civil
action under Rule 65 of the Rules of Court, instead of a petition for review oncertiorari, a mode of appeal, under Rule 45
thereof. On this score alone, the petition should have been dismissed outright.
Section 1, Rule 45 of the Rules of Court expressly provides that a party desiring to appeal bycertiorari from a judgment or
final order or resolution of the Court of Appeals may file a verified petition for review on certiorari. Considering that, in this
case, appeal by certiorari was available to Portillo, that available recourse foreclosed her right to resort to a special civil
action for certiorari, a limited form of review and a remedy of last recourse, which lies only where there is no appeal or plain,
speedy and adequate remedy in the ordinary course of law.12 Ï‚rÎ½ll
A petition for review on certiorari under Rule 45 and a petition for certiorari under Rule 65 are mutually exclusive
remedies. Certiorari cannot co-exist with an appeal or any other adequate remedy.13 If a petition for review is available,
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even prescribed, the nature of the questions of law intended to be raised on appeal is of no consequence. It may well be that
those questions of law will treat exclusively of whether or not the judgment or final order was rendered without or in excess
of jurisdiction, or with grave abuse of discretion. This is immaterial. The remedy is appeal, not certiorarias a special civil
action.14 Ï‚rÎ½ll
Be that as it may, on more than one occasion, to serve the ultimate purpose of all rules of proceduresattaining substantial
justice as expeditiously as possible15 we have accepted procedurally incorrect petitions and decided them on the merits. We
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do the same here.
The Court of Appeals anchors its modified ruling on the ostensible causal connection between Portillos money claims and
Lietz Inc.s claim for liquidated damages, both claims apparently arising from the same employment relations. Thus, did it
say:chanrob lesvi rtual lawlib rary
x x x This Court will have to take cognizance of and consider the "Goodwill Clause" contained [in] the employment contract
signed by and between [respondents and Portillo]. There is no gainsaying the fact that such "Goodwill Clause" is part and
parcel of the employment contract extended to [Portillo], and such clause is not contrary to law, morals and public policy.
There is thus a causal connection between [Portillos] monetary claims against [respondents] and the latters claim for
liquidated damages against the former. Consequently, we should allow legal compensation or set-off to take place.
[Respondents and Portillo] are both bound principally and, at the same time, are creditors of each other. [Portillo] is a
creditor of [respondents] in the sum of â‚±110,662.16 in connection with her monetary claims against the latter. At the same
time, [respondents] are creditors of [Portillo] insofar as their claims for liquidated damages in the sum of
â‚±980,295.2516 against the latter is concerned.17
Ï‚rÎ½ll Ï‚rÎ½ll
We are not convinced.
Paragraph 4 of Article 217 of the Labor Code appears to have caused the reliance by the Court of Appeals on the "causal
connection between [Portillos] monetary claims against [respondents] and the latters claim from liquidated damages against
the former."
Art. 217. Jurisdiction of Labor Arbiters and the Commission. (a) Except as otherwise provided under this code, the
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 case
involving all workers, whether agricultural or nonagricultural: chan roble svirtuallaw lib rary
xxxx
4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations;
(Underscoring supplied)
Evidently, the Court of Appeals is convinced that the claim for liquidated damages emanates from the "Goodwill Clause of the
employment contract and, therefore, is a claim for damages arising from the employeremployee relations."
As early as Singapore Airlines Limited v. Pa,18 we established that not all disputes between an employer and his employee(s)
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fall within the jurisdiction of the labor tribunals. We differentiated between abandonment per se and 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 claims arising 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 se by private respondent Cruz of his jobas the latter was
not required in the Complaint to report back to workbut on the manner andconsequent effects of such abandonment of work
translated in terms of the damages which petitioner had to suffer.
Squarely in point is the ruling enunciated in the case of Quisaba vs. Sta. Ines Melale Veneer & Plywood, Inc. [citation
omitted], the pertinent portion of which reads: chanrob lesvi rtua llawlib ra ry
"Although the acts complained of seemingly appear to constitute 'matter involving employee-employer' relations as Quisaba's
dismissal was the severance of a pre-existing employee-employer relations, his complaint is grounded not on his
dismissal per se, as in fact he does not ask for reinstatement or backwages, but on the manner of his dismissal and the
consequent effects of such dismissal.
"Civil law consists of that 'mass of precepts that determine or regulate the relations . . . that exist between members of a
society for the protection of private interest (1 Sanchez Roman 3).
"The 'right' of the respondents to dismiss Quisaba should not be confused with the manner in which the right was exercised
and the effects flowing therefrom. If the dismissal was done anti-socially or oppressively as the complaint alleges, then the
respondents violated Article 1701 of the Civil Code which prohibits acts of oppression by either capital or labor against the
other, and Article 21, which makes a person liable for damages if he wilfully causes loss or injury to another in a manner that
is contrary to morals, good customs or public policy, the sanction for which, by way of moral damages, is provided in article
2219, No. 10. [citation omitted]"
Stated differently, petitioner seeks protection under the civil laws and claims no benefits under the Labor Code.
The primary relief sought is for liquidated damages for breach of a contractual obligation. The other items
demanded are not labor benefits demanded by workers generally taken cognizance of in labor disputes, such as
payment of wages, overtime compensation or separation pay. The items claimed are the natural consequences
flowing from breach of an obligation, intrinsically a civil dispute. 19 (Emphasis supplied) Ï‚rÎ½ll
Subsequent rulings amplified the teaching in Singapore Airlines. The reasonable causal connection rule was discussed. Thus,
in San Miguel Corporation v. National Labor Relations Commission,20 we held: Ï‚ rÎ½ll c hanro blesvi rt uallawl ibra ry
While paragraph 3 above refers to "all money claims of workers," it is not necessary to suppose that the entire universe of
money claims that might be asserted by workers against their employers has been absorbed into the original and exclusive
jurisdiction of Labor Arbiters. In the first place, paragraph 3 should be read not in isolation from but rather within the context
formed by paragraph 1 (relating to unfair labor practices), paragraph 2 (relating to claims concerning terms and conditions of
employment), paragraph 4 (claims relating to household services, a particular species of employer-employee relations), and
paragraph 5 (relating to certain activities prohibited to employees or to employers). It is evident that there is a unifying
element which runs through paragraph 1 to 5 and that is, that they all refer to cases or disputes arising out of or in
connection with an employer-employee relationship. This is, in other words, a situation where the rule of noscitur a
sociis may be usefully invoked in clarifying the scope of paragraph 3, and any other paragraph of Article 217 of the Labor
Code, as amended. We reach the above conclusion from an examination of the terms themselves of Article 217, as last
amended by B.P. Blg. 227, and even though earlier versions of Article 217 of the Labor Code expressly brought within the
jurisdiction of the Labor Arbiters and the NLRC "cases arising from employer-employee relations, [citation omitted]" which
clause was not expressly carried over, in printer's ink, in Article 217 as it exists today. For it cannot be presumed that money
claims of workers which do not arise out of or in connection with their employer-employee relationship, and which would
therefore fall within the general jurisdiction of regular courts of justice, were intended by the legislative authority to be taken
away from the jurisdiction of the courts and lodged with Labor Arbiters on an exclusive basis. The Court, therefore,
believes and so holds that the "money claims of workers" referred to in paragraph 3 of Article 217 embraces
money claims which arise out of or in connection with the employer-employee relationship, or some aspect or
incident of such relationship. Put a little differently, that money claims of workers which now fall within the
original and exclusive jurisdiction of Labor Arbiters are those money claims which have some reasonable causal
connection with the employer-employee relationship.21 (Emphasis supplied)
Ï‚rÎ½l l
We thereafter ruled that the "reasonable causal connection with the employer-employee relationship" is a requirement not
only in employees money claims against the employer but is, likewise, a condition when the claimant is the employer.
In Dai-Chi Electronics Manufacturing Corporation v. Villarama, Jr.,22 which reiterated the San Miguelruling and allied
Ï‚rÎ½ ll
jurisprudence, we pronounced that a non-compete clause, as in the "Goodwill Clause" referred to in the present case, with a
stipulation that a violation thereof makes the employee liable to his former employer for liquidated damages, refers to post-
employment relations of the parties.
In Dai-Chi, the trial court dismissed the civil complaint filed by the employer to recover damages from its employee for the
latters breach of his contractual obligation. We reversed the ruling of the trial court as we found that the employer did not
ask for any relief under the Labor Code but sought to recover damages agreed upon in the contract as redress for its
employees breach of contractual obligation to its "damage and prejudice." We iterated that Article 217, paragraph 4 does not
automatically cover all disputes between an employer and its employee(s). We noted that the cause of action was within the
realm of Civil Law, thus, jurisdiction over the controversy belongs to the regular courts. At bottom, we considered that the
stipulation referred to post-employment relations of the parties.
That the "Goodwill Clause" in this case is likewise a postemployment issue should brook no argument. There is no dispute as
to the cessation of Portillos employment with Lietz Inc.23 She simply claims her unpaid salaries and commissions, which Lietz
Ï‚rÎ½ ll
Inc. does not contest. At that juncture, Portillo was no longer an employee of Lietz Inc.24 The "Goodwill Clause" or the "Non-
Ï‚rÎ½l l
Compete Clause" is a contractual undertaking effective after the cessation of the employment relationship between the
parties. In accordance with jurisprudence, breach of the undertaking is a civil law dispute, not a labor law case.
It is clear, therefore, that while Portillos claim for unpaid salaries is a money claim that arises out of or in connection with an
employer-employee 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:chanrob lesvi rtua llawli bra ry
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 postemployment relations of the parties.
For sure, a plain and cursory reading of the complaint will readily reveal that the subject matter is one of claim for damages
arising from a breach of contract, which is within the ambit of the regular court's jurisdiction. [citation omitted]
It is basic 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. Neither can jurisdiction of a court be made to depend upon the defenses made by a defendant in his
answer or motion to dismiss. If such were the rule, the question of jurisdiction would depend almost entirely upon the
defendant.25 [citation omitted]
Ï‚rÎ½ll
xxxx
Whereas this Court in a number of occasions had applied the jurisdictional provisions of Article 217 to claims for damages
filed by employees [citation omitted], we hold that by the designating clause "arising from the employer-employee relations"
Article 217 should apply with equal force to the claim of an employer for actual damages against its dismissed employee,
where the basis for the claim arises from or is necessarily connected with the fact of termination, and should be entered as a
counterclaim in the illegal dismissal case.26
Ï‚rÎ½ll
xxxx
This is, of course, to distinguish from cases of actions for damages where the employer-employee relationship is
merely incidental and the cause of action proceeds from a different source of obligation. Thus, the jurisdiction of
regular courts was upheld where the damages, claimed for were based on tort [citation omitted], malicious
prosecution[citation omitted], or breach of contract, as when the claimant seeks to recover a debt from a former
employee [citation omitted] or seeks liquidated damages in enforcement of a prior employment contract. [citation
omitted]
Neither can we uphold the reasoning of respondent court that because the resolution of the issues presented by the
complaint does not entail application of the Labor Code or other labor laws, the dispute is intrinsically civil. Article 217(a) of
the Labor Code, as amended, clearly bestows upon the Labor Arbiter original and exclusive jurisdiction over claims for
damages arising from employer-employee relationsâ”€in other words, the Labor Arbiter has jurisdiction to award not only the
reliefs provided by labor laws, but also damages governed by the Civil Code.27 (Emphasis supplied) Ï‚ rÎ½ll
In the case at bar, the difference in the nature of the credits that one has against the other, conversely, the nature of the
debt one owes another, which difference in turn results in the difference of the forum where the different credits can be
enforced, prevents the application of compensation. Simply, the labor tribunal in an employees claim for unpaid wages is
without authority to allow the compensation of such claims against the post employment claim of the former employer for
breach of a post employment condition. The labor tribunal does not have jurisdiction over the civil case of breach of contract.
We are aware that in Baz v. Hon. Valdevilla, we mentioned that: chanrob lesvi rtua llawlib ra ry
Whereas this Court in a number of occasions had applied the jurisdictional provisions of Article 217 to claims for damages
filed by employees [citation omitted], we hold that by the designating clause "arising from the employer-employee relations"
Article 217 should apply with equal force to the claim of an employer for actual damages against its dismissed employee,
where the basis for the claim arises from or is necessarily connected with the fact of termination, and should be entered as a
counterclaim in the illegal dismissal case.28 Ï‚rÎ½ll
While on the surface, Baz supports the decision of the Court of Appeals, the facts beneath premise an opposite conclusion.
There, the salesman-employee obtained from the NLRC a final favorable judgment of illegal dismissal. Afterwards, the
employer filed with the trial court a complaint for damages for alleged nefarious activities causing damage to the employer.
Explaining further why the claims for damages should be entered as a counterclaim in the illegal dismissal case, we said: chan roble svirtuallaw lib rary
Even under Republic Act No. 875 (the Industrial Peace Act, now completely superseded by the Labor Code), jurisprudence
was settled that where the plaintiffs cause of action for damages arose out of, or was necessarily intertwined with, an alleged
unfair labor practice committed by the union, the jurisdiction is exclusively with the (now defunct) Court of Industrial
Relations, and the assumption of jurisdiction of regular courts over the same is a nullity. To allow otherwise would be "to
sanction split jurisdiction, which is prejudicial to the orderly administration of justice." Thus, even after the enactment of the
Labor Code, where the damages separately claimed by the employer were allegedly incurred as a consequence of strike or
picketing of the union, such complaint for damages is deeply rooted from the labor dispute between the parties, and should
be dismissed by ordinary courts for lack of jurisdiction. As held by this Court in National Federation of Labor vs. Eisma, 127
SCRA 419: chanrob lesvi rtua llawli bra ry
Certainly, the present Labor Code is even more committed to the view that on policy grounds, and equally so in the interest
of greater promptness in the disposition of labor matters, a court is spared the often onerous task of determining what
essentially is a factual matter, namely, the damages that may be incurred by either labor or management as a result of
disputes or controversies arising from employer-employee relations.29 Ï‚rÎ½l l
Evidently, the ruling of the appellate court is modeled after the basis used in Baz which is the "intertwined" facts of the
claims of the employer and the employee or that the "complaint for damages is deeply rooted from the labor dispute
between the parties." Thus, did the appellate court say that: chanroble svi rtual lawlib rary
There is no gainsaying the fact that such "Goodwill Clause" is part and parcel of the employment contract extended to
[Portillo], and such clause is not contrary to law, morals and public policy. There is thus a causal connection between
[Portillos] monetary claims against [respondents] and the latters claim for liquidated damages against the former.
Consequently, we should allow legal compensation or set-off to take place.30 Ï‚rÎ½ll
The Court of Appeals was misguided. Its conclusion was incorrect.
There is no causal connection between the petitioner employees claim for unpaid wages 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 employment is not "rooted" in the alleged
contractual violation. She resigned from her employment. She was not dismissed. Portillos entitlement to the unpaid salaries
is not even contested. Indeed, Lietz Inc.s argument about legal compensation necessarily admits that it owes the money
claimed by Portillo.
The alleged contractual violation did not arise during the existence of the employer-employee relationship. It was a post-
employment matter, a post-employment violation. Reminders are apt. That is provided by the fairly recent case of Yusen Air
and Sea Services Phils., Inc. v. Villamor,31 which harked back to the previous rulings on the necessity of "reasonable causal
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connection" between the tortious damage and the damage arising from the employer-employee
relationship. Yusen proceeded to pronounce that the absence of the connection results in the absence of jurisdiction of the
labor arbiter. Importantly, such absence of jurisdiction cannot be remedied by raising before the labor tribunal the tortious
damage as a defense. Thus: chanroble svirtual lawlib rary
When, as here, the cause of action is based on a quasi-delict or tort, which has no reasonable causal connection with any of
the claims provided for in Article 217, jurisdiction over the action is with the regular courts. [citation omitted]
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 respondents 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 postemployment relations of the parties.
For sure, a plain and cursory reading of the complaint will readily reveal that the subject matter is one of claim for damages
arising from a breach of contract, which is within the ambit of the regular courts jurisdiction. [citation omitted]
It is basic 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. Neither can jurisdiction of a court be made to depend upon the defenses made by a defendant in his
answer or motion to dismiss. If such were the rule, the question of jurisdiction would depend almost entirely upon the
defendant.32 (Underscoring supplied).
Ï‚rÎ½ll
The error of the appellate court in its Resolution of 14 October 2010 is basic. The original decision, the right ruling, should
not have been reconsidered.
Indeed, the application of compensation in this case is effectively barred by Article 113 of the Labor Code which prohibits
wage deductions except in three circumstances: chanro blesvi rt uallawl ibra ry
ART. 113. Wage Deduction. No employer, in his own behalf or in behalf of any person, shall make any deduction from wages
of his employees, except: c hanro blesvi rt uallawl ibra ry
(a) In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the employer
for the amount paid by him as premium on the insurance;
(b) For union dues, in cases where the right of the worker or his union to check-off has been recognized by the employer or
authorized in writing by the individual worker concerned; and
(c) In cases where the employer is authorized by law or regulations issued by the Secretary of Labor.
WHEREFORE, the petition is GRANTED. The Resolution of the Court of Appeals in CA-G.R. SP No. I 06581 dated 14 October
20 I 0 is SET ASIDE. The Decision of the Court of Appeals in CA-G.R. SP No. I 06581 dated 3 I March :2009
is REINSTATED. No costs. Ï‚rÎ±lÎ± Ï‰ l Î¹b rÎ± r
SO ORDERED.
G.R. No. 70295 November 29,1988
EUGENIA C. CREDO, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, NATIONAL SERVICES CORPORATION AND ARTURO L.
PEREZ, respondents.
Consolidated special civil actions for certiorari seeking to review the decision * of the Third Division, National
Labor Relations Commission in Case No. 11-4944-83 dated 28 November 1984 and its resolution dated 16
January 1985 denying motions for reconsideration of said decision.
Eugenia C. Credo was an employee of the National Service Corporation (NASECO), a domestic corporation
which provides security guards as well as messengerial, janitorial and other similar manpower services to the
Philippine National Bank (PNB) and its agencies. She was first employed with NASECO as a lady guard on 18
July 1975. Through the years, she was promoted to Clerk Typist, then Personnel Clerk until she became Chief
of Property and Records, on 10 March 1980. 1
Sometime before 7 November 1983, Credo was administratively charged by Sisinio S. Lloren, Manager of
Finance and Special Project and Evaluation Department of NASECO, stemming from her non-compliance with
Lloren's memorandum, dated 11 October 1983, regarding certain entry procedures in the company's Statement
of Billings Adjustment. Said charges alleged that Credo "did not comply with Lloren's instructions to place
some corrections/additional remarks in the Statement of Billings Adjustment; and when [Credo] was called by
Lloren to his office to explain further the said instructions, [Credo] showed resentment and behaved in a
scandalous manner by shouting and uttering remarks of disrespect in the presence of her co-employees." 2
On 7 November 1983, Credo was called to meet Arturo L. Perez, then Acting General Manager of NASECO, to
explain her side before Perez and NASECO's Committee on Personnel Affairs in connection with the
administrative charges filed against her. After said meeting, on the same date, Credo was placed on "Forced
Leave" status for 1 5 days, effective 8 November 1983. 3
Before the expiration of said 15-day leave, or on 18 November 1983, Credo filed a complaint, docketed as Case
No. 114944-83, with the Arbitration Branch, National Capital Region, Ministry of Labor and Employment,
Manila, against NASECO for placing her on forced leave, without due process. 4
Likewise, while Credo was on forced leave, or on 22 November 1983, NASECO's Committee on Personnel
Affairs deliberated and evaluated a number of past acts of misconduct or infractions attributed to her. 5 As a
result of this deliberation, said committee resolved:
1. That, respondent [Credo] committed the following offenses in the Code of Discipline, viz:
OFFENSE vs. Company Interest & Policies
No. 3 — Any discourteous act to customer, officer and employee of client company or officer of
the Corporation.
OFFENSE vs. Public Moral
No. 7 — Exhibit marked discourtesy in the course of official duties or use of profane or insulting
language to any superior officer.
OFFENSE vs. Authority
No. 3 — Failure to comply with any lawful order or any instructions of a superior officer.
2. That, Management has already given due consideration to respondent's [Credo] scandalous
actuations for several times in the past. Records also show that she was reprimanded for some
offense and did not question it. Management at this juncture, has already met its maximum
tolerance point so it has decided to put an end to respondent's [Credo] being an undesirable
employee. 6
The committee recommended Credo's termination, with forfeiture of benefits. 7

On 1 December 1983, Credo was called age to the office of Perez to be informed that she was being charged
with certain offenses. Notably, these offenses were those which NASECO's Committee on Personnel Affairs
already resolved, on 22 November 1983 to have been committed by Credo.
In Perez's office, and in the presence of NASECO's Committee on Personnel Affairs, Credo was made to
explain her side in connection with the charges filed against her; however, due to her failure to do so, 8 she was
handed a Notice of Termination, dated 24 November 1983, and made effective 1 December 1983. 9 Hence, on 6
December 1983, Credo filed a supplemental complaint for illegal dismissal in Case No. 11-4944-83, alleging
absence of just or authorized cause for her dismissal and lack of opportunity to be heard. 10
After both parties had submitted their respective position papers, affidavits and other documentary evidence in
support of their claims and defenses, on 9 May 1984, the labor arbiter rendered a decision: 1) dismissing
Credo's complaint, and 2) directing NASECO to pay Credo separation pay equivalent to one half month's pay
for every year of service.11
Both parties appealed to respondent National Labor Relations Commission (NLRC) which, on 28 November
1984, rendered a decision: 1) directing NASECO to reinstate Credo to her former position, or substantially
equivalent position, with six (6) months' backwages and without loss of seniority rights and other privileges
appertaining thereto, and 2) dismissing Credo's claim for attorney's fees, moral and exemplary damages. As a
consequence, both parties filed their respective motions for reconsideration, 12 which the NLRC denied in a
resolution of 16 January 1985. 13
Hence, the present recourse by both parties. In G.R. No. 68970, petitioners challenge as grave abuse of
discretion the dispositive portion of the 28 November 1984 decision which ordered Credo's reinstatement with
backwages. 14 Petitioners contend that in arriving at said questioned order, the NLRC acted with grave abuse of
discretion in finding that: 1) petitioners violated the requirements mandated by law on termination, 2)
petitioners failed in the burden of proving that the termination of Credo was for a valid or authorized cause, 3)
the alleged infractions committed by Credo were not proven or, even if proved, could be considered to have
been condoned by petitioners, and 4) the termination of Credo was not for a valid or authorized cause. 15
On the other hand, in G.R. No. 70295, petitioner Credo challenges as grave abuse of discretion the dispositive
portion of the 28 November 1984 decision which dismissed her claim for attorney's fees, moral and exemplary
damages and limited her right to backwages to only six (6) months. 16
As guidelines for employers in the exercise of their power to dismiss employees for just causes, the law
provides that:
Section 2. Notice of dismissal. — Any employer who seeks to dismiss a worker shall furnish him
a written notice stating the particular acts or omission constituting the grounds for his dismissal.
xxx xxx xxx
Section 5. Answer and Hearing. — The worker may answer the allegations stated against him in
the notice of dismissal within a reasonable period from receipt of such notice. The employer
shall afford the worker ample opportunity to be heard and to defend himself with the assistance
of his representative, if he so desires.
Section 6. Decision to dismiss. — The employer shall immediately notify a worker in writing of
a decision to dismiss him stating clearly the reasons therefor. 17
These guidelines mandate that the employer furnish an employee sought to be dismissed two (2) written notices
of dismissal before a termination of employment can be legally effected. These are the notice which apprises the
employee of the particular acts or omissions for which his dismissal is sought and the subsequent notice which
informs the employee of the employer's decision to dismiss him.
Likewise, a reading of the guidelines in consonance with the express provisions of law on protection to
labor 18(which encompasses the right to security of tenure) and the broader dictates of procedural due process
necessarily mandate that notice of the employer's decision to dismiss an employee, with reasons therefor, can
only be issued after the employer has afforded the employee concerned ample opportunity to be heard and to
defend himself.
In the case at bar, NASECO did not comply with these guidelines in effecting Credo's dismissal. Although she
was apprised and "given the chance to explain her side" of the charges filed against her, this chance was given
so perfunctorily, thus rendering illusory Credo's right to security of tenure. That Credo was not given ample
opportunity to be heard and to defend herself is evident from the fact that the compliance with the injunction to
apprise her of the charges filed against her and to afford her a chance to prepare for her defense was dispensed
in only a day. This is not effective compliance with the legal requirements aforementioned.
The fact also that the Notice of Termination of Credo's employment (or the decision to dismiss her) was dated
24 November 1983 and made effective 1 December 1983 shows that NASECO was already bent on terminating
her services when she was informed on 1 December 1983 of the charges against her, and that any hearing which
NASECO thought of affording her after 24 November 1983 would merely be pro forma or an exercise in
futility.
Besides, Credo's mere non-compliance with Lorens memorandum regarding the entry procedures in the
company's Statement of Billings Adjustment did not warrant the severe penalty of dismissal of the NLRC
correctly held that:
... on the charge of gross discourtesy, the CPA found in its Report, dated 22 November 1983 that,
"In the process of her testimony/explanations she again exhibited a conduct unbecoming in front
of NASECO Officers and argued to Mr. S. S. Lloren in a sarcastic and discourteous manner,
notwithstanding, the fact that she was inside the office of the Acctg. General Manager." Let it be
noted, however, that the Report did not even describe how the so called "conduct unbecoming"
or "discourteous manner" was done by complainant. Anent the "sarcastic" argument of
complainant, the purported transcript 19 of the meeting held on 7 November 1983 does not
indicate any sarcasm on the part of complainant. At the most, complainant may have sounded
insistent or emphatic about her work being more complete than the work of Ms. de Castro, yet,
the complaining officer signed the work of Ms. de Castro and did not sign hers.
As to the charge of insubordination, it may be conceded, albeit unclear, that complainant failed
to place same corrections/additional remarks in the Statement of Billings Adjustments as
instructed. However, under the circumstances obtaining, where complainant strongly felt that she
was being discriminated against by her superior in relation to other employees, we are of the
considered view and so hold, that a reprimand would have sufficed for the infraction, but
certainly not termination from services. 20
As this Court has ruled:
... where a penalty less punitive would suffice, whatever missteps may be committed by labor
ought not to be visited with a consequence so severe. It is not only because of the law's concern
for the working man. There is, in addition, his family to consider. Unemployment brings untold
hardships and sorrows on those dependent on the wage-earner. 21
Of course, in justifying Credo's termination of employment, NASECO claims as additional lawful causes for
dismissal Credo's previous and repeated acts of insubordination, discourtesy and sarcasm towards her superior
officers, alleged to have been committed from 1980 to July 1983. 22
If such acts of misconduct were indeed committed by Credo, they are deemed to have been condoned by
NASECO. For instance, sometime in 1980, when Credo allegedly "reacted in a scandalous manner and raised
her voice" in a discussion with NASECO's Acting head of the Personnel Administration 23 no disciplinary
measure was taken or meted against her. Nor was she even reprimanded when she allegedly talked 'in a
shouting or yelling manner" with the Acting Manager of NASECO's Building Maintenance and Services
Department in 1980 24 or when she allegedly "shouted" at NASECO's Corporate Auditor "in front of his
subordinates displaying arrogance and unruly behavior" in 1980, or when she allegedly shouted at NASECO's
Internal Control Consultant in 1981. 25 But then, in sharp contrast to NASECO's penchant for ignoring the
aforesaid acts of misconduct, when Credo committed frequent tardiness in August and September 1983, she was
reprimanded. 26
Even if the allegations of improper conduct (discourtesy to superiors) were satisfactorily proven, NASECO's
condonation thereof is gleaned from the fact that on 4 October 1983, Credo was given a salary adjustment for
having performed in the job "at least [satisfactorily]" 27 and she was then rated "Very Satisfactory" 28as regards
job performance, particularly in terms of quality of work, quantity of work, dependability, cooperation,
resourcefulness and attendance.
Considering that the acts or omissions for which Credo's employment was sought to be legally terminated were
insufficiently proved, as to justify dismissal, reinstatement is proper. For "absent the reason which gave rise to
[the employee's] separation from employment, there is no intention on the part of the employer to dismiss the
employee concerned." 29 And, as a result of having been wrongfully dismissed, Credo is entitled to three (3)
years of backwages without deduction and qualification. 30
However, while Credo's dismissal was effected without procedural fairness, an award of exemplary damages in
her favor can only be justified if her dismissal was effected in a wanton, fraudulent, oppressive or malevolent
manner.31 A judicious examination of the record manifests no such conduct on the part of management.
However, in view of the attendant circumstances in the case, i.e., lack of due process in effecting her dismissal,
it is reasonable to award her moral damages. And, for having been compelled to litigate because of the unlawful
actuations of NASECO, a reasonable award for attorney's fees in her favor is in order.
In NASECO's comment 32 in G.R. No. 70295, it is belatedly argued that the NLRC has no jurisdiction to order
Credo's reinstatement. NASECO claims that, as a government corporation (by virtue of its being a subsidiary of
the National Investment and Development Corporation (NIDC), a subsidiary wholly owned by the Philippine
National Bank (PNB), which in turn is a government owned corporation), the terms and conditions of
employment of its employees are governed by the Civil Service Law, rules and regulations. In support of this
argument, NASECO cites National Housing Corporation vs. JUCO, 33 where this Court held that "There should
no longer be any question at this time that employees of government-owned or controlled corporations are
governed by the civil service law and civil service rifles and regulations."
It would appear that, in the interest of justice, the holding in said case should not be given retroactive effect, that
is, to cases that arose before its promulgation on 17 January 1985. To do otherwise would be oppressive to
Credo and other employees similarly situated, because under the same 1973 Constitution ,but prior to the ruling
inNational Housing Corporation vs. Juco, this Court had recognized the applicability of the Labor Code to, and
the authority of the NLRC to exercise jurisdiction over, disputes involving terms and conditions of employment
in government owned or controlled corporations, among them, the National Service Corporation
(NASECO).<äre||anº•1àw> 34
Furthermore, in the matter of coverage by the civil service of government-owned or controlled corporations, the
1987 Constitution starkly varies from the 1973 Constitution, upon which National Housing Corporation vs.
Juco is based. Under the 1973 Constitution, it was provided that:
The civil service embraces every branch, agency, subdivision, and instrumentality of the
Government, including every government-owned or controlled corporation. ... 35
On the other hand, the 1987 Constitution provides that:
The civil service embraces all branches, subdivisions, instrumentalities, and agencies of the
Government, including government-owned or controlled corporations with original
charter. 36(Emphasis supplied)
Thus, the situations sought to be avoided by the 1973 Constitution and expressed by the Court in the National
Housing . Corporation case in the following manner —
The infirmity of the respondents' position lies in its permitting a circumvention or emasculation
of Section 1, Article XII-B of the constitution. It would be possible for a regular ministry of
government to create a host of subsidiary corporations under the Corporation Code funded by a
willing legislature. A government-owned corporation could create several subsidiary
corporations. These subsidiary corporations would enjoy the best of two worlds. Their officials
and employees would be privileged individuals, free from the strict accountability required by
the Civil Service Decree and the regulations of the Commission on Audit. Their incomes would
not be subject to the competitive restrains of the open market nor to the terms and conditions of
civil service employment. Conceivably, all government-owned or controlled corporations could
be created, no longer by special charters, but through incorporations under the general law. The
Constitutional amendment including such corporations in the embrace of the civil service would
cease to have application. Certainly, such a situation cannot be allowed to exist. 37
appear relegated to relative insignificance by the 1987 Constitutional provision that the Civil Service embraces
government-owned or controlled corporations with original charter; and, therefore, by clear implication, the
Civil Service does not include government-owned or controlled corporations which are organized as
subsidiaries of government-owned or controlled corporations under the general corporation law.
The proceedings in the 1986 Constitutional Commission also shed light on the Constitutional intent and
meaning in the use of the phrase "with original charter." Thus
THE PRESIDING OFFICER (Mr. Trenas) Commissioner Romulo is recognized.
MR. ROMULO. I beg the indulgence of the Committee. I was reading the wrong
provision.
I refer to Section 1, subparagraph I which reads:
The Civil Service embraces all branches, subdivisions, instrumentalities, and agencies of the
government, including government-owned or controlled corporations.
My query: Is Philippine Airlines covered by this provision? MR. FOZ. Will the Commissioner
please state his previous question?
MR. ROMULO. The phrase on line 4 of Section 1, subparagraph 1, under the
Civil Service Commission, says: "including government-owned or controlled
corporations.' Does that include a corporation, like the Philippine Airlines which
is government-owned or controlled?
MR. FOZ. I would like to throw a question to the Commissioner. Is the Philippine
Airlines controlled by the government in the sense that the majority of stocks are
owned by the government?
MR. ROMULO. It is owned by the GSIS. So, this is what we might call a tertiary
corporation. The GSIS is owned by the government. Would this be covered
because the provision says "including government-owned or controlled
corporations."
MR. FOZ. The Philippine Airlines was established as a private corporation. Later
on, the government, through the GSIS, acquired the controlling stocks. Is that not
the correct situation?
MR. ROMULO. That is true as Commissioner Ople is about to explain. There

was apparently a Supreme Court decision that destroyed that distinction between
a government-owned corporation created under the Corporation Law and a
government-owned corporation created by its own charter.
MR. FOZ. Yes, we recall the Supreme Court decision in the case of NHA vs. Juco
to the effect that all government corporations irrespective of the manner of
creation, whether by special charter or by the private Corporation Law, are
deemed to be covered by the civil service because of the wide-embracing
definition made in this section of the existing 1973 Constitution. But we recall the
response to the question of Commissioner Ople that our intendment in this
provision is just to give a general description of the civil service. We are not here
to make any declaration as to whether employees of government-owned or
controlled corporations are barred from the operation of laws, such as the Labor
Code of the Philippines.
MR. ROMULO. Yes.
MR. OPLE. May I be recognized, Mr. Presiding Officer, since my name has been
mentioned by both sides.
MR. ROMULO. I yield part of my time.
THE PRESIDING OFFICER (Mr.Trenas). Commissioner Ople is recognized.
MR. OPLE. In connection with the coverage of the Civil Service Law in Section 1
(1), may I volunteer some information that may be helpful both to the interpellator
and to the Committee. Following the proclamation of martial law on September
21, 1972, this issue of the coverage of the Labor Code of the Philippines and of
the Civil Service Law almost immediately arose. I am, in particular, referring to
the period following the coming into force and effect of the Constitution of 1973,
where the Article on the Civil Service was supposed to take immediate force and
effect. In the case of LUZTEVECO, there was a strike at the time. This was a
government-controlled and government-owned corporation. I think it was owned
by the PNOC with just the minuscule private shares left. So, the Secretary of
Justice at that time, Secretary Abad Santos, and myself sat down, and the result of
that meeting was an opinion of the Secretary of Justice which 9 became binding
immediately on the government that government corporations with original
charters, such as the GSIS, were covered by the Civil Service Law and
corporations spun off from the GSIS, which we called second generation
corporations functioning as private subsidiaries, were covered by the Labor Code.
Samples of such second generation corporations were the Philippine Airlines, the
Manila
Hotel and the Hyatt. And that demarcation worked very well. In fact, all of these companies I
have mentioned as examples, except for the Manila Hotel, had collective bargaining agreements.
In the Philippine Airlines, there were, in fact, three collective bargaining agreements; one, for the
ground people or the PALIA one, for the flight attendants or the PASAC and one for the pilots of
the ALPAC How then could a corporation like that be covered by the Civil Service law? But, as
the Chairman of the Committee pointed out, the Supreme Court decision in the case of NHA vs.
Juco unrobed the whole thing. Accordingly, the Philippine Airlines, the Manila Hotel and the
Hyatt are now considered under that decision covered by the Civil Service Law. I also recall that
in the emergency meeting of the Cabinet convened for this purpose at the initiative of the
Chairman of the Reorganization Commission, Armand Fabella, they agreed to allow the CBA's
to lapse before applying the full force and effect of the Supreme Court decision. So, we were in
the awkward situation when the new government took over. I can agree with Commissioner
Romulo when he said that this is a problem which I am not exactly sure we should address in the
deliberations on the Civil Service Law or whether we should be content with what the Chairman
said that Section 1 (1) of the Article on the Civil Service is just a general description of the
coverage of the Civil Service and no more.
Thank you, Mr. Presiding Officer.
MR. ROMULO. Mr. Presiding Officer, for the moment, I would be satisfied if the
Committee puts on records that it is not their intent by this provision and the
phrase "including government-owned or controlled corporations" to cover such
companies as the Philippine Airlines.
MR. FOZ. Personally, that is my view. As a matter of fact, when this draft was
made, my proposal was really to eliminate, to drop from the provision, the phrase
"including government- owned or controlled corporations."
MR. ROMULO. Would the Committee indicate that is the intent of this
provision?
MR. MONSOD. Mr. Presiding Officer, I do not think the Committee can make
such a statement in the face of an absolute exclusion of government-owned or
controlled corporations. However, this does not preclude the Civil Service Law to
prescribe different rules and procedures, including emoluments for employees of
proprietary corporations, taking into consideration the nature of their operations.
So, it is a general coverage but it does not preclude a distinction of the rules
between the two types of enterprises.
MR. FOZ. In other words, it is something that should be left to the legislature to
decide. As I said before, this is just a general description and we are not making
any declaration whatsoever.
MR. MONSOD. Perhaps if Commissioner Romulo would like a definitive
understanding of the coverage and the Gentleman wants to exclude government-
owned or controlled corporations like Philippine Airlines, then the recourse is to
offer an amendment as to the coverage, if the Commissioner does not accept the
explanation that there could be a distinction of the rules, including salaries and
emoluments.
MR. ROMULO. So as not to delay the proceedings, I will reserve my right to

submit such an amendment.
xxx xxx xxx
THE PRESIDING OFFICE (Mr. Trenas) Commissioner Romulo is recognized.
MR. ROMULO. On page 2, line 5, I suggest the following amendment after

"corporations": Add a comma (,) and the phrase EXCEPT THOSE EXERCISING
PROPRIETARY FUNCTIONS.
THE PRESIDING OFFICER (Mr. Trenas). What does the Committee say?
SUSPENSION OF SESSION
MR. MONSOD. May we have a suspension of the session?
THE PRESIDING OFFICER (Mr. Trenas). The session is suspended.
It was 7:16 p.m.
RESUMPTION OF SESSION
At 7:21 p.m., the session was resumed.
THE PRESIDING OFFICER (Mr. Trenas). The session is resumed.
Commissioner Romulo is recognized.
MR. ROMULO. Mr. Presiding Officer, I am amending my original proposed amendment to now
read as follows: "including government-owned or controlled corporations WITH ORIGINAL
CHARTERS." The purpose of this amendment is to indicate that government corporations such
as the GSIS and SSS, which have original charters, fall within the ambit of the civil service.
However, corporations which are subsidiaries of these chartered agencies such as the Philippine
Airlines, Manila Hotel and Hyatt are excluded from the coverage of the civil service.
THE PRESIDING OFFICER (Mr. Trenas). What does the Committee say?
MR. FOZ. Just one question, Mr. Presiding Officer. By the term "original
charters," what exactly do we mean?
MR. ROMULO. We mean that they were created by law, by an act of Congress,
or by special law.
MR. FOZ. And not under the general corporation law.
MR. ROMULO. That is correct. Mr. Presiding Officer.
MR. FOZ. With that understanding and clarification, the Committee accepts the
amendment.
MR. NATIVIDAD. Mr. Presiding officer, so those created by the general

corporation law are out.
MR. ROMULO. That is correct: 38
On the premise that it is the 1987 Constitution that governs the instant case because it is the Constitution in
place at the time of decision thereof, the NLRC has jurisdiction to accord relief to the parties. As an admitted
subsidiary of the NIDC, in turn a subsidiary of the PNB, the NASECO is a government-owned or controlled
corporation without original charter.
Dr. Jorge Bocobo, in his Cult of Legalism, cited by Mr. Justice Perfecto in his concurring opinion in Gomez vs.
Government Insurance Board (L-602, March 31, 1947, 44 O.G. No. 8, pp. 2687, 2694; also published in 78
Phil. 221) on the effectivity of the principle of social justice embodied in the 1935 Constitution, said:
Certainly, this principle of social justice in our Constitution as generously conceived and so
tersely phrased, was not included in the fundamental law as a mere popular gesture. It was meant
to (be) a vital, articulate, compelling principle of public policy. It should be observed in the
interpretation not only of future legislation, but also of all laws already existing on November 15,
1935. It was intended to change the spirit of our laws, present and future. Thus, all the laws
which on the great historic event when the Commonwealth of the Philippines was born, were
susceptible of two interpretations strict or liberal, against or in favor of social justice, now have
to be construed broadly in order to promote and achieve social justice. This may seem novel to
our friends, the advocates of legalism but it is the only way to give life and significance to the
above-quoted principle of the Constitution. If it was not designed to apply to these existing laws,
then it would be necessary to wait for generations until all our codes and all our statutes shall
have been completely charred by removing every provision inimical to social justice, before the
policy of social justice can become really effective. That would be an absurd conclusion. It is
more reasonable to hold that this constitutional principle applies to all legislation in force on
November 15, 1935, and all laws thereafter passed.
WHEREFORE, in view of the foregoing, the challenged decision of the NLRC is AFFIRMED with
modifications. Petitioners in G.R. No. 69870, who are the private respondents in G.R. No. 70295, are ordered
to: 1) reinstate Eugenia C. Credo to her former position at the time of her termination, or if such reinstatement is
not possible, to place her in a substantially equivalent position, with three (3) years backwages, from 1
December 1983, without qualification or deduction, and without loss of seniority rights and other privileges
appertaining thereto, and 2) pay Eugenia C. Credo P5,000.00 for moral damages and P5,000.00 for attorney's
fees.
If reinstatement in any event is no longer possible because of supervening events, petitioners in G.R. No. 69870,
who are the private respondents in G.R. No. 70295 are ordered to pay Eugenia C. Credo, in addition to her
backwages and damages as above described, separation pay equivalent to one-half month's salary for every year
of service, to be computed on her monthly salary at the time of her termination on 1 December 1983.
SO ORDERED.
G.R. No. 86773 February 14, 1992
SOUTHEAST ASIAN FISHERIES DEVELOPMENT CENTER-AQUACULTURE DEPARTMENT

(SEAFDEC-AQD), DR. FLOR LACANILAO (CHIEF), RUFIL CUEVAS (HEAD, ADMINISTRATIVE
DIV.), BEN DELOS REYES (FINANCE OFFICER), petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and JUVENAL LAZAGA, respondents.
This is a petition for certiorari to annul and set aside the July 26, 1988 decision of the National Labor Relations
Commission sustaining the labor arbiter, in holding herein petitioners Southeast Asian Fisheries Development
Center-Aquaculture Department (SEAFDEC-AQD), Dr. Flor Lacanilao, Rufil Cuevas and Ben de los Reyes
liable to pay private respondent Juvenal Lazaga the amount of P126,458.89 plus interest thereon computed from
May 16, 1986 until full payment thereof is made, as separation pay and other post-employment benefits, and the
resolution denying the petitioners' motion for reconsideration of said decision dated January 9, 1989.
The antecedent facts of the case are as follows:
SEAFDEC-AQD is a department of an international organization, the Southeast Asian Fisheries Development

Center, organized through an agreement entered into in Bangkok, Thailand on December 28, 1967 by the
governments of Malaysia, Singapore, Thailand, Vietnam, Indonesia and the Philippines with Japan as the
sponsoring country (Article 1, Agreement Establishing the SEAFDEC).
On April 20, 1975, private respondent Juvenal Lazaga was employed as a Research Associate an a probationary
basis by the SEAFDEC-AQD and was appointed Senior External Affairs Officer on January 5, 1983 with a
monthly basic salary of P8,000.00 and a monthly allowance of P4,000.00. Thereafter, he was appointed to the
position of Professional III and designated as Head of External Affairs Office with the same pay and benefits.
On May 8, 1986, petitioner Lacanilao in his capacity as Chief of SEAFDEC-AQD sent a notice of termination
to private respondent informing him that due to the financial constraints being experienced by the department,
his services shall be terminated at the close of office hours on May 15, 1986 and that he is entitled to separation
benefits equivalent to one (1) month of his basic salary for every year of service plus other benefits (Rollo, p.
153).
Upon petitioner SEAFDEC-AQD's failure to pay private respondent his separation pay, the latter filed on
March 18, 1987 a complaint against petitioners for non-payment of separation benefits plus moral damages and
attorney's fees with the Arbitration Branch of the NLRC (Annex "C" of Petition for Certiorari).
Petitioners in their answer with counterclaim alleged that the NLRC has no jurisdiction over the case inasmuch
as the SEAFDEC-AQD is an international organization and that private respondent must first secure clearances
from the proper departments for property or money accountability before any claim for separation pay will be
paid, and which clearances had not yet been obtained by the private respondent.
A formal hearing was conducted whereby private respondent alleged that the non-issuance of the clearances by
the petitioners was politically motivated and in bad faith. On the other hand, petitioners alleged that private
respondent has property accountability and an outstanding obligation to SEAFDEC-AQD in the amount of
P27,532.11. Furthermore, private respondent is not entitled to accrued sick leave benefits amounting to
P44,000.00 due to his failure to avail of the same during his employment with the SEAFDEC-AQD (Annex
"D", Id.).
On January 12, 1988, the labor arbiter rendered a decision, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered ordering respondents:

1. To pay complainant P126,458.89, plus legal interest thereon computed from May 16, 1986
until full payment thereof is made, as separation pay and other post-employment benefits;
2. To pay complainant actual damages in the amount of P50,000, plus 10% attorney's fees.
All other claims are hereby dismissed.
SO ORDERED. (Rollo, p. 51, Annex "E")
On July 26, 1988, said decision was affirmed by the Fifth Division of the NLRC except as to the award of
P50,000.00 as actual damages and attorney's fees for being baseless. (Annex "A", p. 28, id.)
On September 3, 1988, petitioners filed a Motion for Reconsideration (Annex "G", id.) which was denied on
January 9, 1989. Thereafter, petitioners instituted this petition for certiorari alleging that the NLRC has no
jurisdiction to hear and decide respondent Lazaga's complaint since SEAFDEC-AQD is immune from suit
owing to its international character and the complaint is in effect a suit against the State which cannot be
maintained without its consent.
The petition is impressed with merit.
Petitioner Southeast Asian Fisheries Development Center-Aquaculture Department (SEAFDEC-AQD) is an

international agency beyond the jurisdiction of public respondent NLRC.
It was established by the Governments of Burma, Kingdom of Cambodia, Republic of Indonesia, Japan,
Kingdom of Laos, Malaysia. Republic of the Philippines, Republic of Singapore, Kingdom of Thailand and
Republic of Vietnam (Annex "H", Petition).
The Republic of the Philippines became a signatory to the Agreement establishing SEAFDEC on January
16,1968. Its purpose is as follows:
The purpose of the Center is to contribute to the promotion of the fisheries development in
Southeast Asia by mutual co-operation among the member governments of the Center,
hereinafter called the "Members", and through collaboration with international organizations and
governments external to the Center. (Agreement Establishing the SEAFDEC, Art. 1; Annex "H"
Petition) (p.310, Rollo)
SEAFDEC-AQD was organized during the Sixth Council Meeting of SEAFDEC on July 3-7, 1973 in Kuala
Lumpur, Malaysia as one of the principal departments of SEAFDEC (Annex "I", id.) to be established in Iloilo
for the promotion of research in aquaculture. Paragraph 1, Article 6 of the Agreement establishing SEAFDEC
mandates:
1. The Council shall be the supreme organ of the Center and all powers of the Center shall be
vested in the Council.
Being an intergovernmental organization, SEAFDEC including its Departments (AQD), enjoys functional
independence and freedom from control of the state in whose territory its office is located.
As Senator Jovito R. Salonga and Former Chief Justice Pedro L. Yap stated in their book, Public International
Law (p. 83, 1956 ed.):
Permanent international commissions and administrative bodies have been created by the
agreement of a considerable number of States for a variety of international purposes, economic
or social and mainly non-political. Among the notable instances are the International Labor
Organization, the International Institute of Agriculture, the International Danube Commission. In
so far as they are autonomous and beyond the control of any one State, they have a distinct
juridical personality independent of the municipal law of the State where they are situated. As
such, according to one leading authority "they must be deemed to possess a species of
international personality of their own." (Salonga and Yap, Public International Law, 83 [1956
ed.])
Pursuant to its being a signatory to the Agreement, the Republic of the Philippines agreed to be represented by
one Director in the governing SEAFDEC Council (Agreement Establishing SEAFDEC, Art. 5, Par. 1, Annex
"H",ibid.) and that its national laws and regulations shall apply only insofar as its contribution to SEAFDEC of
"an agreed amount of money, movable and immovable property and services necessary for the establishment
and operation of the Center" are concerned (Art. 11, ibid.). It expressly waived the application of the Philippine
laws on the disbursement of funds of petitioner SEAFDEC-AQD (Section 2, P.D. No. 292).
The then Minister of Justice likewise opined that Philippine Courts have no jurisdiction over SEAFDEC-AQD
in Opinion No. 139, Series of 1984 —
4. One of the basic immunities of an international organization is immunity from local

jurisdiction, i.e.,that it is immune from the legal writs and processes issued by the tribunals of the
country where it is found. (See Jenks, Id., pp. 37-44) The obvious reason for this is that the
subjection of such an organization to the authority of the local courts would afford a convenient
medium thru which the host government may interfere in there operations or even influence or
control its policies and decisions of the organization; besides, such subjection to local
jurisdiction would impair the capacity of such body to discharge its responsibilities impartially
on behalf of its member-states. In the case at bar, for instance, the entertainment by the National
Labor Relations Commission of Mr. Madamba's reinstatement cases would amount to
interference by the Philippine Government in the management decisions of the SEARCA
governing board; even worse, it could compromise the desired impartiality of the organization
since it will have to suit its actuations to the requirements of Philippine law, which may not
necessarily coincide with the interests of the other member-states. It is precisely to forestall these
possibilities that in cases where the extent of the immunity is specified in the enabling
instruments of international organizations, jurisdictional immunity from the host country is
invariably among the first accorded. (See Jenks, Id.; See also Bowett, The Law of International
Institutions, pp. 284-1285).
Respondent Lazaga's invocation of estoppel with respect to the issue of jurisdiction is unavailing because
estoppel does not apply to confer jurisdiction to a tribunal that has none over a cause of action. Jurisdiction is
conferred by law. Where there is none, no agreement of the parties can provide one. Settled is the rule that the
decision of a tribunal not vested with appropriate jurisdiction is null and void. Thus, in Calimlim vs. Ramirez,
this Court held:
A rule, that had been settled by unquestioned acceptance and upheld in decisions so numerous to
cite is that the jurisdiction of a court over the subject matter of the action is a matter of law and
may not be conferred by consent or agreement of the parties. The lack of jurisdiction of a court
may be raised at any stage of the proceedings, even on appeal. This doctrine has been qualified
by recent pronouncements which it stemmed principally from the ruling in the cited case
of Sibonghanoy. It is to be regretted, however, that the holding in said case had been applied to
situations which were obviously not contemplated therein. The exceptional circumstances
involved in Sibonghanoy which justified the departure from the accepted concept of non-
waivability of objection to jurisdiction has been ignored and, instead a blanket doctrine had been
repeatedly upheld that rendered the supposed ruling in Sibonghanoy not as the exception, but
rather the general rule, virtually overthrowing altogether the time-honored principle that the issue
of jurisdiction is not lost by waiver or by estoppel. (Calimlim vs. Ramirez, G.R. No. L-34362,
118 SCRA 399; [1982])
Respondent NLRC'S citation of the ruling of this Court in Lacanilao v. De Leon (147 SCRA 286 [1987]) to
justify its assumption of jurisdiction over SEAFDEC is misplaced. On the contrary, the Court in said case
explained why it took cognizance of the case. Said the Court:
We would note, finally, that the present petition relates to a controversy between two claimants
to the same position; this is not a controversy between the SEAFDEC on the one hand, and an
officer or employee, or a person claiming to be an officer or employee, of the SEAFDEC, on the
other hand. There is before us no question involving immunity from the jurisdiction of the Court,
there being no plea for such immunity whether by or on behalf of SEAFDEC, or by an official of
SEAFDEC with the consent of SEAFDEC (Id., at 300; emphasis supplied).
WHEREFORE, finding SEAFDEC-AQD to be an international agency beyond the jurisdiction of the courts or
local agency of the Philippine government, the questioned decision and resolution of the NLRC dated July 26,
1988 and January 9, 1989, respectively, are hereby REVERSED and SET ASIDE for having been rendered
without jurisdiction. No costs.
SO ORDERED.
INDUSTRIAL & TRANSPORT G.R. No. 158539

EQUIPMENT, INC. and/or
RAYMOND JARINA,
Petitioners,
Present:
- versus - PUNO, C.J., Chairperson,

CARPIO,
CORONA,
AZCUNA, and
LEONARDO-DE CASTRO, JJ.
TOMAS TUGADE and CRESENCIO
TUGADE,
Respondents. Promulgated:
January 15, 2009
X ---------------------------------------------------------------------------------------- X
DECISION
AZCUNA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court, seeking to annul and set
aside the Decision of the Court of Appeals dated March 14, 2003 which affirmed the decision of the National
Labor Relations Commission (NLRC) finding petitioners liable for illegal dismissal and ordering the payment
of backwages and separation pay to respondents, and the Resolution dated May 29, 2003 denying petitioners
motion for reconsideration.
As found by the Court of Appeals, the facts are as follows:
Petitioner is a corporation engaged in the business of motor vehicle repair. Private

respondents, Tomas Tugade and his brother Cresencio Tugade, were hired on November 14,
1978 and on May 11, 1984, respectively, by petitioner corporation. Tomas was employed as a
diesel mechanic, while Cresencio was the officer-in-charge at petitioners shop
on Visayas Avenue.
Private respondents dismissal stemmed from an incident which took place on March 22,
1998, when Mr. Faustino Cabel, one of the regular customers of petitioner, arrived at the shop to
have his vehicle repaired. On March 27, 1998, respondent Cresencio Tugade, after making the
necessary verifications regarding the payment of the service made by Mr. Cabel, released the
latters vehicle.
On March 28, 1998, Felix P. Broqueza, petitioners Personnel and Administration

Manager issued a memorandum against Engr. Fernando Fabros and respondents Tomas
and Cresencio Tugade, suspending them for ten (10) working days from March 30, 1998 to April
11, 1998 for disobedience, incompetence and gross negligence. The memorandum stated, among
others, that the three employees released the vehicle to Mr. Cabel, despite the instructions made
by the Company president not to release the same, unless and until he made full settlement of his
obligation which remained unpaid since 1996.
After the lapse of ten (10) days suspension or on April 12, 1998, the Tugades allegedly
did not report for work and were considered absent without leave. On April 13, 1998, another
memorandum was issued by Felix Broqueza directing him to make the necessary explanation
why he failed to report for work.
On April 16, 1996, however, the Tugades filed a complaint for illegal dismissal with
prayer for payment of separation pay in lieu of reinstatement, backwages and damages against
petitioner.[1]
On September 28, 1998, Labor Arbiter Potenciano S. Caezares rendered his Decision, dismissing the
complaint for lack of merit but awarding separation pay of P56,680, the dispositive portion of which reads:
WHEREFORE, the above-captioned case is hereby DISMISSED for lack of merit.
However, We find it in conformity with labor justice, considering the long services of the
complainants, to award them separation pay equivalent to one-half month pay for every year of
service, which as computed by Patricia B. Pangilinan of the Commissions NLRC NCR Branch
are the following:
Separation Pay (1/2)

11/14/78-09/30/98
P218 x 13 x 20 yrs. P56,680.00
============
SO ORDERED.
Both parties appealed the decision of the Labor Arbiter to the NLRC which rendered a decision on July
30, 1999 that reversed the Labor Arbiter by ruling that respondents were illegally dismissed and ordering
payment of backwages and separation pay. The motion for reconsideration filed by petitioners was also denied
by the NLRC in a Resolution dated September 20, 1999.
The Court of Appeals, as stated, affirmed the NLRC decision.
On July 8, 2003, petitioners filed the present petition for review on certiorari with prayer for the
issuance of a temporary restraining order and/or writ of preliminary injunction assailing the Decision and
Resolution of the Court of Appeals.
In a Resolution dated March 10, 2004, this Court issued a temporary restraining order enjoining
respondents from enforcing the assailed Decision and Resolution of the Court of Appeals.
Petitioners contend that:
THE COURT OF APPEALS SERIOUSLY ERRED IN DECLARING THAT RESPONDENTS

WERE ILLEGALLY DISMISSED FROM EMPLOYMENT.
II
THE COURT OF APPEALS SERIOUSLY ERRED IN ORDERING THE PAYMENT OF

BACKWAGES AND SEPARATION PAY TO RESPONDENTS.
Dismissal connotes a permanent severance or complete separation of the worker from the service on the
initiative of the employer regardless of the reasons therefor.[2] Based on the foregoing, it can hardly be said that
respondents were dismissed from employment rather than merely temporarily suspended. Nowhere in the
proceedings or pleadings filed before the Labor Arbiter or the NLRC did respondents dispute that they were
merely suspended from March 30, 1998 to April 11, 1998. As shown by the contents of the memorandum
issued to respondents, they were not dismissed but merely suspended from employment:
xxx However, despite our Presidents direct and clear instruction you released the vehicle
to Mr. Faustino Cabel without the necessary payment. This is a clear disobedience, incompetence
and gross negligence of your duty as Supervisor.
In view thereof, we regret to inform you that you are being suspended for ten (10)
working days without pay effective March 30 to April 11, 1998.
Repetition of the same offense will be dealt with accordingly in accordance with the labor
law. (Annex 2 to Annex F to Annex C hereof)
This piece of evidence clearly disproves the finding of the Court of Appeals that respondents were
terminated from employment supposedly based on a memorandum prohibiting their entry into the company
premises. A settled exception to the rule generally sustaining the factual determination of the Court of Appeals
is when it disregards a vitalevidence in reaching its finding. This obtains here.
There is also no dispute that petitioners instructed the respondents not to release the vehicle of Mr.
Faustino Cabel unless and until the latter has completely settled his obligations with the company. However,
despite the fact that Mr. Cabel failed to settle his obligations and in clear defiance of the petitioners order,
respondents released the car to Mr. Cabel. Petitioners were clearly acting within their rights in suspending
respondents.
In numerous cases, this Court has sustained the right of employers to exercise their management
prerogatives to discipline erring employees, thus:
However, petitioner loses sight off the fact that the right of an employer to regulate all
aspects of employment is well settled. This right, aptly called management prerogative, gives
employers the freedom to regulate, according to their discretion and best judgment, all aspects of
employment, including work assignment, working methods, processes to be followed, working
regulations, transfer of employees, work supervision, lay-off of workers and the discipline,
dismissal and recall of workers. In general, management has the prerogative to discipline its
employees and to impose appropriate penalties on erring workers pursuant to company rules and
regulations.[3]
Therefore, the complaint for illegal dismissal filed by respondents was premature, since even after the
expiration of their suspension period, they refused, despite due notice, to report to work. In fact, in their
Memorandum of Appeal, respondents admitted having received petitioners return-to-work memorandum which,
however, became futile because they hastily filed the complaint for illegal dismissal.
Since there was no dismissal to speak of, there is no basis to award any backwages to
respondents. Under Article 279 of the Labor Code, an employee is entitled to reinstatement and backwages only
if he was illegally dismissed.
The decision of the Labor Arbiter is, therefore, sustained, finding that respondents abandoned their
positions by failing to return to work despite management directives to do so, and awarding separation pay
of P56,680 each to respondents.
Nevertheless, this Court agrees with the Court of Appeals that petitioners failed to follow the
requirements of notices after respondents abandoned their positions.Respondents are therefore entitled to an
additional award of P30,000 each in accordance with the doctrine in the Agabon[4] case.
WHEREFORE, the Decision dated March 14, 2003 and the Resolution dated May 29, 2003 of the
Court of Appeals are hereby MODIFIED. The decision of the National Labor Relations Commission dated July
30, 1999 is REVERSED and the Decision of the Labor Arbiter dated September 28, 1998 is REINSTATED
with MODIFICATION, awarding separation pay to respondents in the amount of P56,680 each plus P30,000
each in accordance with the Agabon doctrine.
No costs.
SO ORDERED.
FEDERICO S. ROBOSA, ROLANDOE. G.R. No. 176085

PANDY, NOEL D. ROXAS, ALEXANDER
ANGELES, VERONICA GUTIERREZ,
FERNANDO EMBAT, and NANETTE H. Present:
PINTO,
Petitioners, CARPIO, J., Chairperson,
BRION,
PEREZ,
SERENO, and
- versus - REYES, JJ.
NATIONAL LABOR RELATIONS

COMMISSION (First Division), CHEMO- Promulgated:
TECHNISCHE MANUFACTURING, INC. and
its responsible officials led by FRANKLIN R. February 8, 2012
DE LUZURIAGA, and PROCTER &
GAMBLE PHILIPPINES, INC.,
Respondents.
We resolve the petition for review on certiorari[1] seeking the reversal of the resolutions of the Court of Appeals
(CA) rendered on February 24, 2006[2] and December 14, 2006[3] in CA-G.R. SP No. 80436.
Factual Background
Federico S. Robosa, Rolando E. Pandy, Noel D. Roxas, Alexander Angeles, Veronica Gutierrez, Fernando
Embat and Nanette H. Pinto (petitioners) were rank-and-file employees of respondent Chemo-Technische
Manufacturing, Inc. (CTMI), the manufacturer and distributor of Wella products. They were officers and
members of the CTMI Employees Union-DFA (union). Respondent Procter and Gamble Philippines, Inc. (P &
GPI) acquired all the interests, franchises and goodwill of CTMI during the pendency of the dispute.
Sometime in the first semester of 1991, the union filed a petition for certification election at CTMI. On June 10,
1991, Med-Arbiter Rasidali Abdullah of the Office of the Department of Labor and Employment in the National
Capital Region (DOLE-NCR) granted the petition. The DOLE-NCR conducted a consent election on July 5,
1991, but the union failed to garner the votes required to be certified as the exclusive bargaining agent of the
company.
On July 15, 1991, CTMI, through its President and General Manager Franklin R. de Luzuriaga, issued a
memorandum[4] announcing that effective that day: (1) all sales territories were demobilized; (2) all vehicles
assigned to sales representatives should be returned to the company and would be sold; (3) sales representatives
would continue to service their customers through public transportation and would be given transportation
allowance; (4) deliveries of customers orders would be undertaken by the warehouses; and (5) revolving funds
for ex-truck selling held by sales representatives should be surrendered to the cashier (for Metro Manila) or to
the supervisor (for Visayas and Mindanao), and truck stocks should immediately be surrendered to the
warehouse.
On the same day, CTMI issued another memorandum[5] informing the companys sales representatives and sales
drivers of the new system in the Salon Business Groups selling operations.
The union asked for the withdrawal and deferment of CTMIs directives, branding them as union busting acts
constituting unfair labor practice. CTMI ignored the request. Instead, it issued on July 23, 1991 a notice of
termination of employment to the sales drivers, due to the abolition of the sales driver positions.[6]
On August 1, 1991, the union and its affected members filed a complaint for illegal dismissal and unfair labor
practice, with a claim for damages, against CTMI, De Luzuriaga and other CTMI officers. The union also
moved for the issuance of a writ of preliminary injunction and/or temporary restraining order (TRO).
The Compulsory Arbitration Proceedings
The labor arbiter handling the case denied the unions motion for a stay order on the ground that the issues raised
by the petitioners can best be ventilated during the trial on the merits of the case. This prompted the union to file
on August 16, 1991 with the National Labor Relations Commission (NLRC), a petition for the issuance of a
preliminary mandatory injunction and/or TRO.[7]
On August 23, 1991, the NLRC issued a TRO.[8] It directed CTMI, De Luzuriaga and other company executives
to (1) cease and desist from dismissing any member of the union and from implementing the July 23, 1991
memorandum terminating the services of the sales drivers, and to immediately reinstate them if the dismissals
have been effected; (2) cease and desist from implementing the July 15, 1991 memorandum grounding the sales
personnel; and (3) restore the status quo ante prior to the formation of the union and the conduct of the consent
election.
Allegedly, the respondents did not comply with the NLRCs August 23, 1991 resolution. They instead moved to
dissolve the TRO and opposed the unions petition for preliminary injunction.
On September 12, 1991, the NLRC upgraded the TRO to a writ of preliminary injunction.[9] The respondents
moved for reconsideration. The union opposed the motion and urgently moved to cite the responsible CTMI
officers in contempt of court.
On August 25, 1993, the NLRC denied the respondents motion for reconsideration and directed Labor Arbiter
Cristeta Tamayo to hear the motion for contempt. In reaction, the respondents questioned the NLRC orders
before this Court through a petition for certiorari and prohibition with preliminary injunction. The Court
dismissed the petition for being premature. It also denied the respondents motion for reconsideration, as well as
a second motion for reconsideration, with finality. This notwithstanding, the respondents allegedly refused to
obey the NLRC directives. The respondents defiance, according to the petitioners, resulted in the loss of their
employment.
Meanwhile, the NLRC heard the contempt charge. On October 31, 2000, it issued a resolution[10] dismissing the
charge. It ordered the labor arbiter to proceed hearing the main case on the merits.
The petitioners moved for, but failed to secure, a reconsideration from the NLRC on the dismissal of the
contempt charge. They then sought relief from the CA by way of a petition for certiorari under Rule 65.
The CA Decision
The CA saw no need to dwell on the issues raised by the petitioners as the question it deemed appropriate for
resolution is whether the NLRCs dismissal of the contempt charge against the respondents may be the proper
subject of an appeal. It opined that the dismissal is not subject to review by an appellate court. Accordingly, the
CA Special Sixth Division dismissed the petition in its resolution of February 24, 2006.[11]
The CA considered the prayer of P & GPI to be dropped as party-respondent moot and academic.
The petitioners sought a reconsideration, but the CA denied the motion in its resolution of December 14,
[12]
2006. Hence, the present Rule 45 petition.
The Petition
The petitioners charge the CA with grave abuse of discretion in upholding the NLRC resolutions, despite the
reversible errors the labor tribunal committed in dismissing the contempt charge against the respondents. They
contend that the respondents were guilty of contempt for their failure (1) to observe strictly the NLRC status
quo order; and (2) to reinstate the dismissed petitioners and to pay them their lost wages, sales commissions, per
diems, allowances and other employee benefits. They also claim that the NLRC, in effect, overturned this
Courts affirmation of the TRO and of the preliminary injunction.
The petitioners assail the CAs reliance on the Courts ruling that a contempt charge partakes of a criminal
proceeding where an acquittal is not subject to appeal. They argue that the facts obtaining in the present case are
different from the facts of the cases where the Courts ruling was made. They further argue that by the nature of
this case, the Labor Code and its implementing rules and regulations should apply, but in any event, the
appellate court is not prevented from reviewing the factual basis of the acquittal of the respondents from the
contempt charges.
The petitioners lament that the NLRC, in issuing the challenged resolutions, had unconstitutionally applied the
law. They maintain that not only did the NLRC unconscionably delay the disposition of the case for more than
twelve (12) years; it also rendered an unjust, unkind and dubious judgment. They bewail that [f]or some strange
reason, the respondent NLRC made a queer [somersault] from its earlier rulings which favor the petitioners.[13]
The Case for the Respondents
Franklin K. De Luzuriaga
De Luzuriaga filed a Comment[14] on May 17, 2007 and a Memorandum on December 4, 2008,[15] praying for a
dismissal of the petition.
De Luzuriaga argues that the CA committed no error when it dismissed the petition for certiorari since the
dismissal of the contempt charge against the respondents amounted to an acquittal where review by an appellate
court will not lie. In any event, he submits, the respondents were charged with indirect contempt which may be
initiated only in the appropriate regional trial court, pursuant to Section 12, Rule 71 of the Rules of Court. He
posits that the NLRC has no jurisdiction over an indirect contempt charge. He thus argues that the petitioners
improperly brought the contempt charge before the NLRC.
Additionally, De Luzuriaga points out that the petition raises only questions of facts which, procedurally, is not
allowed in a petition for review on certiorari. Be this as it may, he submits that pursuant to Philippine Long
Distance Telephone Company, Inc. v. Tiamson,[16] factual findings of labor officials, who are deemed to have
acquired expertise in matters within their respective jurisdictions, are generally accorded not only respect but
even finality. He stresses that the CA committed no reversible error in not reviewing the NLRCs factual
findings.
Further, De Luzuriaga contends that the petitioners verification and certification against forum shopping is
defective because it was only Robosa and Pandy who executed the document. There was no indication that they
were authorized by Roxas, Angeles, Gutierrez, Embat and Pinto to execute the required verification and
certification.
Lastly, De Luzuriaga maintains that the petitioners are guilty of forum shopping as the reliefs prayed for in the
petition before the CA, as well as in the present petition, are the same reliefs that the petitioners may be entitled
to in the complaint before the labor arbiter.[17]
P & GPI
As it did with the CA when it was asked to comment on the petitioners motion for reconsideration,[18] P
& GPI prays in its Comment[19] and Memorandum[20] that it be dropped as a party-respondent, and that it be
excused from further participating in the proceedings. It argues that inasmuch as the NLRC resolved the
contempt charge on the merits, an appeal from its dismissal through a petition for certiorari is barred.
Especially in its case, the dismissal of the petition for certiorari is correct because it was never made a party to
the contempt proceedings and, thus, it was never afforded the opportunity to be heard. It adds that it is an entity
separate from CTMI. It submits that it cannot be made to assume any or all of CTMIs liabilities, absent an
agreement to that effect but even if it may be liable, the present proceedings are not the proper venue to
determine its liability, if any.
On December 16, 2008, the petitioners filed a Memorandum[21] raising essentially the same issues and
arguments laid down in the petition.
The Courts Ruling
Issues
The parties submissions raise the following issues:
(1) whether the NLRC has contempt powers;

(2) whether the dismissal of a contempt charge is appealable; and
(3) whether the NLRC committed grave abuse of discretion in dismissing the contempt charge against
the respondents.
On the first issue, we stress that under Article 218[22] of the Labor Code, the NLRC (and the labor
arbiters) may hold any offending party in contempt, directly or indirectly, and impose appropriate penalties in
accordance with law. The penalty for direct contempt consists of either imprisonment or fine, the degree or
amount depends on whether the contempt is against the Commission or the labor arbiter. The Labor Code,
however, requires the labor arbiter or the Commission to deal with indirect contempt in the manner prescribed
under Rule 71 of the Rules of Court.[23]
Rule 71 of the Rules of Court does not require the labor arbiter or the NLRC to initiate indirect contempt
proceedings before the trial court. This mode is to be observed only when there is no law granting them
contempt powers.[24] As is clear under Article 218(d) of the Labor Code, the labor arbiter or the Commission is
empowered or has jurisdiction to hold the offending party or parties in direct or indirect contempt. The
petitioners, therefore, have not improperly brought the indirect contempt charges against the respondents before
the NLRC.
The second issue pertains to the nature of contempt proceedings, especially with respect to the remedy
available to the party adjudged to have committed indirect contempt or has been absolved of indirect contempt
charges. In this regard, Section 11, Rule 71 of the Rules of Court states that the judgment or final order of a
court in a case of indirect contempt may be appealed to the proper court as in a criminal case. This is not the
point at issue, however, in this petition. It is rather the question of whether the dismissal of a contempt charge,
as in the present case, is appealable. The CA held that the NLRCs dismissal of the contempt charges against the
respondents amounts to an acquittal in a criminal case and is not subject to appeal.
The CA ruling is grounded on prevailing jurisprudence.
In Yasay, Jr. v. Recto,[25] the Court declared:

A distinction is made between a civil and [a] criminal contempt. Civil contempt is the
failure to do something ordered by a court to be done for the benefit of a party. A criminal
contempt is any conduct directed against the authority or dignity of the court.[26]
The Court further explained in Remman Enterprises, Inc. v. Court of Appeals[27] and People v.
Godoy[28] the character of contempt proceedings, thus
The real character of the proceedings in contempt cases is to be determined by the relief
sought or by the dominant purpose. The proceedings are to be regarded as criminal when the
purpose is primarily punishment and civil when the purpose is primarily compensatory or
remedial.
Still further, the Court held in Santiago v. Anunciacion, Jr.[29] that:
But whether the first or the second, contempt is still a criminal proceeding in which acquittal, for
instance, is a bar to a second prosecution. The distinction is for the purpose only of determining
the character of punishment to be administered.
In the earlier case of The Insurance Commissioner v. Globe Assurance Co., Inc.,[30] the Court dismissed
the appeal from the ruling of the lower court denying a petition to punish the respondent therein from contempt
for lack of evidence. The Court said in that case:
It is not the sole reason for dismissing this appeal. In the leading case of In re Mison, Jr.
v. Subido, it was stressed by Justice J.B.L. Reyes as ponente, that the contempt proceeding far
from being a civil action is of a criminal nature and of summary character in which the court
exercises but limited jurisdiction. It was then explicitly held: Hence, as in criminal proceedings,
an appeal would not lie from the order of dismissal of, or an exoneration from, a charge of
contempt of court. [footnote omitted]
Is the NLRCs dismissal of the contempt charges against the respondents beyond review by this
Court? On this important question, we note that the petitioners, in assailing the CA main decision, claim that
the appellate court committed grave abuse of discretion in not ruling on the dismissal by the NLRC of the
contempt charges.[31] They also charge the NLRC of having gravely abused its discretion and having committed
reversible errors in:
(1) setting aside its earlier resolutions and orders, including the writ of preliminary injunction it issued,
with its dismissal of the petition to cite the respondents in contempt of court;
(2) overturning this Courts resolutions upholding the TRO and the writ of preliminary injunction;
(3) failing to impose administrative fines upon the respondents for violation of the TRO and the writ of
preliminary injunction; and
(4) failing to order the reinstatement of the dismissed petitioners and the payment of their accrued wages
and other benefits.
In view of the grave abuse of discretion allegation in this case, we deem it necessary to look into the
NLRCs dismissal of the contempt charges against the respondents. As the charges were rooted into the
respondents alleged non-compliance with the NLRC directives contained in the TRO[32] and the writ of
preliminary injunction,[33] we first inquire into what really happened to these directives.
The assailed NLRC resolution of October 31, 2000[34] gave us the following account on the matter -
On the first directive, x x x We find that there was no violation of the said order. A perusal of the
records would show that in compliance with the temporary restraining order (TRO), respondents
reinstated back to work the sales drivers who complained of illegal dismissal (Memorandum of
Respondents, page 4).
Petitioners allegation that there was only payroll reinstatement does not make the respondents
guilty of contempt of court. Even if the drivers were just in the garage doing nothing, the same
does not make respondents guilty of contempt nor does it make them violators of the injunction
order. What is important is that they were reinstated and receiving their salaries.
As for petitioners Danilo Real, Roberto Sedano and Rolando Manalo, they have resigned from
their jobs and were paid their separation pay xxx (Exhibits 6, 6-A, 7, 7-A, 8, 8-A, Respondents
Memorandum dated August 12, 1996). The issue of whether they were illegally dismissed should
be threshed out before the Labor Arbiter in whose sala the case of unfair labor practice and
illegal dismissal were (sic) filed. Records also show that petitioner Antonio Desquitado during
the pendency of the case executed an affidavit of desistance asking that he be dropped as party
complainant in as much as he has already accepted separation benefits totaling to P63,087.33.
With respect to the second directive ordering respondents to cease and desist from implementing
the memoranda dated July 15, 1991 designed to ground sales personnel who are members of the
union, respondents alleged that they can no longer be restrained or enjoined and that the status
quo can no longer be restored, for implementation of the memorandum was already
consummated or was a fait accompli. x x x
All sales vehicles were ordered to be turned over to management and the same were already
sold[.] xxx [I]t would be hard to undo the sales transactions, the same being valid and binding.
The memorandum of July 15, 1991 authorized still all sales representatives to continue servicing
their customers using public transportation and a transportation allowance would be issued.
xxxx
The third directive of the Commission is to preserve the status quo ante between the parties.
Records reveal that WELLA AG of Germany terminated its Licensing Agreement with
respondent company effective December 31, 1991 (Exhibit 11, Respondents Memorandum).
On January 31, 1992, individual petitioners together with the other employees were terminated
xxx. In fact, this event resulted to the closure of the respondent company. The manufacturing and
marketing operations ceased. This is evidenced by the testimony of Rosalito del Rosario and her
affidavit (Exh. 9, memorandum of Respondents) as well as Employers Monthly Report on
Employees Termination/dismissals/suspension xxx (Exhibits 12-A to 12-F, ibid) as well as the
report that there is a permanent shutdown/total closure of all units of operations in the
establishment (Ibid). A letter was likewise sent to the Department of Labor and Employment
(Exh. 12, Ibid) in compliance with Article 283 of the Labor Code, serving notice that it will
cease business operations effective January 31, 1992.
The petitioners strongly dispute the above account. They maintain that the NLRC failed to consider the
following:
1. CTMI violated the status quo ante order when it did not restore to their former work assignments the
dismissed sales drivers. They lament that their being garaged deprived them of benefits, and they were
subjected to ridicule and psychological abuse. They assail the NLRC for considering the payroll reinstatement
of the drivers as compliance with its stay order.
They also bewail the NLRCs recognition of the resignation of Danilo Real, Roberto Sedano, Rolando
Manalo and Antonio Desquitado as they were just compelled by economic necessity to resign from their
employment. The quitclaims they executed were contrary to public policy and should not bar them from
claiming the full measure of their rights, including their counsel who was unduly deprived of his right to collect
attorneys fees.
2. It was error for the NLRC to rule that the memorandum, grounding the sales drivers, could no longer
be restrained or enjoined because all sales vehicles were already sold. No substantial evidence was presented by
the respondents to prove their allegation, but even if there was a valid sale of the vehicles, it did not relieve the
respondents of responsibility under the stay order.
3. The alleged termination of the licensing agreement between CTMI and WELLA AG of Germany,
which allegedly resulted in the closure of CTMIs manufacturing and marketing operations, occurred after the
NLRCs issuance of the injunctive reliefs. CTMI failed to present substantial evidence to support its contention
that it folded up its operations when the licensing agreement was terminated. Even assuming that there was a
valid closure of CTMIs business operations, they should have been paid their lost wages, allowances,
incentives, sales commissions, per diems and other employee benefits from August 23, 1991 up to the date of
the alleged termination of CTMIs marketing operations.
Did the NLRC commit grave abuse of discretion in dismissing the contempt charges against the
respondents? An act of a court or tribunal may only be considered as committed in grave abuse of discretion
when it was performed in a capricious or whimsical exercise of judgment which is equivalent to lack of
jurisdiction. The abuse of discretion must be so patent and gross as to amount to an evasion of a positive duty
enjoined by law, or to act at all in contemplation of law, as where the power is exercised in an arbitrary and
despotic manner by reason of passion or personal hostility.[35]
The petitioners insist that the respondents violated the NLRC directives, especially the status quo
ante order, for their failure to reinstate the dismissed petitioners and to pay them their benefits. In light of the
facts of the case as drawn above, we cannot see how the status quo ante or the employer-employee situation
before the formation of the union and the conduct of the consent election can be maintained. As the NLRC
explained, CTMI closed its manufacturing and marketing operations after the termination of its licensing
agreement with WELLA AG of Germany. In fact, the closure resulted in the termination of CTMIs remaining
employees on January 31, 1992, aside from the sales drivers who were earlier dismissed but reinstated in the
payroll, in compliance with the NLRC injunction. The petitioners termination of employment, as well as all of
their money claims, was the subject of the illegal dismissal and unfair labor practice complaint before the labor
arbiter. The latter was ordered by the NLRC on October 31, 2000 to proceed hearing the case.[36] The NLRC
thus subsumed all other issues into the main illegal dismissal and unfair labor practice case pending with the
labor arbiter. On this point, the NLRC declared:
Note that when the injunction order was issued, WELLA AG of Germany was still under
licensing agreement with respondent company. However, the situation has changed when
WELLA AG ofGermany terminated its licensing agreement with the respondent, causing the
latter to close its business.
Respondents could no longer be ordered to restore the status quo as far as the individual
petitioners are concerned as these matters regarding the termination of the employees are now
pending litigation with the Arbitration Branch of the Commission. To resolve the incident now
regarding the closure of the respondent company and the matters alleged by petitioners such as
the creations of three (3) new corporations xxx as successor-corporations are matters best left to
the Labor Arbiter hearing the merits of the unfair labor practice and illegal dismissal cases.[37]
We find no grave abuse of discretion in the assailed NLRC ruling. It rightly avoided delving into
issues which would clearly be in excess of its jurisdiction for they are issues involving the merits of the case
which are by law within the original and exclusive jurisdiction of the labor arbiter.[38] To be sure, whether
payroll reinstatement of some of the petitioners is proper; whether the resignation of some of them was
compelled by dire economic necessity; whether the petitioners are entitled to their money claims; and whether
quitclaims are contrary to law or public policy are issues that should be heard by the labor arbiter in the first
instance. The NLRC can inquire into them only on appeal after the merits of the case shall have been
adjudicated by the labor arbiter.
The NLRC correctly dismissed the contempt charges against the respondents. The CA likewise
committed no grave abuse of discretion in not disturbing the NLRC resolution.
In light of the above discussion, we find no need to dwell into the other issues the parties raised.
WHEREFORE, premises considered, we hereby DENY the petition for lack of merit and AFFIRM the
assailed resolutions of the Court of Appeals.
SO ORDERED.
FEDERICO S. ROBOSA, ROLANDOE. G.R. No. 176085

PANDY, NOEL D. ROXAS, ALEXANDER
ANGELES, VERONICA GUTIERREZ,
FERNANDO EMBAT, and NANETTE H. Present:
PINTO,
Petitioners, CARPIO, J., Chairperson,
BRION,
PEREZ,
SERENO, and
- versus - REYES, JJ.
NATIONAL LABOR RELATIONS

COMMISSION (First Division), CHEMO- Promulgated:
TECHNISCHE MANUFACTURING, INC. and
its responsible officials led by FRANKLIN R. February 8, 2012
DE LUZURIAGA, and PROCTER &
GAMBLE PHILIPPINES, INC.,
Respondents.
x------------------------------------------------------------------------------------------x
DECISION
BRION, J.:
We resolve the petition for review on certiorari[1] seeking the reversal of the resolutions of the Court of Appeals
(CA) rendered on February 24, 2006[2] and December 14, 2006[3] in CA-G.R. SP No. 80436.
Factual Background
Federico S. Robosa, Rolando E. Pandy, Noel D. Roxas, Alexander Angeles, Veronica Gutierrez, Fernando
Embat and Nanette H. Pinto (petitioners) were rank-and-file employees of respondent Chemo-Technische
Manufacturing, Inc. (CTMI), the manufacturer and distributor of Wella products. They were officers and
members of the CTMI Employees Union-DFA (union). Respondent Procter and Gamble Philippines, Inc. (P &
GPI) acquired all the interests, franchises and goodwill of CTMI during the pendency of the dispute.
Sometime in the first semester of 1991, the union filed a petition for certification election at CTMI. On June 10,
1991, Med-Arbiter Rasidali Abdullah of the Office of the Department of Labor and Employment in the National
Capital Region (DOLE-NCR) granted the petition. The DOLE-NCR conducted a consent election on July 5,
1991, but the union failed to garner the votes required to be certified as the exclusive bargaining agent of the
company.
On July 15, 1991, CTMI, through its President and General Manager Franklin R. de Luzuriaga, issued a
memorandum[4] announcing that effective that day: (1) all sales territories were demobilized; (2) all vehicles
assigned to sales representatives should be returned to the company and would be sold; (3) sales representatives
would continue to service their customers through public transportation and would be given transportation
allowance; (4) deliveries of customers orders would be undertaken by the warehouses; and (5) revolving funds
for ex-truck selling held by sales representatives should be surrendered to the cashier (for Metro Manila) or to
the supervisor (for Visayas and Mindanao), and truck stocks should immediately be surrendered to the
warehouse.
On the same day, CTMI issued another memorandum[5] informing the companys sales representatives and sales
drivers of the new system in the Salon Business Groups selling operations.
The union asked for the withdrawal and deferment of CTMIs directives, branding them as union busting acts
constituting unfair labor practice. CTMI ignored the request. Instead, it issued on July 23, 1991 a notice of
termination of employment to the sales drivers, due to the abolition of the sales driver positions.[6]
On August 1, 1991, the union and its affected members filed a complaint for illegal dismissal and unfair labor
practice, with a claim for damages, against CTMI, De Luzuriaga and other CTMI officers. The union also
moved for the issuance of a writ of preliminary injunction and/or temporary restraining order (TRO).
The Compulsory Arbitration Proceedings
The labor arbiter handling the case denied the unions motion for a stay order on the ground that the issues raised
by the petitioners can best be ventilated during the trial on the merits of the case. This prompted the union to file
on August 16, 1991 with the National Labor Relations Commission (NLRC), a petition for the issuance of a
preliminary mandatory injunction and/or TRO.[7]
On August 23, 1991, the NLRC issued a TRO.[8] It directed CTMI, De Luzuriaga and other company executives
to (1) cease and desist from dismissing any member of the union and from implementing the July 23, 1991
memorandum terminating the services of the sales drivers, and to immediately reinstate them if the dismissals
have been effected; (2) cease and desist from implementing the July 15, 1991 memorandum grounding the sales
personnel; and (3) restore the status quo ante prior to the formation of the union and the conduct of the consent
election.
Allegedly, the respondents did not comply with the NLRCs August 23, 1991 resolution. They instead moved to
dissolve the TRO and opposed the unions petition for preliminary injunction.
On September 12, 1991, the NLRC upgraded the TRO to a writ of preliminary injunction. [9] The respondents
moved for reconsideration. The union opposed the motion and urgently moved to cite the responsible CTMI
officers in contempt of court.
On August 25, 1993, the NLRC denied the respondents motion for reconsideration and directed Labor Arbiter
Cristeta Tamayo to hear the motion for contempt. In reaction, the respondents questioned the NLRC orders
before this Court through a petition for certiorari and prohibition with preliminary injunction. The Court
dismissed the petition for being premature. It also denied the respondents motion for reconsideration, as well as
a second motion for reconsideration, with finality. This notwithstanding, the respondents allegedly refused to
obey the NLRC directives. The respondents defiance, according to the petitioners, resulted in the loss of their
employment.
Meanwhile, the NLRC heard the contempt charge. On October 31, 2000, it issued a resolution[10] dismissing the
charge. It ordered the labor arbiter to proceed hearing the main case on the merits.
The petitioners moved for, but failed to secure, a reconsideration from the NLRC on the dismissal of the
contempt charge. They then sought relief from the CA by way of a petition for certiorari under Rule 65.
The CA Decision
The CA saw no need to dwell on the issues raised by the petitioners as the question it deemed appropriate for
resolution is whether the NLRCs dismissal of the contempt charge against the respondents may be the proper
subject of an appeal. It opined that the dismissal is not subject to review by an appellate court. Accordingly, the
CA Special Sixth Division dismissed the petition in its resolution of February 24, 2006.[11]
The CA considered the prayer of P & GPI to be dropped as party-respondent moot and academic.
The petitioners sought a reconsideration, but the CA denied the motion in its resolution of December 14,
2006.[12] Hence, the present Rule 45 petition.
The Petition
The petitioners charge the CA with grave abuse of discretion in upholding the NLRC resolutions, despite the
reversible errors the labor tribunal committed in dismissing the contempt charge against the respondents. They
contend that the respondents were guilty of contempt for their failure (1) to observe strictly the NLRC status
quo order; and (2) to reinstate the dismissed petitioners and to pay them their lost wages, sales commissions, per
diems, allowances and other employee benefits. They also claim that the NLRC, in effect, overturned this
Courts affirmation of the TRO and of the preliminary injunction.
The petitioners assail the CAs reliance on the Courts ruling that a contempt charge partakes of a criminal
proceeding where an acquittal is not subject to appeal. They argue that the facts obtaining in the present case are
different from the facts of the cases where the Courts ruling was made. They further argue that by the nature of
this case, the Labor Code and its implementing rules and regulations should apply, but in any event, the
appellate court is not prevented from reviewing the factual basis of the acquittal of the respondents from the
contempt charges.
The petitioners lament that the NLRC, in issuing the challenged resolutions, had unconstitutionally applied the
law. They maintain that not only did the NLRC unconscionably delay the disposition of the case for more than
twelve (12) years; it also rendered an unjust, unkind and dubious judgment. They bewail that [f]or some strange
reason, the respondent NLRC made a queer [somersault] from its earlier rulings which favor the petitioners.[13]
The Case for the Respondents
Franklin K. De Luzuriaga
De Luzuriaga filed a Comment[14] on May 17, 2007 and a Memorandum on December 4, 2008,[15] praying for a
dismissal of the petition.
De Luzuriaga argues that the CA committed no error when it dismissed the petition for certiorari since the
dismissal of the contempt charge against the respondents amounted to an acquittal where review by an appellate
court will not lie. In any event, he submits, the respondents were charged with indirect contempt which may be
initiated only in the appropriate regional trial court, pursuant to Section 12, Rule 71 of the Rules of Court. He
posits that the NLRC has no jurisdiction over an indirect contempt charge. He thus argues that the petitioners
improperly brought the contempt charge before the NLRC.
Additionally, De Luzuriaga points out that the petition raises only questions of facts which, procedurally, is not
allowed in a petition for review on certiorari. Be this as it may, he submits that pursuant to Philippine Long
Distance Telephone Company, Inc. v. Tiamson,[16] factual findings of labor officials, who are deemed to have
acquired expertise in matters within their respective jurisdictions, are generally accorded not only respect but
even finality. He stresses that the CA committed no reversible error in not reviewing the NLRCs factual
findings.
Further, De Luzuriaga contends that the petitioners verification and certification against forum shopping is
defective because it was only Robosa and Pandy who executed the document. There was no indication that they
were authorized by Roxas, Angeles, Gutierrez, Embat and Pinto to execute the required verification and
certification.
Lastly, De Luzuriaga maintains that the petitioners are guilty of forum shopping as the reliefs prayed for in the
petition before the CA, as well as in the present petition, are the same reliefs that the petitioners may be entitled
to in the complaint before the labor arbiter.[17]
P & GPI
As it did with the CA when it was asked to comment on the petitioners motion for reconsideration,[18] P
& GPI prays in its Comment[19] and Memorandum[20] that it be dropped as a party-respondent, and that it be
excused from further participating in the proceedings. It argues that inasmuch as the NLRC resolved the
contempt charge on the merits, an appeal from its dismissal through a petition for certiorari is barred.
Especially in its case, the dismissal of the petition for certiorari is correct because it was never made a party to
the contempt proceedings and, thus, it was never afforded the opportunity to be heard. It adds that it is an entity
separate from CTMI. It submits that it cannot be made to assume any or all of CTMIs liabilities, absent an
agreement to that effect but even if it may be liable, the present proceedings are not the proper venue to
determine its liability, if any.
On December 16, 2008, the petitioners filed a Memorandum[21] raising essentially the same issues and
arguments laid down in the petition.
The Courts Ruling
Issues
The parties submissions raise the following issues:
(1) whether the NLRC has contempt powers;

(2) whether the dismissal of a contempt charge is appealable; and
(3) whether the NLRC committed grave abuse of discretion in dismissing the contempt charge against
the respondents.
On the first issue, we stress that under Article 218[22] of the Labor Code, the NLRC (and the labor
arbiters) may hold any offending party in contempt, directly or indirectly, and impose appropriate penalties in
accordance with law. The penalty for direct contempt consists of either imprisonment or fine, the degree or
amount depends on whether the contempt is against the Commission or the labor arbiter. The Labor Code,
however, requires the labor arbiter or the Commission to deal with indirect contempt in the manner prescribed
under Rule 71 of the Rules of Court.[23]
Rule 71 of the Rules of Court does not require the labor arbiter or the NLRC to initiate indirect contempt
proceedings before the trial court. This mode is to be observed only when there is no law granting them
contempt powers.[24] As is clear under Article 218(d) of the Labor Code, the labor arbiter or the Commission is
empowered or has jurisdiction to hold the offending party or parties in direct or indirect contempt. The
petitioners, therefore, have not improperly brought the indirect contempt charges against the respondents before
the NLRC.
The second issue pertains to the nature of contempt proceedings, especially with respect to the remedy
available to the party adjudged to have committed indirect contempt or has been absolved of indirect contempt
charges. In this regard, Section 11, Rule 71 of the Rules of Court states that the judgment or final order of a
court in a case of indirect contempt may be appealed to the proper court as in a criminal case. This is not the
point at issue, however, in this petition. It is rather the question of whether the dismissal of a contempt charge,
as in the present case, is appealable. The CA held that the NLRCs dismissal of the contempt charges against the
respondents amounts to an acquittal in a criminal case and is not subject to appeal.
The CA ruling is grounded on prevailing jurisprudence.
In Yasay, Jr. v. Recto,[25] the Court declared:
A distinction is made between a civil and [a] criminal contempt. Civil contempt is the
failure to do something ordered by a court to be done for the benefit of a party. A criminal
contempt is any conduct directed against the authority or dignity of the court.[26]
The Court further explained in Remman Enterprises, Inc. v. Court of Appeals[27] and People v.
Godoy[28] the character of contempt proceedings, thus
The real character of the proceedings in contempt cases is to be determined by the relief
sought or by the dominant purpose. The proceedings are to be regarded as criminal when the
purpose is primarily punishment and civil when the purpose is primarily compensatory or
remedial.
Still further, the Court held in Santiago v. Anunciacion, Jr.[29] that:
But whether the first or the second, contempt is still a criminal proceeding in which acquittal, for
instance, is a bar to a second prosecution. The distinction is for the purpose only of determining
the character of punishment to be administered.
In the earlier case of The Insurance Commissioner v. Globe Assurance Co., Inc.,[30] the Court dismissed
the appeal from the ruling of the lower court denying a petition to punish the respondent therein from contempt
for lack of evidence. The Court said in that case:
It is not the sole reason for dismissing this appeal. In the leading case of In re Mison, Jr.
v. Subido, it was stressed by Justice J.B.L. Reyes as ponente, that the contempt proceeding far
from being a civil action is of a criminal nature and of summary character in which the court
exercises but limited jurisdiction. It was then explicitly held: Hence, as in criminal proceedings,
an appeal would not lie from the order of dismissal of, or an exoneration from, a charge of
contempt of court. [footnote omitted]
Is the NLRCs dismissal of the contempt charges against the respondents beyond review by this
Court? On this important question, we note that the petitioners, in assailing the CA main decision, claim that
the appellate court committed grave abuse of discretion in not ruling on the dismissal by the NLRC of the
contempt charges.[31] They also charge the NLRC of having gravely abused its discretion and having committed
reversible errors in:
(1) setting aside its earlier resolutions and orders, including the writ of preliminary injunction it issued,
with its dismissal of the petition to cite the respondents in contempt of court;
(2) overturning this Courts resolutions upholding the TRO and the writ of preliminary injunction;
(3) failing to impose administrative fines upon the respondents for violation of the TRO and the writ of
preliminary injunction; and
(4) failing to order the reinstatement of the dismissed petitioners and the payment of their accrued wages
and other benefits.
In view of the grave abuse of discretion allegation in this case, we deem it necessary to look into the
NLRCs dismissal of the contempt charges against the respondents. As the charges were rooted into the
respondents alleged non-compliance with the NLRC directives contained in the TRO[32] and the writ of
preliminary injunction,[33] we first inquire into what really happened to these directives.
The assailed NLRC resolution of October 31, 2000[34] gave us the following account on the matter -
On the first directive, x x x We find that there was no violation of the said order. A perusal of the
records would show that in compliance with the temporary restraining order (TRO), respondents
reinstated back to work the sales drivers who complained of illegal dismissal (Memorandum of
Respondents, page 4).
Petitioners allegation that there was only payroll reinstatement does not make the respondents
guilty of contempt of court. Even if the drivers were just in the garage doing nothing, the same
does not make respondents guilty of contempt nor does it make them violators of the injunction
order. What is important is that they were reinstated and receiving their salaries.
As for petitioners Danilo Real, Roberto Sedano and Rolando Manalo, they have resigned from
their jobs and were paid their separation pay xxx (Exhibits 6, 6-A, 7, 7-A, 8, 8-A, Respondents
Memorandum dated August 12, 1996). The issue of whether they were illegally dismissed should
be threshed out before the Labor Arbiter in whose sala the case of unfair labor practice and
illegal dismissal were (sic) filed. Records also show that petitioner Antonio Desquitado during
the pendency of the case executed an affidavit of desistance asking that he be dropped as party
complainant in as much as he has already accepted separation benefits totaling to P63,087.33.
With respect to the second directive ordering respondents to cease and desist from implementing
the memoranda dated July 15, 1991 designed to ground sales personnel who are members of the
union, respondents alleged that they can no longer be restrained or enjoined and that the status
quo can no longer be restored, for implementation of the memorandum was already
consummated or was a fait accompli. x x x
All sales vehicles were ordered to be turned over to management and the same were already
sold[.] xxx [I]t would be hard to undo the sales transactions, the same being valid and binding.
The memorandum of July 15, 1991 authorized still all sales representatives to continue servicing
their customers using public transportation and a transportation allowance would be issued.
xxxx
The third directive of the Commission is to preserve the status quo ante between the parties.
Records reveal that WELLA AG of Germany terminated its Licensing Agreement with
respondent company effective December 31, 1991 (Exhibit 11, Respondents Memorandum).
On January 31, 1992, individual petitioners together with the other employees were terminated
xxx. In fact, this event resulted to the closure of the respondent company. The manufacturing and
marketing operations ceased. This is evidenced by the testimony of Rosalito del Rosario and her
affidavit (Exh. 9, memorandum of Respondents) as well as Employers Monthly Report on
Employees Termination/dismissals/suspension xxx (Exhibits 12-A to 12-F, ibid) as well as the
report that there is a permanent shutdown/total closure of all units of operations in the
establishment (Ibid). A letter was likewise sent to the Department of Labor and Employment
(Exh. 12, Ibid) in compliance with Article 283 of the Labor Code, serving notice that it will
cease business operations effective January 31, 1992.
The petitioners strongly dispute the above account. They maintain that the NLRC failed to consider the
following:
1. CTMI violated the status quo ante order when it did not restore to their former work assignments the
dismissed sales drivers. They lament that their being garaged deprived them of benefits, and they were
subjected to ridicule and psychological abuse. They assail the NLRC for considering the payroll reinstatement
of the drivers as compliance with its stay order.
They also bewail the NLRCs recognition of the resignation of Danilo Real, Roberto Sedano, Rolando
Manalo and Antonio Desquitado as they were just compelled by economic necessity to resign from their
employment. The quitclaims they executed were contrary to public policy and should not bar them from
claiming the full measure of their rights, including their counsel who was unduly deprived of his right to collect
attorneys fees.
2. It was error for the NLRC to rule that the memorandum, grounding the sales drivers, could no longer
be restrained or enjoined because all sales vehicles were already sold. No substantial evidence was presented by
the respondents to prove their allegation, but even if there was a valid sale of the vehicles, it did not relieve the
respondents of responsibility under the stay order.
3. The alleged termination of the licensing agreement between CTMI and WELLA AG of Germany,
which allegedly resulted in the closure of CTMIs manufacturing and marketing operations, occurred after the
NLRCs issuance of the injunctive reliefs. CTMI failed to present substantial evidence to support its contention
that it folded up its operations when the licensing agreement was terminated. Even assuming that there was a
valid closure of CTMIs business operations, they should have been paid their lost wages, allowances,
incentives, sales commissions, per diems and other employee benefits from August 23, 1991 up to the date of
the alleged termination of CTMIs marketing operations.
Did the NLRC commit grave abuse of discretion in dismissing the contempt charges against the
respondents? An act of a court or tribunal may only be considered as committed in grave abuse of discretion
when it was performed in a capricious or whimsical exercise of judgment which is equivalent to lack of
jurisdiction. The abuse of discretion must be so patent and gross as to amount to an evasion of a positive duty
enjoined by law, or to act at all in contemplation of law, as where the power is exercised in an arbitrary and
despotic manner by reason of passion or personal hostility.[35]
The petitioners insist that the respondents violated the NLRC directives, especially the status quo
ante order, for their failure to reinstate the dismissed petitioners and to pay them their benefits. In light of the
facts of the case as drawn above, we cannot see how the status quo ante or the employer-employee situation
before the formation of the union and the conduct of the consent election can be maintained. As the NLRC
explained, CTMI closed its manufacturing and marketing operations after the termination of its licensing
agreement with WELLA AG of Germany. In fact, the closure resulted in the termination of CTMIs remaining
employees on January 31, 1992, aside from the sales drivers who were earlier dismissed but reinstated in the
payroll, in compliance with the NLRC injunction. The petitioners termination of employment, as well as all of
their money claims, was the subject of the illegal dismissal and unfair labor practice complaint before the labor
arbiter. The latter was ordered by the NLRC on October 31, 2000 to proceed hearing the case.[36] The NLRC
thus subsumed all other issues into the main illegal dismissal and unfair labor practice case pending with the
labor arbiter. On this point, the NLRC declared:
Note that when the injunction order was issued, WELLA AG of Germany was still under
licensing agreement with respondent company. However, the situation has changed when
WELLA AG ofGermany terminated its licensing agreement with the respondent, causing the
latter to close its business.
Respondents could no longer be ordered to restore the status quo as far as the individual
petitioners are concerned as these matters regarding the termination of the employees are now
pending litigation with the Arbitration Branch of the Commission. To resolve the incident now
regarding the closure of the respondent company and the matters alleged by petitioners such as
the creations of three (3) new corporations xxx as successor-corporations are matters best left to
the Labor Arbiter hearing the merits of the unfair labor practice and illegal dismissal cases.[37]
We find no grave abuse of discretion in the assailed NLRC ruling. It rightly avoided delving into
issues which would clearly be in excess of its jurisdiction for they are issues involving the merits of the case
which are by law within the original and exclusive jurisdiction of the labor arbiter.[38] To be sure, whether
payroll reinstatement of some of the petitioners is proper; whether the resignation of some of them was
compelled by dire economic necessity; whether the petitioners are entitled to their money claims; and whether
quitclaims are contrary to law or public policy are issues that should be heard by the labor arbiter in the first
instance. The NLRC can inquire into them only on appeal after the merits of the case shall have been
adjudicated by the labor arbiter.
The NLRC correctly dismissed the contempt charges against the respondents. The CA likewise
committed no grave abuse of discretion in not disturbing the NLRC resolution.
In light of the above discussion, we find no need to dwell into the other issues the parties raised.
WHEREFORE, premises considered, we hereby DENY the petition for lack of merit and AFFIRM the
assailed resolutions of the Court of Appeals.
SO ORDERED.
[G.R. No. 125298. February 11, 1999]
CMP FEDERAL SECURITY AGENCY, INC., petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION, LABOR ARBITER CRESENCIANO R. INIEGO, and FERNANDO
CARANTO, RESTY REMITTERE, REYNALDO ROSALES, ANTONIO TAPAR, NARCISO
CLARO, SIONY MANOS,BALDO VIODOR and DAWAY WAHAB, respondents.
DECISION
BELLOSILLO, J.:
CMP FEDERAL SECURITY AGENCY INC. seeks in this petition for certiorari to annul, for having been
rendered with grave abuse of discretion amounting to lack or excess of jurisdiction, the 26 October 1995
Decision of the National Labor Relations Commission in NLRC NCR CA 007480-94, Fernando Caranto, et al.
v. CMP Federal Security Agency, Inc., et al.,[1] affirming with modifications the decision of the Labor Arbiter
and ordering herein petitioner to pay private respondents wage differentials, 13th month pay, holiday pay and
service incentive leave pay; and, its Resolution of 29 November 1995 denying reconsideration.
CMP Federal Security Agency Inc. (CMP hereon) is in the business of providing detective and security
services. Among its employees were herein private respondent security guards Fernando Caranto, Resty
Remittere, Reynaldo Rosales, Antonio Tapar, Narciso Claro, Siony Manos, Baldo Viodor and Daway
Wahab,[2] all assigned at the Maalikaya Health Complex in Quezon City.
On 10 March 1994 private respondents filed complaints for illegal deduction, underpayment and/or non-
payment of wages, premium pay for holiday, rest day and night shift differential pay, 13th month pay, service
incentive leave pay, separation pay, allowance and unfair labor practice against CMP, [3] Carolina Mabanta Piao
and Ponciano Mabanta Sr. Private respondent Fernando Caranto later amended his complaint to include illegal
dismissal[4] after he was relieved from his post at the Maalikaya Health Complex by CMP, allegedly upon
request of the client.
The case was initially set for mandatory conference or conciliation on 29 March 1994. It was reset to 11
April 1994 by agreement of the parties to give them adequate time to explore the possibility of amicable
settlement. Thereafter the hearing was reset several times with Labor Arbiter Cresencio R. Iniego directing the
parties each time to submit their respective position papers and other documentary evidence. Efforts at
settlement failed.
When the case was finally called for hearing on 23 May 1994 private respondents filed their position paper
and other documentary evidence in compliance with the Labor Arbiters orders. On the other hand, CMP moved
for another postponement which the Labor Arbiter denied. Thereafter, the case was deemed submitted for
decision. It was only on 13 June 1994 that CMP presented its position paper.
On 22 July 1994 the Labor Arbiter rendered a decision in favor of private respondents ordering CMP to
reinstate Fernando Caranto with full back wages, pay salary differentials to all private respondents, plus
attorneys fees.
Both parties appealed to the NLRC. Private respondents, in their Partial Appeal, alleged that the Labor
Arbiter erred in excluding the awards for service incentive leave pay, holiday pay, overtime pay and illegal
deductions. CMP for its part argued that the Labor Arbiter erred in holding that CMP did not submit any
position paper despite his repeated orders; in ruling that the non-filing of the position paper amounted to an
admission of liability by CMP; and, in deciding the case solely on the basis of the position paper and evidence
submitted by complainants.
In its assailed Decision of 26 October 1995 the NLRC denied CMPs appeal, granted private
respondents Partial Appeal and modified the decision of the Labor Arbiter by including in the computation of
monetary awards holiday pay, service incentive leave pay, 13th month pay, overtime pay and reimbursement for
illegal deductions. The dispositive portion reads -
WHEREFORE xxx the appealed decision is xxx modified. Respondent CMP Federal Security Agency is
xxx directed to pay complainants the following:
1. Pay all complainants wage differential(s) in the amount of One Hundred Twenty Eight Thousand Nine
Hundred Eighty Nine and 70/100 (P128,989.70) as well as holiday pay, 13th month pay and service incentive
leave pay, as follows:
FERNANDO CARANTO
13th Month Pay - P3,792.75
Holiday Pay - P1,760.00
Service Incentive Leave Pay - P 590.00
P6,142.75
RESTY REMITTERE
13th Month Pay - P 9,195.49
Holiday Pay - P 3,318.00
Service Incentive Leave Pay - P 1,770.00
P14,283.49
REYNALDO ROSALES
P17,076.17
ANTONIO TAPAR
P17,076.17
CLARO NARCISO
P 9,504.50
SIONY MANOS
P 7,537.83
BALDO VIODOR
P17,076.16
DAWAY WAHAB
13th Month Pay - P 362.50
Holiday Pay - P 430.00
P 797.50
GRAND TOTAL - - - - - - - - - - - - - - - - - - - - - - - - - - - - - P87,797.31

2. The individual respondents Carolina Mabanta Piad and Ponciano Mabanta are held liable in their official
capacity.
3. The other findings stand affirmed.
Its motion for reconsideration having been denied by the NLRC through its Resolution of 29 November
1995, petitioner CMP now comes to us through the present petition imputing grave abuse of discretion on the
NLRC: (a) in holding that private respondent Caranto was illegally dismissed, basing its findings solely on
surmises and baseless conclusion that petitioner resorted to retaliatory
acts; and, (b) in granting the money claims ofprivate respondents on the unfounded presumption that since
petitioner failed to submit its position paper it is deemed to have admitted the charges in the complaint.
The issues are: (a) whether the NLRC committed grave abuse of discretion amounting to lack or excess of
jurisdiction in holding that private respondent Fernando Caranto was illegally dismissed by CMP; and, (b)
whether in granting all the money claims of private respondents CMP was denied due process.
Well-settled is the rule that the findings of the NLRC, except when there is grave abuse of discretion, are
practically conclusive on this Court. It is only when the NLRCs findings are bereft of any substantial support
from the records that the Court may step in and proceed to make its own independent evaluation of the
facts.[5] We see no cogent reason to deviate from this rule.
On the legality of Carantos dismissal, the NLRC held -
On the other hand, respondents [CMP] contention that complainant Fernando Caranto abandoned his work is
without sufficient basis. The plea of abandonment is inconsistent with his immediate filing of a complaint for
illegal dismissal with prayer for reinstatement. It is illogical for an employee to abandon his work and then
immediately seek reinstatement. (Judric Canning Corp. v. Inciong, 115 SCRA 887). Moreover, respondents
failed to prove by evidence that Caranto was indeed absent without leave.[6]
CMP insists that Caranto was never really dismissed but was merely relieved from his post at Maalikaya
Health Complex upon request of the Manager, and transferred by CMP to SM-Feati; that
two (2) specialorders were allegedly sent by CMP to Caranto informing him of his relief from guard duties at
Maalikaya and his assignment at SM-Feati but despite receipt of these orders he failed to report at CMP office;
that a follow-up letter was likewise addressed to him requiring him to show cause why he should not be
dismissed, which he never answered; and, that his refusal to accept a new assignment and his prolonged absence
justify the presumption that he voluntarily abandoned his job.
In termination cases like the one before us, the burden of proving that the dismissal of the employee was
for a valid or authorized cause rests on the employer[7] and failure to discharge that duty would mean that the
dismissal is not justified and therefore illegal.[8] The same principle was reiterated by this Court in Golden
Donuts Inc. v. NLRC[9] when it ruled that the employer carries the burden of proof in showing just cause for
terminating the services of an employee.
In the instant case, CMP failed to present evidence to justify Caranto's dismissal. We have scoured the
records but could not find any letter, memorandum or correspondence between CMP and the management of
Maalikaya Health Complex dealing with the latters alleged request for Carantos relief from guard duties at
Maalikaya Health Complex, nor the two (2) special orders supposedly sent by CMP to Caranto: the first order,
informing him of his relief from his post at Maalikaya Health Complex, and the other, reassigning him to SM-
Feati; neither the follow-up letter by CMP requiring Caranto to explain and show cause why his services
shouldnot be terminated. We could not find any evidence, for that matter, which would clearly and convincingly
show that Caranto was absent without any valid reason and with no intention of returning to work.
Apparently, CMP failed to discharge its burden of proof. Its allegation that Caranto was merely relieved
and reassigned is empty and self-serving, too insufficient to establish a just and valid cause for his dismissal as
employee. To allow an employer to terminate the employment of his worker based merely on allegations
without proof places the latter in an uncertain situation. He is at the sole mercy of his employer who, in this
case, has emasculated his right to a security of tenure.
Contrariwise, when Caranto was relieved from his post on 6 May 1994 he immediately pursued his claim
against CMP by amending his complaint six (6) days after to include illegal dismissal among his charges. This
can hardly be expected from one who has voluntarily "abandoned" his job, as claimed by CMP. The immediate
filing of a complaint for illegal dismissal against the employer is a clear indication that the employee has not
given up on his work.[10]
As already stated above, CMP failed to justify Carantos dismissal thereby rendering it
illegal. Consequently, no grave abuse of discretion was committed by the NLRC in upholding the decision of
the Labor Arbiter ordering Carantos reinstatement.
On the second issue, CMP maintains that both the Labor Arbiter and the
NLRC gravely abused their discretion in granting the money claims of private respondents, alleging that a
reading of the Labor Arbiters decision and that of the NLRC clearly shows that only the pleadings and evidence
submitted by private respondents were taken into consideration while those presented by CMP were completely
ignored, in clear violation of its constitutional right to due process.
Before resolving the merit of the argument, it may be worth to mention the nature of the proceedings before
labor courts in relation to the requirements of due process. Under Art. 221 of the Labor Code, technical rules of
evidence prevailing in courts of law or equity are not controlling in any proceeding before the NLRC or the
Labor Arbiter. Both are mandated to use every and all reasonable means to ascertain the facts in each case
speedily and objectively and without regard to technicalities of law or procedure, all in the interest of due
process.[11]
While administrative tribunals exercising quasi-judicial powers, like the NLRC and Labor Arbiters, are free
from the rigidity of certain procedural requirements, they are nonetheless bound by law and practice to observe
the fundamental and essential requirements of due process. The standard of due process that must be met in
administrative tribunals allows a certain degree of latitude as long as fairness is not ignored.[12] Hence, it
is not legally objectionable, for being violative of due process, for the Labor Arbiter to resolve a case based
solely on the position papers, affidavits or documentary evidence submitted by the parties. The affidavits of
witnesses in such case may take the place of their direct testimony.[13]
Set against the records of this case, CMP's claim that it was deprived of its right to be heard readily
collapses. The earlier narration of facts clearly demonstrates that the parties were repeatedly ordered by the
Labor Arbiter to submit their position papers together with the affidavits of their witnesses and other evidence
in support thereof - first on 11 April 1994, then on 22 April 1994, and finally on 6 May 1994. During the 23
May 1994 conference CMP, instead of complying with the order requiring it to submit its position paper, moved
for another postponement which was denied. It was only on 13 June 1994, after the case was submitted for
resolution, that CMP finally presented its position paper. Having been given ample opportunity to put forth its
case, CMP has only itself to blame or, better still, its counsel who was then present, for its failure to do so
within the extended period.
A party before the Labor Arbiter which had a chance to present its side during a period of more than one
(1) month, and despite repeated extensions of time given to enable it to present its position paper still failed to
meet its final deadline, cannot claim denial of due process[14]if subsequently the Labor Arbiter disregarded its
position paper belatedly filed.
Moreover, CMP had all the chances to ventilate its arguments in its appeal to the NLRC where, in fact, it
submitted a memorandum, presented its position paper and supporting documents allegedly ignored by the
Labor Arbiter, as well as a motion for reconsideration - which documents were considered by that Labor
Tribunal in the course of resolving the case.[15] Consequently, the alleged defect in the proceedings before the
Labor Arbiter, if there be any, was deemed cured.
The fact that the NLRC in its decision made no reference to the position paper and evidence of petitioner
does not mean that they were not considered. It is simply that the NLRC agreed with the Labor Arbiters
findings and conclusions and found nothing substantial in petitioners position paper and documentary evidence
to warrant a reversal of those findings and conclusions.
The essence of due process is simply an opportunity to be heard or, as applied to administrative
proceedings, an opportunity to explain ones side or an opportunity to seek reconsideration of the action or ruling
complained of.[16] Where, as in this case, the party has had ample opportunity to present its side of the
controversy not only before the Labor Arbiter but also the NLRC on appeal, it cannot thereafter interpose lack
of due process for what the fundamental law abhors is simply the absolute absence of opportunity to be heard.
Finally, while it may be true that in labor cases stringent rules of procedure may be dispensed with in the
interest of justice, it does not mean that a party litigant is at liberty to completely disregard or ignore the rules,
particularly those relating to the periods for filing of
pleadings. In this connection, if we are to sustain petitioners argument that it was denied due process when its
position paper and documentary evidence were not considered by the Labor Arbiter in deciding the case, we
will in effect put a premium on the undesirable practice of filing position papers late and only after the case has
already been submitted for decision.
WHEREFORE, the petition is DISMISSED. The Decision of the National Labor Relations Commission
dated 26 October 1995 affirming with modifications the Decision of the Labor Arbiter and ordering petitioner
CMP FEDERAL SECURITY AGENCY, INC., to pay private respondents FERNANDO CARANTO, RESTY
REMITTERE, REYNALDO ROSALES, ANTONIO TAPAR, NARCISO CLARO, SIONY MANOS, BALDO
VIODOR and DAWAY WAHAB wage differentials, 13th month pay, holiday pay and service incentive leave
pay as earlier quoted in this Decision, and its Resolution of 29 November 1995 denying petitioners Motion for
Reconsideration, are AFFIRMED. Costs against petitioner.
SO ORDERED.
G.R. No. 187317 April 11, 2013
CARLITO C. ENCINAS, Petitioner,

vs.
PO1 ALFREDO P. AGUSTIN, JR., and PO1 JOEL S. CAUBANG,** Respondents.
DECISION
SERENO, CJ.:
This is a Rule 45 Petition for Review on Certiorari assailing the Decision dated 20 November 20081 and
Resolution dated 30 March 20092 issued by the Court of Appeals (CA). Affirming the findings of the Civil
Service Commission (CSC), the CA found petitioner Carlito C. Encinas (petitioner) administratively liable for
grave misconduct and conduct prejudicial to the best interest of service- offenses proscribed by Section 46(b)(4)
and (27), Book V of Executive Order No. 292, or the Administrative Code of 1987 - and affirmed his dismissal.
The relevant facts are summarized as follows:
Respondents were then both holding positions as Fire Officer I in Nueva Ecija. They claim that on 11 March
2000, at around 9:00 p.m., petitioner – who was then Provincial Fire Marshall of Nueva Ecija – informed them
that unless they gave him five thousand pesos (₱5,000), they would be relieved from their station at Cabanatuan
City and transferred to far-flung areas. Respondent Alfredo P. Agustin (Agustin) would supposedly be
transferred to the Cuyapo Fire Station (Cuyapo), and respondent Joel S. Caubang (Caubang) to Talugtug Fire
Station (Talugtug). Fearing the reassignment, they decided to pay petitioner. On 15 March 2000, in the house of
a certain "Myrna," respondents came up short and managed to give only two thousand pesos (₱2,000),
prompting petitioner to direct them to come up with the balance within a week. When they failed to deliver the
balance, petitioner issued instructions effectively reassigning respondents Agustin and Caubang to Cuyapo and
Talugtug, respectively.3
Based on the above-narrated circumstances, respondents filed with the Bureau of Fire Protection (BFP) a letter-
complaint (BFP Complaint) on 27 March 2000 for illegal transfer of personnel under Republic Act (R.A.) No.
6975 or the Department of Interior and Local Government (DILG) Act of 1990.4 The record is not clear as to
why this Complaint was later docketed by the BFP for preliminary investigation for violation of R.A. No. 3019
or the Anti-Graft and Corrupt Practices Act.5 The BFP Complaint provides in pertinent part:
Chief Inspector Carlito C. Encinas relieved us from our present assignment and transferred us to different far
places without any cause and due process of law based from the BFP Manual (Republic Act 6975)
The reason why he relieved us was due to our failure to give the money he was asking from both of us in the
amount of Five Thousand Pesos (₱5,000) in exchange for our present assignment to be retained.
x x x.
On 12 April and 25 April 2000, on the basis of similar facts, respondents likewise filed with the CSC Regional
Office in San Fernando, Pampanga (CSCRO), as well as with the CSC Field Office in Cabanatuan City,6 their
Joint Affidavit/Complaint (CSCRO Complaint).7 This time, they accused petitioner of violation of Section 4(c)
of R.A. No. 6713 or the Code of Conduct and Ethical Standards for Public Officials and Employees. The
relevant portion of the CSCRO Complaint provides:
6. That we executed this affidavit to file a complaint against C. Insp. Carlito C. Encinas BFP for violation of
Section 4 (C) R.A. 6713, that is "Justness and sincerity. - Public officials and employees shall remain true to the
people at all times. They must act with justness and sincerity and shall not discriminate against anyone,
especially the poor and the underprivileged. They shall at all times respect the rights of others, and shall refrain
from doing acts contrary to law, good morals, good customs, public policy, public order, public safety and
public interest."
The CSCRO Complaint erroneously pertained to the above-quoted provision as Section 4(c), but it should be
denoted as Section 4(A)(c).
On 27 October 2000, after a fact-finding investigation was conducted in connection with his alleged extortion
activities, petitioner was formally charged with dishonesty, grave misconduct, and conduct prejudicial to the
best interest of service. He was required to file an answer within five (5) days from notice.8 The Formal Charge
specifically reads in part:
WHEREFORE, Carlito C. Encinas is hereby formally charged with the offenses of Dishonesty, Grave
Misconduct and Conduct Prejudicial to the Best Interest of the Service. Accordingly, he is given five (5) days
from receipt hereof to submit to this Office a written answer under oath, together with the affidavits of his
witnesses and documentary evidence, if any, and a statement whether or not he elects a formal investigation. He
is advised of his right to the assistance of his counsel of his own choice.9
Although it was not specifically mentioned in the records, the offenses of dishonesty, grave misconduct, and
conduct prejudicial to the best interest of service can be found in Section 46(b)(1), (4) and (27), Book V,
respectively, of the Administrative Code of 1987.10 The record does not indicate whether petitioner was
formally charged with violation of R.A. No. 6713.
BFP Complaint
In answer to the BFP Complaint against him, petitioner claimed that in an alleged Confidential Investigation
Report dated 31 July 2000 (Confidential Report), no copy of which was attached to the record, 11 the
investigating body recommended that charges against him be dropped for insufficiency of evidence. Instead, it
recommended that respondents be charged with conducting unauthorized fire safety inspection and engaging in
the sale of fire extinguishers, both in violation of the rules.
It appears on record that the Internal Audit Services (IAS) of the BFP issued a Resolution dated 05 July
2005,12recommending that the administrative complaint against petitioner be dismissed for insufficiency of
evidence.13The IAS ruled that the reassignment of respondents was within the ambit of authority of the head of
office. Thus, said reassignment may have been ordered as long as the exigencies of the service so
required.14 The Resolution dated 05 July 2005 states in pertinent part:
The re-assignment of the complainants is within the ambit of authority, CSC Resolution No. 93402 dated 11
February 1993, the commission ruled as follows:
"That reassignment may be ordered by the head of office of the duly authority [sic] representative when the
exigencies of the service so require but subject to the condition that there will be no reduction in rank, status or
salary, further on Bongbong vs Paracaldo (57 SCRA 623) the supreme court ruled held [sic] that "on general
principle petitioner may be transferred as to the exigencies of the service require". x x x
In view of the documents on record, the undersigned investigator finds no sufficient ground to warrant the filing
of appropriate administrative offense against the respondent.
WHEREFORE, premises considered, this office (IAS) most respectfully recommends that the administrative
complaint against C/INSP CARLITO ENCINAS, BFP be dismissed for insufficiency of evidence.
CSCRO Complaint
In his Answer to the formal charge of dishonesty, grave misconduct, and conduct prejudicial to the best interest
of service,15 petitioner claimed that the CSCRO Complaint was an offshoot of the reassignment of respondents.
He alleged that they were reassigned after it was discovered that they had conducted a fire safety inspection of
establishments within Nueva Ecija without any mission order. In relation to this operation, they supposedly sold
fire extinguishers to the owners of the establishments they had inspected.16 He cited the alleged Confidential
Report in which the investigating body recommended the dropping of charges against him.17 He further added
that, in view of his exemplary and faithful service, the then-incumbent governor even requested the continuance
of his stint as Provincial Fire Marshall of Nueva Ecija.18 In his Position Paper,19 petitioner claimed that
respondents’ transfer had been made in compliance with the directive of Supt. Simeon C. Tutaan (Supt. Tutaan)
and pursuant to law.20
CSCRO Ruling
Subsequently, the CSCRO issued its Decision dated 30 July 2004,21 finding petitioner administratively liable for
grave misconduct and conduct prejudicial to the best interest of service, and ordered his dismissal from service.
The CSCRO ruled that respondents, through their respective testimonies, were able to establish the fact that
petitioner demanded from them the amount of ₱5,000 in exchange for their non-reassignment to far-flung fire
stations.22 The fact that they did not present any document to show that petitioner received ₱2,000 did not
preclude a finding of administrative liability.23 The consistency of their oral testimonies already constituted
substantial evidence. Granting that they committed illegal acts prior to their reassignment, this allegation
nevertheless did not rebut their claims that petitioner had extorted money from them. The admission of Supt.
Tutaan that he gave instructions for their reassignment did not disprove the accusation of extortion, but merely
established that there was indeed an order to reassign them.24
Petitioner filed a Motion for Reconsideration.25 He argued that the Sworn Statements of his witnesses should
have been given weight instead of respondents’ testimonies. He explained that Mrs. Angelina Calanoc (Mrs.
Calanoc), owner of Reynand Gas Dealer, confirmed that respondents had conducted a physical inspection of her
establishment, after which they recommended that she pay conveyance permit fees as a requisite for the
issuance of a Fire Safety Certificate.26 Also, Carlito Umali confirmed that he had indeed accompanied petitioner
when the latter investigated the Complaint filed by Mrs. Calanoc against respondents.27 Furthermore, Myrna
Villanueva – the owner of the house where respondents supposedly paid petitioner ₱2,000 – claimed that she
did not know them personally or recall either petitioner or respondents ever visiting her house.28 Likewise, Supt.
Tutaan confirmed that he had instructed petitioner to cause the transfer of respondents.29 The latter also argued
that the BFP Complaint had already been dismissed by virtue of the Confidential Report, and that the dismissal
had already served as a bar to the further prosecution of any administrative charge against him.30
The Motion, however, was subsequently denied by the CSCRO in its Order dated 19 May 2006.31 It affirmed its
previous ruling that the statements of petitioner’s witnesses were incompetent and immaterial, having failed to
disprove that petitioner had indeed extorted money from respondents.32 It likewise rejected the argument of res
judicata proffered by petitioner and ruled that the dismissal of the BFP Complaint by virtue of the Confidential
Report was not a judgment on the merits rendered by a competent tribunal. Furthermore, the Confidential
Report was the result of the recommendation of a fact-finding committee formed to determine the veracity of
the Complaint charging petitioner with extortion, unjustified transfer of BFP personnel, and malversation of
funds.33Res judicata cannot be raised as a defense, since the dismissal of the BFP Complaint did not constitute a
bar by former judgment.34
Aggrieved, petitioner filed an Appeal Memorandum35 with the CSC main office. In his Appeal, he argued that
respondents were guilty of forum-shopping for having filed two (2) separate administrative Complaints before
the CSCRO on the one hand, and before the BFP/DILG on the other.36 Petitioner argued that respondents failed
to attach a certificate of non-forum shopping to either Complaint.37 Moreover, the CSCRO should not have
entertained the Complaint filed before it, considering that it already knew of the then-pending investigation
conducted by the BFP/DILG.38
Petitioner further argued that the CSCRO only had appellate jurisdiction or authority to decide cases brought
before it by the head of agency or, in this case, the BFP.39 He explained that the administrative Complaint was
investigated and heard by the BFP/DILG. The BFP department head or fire director, Rogelio F. Asignado, by
virtue of the Resolution dated 05 July 2005, dismissed the complaint for insufficiency of evidence.40 On the
basis of the dismissal of the case, and there being no appeal or petition filed pertaining thereto, the CSCRO
Complaint should have been dismissed as well.41 Petitioner further argued that the CSCRO erred in concluding
that the resolution of the fact-finding committee was not a judgment on the merits.42 The BFP being an agency
of the government, any decision or resolution it arrives at is also a judgment on the merits.43
Petitioner likewise reiterated his previous arguments on the appreciation of the testimonies of his
witnesses.44 He alleged that on 09 June 2006, respondent Agustin executed an Affidavit of Desistance in the
former’s favor and was no longer interested in pursuing the case against him.45
In answer to the Appeal Memorandum, the CSCRO argued that there was no forum-shopping, considering that
the BFP Complaint was based on a different cause of action.46 The Complaint, which pertained to the alleged
illegal transfer of personnel under R.A. No. 6975, was docketed for preliminary investigation of the alleged
violation of the Anti-Graft and Corrupt Practices Act or R.A. No. 3019.47 The CSCRO further argued that there
could be no res judicata, since the dismissal of the BFP Complaint by virtue of the Resolution dated 05 July
200548 was not a judgment on the merits rendered by a competent tribunal. The dismissal was, instead, the
result of the recommendation of the preliminary investigators of the Internal Audit Service (IAS) of the BFP.49
CSC Ruling
Petitioner’s appeal was subsequently denied by CSC in its Resolution No. 080941 dated 19 May 2008 (CSC
Resolution).50 It ruled that there was no forum-shopping committed by respondents, and that substantial
evidence existed to hold petitioner administratively liable for grave misconduct and conduct prejudicial to the
best interest of the service.
The CSC explained that the CSCRO Complaint was for violation of R.A. No. 6713, while the BFP Complaint
was for violation of R.A. No. 6975.51 It further ruled that, although both Complaints were anchored on a similar
set of facts, there was no identity of causes of action: thus, even if they were successively filed before different
fora, no forum-shopping existed.52 Although an investigation was then ongoing at the BFP when the CSCRO
took cognizance of the case, no forum-shopping resulted. A perusal of the proceedings conducted at the BFP
shows that only a preliminary investigation was initiated by the IAS-BFP, a fact-finding committee that
recommended the dismissal of the case, which was accordingly approved by the fire director. The approval of
this recommendation cannot be regarded as one based on merits. Otherwise, it would bar the filing of another
case, particularly, with the CSCRO.53
With regard to petitioner’s administrative liability, the CSC found that because of the nature of the case –
extortion of money – hardly any documentary evidence could be gathered to prove the act complained of. As
expected, the CSCRO based its findings on the written and oral testimonies of the parties and their witnesses, as
well as on the circumstances surrounding the incident. Respondents clearly established that petitioner had
demanded ₱5,000 in exchange for their reassignment.54 The CSC further ruled that it was contrary to human
nature for respondents, who were merely rank-and-file employees, to impute such a grave act to their boss.
Their disparity in rank would show that respondents could not have fabricated their charges.55 It further ruled
that the withdrawal of the complaint would not result in their outright dismissal or absolve the person
complained of from administrative liability.56
Aggrieved yet again, petitioner filed a Rule 43 Petition with the CA. His main argument was that the CSC erred
in not dismissing respondents’ Complaint despite the absence of a certification of non-forum shopping and
respondent’s actual forum-shopping, as well as the lack of substantial evidence to hold him administratively
liable.57
In his Rule 43 Petition, petitioner claimed that a certificate of non-forum shopping attached to a complaint is a
mandatory requirement as stated in Section 8, Rule I of the Uniform Rules on Administrative Cases.58 He
argued that the causes of action in the two Complaints were similar. With regard to the proceedings before the
CSC, aside from respondents’ sole charge of violation of R.A. No. 6713, also included were charges of
dishonesty, grave misconduct, and conduct prejudicial to the best interest of service. Petitioner reasoned that the
additional offenses charged were equivalent to a violation of R.A. No. 6975, so the issues investigated were
substantially the same.59
In relation to his administrative liability, petitioner argued that the testimonies of respondents should not be
given weight, as their credibility had been rendered questionable by their dismissal from the service. 60 Also,
they had already withdrawn their Complaints against him, as stated in their Affidavit of Desistance
(Affidavit),61 in which they admitted that the cases were filed out of a misapprehension of facts and a
misunderstanding between the parties.62
Significantly, respondent Caubang denounced the supposed execution of the Affidavit. He claimed that he did
not sign it, and that his purported signature therein was a forgery.63
CA Ruling
Subsequently, the CA, in its assailed Decision,64 denied petitioner’s appeal. The CA ruled that it was not the
letter-complaint filed by respondents that commenced the administrative proceedings against petitioner; instead,
it was the formal charge filed by Atty. Marasigan-De Lima. The letter-complaint merely triggered the CSCRO’s
fact-finding investigation. Considering that the Complaint was initiated by the proper disciplining authority, it
need not contain a certification of non-forum-shopping.65
The CA similarly ruled that respondents’ act of simultaneously filing Complaints against petitioner both at the
CSC and the BFP did not constitute forum-shopping. While it was conceded that the two Complaints were
founded on the same set of facts involving the same parties, they were nonetheless based on different causes of
action—more specifically, the BFP Complaint was for alleged violation of R.A. No. 3019, while the CSC
Complaint was for violation of the provisions of R.A. No. 6713.66 Furthermore, the doctrine of res judicata
applies only to judicial or quasi-judicial proceedings, not to the exercise of administrative powers.67
With regard to the administrative liability of petitioner, the CA found that substantial evidence supported the
CSC’s findings.68 It likewise ruled that the testimonies of the witnesses of petitioner were incompetent and
immaterial, as these could prove something else entirely, but did not disprove petitioner’s extortion.69 Also, the
withdrawal of a complaint does not result in outright dismissal or discharge a person from any administrative
liability.70
Petitioner filed a Motion for Reconsideration,71 but the CA denied it in its assailed Resolution dated 30 March
2009.72
Petitioner is now before this Court arguing the following: (1) the CA erred in affirming the CSC Resolution and
in ruling that respondents were not guilty of forum-shopping; and (2) substantial evidence does not exist to hold
petitioner administratively liable for grave misconduct and conduct prejudicial to the best interest of the service.
In their Comment, respondents counter that a certificate of non-forum shopping is not required if the one who
files the formal charge is the head of agency.73 They further argue that the case filed with the BFP was in the
nature of violation under R.A. No. 3019, whereas the case filed before the CSC was in violation of R.A. No.
6713. A single act may result in two or more unlawful transgressions punishable under different laws.74 As to
the matter of administrative liability, the CSC’s findings, especially when affirmed by the CA, are binding upon
this Court.75
Issues
Based on the submissions of both parties, the following main issues are presented for resolution by this Court:
I. Whether or not respondents are guilty of forum-shopping.
II. Whether the CA erred in ruling that substantial evidence exists to hold petitioner administratively
liable for grave misconduct and conduct prejudicial to the best interest of service.
The Court’s Ruling
The Petition is devoid of merit. We rule that petitioner is administratively liable for grave misconduct and
conduct prejudicial to the best interest of the service under the Administrative Code of 1987; thus, we affirm his
dismissal from service.
Discussion
I.
Respondents are not guilty of forum-shopping.
Petitioner argues that respondents are guilty of forum-shopping for filing two allegedly identical Complaints in
violation of the rules on forum-shopping.76 He explains that dishonesty, grave misconduct, and conduct
prejudicial to the best interest of the service—charges included in the CSCRO Complaint—were charges that
were equivalent to the BFP Complaint, the subject of which was his alleged violation of R.A. 6975 or illegal
transfer of personnel.77
We do not agree with petitioner. In Yu v. Lim,78 this Court enumerated the requisites of forum-shopping as
follows:
Forum-shopping exists when the elements of litis pendentia are present or where a final judgment in one case
will amount to res judicata in another. Litis pendentia requires the concurrence of the following requisites: (1)
identity of parties, or at least such parties as those representing the same interests in both actions; (2) identity of
rights asserted and reliefs prayed for, the reliefs being founded on the same facts; and (3) identity with respect
to the two preceding particulars in the two cases, such that any judgment that may be rendered in the pending
case, regardless of which party is successful, would amount to res judicata in the other case.79 (Emphasis
supplied)
Applying the foregoing requisites to this case, we rule that the dismissal of the BFP Complaint does not
constitute res judicata in relation to the CSCRO Complaint. Thus, there is no forum-shopping on the part of
respondents.
Res judicata means "a matter adjudged; a thing judicially acted upon or decided; a thing or matter settled by
judgment." It lays down the rule that an existing final judgment or decree on the merits, rendered 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.80
In order that res judicata may bar the institution of a subsequent action, the following requisites must concur: (a)
the former judgment must be final; (b) it must have been rendered by a court having jurisdiction over the
subject matter and the parties; (c) it must be a judgment on the merits; and (d) there must be between the first
and the second actions (i) identity of parties, (ii) identity of subject matter, and (iii) identity of cause of action.81
A judgment may be considered as one rendered on the merits "when it determines the rights and liabilities of the
parties based on the disclosed facts, irrespective of formal, technical or dilatory objections;"or when the
judgment is rendered "after a determination of which party is right, as distinguished from a judgment rendered
upon some preliminary or formal or merely technical point."82
In this case, there is no "judgment on the merits" in contemplation of the definition above. The dismissal of the
BFP Complaint in the Resolution dated 05 July 2005 was the result of a fact-finding investigation for purposes
of determining whether a formal charge for an administrative offense should be filed. Hence, no rights and
liabilities of parties were determined therein with finality.
The CA was correct in ruling that the doctrine of res judicata applies only to judicial or quasi-judicial
proceedings, and not to the exercise of administrative powers.83 Administrative powers here refer to those
purely administrative in nature,84 as opposed to administrative proceedings that take on a quasi-judicial
character.85
In administrative law, a quasi-judicial proceeding involves (a) taking and evaluating evidence; (b) determining
facts based upon the evidence presented; and (c) rendering an order or decision supported by the facts
proved.86 The exercise of quasi-judicial functions involves a determination, with respect to the matter in
controversy, of what the law is; what the legal rights and obligations of the contending parties are; and based
thereon and the facts obtaining, the adjudication of the respective rights and obligations of the parties.87 In
Bedol v. Commission on Elections,88 this Court declared:
Quasi-judicial or administrative adjudicatory power on the other hand is the power of the administrative agency
to adjudicate the rights of persons before it. It is the power to hear and determine questions of fact to which the
legislative policy is to apply and to decide in accordance with the standards laid down by the law itself in
enforcing and administering the same law. The administrative body exercises its quasi-judicial power when it
performs in a judicial manner an act which is essentially of an executive or administrative nature, where the
power to act in such manner is incidental to or reasonably necessary for the performance of the executive or
administrative duty entrusted to it. In carrying out their quasi-judicial functions the administrative officers or
bodies are required to investigate facts or ascertain the existence of facts, hold hearings, weigh evidence, and
draw conclusions from them as basis for their official action and exercise of discretion in a judicial nature.
The Court has laid down the test for determining whether an administrative body is exercising judicial or
merely investigatory functions: adjudication signifies the exercise of the power and authority to adjudicate upon
the rights and obligations of the parties. Hence, if the only purpose of an investigation is to evaluate the
evidence submitted to an agency based on the facts and circumstances presented to it, and if the agency is not
authorized to make a final pronouncement affecting the parties, then there is an absence of judicial discretion
and judgment.89
In this case, an analysis of the proceedings before the BFP yields the conclusion that they were purely
administrative in nature and constituted a fact-finding investigation for purposes of determining whether a
formal charge for an administrative offense should be filed against petitioner.
It can be gleaned from the Resolution dated 05 July 2005 itself that the purpose of the BFP proceedings was to
determine whether there was sufficient ground to warrant the filing of an appropriate administrative offense
against petitioner. To recall, the Resolution dated 05 July 2005 states:
The re-assignment of the complainants is within the ambit of authority, CSC Resolution No. 93402 dated 11
February 1993, the commission ruled as follows:
"That reassignment may be ordered by the head of office of the duly authority [sic] representative when the
exigencies of the service so require but subject to the condition that there will be no reduction in rank, status or
salary, further on Bongbong vs Paracaldo (57 SCRA 623) the supreme court ruled held [sic] that "on general
principle petitioner may be transferred as to the exigencies of the service require". x x x
In view of the documents on record, the undersigned investigator finds no sufficient ground to warrant the filing
of appropriate administrative offense against the respondent.
WHEREFORE, premises considered, this office (IAS) most respectfully recommends that the administrative
complaint against C/INSP CARLITO ENCINAS, BFP be dismissed for insufficiency of evidence.90 (Emphases
supplied)
The proceedings before the BFP were merely investigative, aimed at determining the existence of facts for the
purpose of deciding whether to proceed with an administrative action. This process can be likened to a public
prosecutor’s preliminary investigation, which entails a determination of whether there is probable cause to
believe that the accused is guilty, and whether a crime has been committed.
The Ruling of this Court in Bautista v. Court of Appeals91 is analogously applicable to the case at bar. In that
case, we ruled that the preliminary investigation conducted by a public prosecutor was merely inquisitorial and
was definitely not a quasi-judicial proceeding:
A closer scrutiny will show that preliminary investigation is very different from other quasi-judicial
proceedings. A quasi-judicial body has been defined as "an organ of government other than a court and other
than a legislature which affects the rights of private parties through either adjudication or rule-making."
xxxx
On the other hand, the prosecutor in a preliminary investigation does not determine the guilt or innocence of the
accused. He does not exercise adjudication nor rule-making functions. Preliminary investigation is merely
inquisitorial, and is often the only means of discovering the persons who may be reasonably charged with a
crime and to enable the fiscal to prepare his complaint or information. It is not a trial of the case on the merits
and has no purpose except that of determining whether a crime has been committed and whether there is
probable cause to believe that the accused is guilty thereof. While the fiscal makes that determination, he cannot
be said to be acting as a quasi-court, for it is the courts, ultimately, that pass judgment on the accused, not the
fiscal. (Emphases supplied)
This principle is further highlighted in MERALCO v. Atilano,92 in which this Court clearly reiterated that a
public prosecutor, in conducting a preliminary investigation, is not exercising a quasi-judicial function. In a
preliminary investigation, the public prosecutor inspects the records and premises, investigates the activities of
persons or entities coming under the formers’ jurisdiction, or secures or requires the disclosure of information
by means of accounts, records, reports, statements, testimony of witnesses, and production of documents. In
contrast, judicial adjudication signifies the exercise of power and authority to adjudicate upon the rights and
obligations of concerned parties, viz.:
This is reiterated in our ruling in Spouses Balangauan v. Court of Appeals, Special Nineteenth Division, Cebu
City, where we pointed out that a preliminary investigation is not a quasi-judicial proceeding, and the DOJ is
not a quasi-judicial agency exercising a quasi-judicial function when it reviews the findings of a public
prosecutor regarding the presence of probable cause. A quasi-judicial agency performs adjudicatory functions
when its awards determine the rights of parties, and its decisions have the same effect as a judgment of a court."
This is not the case when a public prosecutor conducts a preliminary investigation to determine probable cause
to file an information against a person charged with a criminal offense, or when the Secretary of Justice reviews
the former's orders or resolutions" on determination of probable cause.
In Odchigue-Bondoc, we ruled that when the public prosecutor conducts preliminary investigation, he thereby
exercises investigative or inquisitorial powers. Investigative or inquisitorial powers include the powers of an
administrative body to inspect the records and premises, and investigate the activities of persons or entities
coming under his jurisdiction, or to secure, or to require the disclosure of information by means of accounts,
records, reports, statements, testimony of witnesses, and production of documents. This power is distinguished
from judicial adjudication which signifies the exercise of power and authority to adjudicate upon the rights and
obligations of concerned parties. Indeed, it is the exercise of investigatory powers which sets a public
prosecutor apart from the court. (Emphasis supplied)
Indeed, the public prosecutor exercises investigative powers in the conduct of a preliminary investigation to
determine whether, based on the evidence presented, further action should be taken through the filing of a
criminal complaint in court. Similarly, in the instant case, the BFP exercised its investigative or fact-finding
function to determine whether, based on the facts and the evidence presented, further administrative action—in
the form of a formal charge—should be taken against petitioner. In neither instance is there in adjudication upon
the rights, obligations, or liabilities of the parties before them.
With the above disquisition, we rule that the dismissal of the BFP Complaint cannot operate as res judicata.
Therefore, forum-shopping is unavailing in this case.
II.
The CA was correct in ruling that there was substantial evidence to hold petitioner administratively liable for
grave misconduct and conduct prejudicial to the best interest of the service.
On the substantive issue, petitioner claims that the findings are based on a misapprehension of facts. The
dismissal of respondents from service allegedly placed their credibility in question.93
We do not agree. We find petitioner administratively liable for his act of demanding ₱5,000 from respondents in
exchange for their non-reassignment.
At the outset, we stress the settled rule that the findings of fact of administrative bodies will not be interfered
with by the courts in the absence of grave abuse of discretion on the part of the former, or unless the
aforementioned findings are not supported by substantial evidence.94 These factual findings carry even more
weight when affirmed by the CA, in which case they are accorded not only great respect, but even finality.
These findings are binding upon this Court, unless it is shown that the administrative body has arbitrarily
disregarded or misapprehended evidence before the latter to such an extent as to compel a contrary conclusion,
had the evidence been properly appreciated.95 This rule is rooted in the doctrine that this Court is not a trier of
facts.96 By reason of the special knowledge and expertise of administrative agencies over matters falling under
their jurisdiction, they are in a better position to pass judgment on those matters.97
This Court will not disturb the factual findings of both the CSC and the CA, absent any compelling reason to do
so. The conclusion reached by the administrative agencies involved – after their own thorough investigations
and hearings, as well as their consideration of the evidence presented before them and their findings thereon,
especially when affirmed by the CA – must now be regarded with great respect and finality by this Court.
We rule that the alleged dismissal of respondents from the service would not suffice to discredit them as
witnesses. In People v. Dominguez,98 this Court had occasion to rule that even a prior criminal conviction does
not by itself suffice to discredit a witness; the testimony of that witness must be assayed and scrutinized in
exactly the same way the testimonies of other witnesses must be examined for their relevance and
credibility.99 In Gomez v. Gomez-Samson,100 this Court echoed its previous pronouncement that even convicted
criminals are not excluded from testifying as long as, having organs of sense, they "can perceive and perceiving
can make known their perceptions to others."101
This pronouncement is even more significant in this case, as what petitioner is alleging is not any past criminal
conviction of respondents, but merely their dismissal from the service.102 Scrutinizing the testimonies of
respondents, we find, as did both the CSC and the CA, that these testimonies carry more weight than
petitioner’s self-serving statements and blanket denials.
Respondents, through their testimonies, were able to establish that petitioner told them that unless they paid him
₱5,000, they would be re-assigned to far-flung areas. The consistency of their testimonies was further bolstered
by the fact that they had been cross-examined by petitioner’s counsel. Petitioner was unable to rebut their
claims other than by mere denials. Even the admission of Supt. Tutaan that he gave the instructions to reassign
respondents cannot disprove the latter’s claims. As regards the testimonies of the witnesses of petitioner, we
hold that even these testimonies are irrelevant in disproving the alleged extortion he committed, as these were
mainly related to respondents’ supposed illegal activities, which are not the issue in this case.
Even assuming that an Affidavit of Desistance was indeed executed by respondents, petitioner is still not
exonerated from liability. The subsequent reconciliation of the parties to an administrative proceeding does not
strip the court of its jurisdiction to hear the administrative case until its resolution. Atonement, in administrative
cases, merely obliterates the personal injury of the parties and does not extend to erase the offense that may
have been committed against the public service.103 The subsequent desistance by respondents does not free
petitioner from liability, as the purpose of an administrative proceeding is to protect the public service based on
the time-honored principle that a public office is a public trust.104 A complaint for malfeasance or misfeasance
against a public servant of whatever rank cannot be withdrawn at any time for whatever reason by a
complainant, as a withdrawal would be "anathema to the preservation of the faith and confidence of the
citizenry in their government, its agencies and instrumentalities."105 Administrative proceedings "should not be
made to depend on the whims and caprices of complainants who are, in a real sense, only witnesses therein."106
In view of the foregoing, we rule that petitioner’s act of demanding money from respondents in exchange for
their non-reassignment constitutes grave misconduct. We have defined grave misconduct as follows:
Misconduct is a transgression of some established and definite rule of action, more particularly, unlawful
behavior or gross negligence by a public officer; and the misconduct is grave if it involves any of the additional
elements of corruption, such as willful intent to violate the law or to disregard established rules, which must be
established by substantial evidence.107 (Emphasis supplied)
Furthermore, petitioner’s acts likewise constitute conduct prejudicial to the best interest of the service. In
Philippine Retirement Authority v. Rupa108 this Court elaborated on the specific acts that constitute the grave
offense of conduct prejudicial to the best interest of the service, considering that no concrete description is
provided under the Civil Service Law and rules.1âwphi1 The Court outlined therein following acts:
misappropriation of public funds, abandonment of office, failure to report back to work without prior notice,
failure to keep in safety public records and property, making false entries in public documents, and falsification
of court orders.109
Applying this principle to the present case, we hold that petitioner's offense is of the same gravity or odiousness
as that of the aforementioned acts and would likewise amount to conduct prejudicial to the best interest of the
service.
As to the imposable penalty, grave misconduct is a grave offense punishable by dismissal even for the first
offense.110 The penalty of dismissal includes forfeiture of retirement benefits, except accrued leave credits, and
perpetual disqualification from reemployment in government service and bar from taking civil service
examinations.111 On the other hand, conduct prejudicial to the best interest of the service is likewise a grave
offense, but with a less severe penalty of suspension of six ( 6) months and one ( 1) day to one ( 1) year for the
first offense and dismissal for the second offense.112
Considering that petitioner was found guilty of two (2) offenses, then the penalty of dismissal from the service-
the penalty corresponding to the most serious offense-was properly imposed.113
WHEREFORE, in view of the foregoing, this petition is hereby DENIED. The Decision dated 20 November
2008 and the Resolution dated 30 March 2009 issued by the CA in CA-G.R. SP No. 104074 are hereby
AFFIRMED.
SO ORDERED.
[G.R. No. 140374. November 27, 2002]
JANE C. ABALOS, BERNARDO A. BAMBICO, MANUEL G. MALAG, WILFREDO R. SOTELO,

PERCIVAL B. AGRITO, RICHARD M. BALAN-EG, and EDGARDO S. NILLO petitioners,
vs. PHILEX MINING CORPORATION, respondent.
DECISION
QUISUMBING, J.:
This petition for review assails the decision[1] dated July 30, 1999 of the Court of Appeals in CA-G.R. SP
No. 50167, which affirmed the order[2] dated December 11, 1998 of Arbitrator Juan Valdez of the National
Conciliation and Mediation Board, Cordillera Administrative Region, Baguio City. That order partially
modified an earlier one dated March 5, 1994,[3] by directing respondent Philex Mining Corporation to pay
petitioners their separation pay in lieu of reinstatement.
The factual antecedent are uncomplicated.
A manpower audit conducted by respondent Philex, for brevity, revealed that 241 of its employees were
redundant. Thus, Philex undertook a retrenchment program that resulted in the termination of petitioners
employment effective June 30, 1993. Consequently, petitioners filed a case for illegal dismissal against
respondent. The case was submitted for arbitration through a submission agreement coursed through the
National Conciliation and Mediation Board, Cordillera Administrative Region, Baguio City.
On March 5, 1994, Voluntary Arbitrator Juan Valdez rendered his decision, concluding that:
IN THE LIGHT OF THE FOREGOING, Respondent is hereby ordered to reinstate the Complainants and
Intervenors to their former positions with back wages without loss of seniority and privileges within 10 days
from receipt hereof except the two employees namely Pedro Otgalon and Miguel Guyapat who have applied for
and granted early retirement; provided that the amount of separation pay already received by them shall be
deducted from their backwages; and provided further that should the backwages of the employee concerned be
less than the amount of separation pay received, the employee concerned shall refund to Respondent the balance
thereof; and for Respondent to pay to Counsel of the Complainants and Intervenors 10% each of the total
amount of backwages due the employees represented by them as attorneys fees. No award of damages.
SO ORDERED.[4]
Philex appealed to this Court and the case was remanded to the Court of Appeals. On July 22, 1997, the
appellate court promulgated its decision, thus:
In view of the foregoing, we rule that, while there was indeed a valid reason for retrenchment, the means
employed were disadvantageous, thus inequitable, to the affected workers. The fact that these workers signed
quitclaims and received their separation pay would not estop them from seeking reinstatement. The Supreme
Court said: The reason why quitclaims are commonly frowned upon as contrary to public policy, and why they
are held to be ineffective to bar claims for the full measure of the workers legal rights, is the fact that the
employer and the employee obviously do not stand on the same footing. (Marcos vs. National Labor Relations
Commission, G.R. No. 111744, 248 SCRA 146 [1995]).
WHEREFORE, the petition is dismissed for lack of merit.
SO ORDERED.[5]
Philex elevated the case to the Supreme Court via a petition for review on certiorari, which we denied in a
resolution dated January 14, 1998. Entry of judgment was made on April 27, 1998.
On August 14, 1998, Philex filed a manifestation and motion for leave to offer separation pay to
petitioners, in lieu of reinstatement, before the Office of Voluntary Arbitrator Juan Valdez.Philex alleged that
petitioners positions no longer existed and that there arose strained relations between the parties that effectively
barred reinstatement.
Arbitrator Juan Valdez granted Philexs motion in his order dated December 11, 1998, thus:
In the light of the foregoing, Respondent is ordered to pay the Complainants and Intervenors the amounts of
backwages and separation pay stated above less the total amount of salary they received as a result of their
reinstatement thru payroll from November 24, 1997 to date within twenty (20) days from receipt hereof plus ten
percent (10%) thereof as attorneys fees, otherwise this Office will direct the proper Sheriff to execute this
Order.
SO ORDERED.[6]
Consequently, petitioners filed a petition for certiorari with the Court of Appeals on the ground that
Arbitrator Juan Valdez acted without or in excess of jurisdiction. On July 30, 1990, the Court of Appeals
dismissed the petition and affirmed the order of Arbitrator Valdez. It likewise denied the petitioners motion for
reconsideration.
Hence, this petition for review, anchored on a single assignment of error:
THE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN AFFIRMING THE DECEMBER 11,
1998 ORDER OF VOLUNTARY ARBITRATOR JUAN B. VALDEZ ALTERING AND MODIFYING
HIS MARCH 5, 1994 DECISION WHICH HAD ALREADY BECOME FINAL AND EXECUTORY ON
APRIL 27, 1998.[7]
Petitioners aver that when the March 5, 1994 order directing their reinstatement became final and
executory, Arbitrator Valdez no longer had jurisdiction to modify the same. According to them, an order that
has become final and executory can no longer be modified or altered.
Petitioners further insist that Philex failed to sufficiently establish (1) that there were supervening events
which rendered enforcement of the final order unjust, and (2) that the positions vacated by them no longer
existed and there were no similar positions available for them. Petitioners point out that Philex did not conduct
any investigation as to the manner and purpose of the abolition of their former positions. They also assert that
Philex subcontracted to outsiders the work previously performed by the retrenched employees, which proved
that there was no need to abolish their positions.
As to the alleged strained relations between the parties, petitioners maintain that this was also not proven
adequately. Petitioners submit that for this doctrine to apply, it must be shown that the affected employees
occupied positions of trust and confidence, or that the employees differences with their employer are of such
nature or degree as to preclude reinstatement. Petitioners argue that neither of these conditions is present in this
case.
For its part, respondent contends that it presented evidence showing the impossibility and inappropriateness
of reinstatement, which justify the modification of the March 5, 1994 arbitration order. Arbitrator Valdez found
proof of this fact and upon appeal, the Court of Appeals declared said finding as sufficiently supported by
evidence. Invoking the principle embodied in Compania Maritima, Inc. vs. Court of Appeals,[8] respondent
avers that this factual finding must be accorded great weight, in the absence of any showing that it is whimsical,
capricious, or arbitrary.
A basic tenet in our rules of procedure is that an award that is final and executory cannot be amended or
modified anymore. Nothing is more settled in law than that once a judgment attains finality it thereby becomes
immutable and unalterable. It 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. [9] However,
this rule is subject to exceptions as stated in the case of David vs. CA, 316 SCRA 710 (1999), cited by
respondent:
One exception is that where facts and/or events transpire after a decision has become executory, which facts
and/or events present a supervening cause or reason which renders the final and executory decision no longer
enforceable. Under the law, the court may modify or alter a judgment even after the same has become executory
whenever circumstances transpire rendering its execution unjust and inequitable, as where certain facts and
circumstances justifying or requiring such modification or alteration transpired after the judgment has become
final and executory.[10]
In David, we held also that where an execution order [which] has been issued is still pending, all
proceedings on the execution are still proceedings in the suit.[11] As such, modification of the execution of such
judgment is allowed.
In Torres vs. National Labor Relations Commission, 330 SCRA 311 (2000), this Court ruled that:
Execution is the final stage of litigation, the end of the suit. It cannot be frustrated except for serious reasons
demanded by justice and equity. In this jurisdiction, the rule is that when a judgment becomes final and
executory, it is the ministerial duty of the court to issue a writ of execution to enforce the judgment. A writ of
execution may however be refused on equitable grounds as when there was a change in the situation of the
parties that would make execution inequitable or when certain circumstances, which transpired after judgment
became final, rendered execution of judgment unjust. The fact that the decision has become final does not
preclude a modification or an alteration thereof because even with the finality of judgment, when its execution
becomes impossible or unjust, it may be modified or altered to harmonize the same with justice and the
facts (emphasis supplied). [12]
In Deltaventures Resources Inc. vs. Cabato, 327 SCRA 521 (2000), we held that jurisdiction once acquired
is not lost upon the instance of the parties but continues until the case is terminated.[13] The power of a voluntary
arbitrator to issue a writ of execution carries with it the power to inquire into the correctness of its execution and
to consider whatever supervening events transpire during execution.[14] Therefore, we are in agreement with the
appellate court that a voluntary arbitrator has jurisdiction to amend the mode of executing an award if and when
the case merits such amendment.
However, we find respondents reliance on the doctrine of strained relations misplaced. In Mercury Drug
Corporation vs. Quijano,[15] we stated that said doctrine is inapplicable to a situation where the employee has no
say in the operation of the employers business. Petitioners herein are part of the rank-and-file workforce; they
are cooks, miners, helpers and mechanics of the respondent.[16] As held also in the Mercury Drug case:
To protect labors security of tenure, we emphasize that the doctrine of strained relations should be strictly
applied so as not to deprive an illegally dismissed employee of his right to reinstatement. Every labor dispute
almost always results in strained relations and the phrase cannot be given an overarching interpretation,
otherwise an unjustly dismissed employee can never be reinstated.[17]
Considering the circumstances in the present case, we find that the only issue to be resolved is whether the
supervening events are grave enough to warrant a modification in the execution of the judgment. Both the
voluntary arbitrator and the Court of Appeals found that reinstatement is no longer possible due to the fact that
respondent has been continuously suffering business losses and reducing the number of its employees pending
litigation, and so the positions held by petitioners were abolished as a cost-cutting measure.[18] Petitioners argue,
however, that to excuse the respondent from reinstating the petitioners would be to allow it to do indirectly what
it was not allowed to do directly the retrenchment of the petitioners. They add that what is so scheming about
this ploy is that respondent now tries to justify its refusal to reinstate the petitioners by its very own act of
abolishing their positions.[19]
Despite our sympathy for the workers plight, however, we find no legal support for their opposition to the
conclusion and findings of the voluntary arbitrator and the Court of Appeals. On record, there is no showing
that the abolition of the petitioners positions was capricious or whimsical. The appellate court, as well as the
voluntary arbitrator, based their decisions on applicable law and the evidence. As confirmed by the appellate
court, the voluntary arbitrator also found that petitioners reinstatement had become not only inappropriate but
also impossible.
Regrettably, petitioners now raise questions the determination of which would require the Court to look
into the evidence adduced by the parties. This cannot be done in a petition for review on certiorari. It is outside
its purview under Rule 45 of the 1997 Rules of Court. Factual findings of labor officials who are deemed to
have acquired expertise in matters within their respective jurisdiction are generally accorded not only respect
but even finality, and bind us when supported by substantial evidence.[20] It is not our function to assess and
evaluate the evidence all over again, particularly where the findings of both the arbitrator and the Court of
Appeals coincide. Thus, in this case, absent a showing of an error of law committed by the court below, or of
whimsical or capricious exercise of its judgment, or a demonstrable lack of basis for its conclusions, we may
not disturb its factual findings,[21] much less reverse its judgment outright.
WHEREFORE, the instant petition is DENIED. The decision dated July 30, 1999 of the Court of Appeals
in CA-G.R. SP No. 50167, sustaining the order dated December 11, 1998 of the Arbitrator of the National
Conciliation and Mediation Board, Cordillera Administrative Region, Baguio City, is AFFIRMED. No
pronouncement as to costs.
SO ORDERED.
[G.R. No. 141471. September 18, 2000]
COLEGIO DE SAN JUAN DE LETRAN, petitioner, vs. ASSOCIATION OF EMPLOYEES AND

FACULTY OF LETRAN and ELEONOR AMBAS,respondents.
DECISION
KAPUNAN, J.:
This is a petition for review on certiorari seeking the reversal of the Decision of the Court of Appeals,
promulgated on 9 August 1999, dismissing the petition filed by Colegio de San Juan de Letran (hereinafter,
"petitioner") and affirming the Order of the Secretary of Labor, dated December 2, 1996, finding the petitioner
guilty of unfair labor practice on two (2) counts.
The facts, as found by the Secretary of Labor and affirmed by the Court of Appeals, are as follows:
"On December 1992, Salvador Abtria, then President of respondent union, Association of Employees and
Faculty of Letran, initiated the renegotiation of its Collective Bargaining Agreement with petitioner Colegio de
San Juan de Letran for the last two (2) years of the CBA's five (5) year lifetime from 1989-1994. On the same
year, the union elected a new set of officers wherein private respondent Eleanor Ambas emerged as the newly
elected President (Secretary of Labor and Employment's Order dated December 2, 1996, p. 12).
Ambas wanted to continue the renegotiation of the CBA but petitioner, through Fr. Edwin Lao, claimed that the
CBA was already prepared for signing by the parties. The parties submitted the disputed CBA to a referendum
by the union members, who eventually rejected the said CBA (Ibid, p. 2).
Petitioner accused the union officers of bargaining in bad faith before the National Labor Relations Commission
(NLRC). Labor Arbiter Edgardo M. Madriaga decided in favor of petitioner. However, the Labor Arbiter's
decision was reversed on appeal before the NLRC (Ibid, p. 2).
On January 1996, the union notified the National Conciliation and Mediation Board (NCMB) of its intention to
strike on the grounds (sic) of petitioner's: non-compliance with the NLRC (1) order to delete the name of Atty.
Federico Leynes as the union's legal counsel; and (2) refusal to bargain (Ibid, p. 1).
On January 18, 1996, the parties agreed to disregard the unsigned CBA and to start negotiation on a new five-
year CBA starting 1994-1999. On February 7, 1996, the union submitted its proposals to petitioner, which
notified the union six days later or on February 13, 1996 that the same had been submitted to its Board of
Trustees. In the meantime, Ambas was informed through a letter dated February 15, 1996 from her superior that
her work schedule was being changed from Monday to Friday to Tuesday to Saturday. Ambas protested and
requested management to submit the issue to a grievance machinery under the old CBA (Ibid, p. 2-3).
Due to petitioner's inaction, the union filed a notice of strike on March 13, 1996. The parties met on March 27,
1996 before the NCMB to discuss the ground rules for the negotiation. On March 29, 1996, the union received
petitioner's letter dismissing Ambas for alleged insubordination. Hence, the union amended its notice of strike
to include Ambas' dismissal. (Ibid, p. 2-3).
On April 20, 1996, both parties again discussed the ground rules for the CBA renegotiation. However, petitioner
stopped the negotiations after it purportedly received information that a new group of employees had filed a
petition for certification election (Ibid, p. 3).
On June 18, 1996, the union finally struck. On July 2, 1996, public respondent the Secretary of Labor and
Employment assumed jurisdiction and ordered all striking employees including the union president to return to
work and for petitioner to accept them back under the same terms and conditions before the actual strike.
Petitioner readmitted the striking members except Ambas. The parties then submitted their pleadings including
their position papers which were filed on July 17, 1996 ( Ibid, pp. 2-3).
On December 2, 1996, public respondent issued an order declaring petitioner guilty of unfair labor practice on
two counts and directing the reinstatement of private respondent Ambas with backwages. Petitioner filed a
motion for reconsideration which was denied in an Order dated May 29, 1997 (Petition, pp. 8-9)."[1]
Having been denied its motion for reconsideration, petitioner sought a review of the order of the Secretary
of Labor and Employment before the Court of Appeals. The appellate court dismissed the petition and affirmed
the findings of the Secretary of Labor and Employment. The dispositive portion of the decision of the Court of
Appeals sets forth:
WHEREFORE, foregoing premises considered, this Petition is DISMISSED, for being without merit in fact and
in law.
With cost to petitioner.
SO ORDERED.[2]
Hence, petitioner comes to this Court for redress.

Petitioner ascribes the following errors to the Court of Appeals:
I
THE HONORABLE COURT OF APPEALS ERRED AND ACTED WITH GRAVE ABUSE OF
DISCRETION IN AFFIRMING THE RULING OF THE SECRETARY OF LABOR AND EMPLOYMENT
WHICH DECLARES PETITIONER LETRAN GUILTY OF REFUSAL TO BARGAIN (UNFAIR LABOR
PRACTICE) FOR SUSPENDING THE COLLECTIVE BARGAINING NEGOTIATIONS WITH
RESPONDENT AEFL, DESPITE THE FACT THAT THE SUSPENSION OF THE NEGOTIATIONS WAS
BROUGHT ABOUT BY THE FILING OF A PETITION FOR CERTIFICATION ELECTION BY A RIVAL
UNION WHO CLAIMED TO COMMAND THE MAJORITY OF THE EMPLOYEES WITHIN THE
BARGAINING UNIT.
II
THE HONORABLE COURT OF APPEALS ERRED AND ACTED WITH GRAVE ABUSE OF
DISCRETION IN AFFIRMING THE RULING OF THE SECRETARY OF LABOR AND EMPLOYMENT
WHICH DECLARES PETITIONER LETRAN GUILTY OF UNFAIR LABOR PRACTICE FOR
DISMISSING RESPONDENT AMBAS, DESPITE THE FACT THAT HER DISMISSAL WAS CAUSED BY
HER INSUBORDINATE ATTITUDE, SPECIFICALLY, HER REFUSAL TO FOLLOW THE PRESCRIBED
WORK SCHEDULE.[3]
The twin questions of law before this Court are the following: (1) whether petitioner is guilty of unfair
labor practice by refusing to bargain with the union when it unilaterally suspended the ongoing negotiations for
a new Collective Bargaining Agreement (CBA) upon mere information that a petition for certification has been
filed by another legitimate labor organization? (2) whether the termination of the union president amounts to an
interference of the employees' right to self-organization?
The petition is without merit.
After a thorough review of the records of the case, this Court finds that petitioner has not shown any
compelling reason sufficient to overturn the ruling of the Court of Appeals affirming the findings of the
Secretary of Labor and Employment. It is axiomatic that the findings of fact of the Court of Appeals are
conclusive and binding on the Supreme Court and will not be reviewed or disturbed on appeal. In this case, the
petitioner failed to show any extraordinary circumstance justifying a departure from this established doctrine.
As regards the first issue, Article 252 of the Labor Code defines the meaning of the phrase "duty to bargain
collectively," as follows:
Art. 252. Meaning of duty to bargain collectively. - The duty to bargain collectively means the performance of a
mutual obligation to meet and convene promptly and expeditiously in good faith for the purpose of negotiating
an agreement with respect to wages, hours of work and all other terms and conditions of employment including
proposals for adjusting any grievances or questions arising under such agreement and executing a contract
incorporating such agreements if requested by either party but such duty does not compel any party to agree to a
proposal or to make any concession.
Noteworthy in the above definition is the requirement on both parties of the performance of the mutual
obligation to meet and convene promptly and expeditiously in good faith for the purpose of negotiating an
agreement. Undoubtedly, respondent Association of Employees and Faculty of Letran (AEFL) (hereinafter,
"union") lived up to this requisite when it presented its proposals for the CBA to petitioner on February 7,
1996. On the other hand, petitioner devised ways and means in order to prevent the negotiation.
Petitioner's utter lack of interest in bargaining with the union is obvious in its failure to make a timely reply
to the proposals presented by the latter. More than a month after the proposals were submitted by the union,
petitioner still had not made any counter-proposals. This inaction on the part of petitioner prompted the union to
file its second notice of strike on March 13, 1996.Petitioner could only offer a feeble explanation that the Board
of Trustees had not yet convened to discuss the matter as its excuse for failing to file its reply. This is a clear
violation of Article 250 of the Labor Code governing the procedure in collective bargaining, to wit:
Art. 250. Procedure in collective bargaining. - The following procedures shall be observed in collective
bargaining:
(a) When a party desires to negotiate an agreement, it shall serve a written notice upon the other party with a
statement of its proposals. The other party shall make a reply thereto not later than ten (10) calendar days from
receipt of such notice.[4]
xxx
As we have held in the case of Kiok Loy vs. NLRC,[5] the company's refusal to make counter-proposal to the
union's proposed CBA is an indication of its bad faith. Where the employer did not even bother to submit an
answer to the bargaining proposals of the union, there is a clear evasion of the duty to bargain collectively. [6] In
the case at bar, petitioner's actuation show a lack of sincere desire to negotiate rendering it guilty of unfair labor
practice.
Moreover, the series of events that transpired after the filing of the first notice of strike in January 1996
show petitioner's resort to delaying tactics to ensure that negotiation would not push through. Thus, on February
15, 1996, or barely a few days after the union proposals for the new CBA were submitted, the union president
was informed by her superior that her work schedule was being changed from Mondays to Fridays to Tuesdays
to Saturdays. A request from the union president that the issue be submitted to a grievance machinery was
subsequently denied. Thereafter, the petitioner and the union met on March 27, 1996 to discuss the ground rules
for negotiation. However, just two days later, or on March 29, 1996, petitioner dismissed the union president for
alleged insubordination. In its final attempt to thwart the bargaining process, petitioner suspended the
negotiation on the ground that it allegedly received information that a new group of employees called the
Association of Concerned Employees of Colegio (ACEC) had filed a petition for certification election. Clearly,
petitioner tried to evade its duty to bargain collectively.
Petitioner, however, argues that since it has already submitted the union's proposals to the Board of
Trustees and that a series of conferences had already been undertaken to discuss the ground rules for negotiation
such should already be considered as acts indicative of its intention to bargain. As pointed out earlier, the
evidence on record belie the assertions of petitioner.
Petitioner, likewise, claims that the suspension of negotiation was proper since by the filing of the petition
for certification election the issue on majority representation of the employees has arose. According to
petitioner, the authority of the union to negotiate on behalf of the employees was challenged when a rival union
filed a petition for certification election. Citing the case of Lakas Ng Manggagawang Makabayan v. Marcelo
Enterprises,[7] petitioner asserts that in view of the pendency of the petition for certification election, it had no
duty to bargain collectively with the union.
We disagree. In order to allow the employer to validly suspend the bargaining process there must be a valid
petition for certification election raising a legitimate representation issue. Hence, the mere filing of a petition for
certification election does not ipso facto justify the suspension of negotiation by the employer. The petition
must first comply with the provisions of the Labor Code and its Implementing Rules. Foremost is that a petition
for certification election must be filed during the sixty-day freedom period. The "Contract Bar Rule" under
Section 3, Rule XI, Book V, of the Omnibus Rules Implementing the Labor Code, provides that: " . If a
collective bargaining agreement has been duly registered in accordance with Article 231 of the Code, a petition
for certification election or a motion for intervention can only be entertained within sixty (60) days prior to the
expiry date of such agreement." The rule is based on Article 232,[8] in relation to Articles 253, 253-A and 256 of
the Labor Code. No petition for certification election for any representation issue may be filed after the lapse of
the sixty-day freedom period. The old CBA is extended until a new one is signed. The rule is that despite the
lapse of the formal effectivity of the CBA the law still considers the same as continuing in force and effect until
a new CBA shall have been validly executed.[9] Hence, the contract bar rule still applies.[10] The purpose is to
ensure stability in the relationship of the workers and the company by preventing frequent modifications of any
CBA earlier entered into by them in good faith and for the stipulated original period.[11]
In the case at bar, the lifetime of the previous CBA was from 1989-1994. The petition for certification
election by ACEC, allegedly a legitimate labor organization, was filed with the Department of Labor and
Employment (DOLE) only on May 26, 1996. Clearly, the petition was filed outside the sixty-day freedom
period. Hence, the filing thereof was barred by the existence of a valid and existing collective bargaining
agreement. Consequently, there is no legitimate representation issue and, as such, the filing of the petition for
certification election did not constitute a bar to the ongoing negotiation. Reliance, therefore, by petitioner of the
ruling in Lakas Ng Manggagawang Makabayan v. Marcelo Enterprises[12] is misplaced since that case involved
a legitimate representation issue which is not present in the case at bar.
Significantly, the same petition for certification election was dismissed by the Secretary of Labor on
October 25, 1996. The dismissal was upheld by this Court in a Resolution, dated April 21, 1997.[13]
In view of the above, there is no doubt that petitioner is guilty of unfair labor practice by its stern refusal to
bargain in good faith with respondent union.
Concerning the issue on the validity of the termination of the union president, we hold that the dismissal
was effected in violation of the employees' right to self-organization.
To justify the dismissal, petitioner asserts that the union president was terminated for cause, allegedly for
insubordination for her failure to comply with the new working schedule assigned to her, and pursuant to its
managerial prerogative to discipline and/or dismiss its employees. While we recognize the right of the employer
to terminate the services of an employee for a just or authorized cause, nevertheless, the dismissal of employees
must be made within the parameters of law and pursuant to the tenets of equity and fair play.[14] The employer's
right to terminate the services of an employee for just or authorized cause must be exercised in good
faith.[15] More importantly, it must not amount to interfering with, restraining or coercing employees in the
exercise of their right to self-organization because it would amount to, as in this case, unlawful labor practice
under Article 248 of the Labor Code.
The factual backdrop of the termination of Ms. Ambas leads us to no other conclusion that she was
dismissed in order to strip the union of a leader who would fight for the right of her co-workers at the
bargaining table. Ms. Ambas, at the time of her dismissal, had been working for the petitioner for ten (10) years
already. In fact, she was a recipient of a loyalty award. Moreover, for the past ten (10) years her working
schedule was from Monday to Friday. However, things began to change when she was elected as union
president and when she started negotiating for a new CBA. Thus, it was when she was the union president and
during the period of tense and difficult negotiations when her work schedule was altered from Mondays to
Fridays to Tuesdays to Saturdays. When she did not budge, although her schedule was changed, she was
outrightly dismissed for alleged insubordination.[16] We quote with approval the following findings of the
Secretary of Labor on this matter, to wit:
"Assuming arguendo that Ms. Ambas was guilty, such disobedience was not, however, a valid ground to
teminate her employment. The disputed management action was directly connected with Ms. Ambas'
determination to change the complexion of the CBA. As a matter of fact, Ms. Ambas' unflinching position in
faithfully and truthfully carrying out her duties and responsibilities to her Union and its members in getting a
fair share of the fruits of their collective endeavors was the proximate cause for her dismissal, the charge of
insubordination being merely a ploy to give a color of legality to the contemplated management action to
dismiss her. Thus, the dismissal of Ms. Ambas was heavily tainted with and evidently done in bad
faith. Manifestly, it was designed to interfere with the members' right to self-organization.
Admittedly, management has the prerogative to discipline its employees for insubordination. But when the
exercise of such management right tends to interfere with the employees' right to self-organization, it amounts
to union-busting and is therefore a prohibited act. The dismissal of Ms. Ambas was clearly designed to frustrate
the Union in its desire to forge a new CBA with the College that is reflective of the true wishes and aspirations
of the Union members. Her dismissal was merely a subterfuge to get rid of her, which smacks of a pre-
conceived plan to oust her from the premises of the College. It has the effect of busting the Union, stripping it
of its strong-willed leadership. When management refused to treat the charge of insubordination as a grievance
within the scope of the Grievance Machinery, the action of the College in finally dismissing her from the
service became arbitrary, capricious and whimsical, and therefore violated Ms. Ambas' right to due process."[17]
In this regard, we find no cogent reason to disturb the findings of the Court of Appeals affirming the
findings of the Secretary of Labor and Employment. The right to self-organization of employees must not be
interfered with by the employer on the pretext of exercising management prerogative of disciplining its
employees. In this case, the totality of conduct of the employer shows an evident attempt to restrain the
employees from fully exercising their rights under the law. This cannot be done under the Labor Code.
WHEREFORE, premises considered, the petition is DENIED for lack of merit.
SO ORDERED.
G.R. No. L-41955 December 29, 1977
ELISCO-ELIROL LABOR UNION (NAFLU) and its OFFICERS AND MEMBERS OF THE BOARD
OF DIRECTORS, petitioners
vs.
CARMELO NORIEL, in his capacity as Director of the Bureau of Labor Relations, ELIZALDE STEEL
CONSOLIDATED, INC. and NATIONAL FEDERATION OF LABOR UNIONS (NAFLU), respondents.
Villaluz, Villaluz & Villaluz, Padilla Law Offices and Rizalindo V. Diaz for petitioners.
Acting Solicitor General Hugo E. Gutierrez, Jr., Assistant Solicitor Reynato S. Puno and Solicitor Ramon A.
Barcelona respondent Director.
Rolando M. Olalia for respondent Union (NAFLU).
TEEHANKEE, J.:
The Court sets aside respondent director's appealed resolution and rules in accordance with the prevailing law
and settled jurisprudence that the petitioner union consisting of the members-employees of respondent
corporation is the principal party to the collective bargaining agreement (rather than the respondent mother
union which is merely its agent) and is therefore entitled to be recognized as the sole and exclusive bargaining
representative entitled to administer and enforce the collective bargaining agreement with the employer
corporation.
The undisputed antecedent facts which gave rise to the present petition are stated in the petition as follows:
2. That sometime on February 1974, petitioner-Elisco Elirol Labor Union (NAFLU), negotiated
and executed a collective bargaining agreement with respondent-Elizalde Steel Consolidated,
Inc.1
3. That upon verification by individual petitioners at the Registration division, Bureau of Labor
Relations, Department of Labor, the Elisco-Elirol Labor Union (NAFLU), the contracting party
in said collective bargaining agreement, was not then registered and therefore not entitled to the
benefits and privileges embodied in said collective bargaining agreement; thus on March 3,
1975, the member of petitioner-appellant union in a general membership meeting decided in a
resolution to register their union to protect and preserve the integrity and inviolability of the
collective bargaining agreement between the Elisco-Elirol Labor Union (NAFLU) and the
Elizalde Steel Consolidated, Inc.
4. That said resolution of the members of petitioner-appellant union was passed upon by the
officers and members of the Board of Directors on May 20, 1975, at a special meeting called for
the purpose, resolution No. 6, s. 1975 was approved requesting the Acting Directors, Registration
Division, Bureau of Labor Relations, to register the union Elisco-Elirol Labor Union (NAFLU).
5. That by virtue of resolution No. 6, Petitioner-appellant union applied for registration with the
Bureau of Labor Relations, hence on May 28, 1975, Certificate of Registration No. 8511-IP was
issued by said Office.
6. That with the issuance of the certificate of registration petitioner-appellant acquired a

personality separate and distinct from any other labor union.
7. That steps were taken by petitioner-appellant to enforce the collective bargaining agreement as
the principal party to the same representing the workers covered by such agreement immediately
after the issuance of the certificate of registration.
8. That on June 10, 1975, at a special meeting called for the purpose, the general membership of
petitioner union decided that their mother union, the National Federation of Labor Unions, can
no longer safeguard the rights of its members insofar as working conditions and other terms of
employment are concerned and that the interest and welfare of petitioner can be served best if it
will stay independent and disaffiliated from said mother union, hence, the general membership
adopted a resolution to disaffiliate from the National Federation of Labor Unions.
9. That on June 11, 1975, petitioner, acting through its President Hilario Riza informed
respondents of said disaffiliation by means of a letter, and subsequently requested respondents to
recognize petitioner as the sole and exclusive bargaining representative of the employees thereof.
10. That respondent without any justifiable reason refused and continues to refuse to recognize
petitioner as the sole and exclusive bargaining representative of its employees, and, now actually
dismissed the petitioner union's officers and board members.2 In this connection, a complaint for
unfair labor practice was filed by petitioners against respondents for the latter's refusal to bargain
collectively with petitioner, which complaint is presently docketed as Case No. LR-RO4-6-1662.
11. That by virtue of said refusal of respondent company to recognize petitioner as the sole and
exclusive bargaining representative of the employees, petitioners filed a petition before the
Bureau of Labor Relations, Department of Labor on July 2, 1975, with Case No. LR-861 against
respondents Elizalde Steel Consolidated, Inc. and the National Federation of Labor Unions be
ordered to stop from presenting itself as the collective bargaining agent and pursuant thereto, a
writ of preliminary mandatory and prohibitory injunction be issued.
12. That on August 19, 1975. the Bureau of Labor Relations, through Med-Arbiter Reynaldo B.
Carta, before whom the case was beard, issued an Order dismissing the petition for lack of merit.
On appeal to respondent Director of the Bureau of Labor Relations, said respondent issued his
Resolution of October 30, 1975 affirming the dismissal of petitioner-union's petition as follows:
On February, 1974 the members of the petitioner union who were then yet affiliated with the
National Association of Free Labor Union negotiated and executed with the respondent company
a collective bargaining agreement with expiry date in November, 1976.
On May 28, 1975, after the same members, by valid resolution of the Board of directors and
approved by the general membership, have formed themselves into an i t organization and
applied for registration as a union, a certificate of registration was issued by the Department of
Labor. And on June 10, 1975 again by a valid resolution the same members disaffiliated with the
NAFLU.
The issue for resolution is —
Which of the two unions should be recognized as the sole and exclusive bargaining
representative of the employees and ultimately recognized to administer and supervise the
enforcement of the collective bargaining agreement.
Petitioner-union contends that it having the necessary interest and being the real party must be
the sole union to be recognized and given authority to bargain with the company.
Setting aside jurisprudence and the collective bargaining agreement of the parties, the
appellant is correct. For to grant to the former mother union (NAFLU) the authority to
administer and enforce their collective bargaining agreement without presumably any
members in the bargaining unit is quite absurd. But to transfer also the authority to the newly
formed union although the members of the same were the same members who composed then
the local chapter of the mother union is also in violation of the CBA particularly article IV which
is the union security clause, wherein it is a condition for a continued employment in the
company to maintain membership in the Union. Theoreticallytherefore, when the employees
disaffiliated from the mother union and formed themselves into a new union, their status as
employees was also terminated. As such they could not therefore absolutely and legally claim
that they still comprise the majority of the bargaining unit.
Secondly, to vest, upon the new union the authority to bargain is in violation of the whole CBA,
under the theory that when the mother union (NAFLU) entered and executed the same in its
separate and distinct personality aside from the people composing the same. In fine, the CBA
then was executed by and between the company and the (NAFLU) with the latter as an entity
having its own capacity and personality different from the members composing the same.
Lastly, to preserve and avoid unstability and disorder in the labor movement as correctly ruled by
the med-arbiter, the status quo should be preserved, there being no compelling reason to alter the
same.3
Hence, the petition at bar. We find the petition to be clearly meritorious and reverse the appealed resolution.
1. Respondent director correctly perceived in his Resolution that "to grant to the former mother union (NAFLU)
the authority to administer and enforce their collective bargaining agreement without presumably any members
in the bargaining unit is quite absurd" but fell unto the grave error of holding that "When the employees
disaffiliated from the mother union and formed themselves into a new union, their status as employees was also
terminated."
His error was in not perceiving that the employees and members of the local union did not form a new union but
merely registered the local union as was their right. Petitioner Elisco-Elirol Labor Union-NAFLU, consisting of
employees and members of the local union was the principal party to the agreement. NAFLU as the "mother
union" in participation in the execution of the bargaining agreement with respondent company acted merely
as agent of the local union, which remained the basic unit of the association existing principally and freely to
serve the common interest of all its members, including the freedom to disaffiliated when the circumstances so
warranted as in the present case.
2. Contrary to respondent director's misimpression, our jurisprudence fully supports 'petitioner's stand.
In Liberty Cotton Mills Workers Union vs. Liberty Cotton Mills, Inc.4 , the Court expressly cited and affirmed
the basic principle that "(T)he locals are separate and distinct units primarily designed to secure and maintain an
equality of bargaining power between the employer and their employee-members in the economic struggle for
the fruits of the joint productive effort of labor and capital; and the association of the locals into the national
union (as PAFLU) was in furtherance of the same end.These associations are consensual entities capable of
entering into such legal relations with their members. The essential purpose was the affirmation of the local
unions into a common enterprise to increase by collective action the common bargaining power in respect of the
terms and conditions of labor. Yet the locals remained the basic units of association, free to serve their own and
the common interest of all, subject to the restraints imposed by the Constitution and By-Laws of the Association,
and free also to renounce the affiliation for mutual welfare upon the terms laid down in the agreement which
brought it into existence."
Corollarily, the "substitutionary" doctrine likewise fully supports petitioner's stand. Petitioner union to whom
the employees owe their allegiance has from the beginning expressly avowed that it "does not intend to change
and/or amend the provisions of the present collective bargaining agreement but only to be given the chance to
enforce the same since there is a shift of allegiance in the majority of the employees at respondent company."
As was stressed by the Court in Benguet Consolidated Inc. vs. BCI Employees & W Union-PAFLU5 —
... This principle, formulated by the NLRB as its initial compromise solution to the problem
facing it when there occurs a shift in employees' union allegiance after the execution of a
bargaining contract with their employer, merely states that even during the effectivity of a
collective bargaining agreement executed between employer and employees thru their agent, the
employees can change said agentbut the contract continues to bind then up to its expiration
date. They may bargain however for the shortening of said expiration date.
In formulating the "substitutionary" doctrine, the only consideration involved as the employees'
interest in the existing bargaining agreement. The agent's interest never entered the picture. In
fact, the justification for said doctrine was:
... that the majority of the employees, as an entity under the statute, is the true party in interest to
the contract, holding rights through the agency of the union representative. Thus, any exclusive
interest claimed by the agent is defeasible at the will of the principal.
3. It need only be mentioned finally that the Secretary of Labor in his decision of April 23, 1976 and order of
January 10, 1977 denying reconsideration in the sister unfair labor practice case and ordering respondent
corporation to immediately lift the suspension and reinstate the complainant officers and board members of
petitioner union6 has likewise adhered to the foregoing basic principles and settled jurisprudence in contrast to
respondent director (as well as therein respondent NLRC which similarly adhered to the archaic and illogical
view that the officers and board members of petitioner local union committed an "act of disloyalty" in
disaffiliating from the mother union when practically all its members had so voted to disaffiliate and the mother
union [as mere agent] no longer had any local union or members to represent), ruling that
"(G)ranting arguendo that the disaffiliation from the NAFLU is a legal cause for expulsion and dismissal, it
could not detract from the fact that only 13 individual complainants out of almost 700 members who
disaffiliated, were singled out for expulsion and recommended for dismissal. The actuation of NAFLU
conclusively constitute discrimination. Since the suspension of the complainants was effected at the instance of
NAFLU, it should be held liable to the payment of back wages."
The Presidential Assistant for Legal Affairs Ronaldo B. Zamora has likewise dismissed as untenable in a similar
case respondents' views that "such maintenance of membership" clause be distorted as "intended for the security
of the union rather than the security of tenure for the workers", ruling that "(W)hat is paramount, as it is
expressly and explicitly emphasize in an exacting language under the New Constitution, is the security of tenure
of the workers, not the security of the union. To impress, therefore, such "maintenance of membership" —
which is intended for the security of the union rather than the security of tenure of the workers — as a bar to
employees' changing their affiliation is not only to infringe on the constitutional right of freedom of association,
but also to trample upon the constitutional right of workers to security of tenure and to render meaningless
whatever "adequate social services" the State may establish or maintain in the field of employment "to
guarantee the enjoyment by the people of a decent standard of living."7
It is expected that with this decision, any suspension or lay-off of the complainants officers and board members
or employees of petitioner union arising from the respondents' misconception of the clearly applicable
principles and jurisprudence upholding the primacy of the employees and their freely chosen local union as the
true party in interest to the collective bargaining agreement will be forthwith rectified and set aside.
ACCORDINGLY, the petition is granted and the appealed resolution is set aside and petitioner local union is
declared to be the sole and exclusive bargaining representative of the employees of respondent corporation
entitled to administer and enforce any subsisting collective bargaining agreement with said employer
corporation. This decision shall be immediately executory upon its promulgation.
[G.R. No. 161693. June 28, 2005]
MANOLO P. SAMSON, petitioner, vs. HON. VICTORIANO B. CABANOS, In his capacity as Acting
Presiding Judge, Regional Trial Court of Antipolo City, Branch 71, PEOPLE OF THE
PHILIPPINES and CATERPILLAR, INC., respondents.
DECISION
PUNO, J.:
Petitioner Manolo P. Samson seeks the reversal of the orders dated January 22, 2003 and November 17,
2003 issued by Presiding Judge Felix S. Caballes and Acting Presiding Judge Victoriano B. Cabanos,
respectively, of the Regional Trial Court (RTC) of Antipolo City, Branch 71, in relation to Criminal Case No.
02-23183. The assailed orders denied petitioners motion to quash the information for unfair competition filed
against him before said court.[1] Petitioner also prayed that a temporary restraining order and/or preliminary
injunction be issued to enjoin respondent judge from further proceeding with Criminal Case No. 02-23183 until
the resolution of the instant petition. The Court issued a temporary restraining order on February 18, 2004.[2]
The background facts: Petitioner was charged with the crime of unfair competition before the RTC of
Antipolo City in an Information that states:
The undersigned Senior State Prosecutor of the Department of Justice hereby accuses MANOLO P. SAMSON
for violation of Sec. 168.3 (a) in relation to Secs. 123.1 (e), 131.3 and 170 of RA 8293 otherwise known as the
Intellectual Property Code of the Philippines, committed as follows:
That on or about the first week of November 1999 and sometime prior or subsequent thereto, in Cainta, Rizal,
Philippines, and within the jurisdiction of this Honorable Court, above-named accused, owner/proprietor of
ITTI Shoes Corporation located at F.P. Felix Avenue, Cainta, Rizal, did then and there willfully, unlawfully and
feloniously distribute, sell and/or offer for sale CATERPILLAR products such as footwear, garments, clothing,
bags, accessories and paraphernalia which are closely identical to and/or colorable imitations of the authentic
Caterpillar products and likewise using trademarks, symbols and/or designs as would cause confusion, mistake
or deception on the part of the buying public to the damage and prejudice of CATERPILLAR, INC., the prior
adopter, user and owner of the following internationally famous marks: CATERPILLAR, CAT,
CATERPILLAR, CAT, CATERPILLAR & DESIGN, CAT AND DESIGN, WALKING MACHINES and
TRACK-TYPE TRACTOR & DESIGN.
CONTRARY TO LAW.[3]
Petitioner moved to quash the information on the ground that the court has no jurisdiction over the offense
charged in the Information. He argued that Section 170 of Republic Act (R.A.) No. 8293 [4] provides that the
penalty for violation of Section 168 thereof is imprisonment from two (2) to five (5) years and a fine ranging
from fifty thousand pesos (P50,000.00) to two hundred thousand pesos (P200,000.00), and R.A. No.
7691[5] amending Batas Pambansa (B.P.) Blg. 129[6] vested the Metropolitan Trial Courts (MTC) exclusive
original jurisdiction over all offenses punishable with imprisonment not exceeding six (6) years irrespective of
the amount of the fine.[7] Presiding Judge Felix S. Caballes denied the motion for lack of merit in his order dated
January 22, 2003.[8] Petitioner filed a motion for reconsideration which was likewise denied by Acting Presiding
Judge Victoriano B. Cabanos.[9]
Petitioner filed the instant petition for certiorari before this Court on pure question of law:
Whether or not the respondent Regional Trial Court has jurisdiction over the offenses charged in the subject
information where the penalty therein range from two (2) years to five (5) years, pursuant to Section 170 of
R.A. 8293, in the light of the enactment of Republic Act No. 7691, amending B.P. Blg. 129, which vests
exclusive original jurisdiction on the Metropolitan Trial Courts over all offenses punishable with imprisonment
not exceeding six (6) years irrespective of the amount of fine, in relation to Section 163 of R.A. No. 8293.[10]
Petitioner reiterates his argument before the trial court in support of his motion to quash. He contends that
Section 170 of R.A. No. 8293 provides that the penalty to be imposed upon any person guilty of violation of
Section 168 of the law is imprisonment from two (2) to five (5) years and a fine ranging from fifty thousand
pesos (P50,000.00) to two hundred thousand pesos (P200,000.00). Under Section 2 of R.A. No. 7691, amending
Section 32 of B.P. 129, the MTC shall exercise exclusive original jurisdiction over all offenses punishable with
imprisonment not exceeding six (6) years irrespective of the fine. As petitioner is charged with an offense
penalized by imprisonment not exceeding six (6) years, the jurisdiction to try the case lies with the MTC and
not the RTC. In addition, petitioner submits that the old Trademark Law, R.A. No. 166, conferring jurisdiction
on the Courts of First Instance (now RTC) over complaints for unfair competition, has been repealed by Section
239 of R.A. No. 8293. He cites the Courts decision in Mirpuri vs. Court of Appeals.[11]
The petition must be dismissed.
It appears that petitioner had already raised the same issue and argument before this Court in the case
of Samson vs. Daway,[12] decided on July 21, 2004. That case involved exactly the same facts and issue as in
this case, except that the information for unfair competition against petitioner was filed before the RTC of
Quezon City. We held in that case:
The issues posed for resolution are - (1) Which court has jurisdiction over criminal and civil cases for violation
of intellectual property rights? xxx
Under Section 170 of R.A. No. 8293, which took effect on January 1, 1998, the criminal penalty for
infringement of registered marks, unfair competition, false designation of origin and false description or
representation, is imprisonment from 2 to 5 years and a fine ranging from Fifty Thousand Pesos to Two
Hundred Thousand Pesos, to wit:
SEC. 170. Penalties. - Independent of the civil and administrative sanctions imposed by law, a criminal penalty
of imprisonment from two (2) years to five (5) years and a fine ranging from Fifty thousand pesos (P50,000.00)
to Two hundred thousand pesos (P200,000.00) shall be imposed on any person who is found guilty of
committing any of the acts mentioned in Section 155 [Infringement], Section 168 [Unfair Competition] and
Section 169.1 [False Designation of Origin and False Description or Representation].
Corollarily, Section 163 of the same Code states that actions (including criminal and civil) under Sections 150,
155, 164, 166, 167, 168 and 169 shall be brought before the proper courts with appropriate jurisdiction under
existing laws, thus -
SEC. 163. Jurisdiction of Court. - All actions under Sections 150, 155, 164 and 166 to 169 shall be brought
before the proper courts with appropriate jurisdiction under existing laws. (Emphasis supplied)
The existing law referred to in the foregoing provision is Section 27 of R.A. No. 166 (The Trademark Law)
which provides that jurisdiction over cases for infringement of registered marks, unfair competition, false
designation of origin and false description or representation, is lodged with the Court of First Instance (now
Regional Trial Court) -
SEC. 27. Jurisdiction of Court of First Instance. - All actions under this Chapter [V - Infringement] and
Chapters VI [Unfair Competition] and VII [False Designatiion of Origin and False Description or
Representation], hereof shall be brought before the Court of First Instance.
We find no merit in the claim of petitioner that R.A. No. 166 was expressly repealed by R.A. No. 8293. The
repealing clause of R.A. No. 8293, reads -
SEC. 239. Repeals. - 239.1. All Acts and parts of Acts inconsistent herewith, more particularly Republic Act
No. 165, as amended; Republic Act No. 166, as amended; and Articles 188 and 189 of the Revised Penal Code;
Presidential Decree No. 49, including Presidential Decree No. 285, as amended, are hereby repealed. (Emphasis
added)
Notably, the aforequoted clause did not expressly repeal R.A. No. 166 in its entirety, otherwise, it would not
have used the phrases parts of Acts and inconsistent herewith; and it would have simply stated Republic Act
No. 165, as amended; Republic Act No. 166, as amended; and Articles 188 and 189 of the Revised Penal Code;
Presidential Decree No. 49, including Presidential Decree No. 285, as amended are hereby repealed. It would
have removed all doubts that said specific laws had been rendered without force and effect. The use of the
phrases parts of Acts and inconsistent herewith only means that the repeal pertains only to provisions which are
repugnant or not susceptible of harmonization with R.A. No. 8293. Section 27 of R.A. No. 166, however, is
consistent and in harmony with Section 163 of R.A. No. 8293. Had R.A. No. 8293 intended to vest jurisdiction
over violations of intellectual property rights with the Metropolitan Trial Courts, it would have expressly stated
so under Section 163 thereof.
Moreover, the settled rule in statutory construction is that in case of conflict between a general law and a special
law, the latter must prevail. Jurisdiction conferred by a special law to Regional Trial Courts must prevail over
that granted by a general law to Municipal Trial Courts.
In the case at bar, R.A. No. 8293 and R.A. No. 166 are special laws conferring jurisdiction over violations of
intellectual property rights to the Regional Trial Court. They should therefore prevail over R.A. No. 7691,
which is a general law. Hence, jurisdiction over the instant criminal case for unfair competition is properly
lodged with the Regional Trial Court even if the penalty therefor is imprisonment of less than 6 years, or from 2
to 5 years and a fine ranging from P50,000.00 to P200,000.00.
In fact, to implement and ensure the speedy disposition of cases involving violations of intellectual property
rights under R.A. No. 8293, the Court issued A.M. No. 02-1-11-SC dated February 19, 2002 designating certain
Regional Trial Courts as Intellectual Property Courts. On June 17, 2003, the Court further issued a Resolution
consolidating jurisdiction to hear and decide Intellectual Property Code and Securities and Exchange
Commission cases in specific Regional Trial Courts designated as Special Commercial Courts.
The case of Mirpuri v. Court of Appeals, invoked by petitioner finds no application in the present case.
Nowhere in Mirpuri did we state that Section 27 of R.A. No. 166 was repealed by R.A. No. 8293. Neither did
we make a categorical ruling therein that jurisdiction over cases for violation of intellectual property rights is
lodged with the Municipal Trial Courts. The passing remark in Mirpuri on the repeal of R.A. No. 166 by R.A.
No. 8293 was merely a backgrounder to the enactment of the present Intellectual Property Code and cannot thus
be construed as a jurisdictional pronouncement in cases for violation of intellectual property rights.
The foregoing ruling is the law of the case and thus lays to rest the issue posed by petitioner. We see no
reason in this case to deviate therefrom. It is a basic legal principle that whatever is once irrevocably established
as the controlling legal rule or decision between the same parties in the case continues to be the law of the case,
whether correct on general principles or not, so long as the facts on which such decision was predicated
continue to be the facts of the case before the court.[13]
IN VIEW WHEREOF, the petition is DISMISSED. The temporary restraining order issued by this Court
on February 18, 2004 is hereby LIFTED.
SO ORDERED.
G.R. No. 165407
Present:
YNARES-SANTIAGO, J.,
HERMINIGILDO INGUILLO AND Chairperson,
ZENAIDA BERGANTE,
Petitioners, CARPIO,*
CORONA,**
- versus -
NACHURA, and
PERALTA, JJ.
FIRST PHILIPPINE SCALES,

INC.and/or AMPARO POLICARPIO, Promulgated:
MANAGER,
Respondents. June 5, 2009
x-----------------------------------------------------x
Assailed in this petition for review under Rule 45 of the Rules of Court are the Court of Appeals (1)
Decision[1] dated March 11, 2004 in CA-G.R. SP No. 73992, which dismissed the Petition for Certiorari of
petitioners Zenaida Bergante (Bergante) and Herminigildo Inguillo (Inguillo); and
(2) Resolution[2] dated September 17, 2004 denying petitioners' Motion for Reconsideration. The appellate court
sustained the ruling of the National Labor Relations Commission (NLRC) that petitioners were validly
dismissed pursuant to a Union Security Clause in the collective bargaining agreement.
The facts of the case are as follows:
First Philippine Scales, Inc. (FPSI), a domestic corporation engaged in the manufacturing of weighing scales,
employed Bergante and Inguillo as assemblers on August 15, 1977 and September 10, 1986, respectively.
In 1991, FPSI and First Philippine Scales Industries Labor Union (FPSILU)[3] entered into a Collective
Bargaining Agreement (CBA),[4] the duration of which was for a period of five (5) years starting on September
12, 1991 until September 12, 1996. On September 19, 1991, the members of FPSILU ratified the CBA in a
document entitled RATIPIKASYON NG KASUNDUAN.[5] Bergante and Inguillo, who were members of
FPSILU, signed the said document.[6]
During the lifetime of the CBA, Bergante, Inguillo and several FPSI employees joined another union,
the Nagkakaisang Lakas ng Manggagawa (NLM), which was affiliated with a federation called KATIPUNAN
(NLM-KATIPUNAN, for brevity). Subsequently, NLM-KATIPUNAN filed with the Department of Labor and
Employment (DOLE) an intra-union dispute[7] against FPSILU and FPSI. In said case, the Med-Arbiter
decided[8] in favor of FPSILU. It also ordered the officers and members of NLM-KATIPUNAN to return to
FPSILU the amount of P90,000.00 pertaining to the union dues erroneously collected from the
employees. Upon finality of the Med-Arbiter's Decision, a Writ of Execution[9] was issued to collect the
adjudged amount from NLM-KATIPUNAN. However, as no amount was recovered, notices of garnishment
were issued to United Coconut Planters Bank (Kalookan City Branch)[10] and to FPSI[11] for the latter to hold for
FPSILU the earnings of Domingo Grutas, Jr. (Grutas) and Inguillo, formerly FPSILU's President and Secretary
for Finance, respectively, to the extent of P13,032.18. Resultantly, the amount of P5,140.55 was
collected,[12] P1,695.72 of which came from the salary of Grutas, while the P3,444.83 came from that of
Inguillo.
Meanwhile, on March 29, 1996, the executive board and members of the FPSILU addressed a document dated
March 18, 1996 denominated as Petisyon[13] to FPSI's general manager, Amparo Policarpio (Policarpio),
seeking the termination of the services of the following employees, namely: Grutas, Yolanda Tapang, Shirley
Tapang, Gerry Trinidad, Gilbert Lucero, Inguillo, Bergante, and Vicente Go, on the following grounds:[14] (1)
disloyalty to the Union by separating from it and affiliating with a rival Union, the NLM-KATIPUNAN; (2)
dereliction of duty by failing to call periodic membership meetings and to give financial reports; (3) depositing
Union funds in the names of Grutas and former Vice-President Yolanda Tapang, instead of in the name of
FPSILU, care of the President; (4) causing damage to FPSI by deliberately slowing down production,
preventing the Union to even attempt to ask for an increase in benefits from the former; and (5) poisoning the
minds of the rest of the members of the Union so that they would be enticed to join the rival union.
On May 13, 1996, Inguillo filed with the NLRC a complaint against FPSI and/or Policarpio (respondents) for
illegal withholding of salary and damages, docketed as NLRC-NCR-Case No. 00-05-03036-96.[15]
On May 16, 1996, respondents terminated the services of the employees mentioned in the Petisyon.
The following day, two (2) separate complaints for illegal dismissal, reinstatement and damages were filed
against respondents by: (1) NLM-KATIPUNAN, Grutas, Trinidad, Bergante, Yolanda Tapang, Go, Shirley
Tapang and Lucero[16] (Grutas complaint, for brevity); and (2) Inguillo[17] (Inguillo complaint). Both complaints
were consolidated with Inguillo's prior complaint for illegal withholding of salary, which was pending before
Labor Arbiter Manuel Manansala. After the preliminary mandatory conference, some of the complainants
agreed to amicably settle their cases. Consequently, the Labor Arbiter issued an Order[18] dated October 1, 1996,
dismissing with prejudice the complaints of Go, Shirley Tapang, Yolanda Tapang, Grutas,
and Trinidad.[19] Lucero also settled the case after receiving his settlement money and executing a Quitclaim
and Release in favor of FPSI and Policarpio.[20]
Bergante and Inguillo, the remaining complainants, were directed to submit their respective position papers,
after which their complaints were submitted for resolution on February 20, 1997.[21]
In their Position Paper,[22] Bergante and Inguillo claimed that they were not aware of a petition seeking for their
termination, and neither were they informed of the grounds for their termination. They argued that had they
been informed, they would have impleaded FPSILU in their complaints. Inguillo could not think of a valid
reason for his dismissal except the fact that he was a very vocal and active member of the NLM-
KATIPUNAN. Bergante, for her part, surmised that she was dismissed solely for being Inguillo's sister-in-
law.She also reiterated the absence of a memorandum stating that she committed an infraction of a company
rule or regulation or a violation of law that would justify her dismissal.
Inguillo also denounced respondents' act of withholding his salary, arguing that he was not a party to the intra-
union dispute from which the notice of garnishment arose. Even assuming that he was, he argued that his salary
was exempt from execution.
In their Position Paper,[23] respondents maintained that Bergante and Inguillo's dismissal was justified, as the
same was done upon the demand of FPSILU, and that FPSI complied in order to avoid a serious labor dispute
among its officers and members, which, in turn, would seriously affect production. They also justified that the
dismissal was in accordance with the Union Security Clause in the CBA, the existence and validity of which
was not disputed by Bergante and Inguillo. In fact, the two had affixed their signatures to the document which
ratified the CBA.
In his Decision[24] dated November 27, 1997, the Labor Arbiter dismissed the remaining complaints of Bergante
and Inguillo and held that they were not illegally dismissed. He explained that the two clearly violated the
Union Security Clause of the CBA when they joined NLM-KATIPUNAN and committed acts detrimental to
the interests of FPSILU and respondents. The dispositive portion of the said Decision states:
WHEREFORE, premises considered, judgment is hereby rendered:
1. Declaring respondents First Philippines Scales, Inc. (First Philippine Scales

Industries [FPSI] and Amparo Policarpio, in her capacity as President and General Manager of
respondent FPSI, not guilty of illegal dismissal as above discussed. However, considering the
length of services rendered by complainants Herminigildo Inguillo and Zenaida Bergante as
employees of respondent FPSI, plus the fact that the other complainants in the above-entitled
cases were previously granted financial assistance/separation pay through amicable settlement,
the afore-named respondents are hereby directed to pay complainants Herminigildo Inguillo and
Zenaida Bergante separation pay and accrued legal holiday pay, as earlier computed, to wit:
Herminigildo Inguillo
Separation pay ................P22,490.00
Legal Holiday Pay........... 839.00
Total 23,329.00
Zenaida Bergante
Separation pay.................P43,225.00
Legal Holiday Pay........... 839.00
Total 44,064.00
2. Directing the afore-named respondents to pay ten (10%) percent attorney's

fees based on the total monetary award to complainants Inguillo and Bergante.
3. Dismissing the claim for illegal withholding of salary of complainant

Inguillo for lack of merit as above discussed.
4. Dismissing the other money claims and/or other charges of complainants

Inguillo and Bergante for lack of factual and legal basis.
5. Dismissing the complaint of complainant Gilberto Lucero with prejudice for

having executed a Quitclaim and Release and voluntary resignation in favor of respondents FPSI
and Amparo Policarpio as above-discussed where the former received the amount of P23,334.00
as financial assistance/separation pay and legal holiday pay from the latter.
SO ORDERED.[25]
Bergante and Inguillo appealed before the NLRC, which reversed the Labor Arbiter's Decision in a
Resolution[26] dated June 8, 2001, the dispositive portion of which provides:
WHEREFORE, the assailed decision is set aside. Respondents are hereby ordered to reinstate
complainants Inguillo and Bergante with full backwages from the time of their dismissal up [to]
their actualreinstatement. Further, respondents are also directed to pay complainant Inguillo the
amount representing his withheld salary for the period March 15, 1998 to April 16, 1998. The
sum corresponding to ten percent (10%) of the total judgment award by way of attorney's fees is
likewise ordered. All other claims are ordered dismissed for lack of merit.
SO ORDERED.[27]
In reversing the Labor Arbiter, the NLRC[28] ratiocinated that respondents failed to present evidence to show
that Bergante and Inguillo committed acts inimical to FPSILU's interest. It also observed that, since the two (2)
were not informed of their dismissal, the justification given by FPSI that it was merely constrained to dismiss
the employees due to persistent demand from the Union clearly proved the claim of summary dismissal and
violation of the employees' right to due process.
Respondents filed a Motion for Reconsideration, which was referred by the NLRC to Executive Labor Arbiter
Vito C. Bose for report and recommendation. In its Resolution[29]dated August 26, 2002, the NLRC adopted in
toto the report and recommendation of Arbiter Bose which set aside its previous Resolution reversing the Labor
Arbiter's Decision.This time, the NLRC held that Bergante and Inguillo were not illegally dismissed as
respondents merely put in force the CBA provision on the termination of the services of disaffiliating Union
members upon the recommendation of the Union. The dispositive portion of the said Resolution provides:
WHEREFORE, the resolution of the Commission dated June 8, 2001 is set aside. Declaring the
dismissal of the complainants as valid, [t]his complaint for illegal dismissal is
dismissed. However, respondents are hereby directed to pay complainant Inguillo the amount
representing his withheld salary for the period March 15, 1998 to April 16, 1998, plus ten (10%)
percent as attorney's fees.
All other claims are ordered dismissed for lack of merit.
SO ORDERED.[30]
Not satisfied with the disposition of their complaints, Bergante and Inguillo filed a petition for certiorari under
Rule 65 of the Rules of Court with the Court of Appeals (CA). The CA dismissed the petition for lack of
merit[31] and denied the subsequent motion for reconsideration.[32] In affirming the legality of the dismissal, the
CA ratiocinated, thus:
x x x on the merits, we sustain the view adopted by the NLRC that:

x x x it cannot be said that the stipulation providing that the employer may dismiss
an employee whenever the union recommends his expulsion either for disloyalty
or for any violation of its by-laws and constitution is illegal or constitutive of
unfair labor practice, for such is one of the matters on which management and
labor can agree in order to bring about the harmonious relations between them and
the union, and cohesion and integrity of their organization. And as an act of
loyalty, a union may certainly require its members not to affiliate with any other
labor union and to consider its infringement as a reasonable cause for separation.
The employer FPSI did nothing but to put in force their agreement when it
separated the disaffiliating union members, herein complainants, upon the
recommendation of the union.Such a stipulation is not only necessary to maintain
loyalty and preserve the integrity of the union, but is allowed by the Magna Carta
of Labor when it provided that while it is recognized that an employee shall have
the right of self-organization, it is at the same time postulated that such rights shall
not injure the right of the labor organization to prescribe its own rules with respect
to the acquisition or retention of membership therein. Having ratified their CBA
and being then members of FPSILU, the complainants owe fealty and are required
under the Union Security clause to maintain their membership in good standing
with it during the term thereof, a requirement which ceases to be binding only
during the 60-day freedom period immediately preceding the expiration of the
CBA, which was not present in this case.
x x x the dismissal of the complainants pursuant to the demand of the majority

union in accordance with their union security [clause] agreement following the
loss of seniority rights is valid and privileged and does not constitute unfair labor
practice or illegal dismissal.
Indeed, the Supreme Court has for so long a time already recognized a union security clause in
the CBA, like the one at bar, as a specie of closed-shop arrangement and trenchantly upheld the
validity of the action of the employer in enforcing its terms as a lawful exercise of its rights and
obligations under the contract.
The collective bargaining agreement in this case contains a union security

clause-a closed-shop agreement.
A closed-shop agreement is an agreement whereby an employer binds

himself to hire only members of the contracting union who must continue to
remain members in good standing to keep their jobs. It is the most prized
achievement of unionism. It adds membership and compulsory dues. By holding
out to loyal members a promise of employment in the closed-shop, it welds group
solidarity. (National Labor Union v. Aguinaldo's Echague Inc., 97 Phil. 184). It is
a very effective form of union security agreement.
This Court has held that a closed-shop is a valid form of union security,
and such a provision in a collective bargaining agreement is not a restriction of
the right of freedom of association guaranteed by the Constitution. (Lirag Textile
Mills, Inc. v. Blanco, 109 SCRA 87; Manalang v. Artex Development Company,
Inc., 21 SCRA 561.)[33]
Hence, the present petition.

Essentially, the Labor Code of the Philippines has several provisions under which an employee may be validly
terminated, namely: (1) just causes under Article 282;[34] (2) authorized causes under Article 283;[35] (3)
termination due to disease under Article 284;[36] and (4) termination by the employee or resignation under
Article 285.[37] While the said provisions did not mention as ground the enforcement of the Union Security
Clause in the CBA, the dismissal from employment based on the same is recognized and accepted in our
jurisdiction.[38]
Union security is a generic term, which is applied to and comprehends closed shop, union shop, maintenance of
membership or any other form of agreement which imposes upon employees the obligation to acquire or retain
union membership as a condition affecting employment.[39] There is union shop when all new regular
employees are required to join the union within a certain period as a condition for their continued
employment. There is maintenance of membership shop when employees, who are union members as of the
effective date of the agreement, or who thereafter become members, must maintain union membership as a
condition for continued employment until they are promoted or transferred out of the bargaining unit or the
agreement is terminated.[40] A closed-shop, on the other hand, may be defined as an enterprise in which, by
agreement between the employer and his employees or their representatives, no person may be employed in any
or certain agreed departments of the enterprise unless he or she is, becomes, and, for the duration of the
agreement, remains a member in good standing of a union entirely comprised of or of which the employees in
interest are a part.[41]
In their Petition, Bergante and Inguillo assail the legality of their termination based on the Union Security
Clause in the CBA between FPSI and FPSILU. Article II[42] of the CBA pertains to Union Security and
Representatives, which provides:
The Company hereby agrees to a UNION SECURITY [CLAUSE] with the following terms:
1. All bonafide union members as of the effective date of this

agreement and all those employees within the bargaining unit who shall
subsequently become members of the UNION during the period of this
agreement shall, as a condition to their continued employment, maintain their
membership with the UNION under the FIRST PHIL. SCALES INDUSTRIES
LABOR UNION Constitution and By-laws and this Agreement;
2. Within thirty (30) days from the signing of this Agreement,
all workers eligible for membership who are not union members shall become and
to remain members in good standing as bonafide union members therein as a
condition of continued employment;
3. New workers hired shall likewise become members of the

UNION from date they become regular and permanent workers and shall remain
members in good standing as bonafide union members therein as a condition of
continued employment;
4. In case a worker refused to join the Union, the Union will

undertake to notify workers to join and become union members. If said worker or
workers still refuses, he or they shall be notified by the Company of his/her
dismissal as a consequence thereof and thereafter terminated after 30 days notice
according to the Labor Code.
5. Any employee/union member who fails to retain union

membership in good standing may be recommended for suspension or
dismissal by the Union Directorate and/or FPSILU Executive Council for
any of the following causes:
a) Acts of Disloyalty;
b) Voluntary Resignation or Abandonment from the UNION;
c) Organization of or joining another labor union or any labor group that
would work against the UNION;
d) Participation in any unfair labor practice or violation of the Agreement,
or activity derogatory to the UNION decision;
e) Disauthorization of, or Non-payment of, monthly membership dues,
fees, fines and other financial assessments to the Union;
f) Any criminal violation or violent conduct or activity against any
UNION member without justification and affecting UNION rights
or obligations under the said Agreement.
Verily, the aforesaid provision requires all members to maintain their membership with FPSILU during the
lifetime of the CBA. Failing so, and for any of the causes enumerated therein, the Union Directorate and/or
FPSILU Executive Council may recommend to FPSI an employee/union member's suspension or
dismissal. Records show that Bergante and Inguillo were former members of FPSILU based on their signatures
in the document which ratified the CBA. It can also be inferred that they disaffiliated from FPSILU when the
CBA was still in force and subsisting, as can be gleaned from the documents relative to the intra-union dispute
between FPSILU and NLM-KATIPUNAN. In view of their disaffiliation, as well as other acts allegedly
detrimental to the interest of both FPSILU and FPSI, a Petisyon was submitted to Policarpio, asking for the
termination of the services of employees who failed to maintain their Union membership.
The Court is now tasked to determine whether the enforcement of the aforesaid Union Security Clause justified
herein petitioners' dismissal from the service.
In terminating the employment of an employee by enforcing the Union Security Clause, the employer needs
only to determine and prove that: (1) the union security clause is applicable; (2) the union is requesting for the
enforcement of the union security provision in the CBA; and (3) there is sufficient evidence to support the
union's decision to expel the employee from the union or company.[43]
We hold that all the requisites have been sufficiently met and FPSI was justified in enforcing the Union Security
Clause, for the following reasons:
First. FPSI was justified in applying the Union Security Clause, as it was a valid provision in the CBA, the
existence and validity of which was not questioned by either party.Moreover, petitioners were among the 93
employees who affixed their signatures to the document that ratified the CBA. They cannot now turn their back
and deny knowledge of such provision.
Second. FPSILU acted on its prerogative to recommend to FPSI the dismissal of the members who failed to
maintain their membership with the Union. Aside from joining another rival union, FPSILU cited other grounds
committed by petitioners and the other employees which tend to prejudice FPSIs interests, i.e., dereliction of
duty - by failing to call periodic membership meetings and to give financial reports; depositing union funds in
the names of Grutas and former Vice-President Yolanda Tapang, instead of in the name of FPSILU care of the
President; causing damage to FPSI by deliberately slowing down production, preventing the Union from even
attempting to ask for an increase in benefits from the former; and poisoning the minds of the rest of the
members of the Union so that they would be enticed to join the rival union.
Third. FPSILU's decision to ask for the termination of the employees in the Petisyon was justified and
supported by the evidence on record. Bergante and Inguillo were undisputably former members of FPSILU. In
fact, Inguillo was the Secretary of Finance, the underlying reason why his salary was garnished to satisfy the
judgment of the Med-Arbiter who ordered NLM-KATIPUNAN to return the Union dues it erroneously
collected from the employees. Their then affiliation with FPSILU was also clearly shown by their signatures in
the document which ratified the CBA. Without a doubt, they committed acts of disloyalty to the Union when
they failed not only to maintain their membership but also disaffiliated from it. They abandoned FPSILU and
even joined another union which works against the former's interests. This is evident from the intra-union
dispute filed by NLM-KATIPUNAN against FPSILU. Once affiliated with NLM-KATIPUNAN, Bergante and
Inguillo proceeded to recruit other employees to disaffiliate from FPSILU and even collected Union dues from
them.
In Del Monte Philippines,[44] the stipulations in the CBA authorizing the dismissal of employees are of equal
import as the statutory provisions on dismissal under the Labor Code, since a CBA is the law between the
company and the Union, and compliance therewith is mandated by the express policy to give protection to
labor. In Caltex Refinery Employees Association (CREA) v. Brillantes,[45] the Court expounded on the
effectiveness of union security clause when it held that it is one intended to strengthen the contracting union and
to protect it from the fickleness or perfidy of its own members. For without such safeguards, group solidarity
becomes uncertain; the union becomes gradually weakened and increasingly vulnerable to company
machinations. In this security clause lies the strength of the union during the enforcement of the collective
bargaining agreement. It is this clause that provides labor with substantial power in collective bargaining.
Nonetheless, while We uphold dismissal pursuant to a union security clause, the same is not without a condition
or restriction. For to allow its untrammeled enforcement would encourage arbitrary dismissal and abuse by the
employer, to the detriment of the employees. Thus, to safeguard the rights of the employees, We have said time
and again that dismissals pursuant to union security clauses are valid and legal, subject only to the requirement
of due process, that is, notice and hearing prior to dismissal.[46] In like manner, We emphasized that the
enforcement of union security clauses is authorized by law, provided such enforcement is not characterized by
arbitrariness, and always with due process.[47]
There are two (2) aspects which characterize the concept of due process under the Labor Code: one is
substantivewhether the termination of employment was based on the provisions of the Labor Code or in
accordance with the prevailing jurisprudence; the other is procedural - the manner in which the dismissal was
effected.
The second aspect of due process was clarified by the Court in King of Kings Transport v. Mamac,[48] stating,
thus:
(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. x x x
(2) After serving the first notice, the employers should schedule and conduct
a hearing or conference wherein the employees will be given the opportunity to: (1) explain and
clarify their defenses to the charge against them; (2) present evidence in support of their
defenses; and (3) rebut the evidence presented against them by the management. During the
hearing or conference, the employees are given the chance to defend themselves personally, with
the assistance of a representative or counsel of their choice. Moreover, this conference or hearing
could be used by the parties as an opportunity to come to an amicable settlement.
(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.
Corollarily, procedural due process in the dismissal of employees requires notice and hearing. The employer
must furnish the employee two written notices before termination may be effected. The first notice apprises the
employee of the particular acts or omissions for which his dismissal is sought, while the second notice informs
the employee of the employers decision to dismiss him.[49] The requirement of a hearing, on the other hand, is
complied with as long as there was an opportunity to be heard, and not necessarily that an actual hearing was
conducted.[50]
In the present case, the required two notices that must be given to herein petitioners Bergante and Inguillo were
lacking. The records are bereft of any notice that would have given a semblance of substantial compliance on
the part of herein respondents. Respondents, however, aver that they had furnished the employees concerned,
including petitioners, with a copy of FPSILU's Petisyon. We cannot consider that as compliance with the
requirement of either the first notice or the second notice. While the Petisyon enumerated the several grounds
that would justify the termination of the employees mentioned therein, yet such document is only a
recommendation by the Union upon which the employer may base its decision. It cannot be considered a notice
of termination. For as agreed upon by FPSI and FPSILU in their CBA, the latter may only recommend to the
former a Union member's suspension or dismissal. Nowhere in the controverted Union Security Clause was
there a mention that once the union gives a recommendation, the employer is bound outright to proceed with
the termination.
Even assuming that the Petisyon amounts to a first notice, the employer cannot be deemed to have substantially
complied with the procedural requirements. True, FPSILU enumerated the grounds in said Petisyon. But a
perusal of each of them leads Us to conclude that what was stated were general descriptions, which in no way
would enable the employees to intelligently prepare their explanation and defenses. In addition, the Petisyon
did not provide a directive that the employees are given opportunity to submit their written explanation within a
reasonable period. Finally, even if We are to assume that the Petisyon is a second notice, still, the requirement
of due process is wanting. For as We have said, the second notice, which is aimed to inform the employee that
his service is already terminated, must state that the employer has considered all the circumstances which
involve the charge and the grounds in the first notice have been established to justify the severance of
employment. After the claimed dialogue between Policarpio and the employees mentioned in the Petisyon, the
latter were simply told not to report for work anymore.
These defects are bolstered by Bergante and Inguillo who remain steadfast in denying that they were notified of
the specific charges against them nor were they given any memorandum to that effect. They averred that had
they been informed that their dismissal was due to FPSILU's demand/petition, they could have impleaded the
FPSILU together with the respondents. The Court has always underscored the significance of the two-notice
rule in dismissing an employee and has ruled in a number of cases that non-compliance therewith is tantamount
to deprivation of the employees right to due process.[51]
As for the requirement of a hearing or conference, We hold that respondents also failed to substantially comply
with the same. Policarpio alleged that she had a dialogue with the concerned employees; that she explained to
them the demand of FPSILU for their termination as well as the consequences of the Petisyon; and that she had
no choice but to act accordingly. She further averred that Grutas even asked her to pay all the involved
employees one (1)-month salary for every year of service, plus their accrued legal holiday pay, but which she
denied. She informed them that it has been FPSI's practice to give employees, on a case-to-case basis, only one-
half () month salary for every year of service and after they have tendered their voluntary resignation. The
employees refused her offer and told her that they will just file their claims with the DOLE.[52]
Policarpio's allegations are self-serving. Except for her claim as stated in the respondent's Position Paper,
nowhere from the records can We find that Bergante and Inguillo were accorded the opportunity to present
evidence in support of their defenses. Policarpio relied heavily on the Petisyon of FPSILU. She failed to
convince Us that during the dialogue, she was able to ascertain the validity of the charges mentioned in the
Petisyon. In her futile attempt to prove compliance with the procedural requirement, she reiterated that the
objective of the dialogue was to provide the employees the opportunity to receive the act of grace of FPSI by
giving them an amount equivalent to one-half () month of their salary for every year of service. We are not
convinced. We cannot even consider the demand and counter-offer for the payment of the employees as an
amicable settlement between the parties because what took place was merely a discussion only of the amount
which the employees are willing to accept and the amount which the respondents are willing to give.Such non-
compliance is also corroborated by Bergante and Inguillo in their pleadings denouncing their unjustified
dismissal. In fine, We hold that the dialogue is not tantamount to the hearing or conference prescribed by law.
We reiterate, FPSI was justified in enforcing the Union Security Clause in the CBA. However, We cannot
countenance respondents' failure to accord herein petitioners the due process they deserve after the former
dismissed them outright in order to avoid a serious labor dispute among the officers and members of the
bargaining agent.[53] In enforcing the Union Security Clause in the CBA, We are upholding the sanctity and
inviolability of contracts. But in doing so, We cannot override an employees right to due process.[54] InCarino
v. National Labor Relations Commission,[55] We took a firm stand in holding that:
The power to dismiss is a normal prerogative of the employer. However, this is not
without limitation. The employer is bound to exercise caution in terminating the services of
his employees especially so when it is made upon the request of a labor union pursuant to
the Collective Bargaining Agreement x x x. Dismissals must not be arbitrary and
capricious. Due process must be observed in dismissing an employee because it affects not
only his position but also his means of livelihood. Employers should respect and protect the
rights of their employees, which include the right to labor."
Thus, as held in that case, "the right of an employee to be informed of the charges against him and to reasonable
opportunity to present his side in a controversy with either the company or his own Union is not wiped away by
a Union Security Clause or a Union Shop Clause in a collective bargaining agreement. An employee is entitled
to be protected not only from a company which disregards his rights but also from his own Union, the
leadership of which could yield to the temptation of swift and arbitrary expulsion from membership and mere
dismissal from his job."[56]
In fine, We hold that while Bergante and Inguillo's dismissals were valid pursuant to the enforcement of Union
Security Clause, respondents however did not comply with the requisite procedural due process. As in the case
of Agabon v. National Labor Relations Commission,[57] where the dismissal is for a cause recognized by the
prevailing jurisprudence, the absence of the statutory due process should not nullify the dismissal or render it
illegal, or ineffectual. Accordingly, for violating Bergante and Inguillo's statutory rights, respondents should
indemnify them the amount of P30,000.00 each as nominal damages.
In view of the foregoing, We see no reason to discuss the other matters raised by petitioners.
WHEREFORE, premises considered, the instant Petition is DENIED. The Court of Appeals Decision
dated March 11, 2004 and Resolution dated September 17, 2004, in CA-G.R. SP No. 73992,
are hereby AFFIRMED WITH MODIFICATION in that while there was a valid ground for dismissal, the
procedural requirements for termination, as mandated by law and jurisprudence, were not
observed. Respondents First Philippine Scales, Inc. and/or Amparo Policarpio are
hereby ORDERED to PAY petitioners Zenaida Bergante and Herminigildo Inguillo the amount of P30,000.00
each as nominal damages. No pronouncement as to costs.
SO ORDERED.

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G.R. No.

L-69870 November 29, 1988

519 Phil. 601

The facts are as follows:

Countrywide Rural Bank of La Carlota, Inc. (Countrywide Rural Bank) in Marbel,

WHEREFORE, premises considered, respondent Countrywide Rural Bank of La

All other claims are dismissed for lack of merit.

WHEREFORE, premises considered, the instant petition is hereby GRANTED. The

WHETHER OR NOT THE RESPONDENT HONORABLE COURT OF APPEALS

WHETHER OR NOT THE COURT OF APPEALS ERRED IN ITS FINDING THAT

WHETHER OR NOT THE COURT OF APPEALS ERRED IN AFFIRMING THAT THE

WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN FINDING

WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN ITS

Lacking this evidence, the act of petitioner Uy in dismissing respondent cannot be

Sandoval-Gutierrez, Azcuna, and Garcia, JJ. concur.

The facts are not in dispute.

Portillos motion for reconsideration was denied.

do the same here.

We are not convinced.

The Court of Appeals was misguided. Its conclusion was incorrect.

G.R. No. 70295 November 29,1988

EUGENIA C. CREDO, petitioner,

OFFENSE vs. Company Interest & Policies

OFFENSE vs. Public Moral

OFFENSE vs. Authority

The committee recommended Credo's termination, with forfeiture of benefits. 7

xxx xxx xxx

As this Court has ruled:

On the other hand, the 1987 Constitution provides that:

THE PRESIDING OFFICER (Mr. Trenas) Commissioner Romulo is recognized.

I refer to Section 1, subparagraph I which reads:

MR. ROMULO. That is true as Commissioner Ople is about to explain. There

MR. ROMULO. Yes.

MR. ROMULO. I yield part of my time.

THE PRESIDING OFFICER (Mr.Trenas). Commissioner Ople is recognized.

Thank you, Mr. Presiding Officer.

MR. ROMULO. So as not to delay the proceedings, I will reserve my right to

xxx xxx xxx

THE PRESIDING OFFICE (Mr. Trenas) Commissioner Romulo is recognized.

MR. ROMULO. On page 2, line 5, I suggest the following amendment after

MR. MONSOD. May we have a suspension of the session?

THE PRESIDING OFFICER (Mr. Trenas). The session is suspended.

It was 7:16 p.m.

At 7:21 p.m., the session was resumed.

THE PRESIDING OFFICER (Mr. Trenas). The session is resumed.

Commissioner Romulo is recognized.

MR. ROMULO. That is correct. Mr. Presiding Officer.

MR. NATIVIDAD. Mr. Presiding officer, so those created by the general

MR. ROMULO. That is correct: 38

SOUTHEAST ASIAN FISHERIES DEVELOPMENT CENTER-AQUACULTURE DEPARTMENT

The antecedent facts of the case are as follows:

SEAFDEC-AQD is a department of an international organization, the Southeast Asian Fisheries Development

WHEREFORE, premises considered, judgment is hereby rendered ordering respondents:

All other claims are hereby dismissed.

SO ORDERED. (Rollo, p. 51, Annex "E")

The petition is impressed with merit.

Petitioner Southeast Asian Fisheries Development Center-Aquaculture Department (SEAFDEC-AQD) is an

4. One of the basic immunities of an international organization is immunity from local

INDUSTRIAL & TRANSPORT G.R. No. 158539

- versus - PUNO, C.J., Chairperson,

Petitioner is a corporation engaged in the business of motor vehicle repair. Private

On March 28, 1998, Felix P. Broqueza, petitioners Personnel and Administration

WHEREFORE, the above-captioned case is hereby DISMISSED for lack of merit.